innovation Archives

CEOs and executive leaders of innovation-stage companies often ask themselves what is the best approach to employee appreciation, productivity and retention.

We’ve all heard the stories around the lengths some venture capital-backed companies go in their efforts to service the needs of their employees.  What started as the water cooler and drip coffee pot, fast-growth companies have super-sized, continuing to up the employee pampering ante–  installing company-paid cappuccino machines and Kurig coffee makers with what appears to be an endless supply and variety of coffees and teas.  Keeping well-stocked office kitchen pantries with either favored junk food, healthy snack choices, or both.  Catering lunch, breakfast, dinner, sometimes all three meals plus a midnight snack that rivals food options found on luxe cruise liners.  Car valet services, onsite dry-cleaning pick-up/drop off, massages, yoga, concierge services, onsite daycare/nanny service, bring-your-pet-to-work options.  And on and on and on, the calories and comfort food arms race continues its grim march toward caffeine OD and adult-onset diabetes.

However, there’s a moral and dilemma CEOs often face when trying to strike the right balance of perks and austerity.

The argument for pampering:  In the new knowledge-worker driven economy, there is often precious little machinery or automation.  So every time an employee walks out the door to Starbucks, Dunkin’ Donuts, the sandwich shop, or the drycleaner, the corporate engine slows down a notch.  Therefore, the logic emerges that if you can remove all interruptions for employees, you’ll get far more in productivity out of them than junk food and pampering you put in to them.

The argument against:   It’s expensive.  It creates a sense of entitlement in employees.  It creates a false sense of prosperity in a company that may be pre-revenue and in need of several more rounds of funding before it can stand on it’s own two financial legs.

Some might say that economic recessions pound the potential for excess back to square one.   OK, so perks have slowed down a bit after each economic set-back in the last decade, starting with the Internet bubble bursting and post-Y2K malaise, the aftermath of 9/11 on the U.S. economy and, most recently, the banking sector melt-down.  However, after each setback it seems a new “floor” gets set that’s just a bit tonier than the last one.

So how do CEOs handle this arms race in employee perks you ask?

Below are a few lessons learned and secrets shared by a number of CEOs who know a bit about the word “value” in serving up employee perks-

Perks Case Study A: Intra-office “micropreneurship.” The secret of the concession license

One venture-backed CEO wanted to offer some of the perks, but not all when it came to stocking the pantry.    So, rather than facing an all-or-nothing approach, the CEO decided that a business principle was in play that could be exploited in a win-win-win fashion–  what the company had as an asset was the equivalent of a monopoly.  He reasoned that employees were a captive audience.  If the CEO offered the “vendor concession” contract to an aspiring employee who wanted to make a few bucks, the company would offer exclusive stocking/inventory rights to that employee to stock the pantry.  However, in trade, the employee had to agree to offer below-market pricing on food and beverages, and also manage the “SKU requests” that the employees would log from time to time regarding food selection and preferences.  His formula in a nutshell looked like this:

-          win for employees-as the got a below market food and beverage offering, the equivalent of a “company subsidized” pantry offering

-          win for the “intra-preneur”-who was given the food concession to run, and could make a few extra bucks running the business

-          win for the company-the company didn’t have to provide all the food gratis, nor had the headache of fielding all the requests from employees

Perks Case Study B:  Serving dinner not as an entitlement, but only to the truly meritorious

[click more button below for rest of post]

More…

One of the questions we as executive recruiters often get asked  is the trade-off between experience and aptitude.   Both sides of the equation are prone to asking it, clients and executive candidates alike.  Sometimes this teeter-totter is referred to as “domain expert versus best athlete.”

What do they mean when they ask?  There’s actually a lot of nuance in the question-when are skills and experience most important to success in the role versus pure talent and aptitude?

• •    Just because a CEO is moving from one industry to another, does s/he lose his ability to successfully lead?
• •    If a VP Sales has been successful at one stage of company growth, can s/he take that same sales toolbox and be successful in another stage company, say either emerging-stage or mature-stage?
• •    Can a VP Engineering be equally effective managing in large companies and small?
• •    Do companies look for the same types of leadership in good economic cycles as well as bad?
• •    How does an executive’s move out of their wheelhouse of skills and experience impact their compensation and/or level in a new industry and company?

