What Successful Entrepreneurs Know That Sets Them Apart
One interesting trend that's emerged from the volatile labor market and robust private equity environment of the last few years is the proliferation of startups.
According to Statista, after a brief drop in mid-2020, the number of new businesses launched in the U.S. climbed from 227,000 in Q2 2020 to 359,000 in Q2 2022. The increase can in part be attributed to some of the factors behind the Great Resignation: a desire for more workplace autonomy, flexibility and purpose.
It's in these conditions that Mike Pino launched Targeted Velocity, an advisory firm for early-stage startups that specialize in future-of-work technology. Pino helps these clients accelerate their market presence and traction by introducing a new way to leverage advisory boards. As a former principal/partner at PwC, a global learning leader at Cognizant, and a digital learning leader at GE, Mike brings thought leadership, research and practical experience to his work.
I spoke with Pino to hear what makes working with early-stage startups so unique. His answers could be helpful to any business leader, not just entrepreneurs, looking to improve their decision making, their communications and the collaboration practice in their companies.
What Sets Successful Entrepreneurs Apart
Q: What makes startups so interesting to you?
Mike Pino: It’s not a surprise that some people are better in startup companies than others. Things move fast, and often it’s quite hard to make sense of what’s happening. But decisions need to be made quickly. What I find fascinating is the emerging neuroscience research. For example, the Lawrence study published in Nature demonstrated that entrepreneurs are different than many executives in how well they integrate their feelings with their understanding in order to make quicker decisions. When it works with entrepreneurs and founders, it really works. When it doesn’t work, an individual’s triggers produce some extraordinarily bad behaviors and decisions. Research like this and others shows that not all risk-taking is problematic, particularly when combined with a better approach to solving problems in uncertainty.
Q: Other than the obvious need to survive, what do you notice about successful early-stage startups?
Pino: Whether an executive in an established corporation or a leader in an early-stage startup, one of the biggest challenges senior leaders face in a business is how to make sense of emerging information, especially in the noisy uncertainty of markets and customer needs. The issue is not access to information — we are awash in opinions and positions. To me, it’s two things: 1) better approaches to filter and amplify weak signals hidden among the noise and 2) techniques to make sense of these weak signals in order to decide on a course of action.
Finding the Weak Signals in the Noise
Q: Entrepreneurs in startups look a lot like senior leaders in established companies, with the exception of the different context, right?
Pino: Absolutely, at least when it comes to gathering information to make strategic business decisions. Peter Drucker once said in a 1989 interview with Bill Moyer, “The most important thing in communication is hearing what isn't said.” The challenge of filtering information and making sense of weak signals has plagued both entrepreneurs and executives since Drucker’s time. Hearing what isn’t said requires being adept enough to adjust your filters to seek and amplify weak signals such as disconfirming information, news that isn’t what you expect or want to hear but you need to hear.
Q: How has the environment changed for startups as companies embrace hybrid and remote work?
Pino: I wouldn’t say it’s changed, but rather it has been exacerbated. With the explosion of content, the rise of “fake news” and the potential inaccurate filtering through AI approaches like ChatGPT, being able to discern signal from noise is likely to become much more difficult and important for business leaders.
It’s even worse for entrepreneurs in startups. The research on neuro-entrepreneurship shows how exceptional they can be when it comes to making decisions, rapidly integrating instinct, weak signals and what data they have. In weak signal/high noise situations, however, the leading thinking at present is that entrepreneurs — and anyone with a bias for action, for that matter — are likely to make a wrong decision.
The research on filtering and amplification points to better techniques that could help both entrepreneurs and any of us who are likely to have a bias toward action. For instance, in "Messengers: Who We Listen To, Who We Don't, and Why," Stephen Martin and Joseph Marks explain that our neurobiology wires us to be persuaded by what looks and sounds right far more than information gathered about what is right. And they offer a few ways on how to address that.
