Picture: 123RF/THANANIT SUNTIVIRIYANON
Picture: 123RF/THANANIT SUNTIVIRIYANON

In start-up circles you’ll often hear investors talk about how important it is to “bet the jockey, not the horse”. The gist behind this saying is that a great entrepreneur can take a moderately good idea and ride it to success, while an average entrepreneur can run a great idea into the ground. But when it comes to incubation, backing the right team might be even more important.

No matter how talented they are, teams that are at odds with each other can tank a great company. It’s therefore pivotal that incubation involves backing people (and their collective vision) and thus the team dynamic and how it translates into the organisational culture.

For an entrepreneur who has a lot of money and backing, it can be tempting to hire the best of the best in every position. That’s not surprising. If you can afford gold-standard players, why would you ever hire someone who’s silver or bronze standard?

But sometimes those “gold-standard” players can be toxic. In fact, there’s even an industry term for them: brilliant jerks. They’re often gifted, have great ideas and can be high performers. In short, they’re often a phenom in their discipline — but they’re real jerks. Brilliant jerks, but undeniable jerks nonetheless.

They can be rude to co-workers, display bullying behaviour, be overly competitive and be generally unprofessional to their co-workers. No matter how much high-quality work they put out, the effect they have on the rest of the team can be incredibly detrimental.

But even outside brilliant jerks, the right person for the job might not be the one with the best skills, but rather the one who gels best with the rest of the team.

Perhaps the most vivid example of this in recent years is Rassie Erasmus’s 2019 Rugby World Cup-winning Springboks. In selecting his team, Erasmus was adamant about picking the “right people”, even if they weren’t the best people. Their ability to work within, and contribute to, the wider vision of the team was more important than their individual talents.

While there were certainly several superstars in the side, none outshone the team or its vision as a whole. As a result, members of the squad were able to step up when there was an injury without anyone suffering.

If you can find a business that displays those capabilities, then it’s much more likely to succeed (no matter what it’s building) than any other.

When it comes to incubating a business, it’s therefore essential that investors not just focus on building the product and business model, but also the team. That goes beyond just finding businesses with the right teams but also guiding them to hire the right matches for that team.

It also means making teams and organisational culture a focus from the beginning. As an investor you are in effect becoming a part of the team you are investing in. You have to buy into the vision and become part of the organisational collective. But it also means ensuring any incubation efforts you make keep that vision in mind and fully involve the team. Whether that’s taking care to introduce the right mentors or ensuring any networks you bring the business into are aligned with its vision, you can’t simply take an approach designed to make the business grow as fast as possible at whatever cost.

As important as it is that you identify good teams, it’s equally critical that you be able to look for and rectify any weaknesses that might be present in the team. You might, for example, see that the team doesn’t have much diversity when it comes to race, gender or class background. Diverse teams that are stronger perform better and are more innovative. Fortunately, the right kind of incubation is an effective tool to enable greater transformation.

Taking this team- and culture-based approach can have a major positive impact on the business. To see how much of an impact it can have, it’s worth looking at what happens when the opposite is true.

Research shows that disengaged workers had 37% higher absenteeism, 49% more accidents, and 60% more errors and defects. Organisations with low employee engagement scores also experienced 18% lower productivity, 16% lower profitability, 37% lower job growth, and a 65% lower share price over time.

Additionally, workplaces with poor organisational culture have higher employee turnover, which comes with significant costs associated with recruiting, training, lowered productivity, and lost expertise.

No matter how promising a company is, how good its products are and how talented its founders are, that’s not something it can easily survive.

It’s therefore pivotal that investors incubating businesses focus on building and maintaining organisational culture.

Ultimately, what all of this demonstrates is that incubating businesses is about more than just product and leadership. It’s also critical that teams be taken into consideration before the incubation process and built up during it all.

Doing so means taking an approach that emphasises empathy, encourages transparency and fosters social connections within the organisation and the networks that will benefit its growth.

The investors who get this right will incubate successful businesses that are transformed and benefit the societies they operate in. Those who don’t risk not fulfilling the business’s true potential.

• Cata is CEO of Thuso Partners.

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