These questions are only a few of the factors that impact the answer.    The following discussion is aimed at trying to lend some clarity and context to question.

Let’s take a look at the hour-glass graph below to lay down some of these factors against our “expert or athlete” question:

1)     Level of management: The first factor is where an employee sits in the organizational chart.   In general, skills and experience are most critical at the “waist” of the hour-glass graph-mid-to-upper level management, starting at manager, through director- and VP-level.  At the top and bottom of the hour-glass, aptitude often ends up as the greater emphasis in “hireability.”  This may be fairly intuitive for many.

a.     Entry-level: When you first get out of school, employers often hire for a combination of attitude and intelligence and look for those who exhibit room to grow or “headroom.”   In fact, at entry-level, skills and experience for those roles are often a liability.  Employers may feel someone is overqualified, or a “flight risk” if that employee finds another better-paying and/or higher level position at another company.

b.     CEO-level: When you achieve P&L/CEO status, employers often will place more emphasis on the track record a CEO has in leading a company versus a tenured career history in a specific industry area.  Can a CEO move from rust-belt manufacturer to biotech?  Likely not.  However, there isn’t the same granularity of fit applied at the CEO-level as at the middle-management layer.  If a CEO has been broadly successful in in a number of software companies, it often becomes less important what type of software, or what industry vertical that software was developed for.  Certainly some screening is applied to industry, with some of the below more general industry characteristics takingi precedence-

i.      Experience in selling to similar customer base, B2B vs. B2C or government

ii.      Experience raising equity capital from venture capital or private equity

iii.      Experience creating exits for investors that have generated good returns for those investors

iv.      Experience taking a company from one industry into other industries, popularly referred to as “crossing the chasm”

c.     Mid-to-upper management:   Mid and upper management are where skills and experience over mere aptitude are often most sought after by employers.  Those who are hiring at this level will often even emphasize industry skills and experience above managerial experience, giving the edge to a candidate with industry-relevant background and a lesser degree of leadership experience, assuming that management is a learned skill and can be taught or picked up on the job.  Is this right?  That’s not the focus of our discussion here.  Rather, our goal here is to describe corporate hiring  norms from our observations.

[click more button below for rest of post]

More…

Senator Markey addresses the formal-wear only crowd at the JFK Library during Clean Energy Week in November.

An annual event in Boston punches up the fact that we have an incredible cleantech cluster-New England Clean Energy Council’s annual Green Tie Gala.

Although this event took place back during Clean Energy Week in November, I was reminded of it when out in Denver recently.  Denver has some great stuff going for it.  NREL (National Renewable Energy Lab), University of Colorado with multiple campuses in Denver and Boulder that have significant funding from both Federal and State agencies, and a history of technology oriented companies, albeit with a heavy emphasis on telecom (Qwest, Level 3).

However, what there isn’t as much of in Denver is what some call the “ecosystem.” Others call it the “cluster.” This is a body of people who hold different but overlapping responsibilities in the entrepreneurial ecosystem and whose fusion is its wellspring–

• Academics: These are those most often with the new disruptive technology or science breakthrough that serves as the seed of a new company
• Business entrepreneurs: those who have experience taking the seed of an idea, and building a company around it
• Investors: The first friends & family, then angel investors, and often venture capitalists or corporate strategic investors who pour money into these new ideas to fund the business entrepreneurs scale the disruptive idea
• Professional services providers: These are often the “connectors” in the ecosystem. They’re comprised of lawyers, accountants, executive search consultants, and start-up advisors. They act as the glue between the prior three categories, more often than not introducing one to another, supporting the growth of these companies with their area of specialty

[Footnote: If you compare Boston to Silicon Valley however, Boston is shallower in large technology and sciences companies that serve to spawn "runners" to new start-up companies.   The biotech industry is perhaps better in Boston at doing this than the pure technology industry in the last decade, with a growing base of larger biotech and pharma companies including Genzyme, Cubist, Biogen and Sepracor.  Medical devices companies also fair better in many ways to large tech, with Boston Scientific, ThermoFisher, and Perkin Elmer.  In technology hardware and software, beyond EMC, there are precious few large technology companies left in Massachusetts. ]