Related Article: The Speed of Work Today: More, Faster, Now
Ethical Listening, Strategic Listening and the Power of Collective Intelligence
Q: What have you seen that seems to help with filtering and amplifying for founders in early-stage startups?
Pino: Professor Jim Macnamara at the University of Technology, Sydney has been leading the charge on what he calls strategic communication. His work focuses on challenging the organization-centric view of public relations or corporate communications, opting for a network view because of the interconnected, dynamic and participatory nature of social media, which he calls open listening. Macnamara divides open listening into two distinct practices: 1) ethical listening, which suspends judgment in order to hear what may be deemed the good, bad and regrettable about the matter and 2) strategic listening, which is being able to make sense of the good, bad and regrettable, and identifying ways to act upon them.
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Though Macnamara’s work on open listening focuses on the collective view of how people within a corporation interact with its shareholders, stakeholders, employees and the public, the model offers a way forward for entrepreneurs. The practice of ethical listening and strategic listening are critical to help them establish the filters and amplifiers needed to make better decisions.
Q: How important are the perspectives of others to founders (given they are accustomed to getting things done on their own)?
Pino: I’m making a big bet that you can apply the research on human collective intelligence to improve filtering and amplifying information by helping to distill the wisdom in groups. A lot of this work shows how we can be better together, especially when a group is assembled to work on amplifying weak signals to improve decisions. In a famous study on collaborative reasoning, groups generally outperformed individuals in completing the famous Wason selection task — an exercise in the logic of hypothesis-testing — not because they mirrored the solution hit upon by one incisive member, but because they co-constructed a solution together by listening to and questioning each other’s contributions. There is good reason to think that we can be smarter together, but only if we give each other a chance to think and speak.
Q: What features of collective intelligence tend to produce better results for early-stage startups?
In another famous study identifying a collective intelligence model, the researchers placed people into groups of two to five people, and asked them to collaboratively perform a diverse set of cognitive tasks. The performance of the groups on these tasks was not strongly correlated with the average or maximum cognitive ability of the individual members, but instead with the average social sensitivity of group members, the proportion of females in the group, and the equality in distribution of conversational turn-taking. Since then, the work on collective intelligence has continued to disentangle features behind team performance to produce insights through what is sometimes known as extreme teaming or working cooperatively across all sorts of boundaries.
Q: How is this different, or similar, to what people think about collaboration?
A really good book came out a few years ago by Adam Kahane titled "Collaborating with the Enemy: How to Work with People You Don’t Agree with, or Like, or Trust." The book helped me make sense of the challenge of collaboration.
Many business leaders can recognize the value of bringing people together to work through difficult challenges, but often don’t know where to start. The book builds on research that found two distinct features need to be a part of bringing people together for this purpose: 1) removing the power dynamics while 2) assuring an atmosphere of mutual respect (and a rejection of zero-sum activity). Part of the challenge of group formation is maintaining enough tension to avoid groupthink. "Collaborating with the Enemy" offers a good framework to start from. As Kahane puts it, collaboration requires experimentation, which cannot work unless you listen to other’s ideas. And he offers a practice that he calls stretch collaboration, which is a way for people who may be rivals to use trial and error to create a mutually acceptable reality.
It should be no surprise that part of this effort is creating a safe zone so that people can voice their concerns — establishing trust as a form of psychological safety, in other words. So is managing the framing of the discussion and focusing on refining the question to be explored. What may not be so apparent, however, is the importance of helping to encourage the right form of disagreement to help get to the news you need.
Q: Last question: Are better decisions made when founders engage with others who possess more experience, particularly in uncertain times?
Yes, that’s it in a nutshell. It’s not a panacea, and it won’t solve all problems. But if you’re looking to improve the quality of decision making in limited windows of opportunity, the research points toward bringing groups together in stretch collaboration.
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About the Author
Mary Slaughter is the Global Head of Employee Experience at Morningstar, an investment research and management firm headquartered in Chicago, IL. Prior to joining Morningstar, she served as a managing director, People Advisory Services at EY.