Venture Capitalists are famously hard-nosed. They see hundreds of businesses each year, and their job is to accurately pick the small handful of these that will go on to be wildly successful. Their livelihoods depend on getting those picks right. So, what do these experts look for in a business? Two of the top factors are the quality of its leadership team and the quality of its culture. Experience has told them that these are critical to success.
A high-performance team is crucial because teams are how things get done. A great business idea targeting a significant market opportunity means little without an exceptional team that is able to turn that opportunity into a reality. And a high-performance culture is important because this is what enables a business to scale. Here are the keys to achieving both of these.
Building a high-performing team: mind your A’s, B’s and C’s
All businesses, and especially small to medium-sized ones, should aim to only employ A-graders (exceptionally talented people) and B-graders (good, solid contributors). To paraphrase Jim Collins, author of Good to Great, there is no room on your company’s bus for C-graders: folks who simply do not have the capability to operate at a high level. It’s OK to bring on less experienced people who have a natural ability and a great attitude because, with the right training and culture, they will quickly become great contributors. What cannot be tolerated are plodders, or high performers who are a bad cultural fit.
As a leader, you stand for the things you walk past. It’s not enough to say that you are building a high-performing team. You need to show it. And that means making hard calls on people, who despite every effort on their and the business’s part, have shown that they simply cannot operate at the level required. Sometimes you can move them into another role that is a better fit for their skills, but if this isn’t possible, it is typically best for them to leave the organisation and find another opportunity that is a better fit for their skills and capabilities. The same applies to people who are high performers but who are toxic to your culture. If you allow poor performers or folks who are ‘culture-killers’ to remain on the team, morale will suffer, and eventually, you will start to lose your best people.
Top performers want to work alongside other top performers, in a business with a great culture. The best talent always has choices, and this is especially the case right now when unemployment is at historic lows. Your job as a leader is to create an environment that makes them want to stay with your business. And the most effective way to do this is not necessary to pay them more but is instead to create a fantastic company culture. Here’s how.
Be Clear on Purpose
Great cultures start with a clear purpose. Everyone in the business knows exactly why the business exists. And this needs to be more than just to ‘make money’ or ‘deliver great service to our wonderful customers’. Your company’s purpose should make the hairs on your arms stand up. It should inspire. And it should be deeply true.
Simon Sinek’s exceptional TED Talk ‘Start with Why’ eloquently explains why this is so. Google exists “To organize the world’s information and make it universally accessible and useful.” Uber seeks to make “Transportation as reliable as running water, everywhere for everyone.” These are missions that can make people jump out of bed in the morning.
What is your business purpose? Gaining clarity on this is challenging work that is often best done with the help of an external facilitator, but it is well worth the investment. Why? Because clarity of purpose empowers employees and increases organisational agility. When faced with a difficult decision, all a team member needs to do is ask herself: “Which of the choices before me is best aligned with our organisation’s purpose?” In most cases, the right way forward will be obvious. This speeds up decision making and increases organisational agility, both of which are hallmarks of high performing organisations. A clear purpose also helps avoid bad decisions. Facebook might have avoided its current travails had it reflected more deeply on its purpose and the potential implications of this for a business that now wields so much market power.
Identify Core Values
Values are the (often unspoken) guidelines around ‘how we do things around here’. They play a central role in setting a company’s culture and are crucial in allowing it to scale. They help a two-hundred-person business deliver the same level of quality, passion and personalised service that it did when it was just the three founders working out of a spare room.
Common mistake companies make with values is to have too many of them. Three core values are ideal, four is acceptable, five is too many. There are a relatively small number of commonly occurring values. For example, see this list. These include ‘integrity’, ‘excellence’, ‘collaboration’ and ‘achievement’. These are all ‘good’ values to have, but the key is to identify the handful of values that are absolutely core to the company’s DNA.
My favorite way to do this is the Mission to Mars exercise. Ask yourself and your team this question: “If your company was setting up a new division on Mars, what are the three values without which the mission simply could not succeed? Divide people into groups, give each group a deck of ‘values cards’ and challenge them to narrow these down to six values (which is pretty easy), and then down to just three (which is a lot harder!). Then, have each group present their results, and why they thought those three values were so crucial, and have everyone vote on these.
Typically, there are one or two values that most people agree on, and then another two or three that have widespread support. Do not settle! Challenge the group to debate these shortlisted values until everyone agrees on the three (or maximum four) core ones that everyone is prepared to stand behind come rain, hail or shine. The process of having the employees come up with the values together is crucial because this is how you achieve buy-in.
Behaviors bring Values to Life
Values alone are not enough to create a high performing team: they need to be translated into clear and mutually agreed behaviours. For each value, the team should come up with one or two behaviours that would clearly demonstrate whether that value was (or was not) being lived. You can have fun with this. For instance, Atlassian – Australia’s most successful tech start-up (and one of my clients) – is deadly serious about putting its customer’s needs first. It famously has “Don’t #@!% the customer!” as one of its core behaviors.
By having the team come up with these behaviors together, they are able to hold one another accountable, and they can do this without necessarily getting their leader involved. Patrick Lencioni’s bestseller The Five Dysfunctions of a Team has peer accountability as one of the key characteristics of cohesive, high-performing teams. Having your team or business come up with clear, mutually agreed behaviors that reflect core values is a great way to achieve this.
Successful businesses are built upon great teams, and the key to scaling a successful business is creating a high-performance culture. Making sure you have the right people on the bus, sitting in the right seats, is a crucial first step. Then, go about getting clear on your company’s purpose, core values, and associated behaviors. While all of this is challenging work, the payoff is enormous: motivated and talented employees, who love turning up at work each day to delight your customers, and ultimately, grow your business.
Revel Gordon is a Sydney-based executive coach and leadership expert. He was also a Director of the International Coach Federation Australasia.