Details on the Gala?  This year’s Green Tie Gala was held at the JFK Memorial Library in Boston (last year was held at the Museum of Science).    There are many organizations in the innovation sector here in Massachusetts that have done a good job at galvanizing a broad cross section of constituents, including the Mass Biotech Council, as well as MITX (formerly MIMC), and the Massachusetts Technology Leadership Council, or TiE Boston (Indus Entrepreneurs).  However, we’ve had yet to participate in a gathering of any that approaches that of the cleantech cluster here in New England.

Senator Markey gave the opening address to punctuate the cocktail hour.  To a person it seemed, everyone knew everyone.  Yes there were a few outsiders (a small contingent from the UK had come over as part of a trade mission coordinated with Clean Energy Week in Massachusetts because of its target rich calendar), yet all of these were welcomed by the larger fold, and the gathering seemed to virtually breathe together as some sort of larger unified body, a cluster with so few degrees of separation that walking from group to group or table to table was akin to going back to your high school reunion…. You knew at least half those sitting at every table.  For those who have experienced the annual Nantucket Conference, it is this atmosphere if intimacy and familiarity that presides.

To cap the night off, venture capitalist Chuck McDermott of Rockport Capital led his band in an after-hours session that continued the beat of familiarity both given its leader as well as in its musical selection (Chuck stating that the band only plays “songs popularized before 1960″).

Chuck McDermott, leading cleantech venture capitalist at Rockport, moonlighting as 50's music band leader

A weekday morning in late November.  A brownstone residence on Beacon Hill in the shadow of the State House.  A dozen of the foremost experts in technology transfer and intellectual property in the Boston innovation cluster.  And a representative from the Department of Energy.  We at BSG Team Ventures had the recent opportunity to host a salon-style meeting in a home of a friend of the firm during Clean Energy Week here in the Commonwealth (for more on Clean Energy week, see http://greenovationconference.com/conference-info/cew.html).

The purpose?  Bringing the best minds in the Boston venture, entrepreneurship and innovation community together for a brainstorming session with the Department of Energy around best practices in technology transfer out of our national laboratories.   Attending the meeting were Alan Gordon from Harvard University Technology Licensing Office, Chris Noble from MIT’s TLO, head of the Mintz Levin cleantech practice Tom Burton, Peter Rothstein from the New England Clean Energy Council, Director of the Massachusetts Technology Transfer Center Abi Barrow, Director of Partners CIMIT John Collins, General Partner at Flagship Ventures Jim Matheson, and CEOs Chris Hobson and Peter Vandermeulen each running cleantech start ups with technology licensed out of several of the national labs themselves.

The challenge the current Obama Administration is taking on under Secretary of Energy Chu is how to better mine the metaphorical gold created inside the U.S. Department of Energy-funded  national laboratory network of some 15 that are spread across the country.  Some of these labs are household names–Los Alamos and  Sandia (New Mexico), and Lawrence Livermore (California).  Others are less well known-Argonne (Illinois), Brookhaven (NY), and Ames (Iowa).  Even the National Renewable energy Lab (Colorado, known more often as NREL), are not as well known as one would hope.  The history of these national labs springs from energy research spurred by World War II.  What the layperson may remember is that many of these labs were where secretive nuclear energy research was conducted.  However, much of the mandate for these labs some 60 years later is focused on discoveries that will broadly contribute to advancing the United States’ understanding of energy, renewable energy, energy conservation, and all the various scientific disciplines that can contribute-physics, materials engineering, chemistry, and more.  These labs are panning for a 21^st century gold-energy discoveries and breakthroughs that will create new batteries using renewable resources, wean the U.S. dependence on oil and coal as primary energy sources, and break new barriers in energy efficiency.

However, the problem has been that these labs have explored a lot, and engaged in extensive primary research, but have punched below their weight class in bringing innovation from discovery through to successful commercialization.  The DOE budget in FY 2009 topped $25 billion.  The national labs budget made up approximately $10 billion of that.  And with the Obama administration’s  stimulus package, these numbers only look to be increasing.  One example brought up in the conversation to punctuate the problem from one of the Boston-based attendees was that fact that Argonne National Laboratory in the last decade has created less than a dozen successful out licensing/royalty events that generated meaningful returns.   Logic holds that in terms of return-on-investment, there remains much room for added improvement.

