A startup is only as strong as its founding team. This group must have the capabilities, tenacity, and teamwork required to make sound decisions as they guide a new company through the earliest stages of building a business.
Diversification is a critical component for most professional teams — but it is particularly important for groups overseeing the formulation, launch, and initial growth of a new business. From skill sets to experience, training to demographics, it is important to invest in a diverse management team for your startup.
As a business incubator, Missouri Innovation Center has prioritized the role of team building and leadership as part of its healthy support structure for entrepreneurial leadership. Over the years since its inception, MIC’s own leadership has seen the intangible yet impactful value of balanced teams as a way to make stronger decisions and drive better business outcomes. In this resource, we will explore why this is the case and consider how founders can take advantage of this by assembling balanced management teams.
The Business Case for Balanced Management
Diversity in leadership is more than a talking point or a corporate initiative. It is a well-documented business strategy with a positive, real-world impact on business. For example, McKinsey reports that diversity creates a more holistic impact. The global management consulting firm’s findings come from a years-long analysis project, which revealed the top quartile of companies with a greater emphasis on women’s representation or ethnic diversity in their executive teams were 39% more likely to financially outperform compared to the bottom quartile.
Another study by CloverPop found that a team that is diverse on age, gender, and geographic lines makes better decisions than an individual 87% of the time. In comparison, an average team with less diversity only did so 66% of the time.
The power of diverse leadership largely comes from an ability to avoid blind spots. A homogenous leadership group is naturally limited in areas like market research, leading to misalignment with target audiences. They also lack well-rounded perspectives on innovation, adapt to change slower, and struggle to holistically solve problems.
Key Dimensions of Management Team Diversity
While diversity and DEI are common in the current vernacular, the truth is that team diversity spans across a variety of areas, all of which should at least be considered when launching a startup. Here are five key diversity dimensions to evaluate when building a well-rounded team.
Background and Experience
A new business may not have a long track record, but its members should. It is wise for founders to seek out professionals with specific backgrounds and industry experience that relate to the unique demands of their field.
Founders can also meet some of these experiential needs by building veteran boards of directors and boards of advisors. However, they should also seek experienced individuals who are willing to engage as members of management, as well, to provide an informed perspective in day-to-day decision-making.
Technical and Business-Oriented Approaches
Thinking styles are a nuanced but essential element of a balanced leadership team. In a field like life sciences, it is easy to become focused on the technical side of leadership. As you seek the knowledge and input of pharmacologists, microbiologists, lab technicians, and similar individuals, you also want to consider the business side of things.
Business-oriented mindsets can help a new company navigate things like financials, marketing, branding, and market expansion. Missouri Innovation Center further supports this entrepreneurial need through a mentorship program that connects highly qualified business professionals with founders to answer questions throughout the startup journey.
Educational Diversity
Education is another common thread when launching a technical or life-sciences-based company. Often, educational qualifications will play a primary role in developing products and services. This is the case for many of MIC’s incubator companies as they have developed complex offerings, like Elemental Enzymes’ agrotech solutions or NorthStar’s radioisotope supply solutions.
However, it’s important to remember that education comes in different forms, and more than one of these is required to build a successful business that supports a good product idea. This is why MIC has leveraged Missouri’s university system to cultivate a network of educationally diverse professionals that range from technical college graduates to self-taught entrepreneurs.
Cognitive Diversity
It is no secret that entrepreneurs are willing to take risks. This is the calculated effort that ultimately pays off in big wins and thriving businesses. However, a management team shouldn’t become risk-imbalanced.
Diversifying the cognitive and risk-tolerant elements of leadership leads to more balanced decision-making. Founders should staff their fledgling C-suites with a blend of forward-thinking individuals, problem-solvers, detail-oriented leaders, practical realists, and so on.
Demographic Diversity
Demographic diversity is the most common form of DEI initiatives — and with good reason. It is more than a way to level playing fields and provide cross-cultural equity. When you bring individuals from different backgrounds and demographics, it broadens a management team’s potential.
When a business integrates women, ethnic minorities, multiple generations, international cultures, and more from the outset, it positions a company to have a complex and nuanced understanding of how it operates. From identifying target markets to understanding consumer behavior to balancing scientific theory and application, bringing more qualified voices to the table ensures that no stone is left unturned as your leadership engages in making critical decisions on a regular basis.
Assembling Your Balanced Team
Understanding the need for a diverse team is a good first step. But how do you assemble one? Here are five tips to help you identify and fill management gaps with diverse leaders.
Audit Your Existing Team
You can’t make informed hires without knowing where your weaknesses are. Conduct a thorough audit of your current team composition. Use the criteria outlined above (background, education, demographics, etc.) to identify gaps and define where you are lacking talent.
Use Third-Party Resources
Missouri Innovation Center provides services to support talent acquisition and team building. From mentorship advice to advanced networking opportunities, these can shortcut the process of sourcing talent to fill specific management needs.
Recruit for Diversity
Don’t recruit your leadership in a flat or restrictive manner. Expand your strategy by setting clear goals, diversifying your talent channels, updating job descriptions, and fostering an inclusive company culture.
Overcome Unconscious Bias
It is easy for bias to seep into the recruitment process. Avoid this by adopting things like blind resume screening and cultivating diverse talent networks.
Create Diversity Paths
Go beyond recruitment by developing pathways for clear advancement within your company. This should embrace diverse and multi-faceted professional development tracks that empower and enable a wide cross-section of candidates to advance within your company as it grows.
Cultivating an Environment Where Diverse Teams Thrive
The best way to foster diversity from the top down is to build it from the ground up. As you consider diverse members for your management team, it is important to also invest in establishing a startup culture that can not just promote diversity but help a diverse team thrive. You can do this in a few different ways:
- Teach psychological safety: This seeks to show team members that it is okay to take risks, express ideas, voice concerns, and ask questions — all without fear of negative consequences. As Professor Amy Edmonsun from the Harvard Business School explains, psychological safety should feel like “permission for candor.”
- Work in a diverse environment: When you rent office space and equipment at an incubator like MIC, you gain access to a large and diverse group of peers, mentors, and administrators. Investing in environments like this can help you shape an inclusive leadership strategy and holistic team dynamics.
- Leverage diverse perspectives on purpose: Be deliberate about how you work diversity into your decision-making processes. Seek multiple opinions, allow room for discussion, and make sure everyone is heard.
- Balance efficiency with inclusivity: Finally, don’t forget to maintain balance in your diversity efforts. Efficiency and productivity are still priorities for a startup. Ensure that your diversity efforts are keeping pace with your entrepreneurial needs.
Assembling Balanced Management Teams
Your management team is a central component of your startup. The people you hire to lead a young company will be responsible for many of the key decisions that can set your enterprise on the path to success.
This group requires careful, thoughtful, and deliberate selection — and diversity plays a major role in that process. From expertise to demographics and more, make sure you are looking for ways to use diverse opinions, backgrounds, and experiences to strengthen your core executive team’s capabilities as your company gets off the ground.
If you work with an incubator like Missouri Innovation Center, you can also expect to have further support once your company is up and running. The ability to lean on informed and experienced third-party lifelines is critical to long-term executive balance. It provides an outside opinion on where your leadership team’s strengths and weaknesses are to maintain this critical piece of your company as you continue to grow.If you are an entrepreneur looking for support and guidance as you select the core members of your management, we encourage you to get in touch with our team at the Missouri Innovation Center. We can show you the resources we have available to help with team development. Together, we can build a vision for your startup that uses a balanced management team to achieve benchmarks, realize vision, and drive long-term success.
