Venture Team Building and Organizational Plan Chapter 6

Prof. Dev B. Koli @ SIBM; Mumbai, 2014

Learning Objectives
To understand the importance of venture team in the success of a venture. To understand the meaning and implication of effective team management. To know about the precautions that need to be taken for team building for venture and how to take care of those factors. To learn about the factors that result in lack of understanding amongst the co-founders of a venture.
Prof. Dev B. Koli @ SIBM; Mumbai, 2014 2 Contd

Learning Objectives
To learn about common attributes of an effective venture team. To understand the process of developing a venture team. To learn about importance of managing people to build effective teams.

To learn about different types of organizational structures and their relevance to different types of ventures during different stages of growth. To learn about importance of organizational structure, and systems and procedures for managing a venture.
Prof. Dev B. Koli @ SIBM; Mumbai, 2014 3

Importance of Effective Team for Venture Success

More than an idea what matters, is the effective, harmonious trustworthy, competent team that leads to success in an entrepreneurial venture. Entrepreneurial team with an entrepreneurial leader and quality of the team is a key ingredient in the higher potential venture. Founding members of a venture need to have a clear goal and worthwhile idea. Although each team member has a unique role and contribution but it needs to be synergized with the role of the others.
Contd

Prof. Dev B. Koli @ SIBM; Mumbai, 2014

Importance of Effective Team for Venture Success

Building a professionally backed-up winning team goes a long way in achieving dynamism and success. Building high potential ventures without the backing of a strong and cohesive team is not possible. Team building process starts with objective and honest assessment of the strengths and weaknesses of team members to identify the gaps to be filled in by inducting new people in the team as employees or co-founders. Core team should consist of complementary competencies and knowledge.
Prof. Dev B. Koli @ SIBM; Mumbai, 2014 5

Effective Management TeamKey to Venture Success

Board of Directors Chief Executive Officer
High Growth Successful Ventures

Effective Management Team

Banks, Seed Funders, Venture Capitalists, Financial Institutions

Prof. Dev B. Koli @ SIBM; Mumbai, 2014

Business Plan Success Depend Upon Committed Team

Genuinely Committed Team Members

Having Diversified Competencies, Skills and Other Resources

Business Plan Success

It is important to realize that business of business is business and therefore any money, time and effort put into it has to be viewed on business lines rather than charity.

Prof. Dev B. Koli @ SIBM; Mumbai, 2014

Reasons for Business Failures

Lack of Understanding Amongst Co-founders arises on Account of Lack or No Documentation

Goals/ Objectives

Participation

Role and Responsibilities

Sharing Loss/ Gain

Process to Deal with Differences

Prof. Dev B. Koli @ SIBM; Mumbai, 2014

Common Attributes of Effective Teams

Clear Expectation and Context Cultural Change
Commitment to Purpose and Values

Control

Attributes of Effective Teams

Competence

Consequences Sharing

Communication, Coordination and Collaboration Creative Innovation

Teams outperform individuals, especially when performance requires multiple skills, judgments, and experiences. Jon R Katzenbach
Prof. Dev B. Koli @ SIBM; Mumbai, 2014 9

Venture Team Development

Need for Partners

Where to find partners?

How to choose the best one(s)? How to convince them to become a part of the core team?

Issues to be Resolved for Inducting Partners

Prof. Dev B. Koli @ SIBM; Mumbai, 2014

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People ManagementKey to Venture Success

Employees are fulcrum of business Hire people with adaptability and attitude Inspire, motivate and enable them to deliver excellence Be transparent and open with your employees Respect and treat employees as equals

Principles of Managing People

Encourage employees to take initiative Remove employees, as and when becomes necessary
Prof. Dev B. Koli @ SIBM; Mumbai, 2014 11

Tips for Employees Management

Guru Guide to Entrepreneurship by Boyett and Boyett based on the advice from leading entrepreneurs has proposed three ways to treat employees as equals: Get rid of executive limos and executive parking spaces. Eliminate executive dining rooms, executive bathrooms, and exclusive executive offices. Dont employ receptionists, executive secretaries, personal assistants, or other support staff.

Prof. Dev B. Koli @ SIBM; Mumbai, 2014

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Organizational Structure
People

Business Environment

Structure

Systems and Processes

Growth Plans of the Company

Prof. Dev B. Koli @ SIBM; Mumbai, 2014 13

Nature of Organizational Structure

Small Business

Simple, Lean, Flexible Organizational Structure

Organization

Large Companies

Formal, Large and Complex Organizational Structure

Prof. Dev B. Koli @ SIBM; Mumbai, 2014

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Flat OrganizationsAdvantages
Open communication between employees Close relationships with each other Less bureaucratic Quick decision making Better to build teams Less cost on account of higher productivity up to a particular point

of production
Highly innovative
Prof. Dev B. Koli @ SIBM; Mumbai, 2014 15

Designing Organizational Structure

Reporting Relationships

Arrangements of Jobs or Group of Jobs

Functional Relationships

Operational Relationships

Achievement of Organizational Goals in Most Effective and Efficient Manner

Prof. Dev B. Koli @ SIBM; Mumbai, 2014 16

Requirements of Effective Organizational Structure

Identifying specific vital tasks/functions.

Identifying right people to perform those functions.

Explaining it to each and every employee, what his role will be. Organization should develop objective criteria to measure the performance of its employees without being biased or unfair to any employee. No concentration of power in the hands of a few executives, as this may lead to grouping and reduced quality output. To have optimum number of employees in each department.
Prof. Dev B. Koli @ SIBM; Mumbai, 2014 17

Factors to be Considered by Small Business Owners for Organizational Structure

Relative strengths and weaknesses of various organizational forms. Legal advantages and disadvantages of organizational structure options. Advantages and drawbacks of departmentalization options. Likely growth patterns of the company. Reporting relationships that are currently in place.
Prof. Dev B. Koli @ SIBM; Mumbai, 2014 18 Contd

Factors to be Considered by Small Business Owners for Organizational Structure

Reporting and authority relationships that you hope will be implemented in the future. Optimum ratios of supervisors/managers to subordinates.

Suitable level of autonomy/empowerment to be granted to employees at various levels of the organization (while still recognizing individual capacities for independent work).
Structures that will produce greatest worker satisfaction. Structures that will produce optimum operational efficiency.
Prof. Dev B. Koli @ SIBM; Mumbai, 2014 19

Types of Organizational Structure

Informal structure has lot of flexibility and openness, and is most suitable for startup ventures having few people who are highly committed and self directed to the organization. Functional organizational structure is suitable when the organization is small in terms of number of employees as well as operations, geographically centralized, and provides few goods and services. Divisional structure helps in overcoming problems associated with relatively large size of employees and operations, geographically dispersed activity, and company starts delivering wide range of goods/services to the customers. Matrix structure helps in grouping employees by both function and product. It attempts to derive the advantage of both separate structures.

Prof. Dev B. Koli @ SIBM; Mumbai, 2014

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Advantages of Systems and Procedures

Systems and ProceduresAdvantages

Undertakes Various Optimum Resource Tasks with Utilization Consistency

Compliance to Accounting, Legal and Other Stipulations

Backed-up by Appropriate Manuals and Forms

Prof. Dev B. Koli @ SIBM; Mumbai, 2014 21