So, two hours later, what were the issues that were brought up by the braintrust, and potential solutions that were tendered to improve the return on investment the DOE makes in the national laboratory’s innovation mission?

Some of the key issues with the current structure that came out of the dialogue:

•    Risk aversion of national labs researchers to leave the security of the lab to spearhead a risk-laden venture

•    Innate interest of lab researchers is more geared toward research and “discovery” versus market-matching and commercialization

•    Low/no financial incentive to take a discovery beyond research phase

•    No business ecosystem or business-savvy catalysts to help focus lab research talent on “known problems,” or the sifting through lab breakthroughs to match-make with existing  business  problems

Suggestions for improvement focused around the three ingredients that are key to metaphorical “combustion” of the innovation commercialization engine: More…

I had the opportunity to be out in Denver for the 22^nd Annual National Renewable Energy Lab’s (NREL) Growth Forum.  As many know, the U.S. has more than half a dozen national labs, some of the best known being Los Alamos and Lawrence Livermore, and Sandia.  These labs are scattered across the U.S., and each often has a specific focus (nuclear research for instance is what has kept the National Labs in the public eye most often).

Given the Obama Administration’s commitment to renewable energy and innovation, it was an upbeat gathering.    The attendee list was well-balanced between entrepreneurs, venture capitalists, and academics.  Geographically, the majority of attendees either hailed from the Colorado area (with Boulder as the epicenter for cleantech in CO despite the NREL lab being located in Golden, CO), the West Coast (Silicon Valley entrepreneurs and venture investors), and New England (Boston-skewed).

What was surprising is how small the renewable energy community truly is.  It’s still a very close knit group.  And the community tends to shift from one location to another to pursue the next opportunity to contribute to the national cleantech ecosystem.  Two notable examples are Tod Perry, who now is the Program Manager of the Clean Energy Entrepreneurship Center for NREL.  Tod had originally started as a cleantech entrepreneur 5 years ago in Boston, pioneering a water purification technology, and a contestant in the first Ignite Clean Energy Competition in 2005.  Another Bostonian who’s moved out to Colorado recently is Trent Yang, formerly a principal at Globespan Venture Partners, now Director, Entrepreneurship and Business Development at RASEI in Boulder (Renewable and Sustainable energy institute), part of the University of Colorado commitment to innovation in the renewable energy sector in the Rocky Mountain region.  Other notable Bostonians sited at the conference included Peter Rothstein of New England Clean Energy Council, Bob Metcalfe of Polaris, and Chris Hobson, CEO of BandGap Engineering.

While out there, stopped by the Finals for the Cleantech Open’s Rocky Mountain Finals.  New Sky Energy, Rivertop Renewables, and SunTrac Solar were the winners, now headed to the Cleantech Open Finals for all 3 regions up in Silicon Valley.

For more on the winners, see http://www.metrodenver.org/news-center/metro-denver-news/mayor-hickenlooper-announces-cleantech-open-winners.html

There’s a lot written about the entrepreneur, entrepreneurship, and what ingredients make for success over failure in the industry of business venturing.  Much of it is pretty shallow, pop psych fodder, meant to be read in a short trip to the commode, and disposed of similarly.

Books like Malcolm Gladwell’s Outliers takes a much more thoughtful approach, one of myth-busting versus myth-making.

Another similarly thoughtful deconstruction of entrepreneurship was brought to my attention via Babson College’s new president, Len Schlesinger, and his efforts to better match entrepreneurship’s leading institution for  higher education and its curriculum with a more effective toolbox for start-up success [full disclosure, Babson is my MBA alma mater].

Dr. Saras Sarasvathy, Professor at the Darden Graduate School of Business, is the author of this piece, written back in the dark corners of the 2001 post-Bubble recession, when entrepreneurship was the worst nightmare of those smart enough to avoid its allure while clinging to safety in their day jobs.    The full piece can be found at www.effectuation.org/ftp/effectua.pdf.

