Having a diverse founding team seems integral to the success of a new venture. A “dream team” creates a certain spark and creative clash when its team members bring their unique perspectives and backgrounds to the table. This diversity allows for enriched decision making, which helps solve the complex, non-routine problems any enterprise will inevitably encounter. It also heightens idea generation: a diverse team is known to be more innovative in the development of products, services, processes, or problem-solving.
Yet there are many questions surrounding diverse teams. What defines diversity? What are the optimal levels of diversity? Should there be an appropriate balance of different forms of diversity?
In Maria Kakarika’s theoretical research, which builds upon Harrison and Klein’s groundbreaking work, she distinguishes three types of diversity: power, opinion, and expertise.
The differences in decision power and resources of the team members should be low. All team members should have a say in key decisions. Giving all the decision-making power to one founder will create inequalities and de-motivate team members. When team members feel powerless, they’re less likely to feel empowered to contribute to the venture in meaningful ways. Distributing power equally, encourages heightened levels of commitment towards the venture’s success.
Kakarika (2013, p.36) describes, “While there is intuitive appeal to the concept of a single strong leader who makes sure that work stays on track, power parity encourages active participation of every team member, outweighing the potential costs of coalition formation, leader directiveness, social loafing, and disruptive power plays.”
Opinion diversity deals with the differences in attitudes, values, and beliefs about the new venture’s mission, goals and processes. The optimum is a “healthy balance” between the team members. Full alignment of beliefs and constant agreement of opinion amongst teams can result in “group think”: an inaccurate analysis of alternatives, a decrease in creativity and less objective decision-making. On the other hand, large differences in opinion result in impasses, wasted time and overall reductions in performance.
Variance in levels of specialization, educational and functional backgrounds and entrepreneurial experience – team members should have a high level of expertise diversity. High diversity in expertise enriches the team by increasing access to more resources integral to venture performance including knowledge, networks and skills. Having team members that complement each other allows for better problem solving.
According to Kakarika (2013, p.36), “Such teams also ensure legitimacy from key stakeholders such as investors, customers, suppliers and employees, who generally sense that a successful venture should consist of people with complementary backgrounds.”
What about conflict?
There are two types of conflict in teams: affective and cognitive. Affective conflict is emotional and personal, while cognitive conflict is constructive and outcomes-based. Team cohesion is the key to encouraging cognitive conflict while keeping affective conflict at bay. Cohesive teams have strong interpersonal relationships, aligned values and a mutual understanding of the overall objectives. To make the chemistry work, the team needs a solid start, a concrete mission and a place to call home.
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