Background on traditional (functional) recruiting
The traditional organizational structure consists of groups headed by senior leadership. We are all familiar with the standard organizational chart comprised of separate teams for marketing, sales, engineering, human resources, etc. Alcatel-Lucent has 16 groups reporting directly to the CEO. Within each silo, a combination of merit, seniority and responsibility determines titles and roles. For example, the organizational structure of Lucent (or NBC or insert the name of your favorite typical large company) consists of product line engineers at 100 and 200 level designations reporting into the more experienced 300 level project managers and vice presidents who are the decision-makers. Within companies adopting this traditional hierarchy, senior managers can become mere tollgates in the decision-making process rather than participants in the problem solving exercise . Most of the time, startups need a culture of experimentation, and an attitude of “change the industry rules, not play by them” is a key requirement. Often in larger, more stable enterprises, repeating yesterday’s strategy is 90-percent of the job. In startups, there was no yesterday and one can’t use “industry rules” to cause disruption. Knowing how the industry works and having experiences from it – as long as that knowledge does not dominate decision-making – can reduce risks and also help identify new opportunities and industry vulnerabilities. Since generally a startup is trying to upend the industry rules of yesterday, one has to have enough talent to meet industry “requirements” and have knowledge of existing systems while changing the rules of engagement.
Startups need a culture of experimentation, and an attitude of “change the industry rules, not play by them”
This nuanced approach to change, innovation and disruption is dependent upon the team one builds. One needs team members to lead and add to the thinking rather than follow a process. To think of and execute on experiments, to lead thinking instead of simply responding to competition and the next increment on a broad base are significant differences in the needs of startups versus bigger, more established entities. This “beyond the functional role” thinking can come from any level of an organization, and team leaders should be open-minded and encouraging of this “experimental” behavior. If a startup instead takes the big company approach, team members are prone to adopt “more of the usual” mentalities and act as individuals who simply feed information up the chain versus cooperate in an environment more conducive to problem-solving, evolutionary planning, flex-planning and experimentation. This big company mentality can be disastrous, as team dynamics driven by a sense of loyalty can often easily encourage individuals to tell the leader exactly what he or she wants to hear, rather than challenge the status quo and tell leaders what they need to hear. This does not apply just to the leadership. Each new hire improves and stretches all of the existing team members in various functional areas beyond their immediate expertise.
Diversity in all forms helps drive “figure out the new” behavior. I recently asked a CEO if he had enough talent. His response was to assure me that he had “15 PhD’s” – impressive for a startup project. But when I asked how many were from outside their market, the answer was none. When I asked how many were under age 35, the answer again was zero. In my view, both are signs of sub-optimal teams. Beyond diversity, hiring tuned to key risks and opportunity is very critical and very different. What I mean by diversity here is not in the generic sense of the word. I mean diversity in very specific dimensions of hiring, which from our experience has shown the highest yield of the high-innovation teams that we are looking for are at Khosla Ventures:
- Diversity of the team’s problem-solving portfolio, ensuring that the potential failures are spotted early on and that solutions are arrived at faster
- Diversity of the team’s industry experience, ensuring that the team deeply and comprehensively understands all of the rules and requirements of the field
- Diversity of the team’s creativity, ensuring not only a culture of livelier conversations and brainstorming sessions, but also an atmosphere of welcome dynamic innovation.
- Diversity of age, ensuring the mixing of old and new ideas, methods and mindsets, ideally between multiple generations of engineers
Whenever startups wish to hire to reduce risks, they are inherently discussing inviting and fostering diversity within their team because the risk already implies an expertise not currently presentThis does not represent an exhaustive list of what diversity is, but it offers four readily identifiable categories that the team leaders can target in their hiring process. Ultimately, whenever startups wish to hire to reduce risks, they are inherently discussing inviting and fostering diversity within their team because the risk already implies an expertise not currently present. Alternatively, the expertise might be present, but the risk is so important that it might require additional (different!) expertise from the one already available. The process of gene pool engineering, therefore, is not something akin to an alien procedure – it is the streamlining of what startups do inherently by being startups!