As a foundation for the suppositions Sarasvathy makes in her article, she interviewed 30 founders of U.S. companies ranging in size from $200M to $6.5B across the spectrum of industries.  She also had them each tackle the same case study to see how each founder approached the problem-solving required.  Her goal was to try to determine whether there was a common denominator in the way entrepreneurs thought, and if so, could it be distilled to several core nuggets of “teaching wisdom” to help aspiring entrepreneurs.

After Sarasvathy completed her interviews, she transcribed the tapes in search of a common set of principles each entrepreneur operated from in problem-solving.  Sarasvathy strings the principles she identified together into what she terms “effectual reasoning” of the entrepreneur.  Effectual reasoning is a different approach to problem solving than what is used in large corporations, or already successful and established enterprises.  She refers to the mature company’s approach to problem solving as the inverse, or predictive, “causal reasoning” -

Causal rationality begins with a pre-determined goal and a given set of means, and seeks to identify the optimal – fastest, cheapest, most efficient, etc. – alternative to achieve the given goal.

However, effectual reasoning takes a very different approach, and the metaphor Sarasvathy uses paints an evocative image of the difference-

It does not begin with a specific goal.  Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with. While causal thinkers are like great generals seeking to conquer fertile lands (Genghis Khan conquering two thirds of the known world), effectual thinkers are like explorers setting out on voyages into uncharted waters (Columbus discovering the new world).

Sarasvathy identified that there is no question that creativity is the cornerstone of effectual reasoning.  Another metaphor she uses is that of cooking – a chef given a recipe, versus a chef given the ingredients.  The chef given the recipe can go out and shop for what they need, compare cost versus quality versus convenience given the time allowed to prepare the meal, and create a very “causal” approach to the preparation.  However, the chef given the ingredients must use his or her creativity and invent a dish out of a combination of what raw materials they were given, and the background and experience they have had in cooking across their career.  Sarasvathy refers to this creative chef as having three categories of means:

1.      Who they are – their traits, tastes and abilities

2.      What they know – their education, training, expertise, and experience; and

3.      Whom they know – their social and professional networks.

From these means, they start to cook up their idea, be it a product, service or invention.  More…

Every few months we survey the innovation-stage community of CEOs with the goal of leveraging our C-level relationships as executive recruiters to generate collective wisdom to share back.    We hope below you find insights that help to run your companies more strategically.

In August, we surveyed our CEO community and had more than 60 CEOs participate.  Thanks to all who contributed.   The theme of this survey was centered around whether a different strategy is required to succeed post-recovery than that which was in place pre-recession.  These CEOs came from those practice areas in which we focus, and included broad based technology companies in the media, software, mobile and telecom sectors, Biotechnology, medical devices, and cleantech / renewable energy.

The 60-plus participating companies were spread across the growth-stage spectrum, ranging from pre-revenue through profitable/shipping product, most being seed-funded through post-Series C, as well as private equity-backed–

To set the stage for the survey questions, when asked when CEOs were expecting the recovery to materially reach their companies, the results were still quite bearish, with more than 50% responding Q2 2010 or later–

Although entrepreneurs are supposed to be eternal optimists, when asked what sort of recovery CEOS expected, again, the majority picked the worst of the alternatives, with more than half opting for a “W” recovery (in graphical terms, a double dip, with the last year starting September 2008 to now equalling the first “u” of the “W,” and another anticipated dip between now and Q2 2010 or later.  Almost as bearish, 28% of CEOs chose an “L” recovery, indicating that they felt “recovery” was really better defined as a flatting out of the downward trendline, but no corresponding upward rebound–

The next several survey questions focused on business strategy.  58% of CEOs indicated that they were not planning on pursuing the same strategy after the recession than before–

In executing on their strategies, CEOs responded somewhat intuitively that sales & business development functions would be two of the most important executive level functions that would help them in executing successfully post-recovery.  Somewhat less intuitively, the third most important functional area ranked was product development–

The last strategy question posed to CEOs was whether - if a majority of the CEOs were executing on a different strategy in post-recovery than pre-recession – did CEOs feel that the same executive team they had could execute effectively on both.  More than a third of CEOs surveyed indicated, no, their current executive teams were not the right teams for their new post-recovery strategies.

