Five Reasons Why Balanced Teams Are So Important For Startups
According to a study by Statistics Brain, the failure rate of all U.S.-venture-backed companies after five years was over 50% — and over 70% after 10 years. In an economy that survives on innovation, growth and competition, it is important to improve the chances of startup success. But what contributes to startup success? CB Insights recently identified 20 reasons startups fail. Behind market need and funding, unbalanced teams are the third most significant contributing factor to startup failure. I have identified five reasons why balanced teams lead to successful early-stage ventures.
1. Balanced teams provide varied perspectives.
The stereotypical, homogeneous high-tech startup tends to make products that few people want. When a team is balanced, every meeting has a variety of different perspectives. The best way to overcome unconscious bias is to include people with different life experiences and backgrounds. With a balanced team, strategic decisions are evaluated from all angles to make sure the best option is chosen, and the product or service the startup develops will have a coherent vision that solves the problem for which it was designed.
2. Balanced teams define startup culture, which can make or break your business.
Startups are largely defined by their culture. Nobody wants to work in a toxic environment. Good startups are designed to reinforce their values from the ground up. Startups that enter their growth phase with their values spelled out are more likely to hire employees who will stick with the business for a long time. These high-value employees become just as motivated as the original founders to see the startup succeed. With a balanced team, a startup sets the foundations for future growth by creating a culture of inclusiveness and collaboration.
3. Balanced teams create synergy.
It’s especially hard to see the bigger picture when everyone only understands one side of a problem. With a balanced team, cross-discipline collaboration is possible. A technical team member might see a situation differently than a marketer. When working together, the sum may be greater than the size of its parts. This kind of collaboration goes a long way in overcoming the struggles of product-market fit and avoiding the failures of not building for the consumer. If the goal is to create the most value in a product or service, balanced teams can synergize to multiply their worth
4. Venture capitalists appreciate balanced teams.
In a Stanford Business School study on how venture capitalists invest, finance professor IIya A. Strebulaev concluded that the abilities of the founders and management team are the most important factor in investment decisions. VCs likely want their portfolio to reflect strong, balanced teams for the same reasons listed in this article. When VCs ask a hard question, a good, dependable team is essential in order to be able to answer the question from multiple angles. Having a reliable team also demonstrates to VCs that their potential investments have management that works like an efficient machine. VCs catch the team factor incredibly quickly, so it is crucial to have a balanced team.
5. Balanced teams are accountable and have clear separations of responsibilities.
In any collaborative setting, not having a clear separation of responsibilities always ends in disaster. The front-end designer likes it one way, and the back-end developer another. In a balanced team, everyone’s roles and responsibilities can be made clear. Instead of a negative overlap, the synergies that are created when people from two distinct disciplines work together propel the project forward.
Not only do balanced teams separate responsibilities, but they also create accountability. Each member can hold the others responsible for their aspects of the project. Personal and group milestones are easy for each member to comprehend, and there is never any confusion about what each member’s tasks should be. Startups can avoid costly mistakes more quickly with the accountability and responsibility that balanced teams provide.
Getting a startup off the ground is hard. There’s paperwork, funding, sales, marketing, development, human resources, R&D and loads more. A balanced team offers a company vision, culture, synergy, investor attractiveness and accountability. Teamwork is the bedrock of successful collaborative production. Whether you are opening a coffee shop or starting the next social media giant, a good team goes a long way in protecting your company from turbulence. Don’t let your venture become part of the ever-growing statistic of failed startups. Forge a balanced team.
Originally published via Forbes Finance Council: https://www.forbes.com/sites/forbesfinancecouncil/2018/05/11/five-reasons-why-balanced-teams-are-so-important-for-startups/#76ef46d232ce