As for their companies’ financial condition, 60% CEOs responding indicated they were still burning cash, 15% were cash flow break-even, and 25% were running their companies in cash positive position–

And answering the perennial question as to whether CEOs were planning on raising equity capital in the near future, slightly more than half responded in the affirmative–

In conclusion, the survey pointed up the fact that innovation-stage companies are still very cautious around the economic forecast, have recast their strategies as different from pre-recession in preparation for the recovery, but still have some retooling to do within their executive teams to optimize the chances of outstripping their competitors in 2010.

Thanks again to the CEOs who participated.  Knowledge is power.  Collective knowledge is actionable.

August 7th, 2009

INmobile.org released their first collective intelligence research paper today, titled “Harnessing Collective Wisdom to Forecast the Near Future of Mobility.”

INmobile.org – Harnessing Collective Wisdom to Forecast the Near Future of Mobility Aug 2009

The Idea in Brief

A problem presents an opportunity: Periods of economic slowdown such as the one we are currently operating within offers us the unique and incredibly valuable opportunity to reflect upon past periods of expansion and prepare strategically about the upcoming period of recovery and growth.�This practice should be universal but often is not and too often the methodologies used are flawed, outdated, or both. The remarkable opportunity for assessment and planning may in part be unintentionally squandered when companies continue to rely upon the same perspectives and methodologies that have disappointed in the past regardless of where they are in the economic cycle.Previous techniques to forecast vary historically based upon cost and theory.Some rely upon internal perspectives, outside or analyst input, and market data.Often they range greatly in their level of sophistication, objectivity, and conjecture.While many remain valuable, they are perhaps too often relied upon.Here we begin to offer a more innovate and arguably more accurate means to acquire that knowledge.It is the tool of collective intelligence.

The idea of collective intelligence: Collective intelligence can perhaps be best understood as the intelligence which results�from the competitive collaboration of a group of individuals. Published in 2004, The Wisdom of Crowds � Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations by James Surowiecki argues that the aggregations of information in groups results in decisions that are better than those which could have been made by any single member of the group. In Surowiecki�s book, he argues that under the right circumstances, groups are remarkably intelligent and often smarter than the smartest individuals within them. When faced with a cognition problem such as, Who will win?, the idea of posing it to 100 experts was suggested as a collective �wisdom of the smart crowds exercise.As we currently seek to gain more informative and credible insights into the next five years of mobile technology, we should begin to take hold of this incredibly useful and adept tool called collective intelligence and apply it to the task.

The power of INmobile.org: INmobile.org is a private, global community of senior executives focused on mobility and convergence.This vital community of global wireless industry leaders enjoys both on-line and in-person events. Its private forum is fueled by a genuine and generous exchange of ideas, informed observations, timely information, empirical knowledge, and analysis.

The opportunity taken:In order to harness the collective intelligence and predictive abilities of INmobile.org, we interviewed one hundred senior executives from within this on-line community.We independently asked these executives the identical question during a one on one conversation and under similar circumstances.No previous conversations or predictions were referred to during these interviews in order to avoid the potential problem of group think.Based upon this methodology, it is our expectation that the whole of the INmobile.org community represented by these one hundred executives will show itself to be significantly more than the sum of its many parts.

The question:We posed the question, What industries will be most affected by the growth of wireless technology over the next five years? This question was suggested during the INmobile.org member reception held on March 31^st at the Wynn Hotel in Las Vegas, NV.�Over 200 senior executives attended the private reception where the concept of �capturing the collective intelligence� of INmobile.org was initially discussed.

The executives who answered:�The identification and selection of the 100 interviewees was done in two stages.The initial selection targeted fifty senior executives to represent the vital components of the mobile ecosystem with the broadest and most relevant perspectives for this specific question.These included mobile carriers, handset OEMs, OS vendors, and mobility focused venture capital and private equity.A call to action was then sent out to the INmobile.org membership requesting additional participants in this research project. Those additional participants provided increased geographical reach and diverse areas of mobility.Telephone interviews were conducted from April to June of 2009 and were conducted by either Matthew Corbett or Mark Newhall.

The results:Consensus predicts industries most likely affected by mobility because the predictive likelihood is heightened if and when a majority of experts independently think the same industry will be affected. These findings have been aggregated and documented in the report.

For more imformation, contact Matthew Corbett at mcorbett@bsgtv.com or at 1-617-266-4333 x241.

www.bsgtv.com

www.inmobile.org

A few months back in the New Yorker Magazine (May, 2009, http://www.newyorker.com/reporting/2009/05/11/090511fa_fact_gladwell ), Malcolm Gladwell penned a really interesting article on the subject of how underdogs-when they change the rules of the game-can beat stronger, bigger rivals. This is a story told many times over, starting with the Biblical story of David beating Goliath, which Gladwell uses in his article as the first of two fulcrums to work the concept out. The other fulcrum he uses is a girls basketball team on the West Coast that had as its coach a successful entrepreneur, Vivek Ranadivé, accustomed to innovating the rulebook to a start-up’s advantage as founder, Chairman and CEO of TIBCO Software, $1+B enterprise value publicly traded start-up success.

In the case of Gladwell’s article, the girls basketball coach was not given any special “talent” as an asset to build around. In fact, kids’ teams at younger ages are most often randomly assembled, with no “draft picking” involved. So, Randivé had to play with the hand he was dealt. He ended up with no tall girls, nor good shooters, just moldable clay, where a winning strategy would have to prevail over a special selection of talent.

In professional sports as well as business, however, coaches/CEOs get to pick their teams. And for business, there is no more crucial time to think about executive team-building than now. According to most analyst reports, markets are preparing for growth. The strongest competitors in each industry were the first to streamline operations at the beginning of the downturn and make sure their financial houses were in order. Now these leaner and meaner companies are looking to leapfrog their competition as recovery sets in. If a rising tide floats all boats, the top companies in each industry sector are looking for a way to rise at a faster rate than their weaker rivals. A recent McKinsey report framed this competitive dynamic, saying:

Roughly one in three industry leaders was toppled during the previous recession as attackers used the downturn to their advantage. Recent big acquisitions in sectors such as pharmaceuticals and information technology suggest that the current slump will be no different.

Our research shows that while all companies in an industry typically suffer during a recession, the performance gap between strong and weak rivals tends to widen. This gives strong players more opportunities to reshape their competitive environment. [http://blogs.harvardbusiness.org/hbr/hbr-now/2009/07/trend-to-watch-industries-taki.html]

But, how should these companies go about accelerating around the executive curve into the straight-away of economic expansion?

Sticking with basketball as a parallel for what one business can do to accelerate their rise over their peers, is it possible to consider hiring a superstar in a key area of the business?  A Michael Jordan of the Bulls, or Kevin Garnett of the Boston Celtics, or L.A. Lakers’ Kobe Bryant?  However, what should the latest definition of “superstar” be in light of all the change the recession has wrought in the business landscape?  McKinsey’s article went on to chronicle 10 key changes in the global competitive topography that are “must-be- aware-of’s” when re-engaging in strategic planning for the recovery in 2009 and beyond.  In July’s issue of Harvard Business Review, one answer is to bring on an executive with what Ron Heifetz and Marty Linsky call “adaptive leadership” ability-

The current economic crisis is not just another rough spell. Today’s mix of urgency, high stakes, and uncertainty will continue even after the recession ends….

Instead of hunkering down and relying on their familiar expertise to deal with the sustained crisis, people in positions of authority-whether they are CEOs or managers heading up a company initiative-must practice what the authors call adaptive leadership. They must, of course, tackle the underlying causes of the crisis, but they must also simultaneously make the changes that will allow their organizations to thrive in turbulent environments.

Adaptive leadership is an improvisational and experimental art, requiring some new practices.

[http://hbr.harvardbusiness.org/2009/07/leadership-in-a-permanent-crisis/ar/1 ]

The adaptive leader has a greater agility than other leadership types. The adaptive-leader type also allows for optimal breakthrough performance coming out of a down cycle.  Generic adaptive leadership is not enough, however.  You still need to figure out where you topgrade your executive team to best capitalize on the upside afforded in an executive change.  Do you seek this new “adaptive leader” for marketing, strategy, operations, sales? General management of one business unit that’s high growth versus another that’s slower growth but lower risk? Or is it in new product development, R&D, or international/global specialization?  At the risk of overplaying a metaphor, coming back to basketball for a moment, it’s interesting to note that each successful professional team has often been built around one “superstar” player, but not always playing the same position.   There are 3 traditional positions in basketball-guard (2), forwards (2), and a center.  Magic Johnson was a guard (point guard to be specific) and he took the Lakers to several championships.  A current L.A. Lakers superstar, Koby Bryant, as well as the Boston Celtics Paul Pierce are also guards.  However, Larry Bird and Julius “Dr. J” Irving were forwards.  And not to leave out the third successful superstar permutation, Shaquille O’Neal, Wilt Chamberlain, Kareem Abdul-Jabbar, and Patrick Ewing were all “superstar” centers who repeatedly drove their teams to pennant victories.

Once you identify where the biggest impact can be made via topgrading your current executive team, and you pre-select for a leader with proven adaptive leadership skills and experience, the final question presents itself-where are adaptive leaders most frequently bred?  Where should you look for them, what ecosystem have they been building there leadership toolbox within?

Our experience indicates that a disproportionate  number of adaptive leaders come from professional backgrounds they’ve honed in two specific stages of the company lifecycle-

At our firm, where we specialize in recruiting adaptive leaders, we’ve broadly referred to the executives who are best equipped at leading the green-highlighted columns above of emerging and growth-stage as “Builder-Leaders.” However, whether we refer to them as “builder-leaders” or “adaptive leaders,” their experiences creating and growing companies in these stages are the foundational criteria for success for those companies looking to outpace their competitors as we come out of a down cycle and head into the next growth phase.

The winning formula for extra-ordinary company performance in this next economic expansion is a combination of good internal executive assessment as to which role(s) will give you the biggest step-function impact if you topgrade them, and a key attribute of “adaptive leadership” in the new executive you bring. This is the very same leadership characteristic Malcolm Gladwell’s Vivek Ranadivé demonstrated when he was coaching his daughter’s basketball team to compete and win against the rest of their basketball league.

Hotel Indigo

A little bit of South Beach, FL in our socially conservative Commonwealth of Massachusetts?  No, impossible.

Yet Partners Roy Hirshland, Greg Hoffmeister, and Mark Cote of T3 Realty Advisors just hosted an invite-only “Pool Party” on one of the few gorgeous days in June here.  The venue you ask? Being the social miscreant, I’d of course never heard of it–  the Hotel Indigo, in Newton, MA.   Incredible but true, it’s a 9-iron from the Riverside T station if you wanted to be “green” in getting there.   However, valets hovered about ever solicitous and helpful in stowing away the private transport.

The pool deck behind the hotel was the networking platform, and the restaurant just off the pool I’m told is where the cool make the scene after hours these days.

Prism Ventures, Polaris Venture Partners, Grand Banks Capital and a number of others made the scene, hobnobbing with the successful digirati and tech influencers in the greater Boston area.

There’s clearly a new watering hole for investors in Newton as an alternative to Johnny’s Luncheonette, Flat Top Johnny’s in Kendall Square Cambridge, Waltham’s Naked Fish, or breakfast at Clio at the Elliot Hotel in Back Bay.

Hats off to T3 for throwing an edgy party, and rounding up a sizable group of Boston’s innovation sector to catch up, do some scotch tasting or cigar sampling, and try to counterbalance the Vitamin D deficits we Bostonians have suffered so mightily from thus far this summer.   For those who had to go to South Beach, Florida (or downtown Boston) finally there’s a bit of hip on Route 128.   For those less hip, the tip I got from someone at our firm before leaving the office was, “Well…. (frown, with a look-up-and-down at me)  Take your socks off and just wear the loafers, and that’ll have to do (eye-roll, sigh of exasperation at the meager assets they were being asked to work with).”

[Note: no request was made to write this as some sort of nefarious blog marketing ploy.  Just a simple observer's kudo to the venue and organizers]