Born to Star - Part 3 - Evidence From Research & Investors

To read Part 1 on LinkedIn click here. To read Part 2 on LinkedIn click here.To read all current installments on our website, click here. *Scroll down the page to see links to each installment.

Evidence from Research

Many of you are scientists and technologists. You work in the world of theory, testing and proof. Like me, you’re interested in new ideas like the notion that the most successful businesses have both a Vision Master and an Execution Master. But you want to see the proof. After all, theory without proof is just conjecture; and you’re not going to change your thinking or the structure of your business based on conjecture.

So, the billion-dollar question that this book is written to answer is:

Can we prove the theory that you, the Vision Master, need an Execution Master to maximize your chances to succeed in business or with your startup?

Can we offer proof that having an Execution Master will substantially reduce your chances of ending up like Nikola Tesla?

How to Make the Most of Your Partnerships at Work and in Life, Rodd Wagner and Gale Muller undertook five years of research on collaborative partnerships.

During that time the authors randomly surveyed thousands of people, asking them to identify a successful and an unsuccessful partnership (outside of family relationships) that they had engaged in, and what was responsible for success and failure. From thousands of answers, twenty-three were found most predictive of success or failure and of these, these were determined to be most decisive:

• We complement each other’s strengths.
• He or she does some things much better than I do, and I do some things much better than he or she does.
• We need each other to get the job done.

Responses scored from 1 to 5 based on whether a respondent most agreed or least agreed with the statement. Curiously, only respondents who answered “5” to all three statements also reported the highest partnership success levels. In other words, even one “4” indicated some reservations about the value of complementary strengths in a partnership. As the author’s concluded:

“Answering 4 to any of the statements, while right in an absolute sense, also indicates a full point of reservation — something substantial that is keeping you from giving the most positive response. In practice, this holding back is costly. It reveals that you and your counterpart are not quite a perfect fit or don’t need each other to get the job done.In exceptional two-person teams, there is no such reservation. These statements reflect not just interdependence, but a mutual recognition of it.”

From my research, I can report that Wagner and Muller’s findings imply three fundamental components to the most successful partnerships:

1. Self-Awareness – knowing what you do well and what you don’t do well (or what you most like doing and don’t like doing)
2. Situational Awareness – knowing that one needs the skills and qualities of the other to succeed
3. Trust – acceptance that a deep level of trust between the dependents within a partnership is critical to success

The authors concluded that:

“Sometimes what’s required is the difference in how the two of you think or act. One consistently sees the potential; the other routinely sees the risks. One generates ideas; the other puts them into production. One is good with technology; the other is good with people.”

Think about each of these statements:

• One consistently sees the potential; the other routinely sees the risks – that’s Warren Buffet and his Execution Master partner, Charlie Munger, at work assessing companies.
• One generates ideas; the other puts them into production – that’s Elon Musk and leading Execution Master at Space X, Gwynne Shotwell.
• One is good with technology; the other is good with people – that was Steve Jobs and Tim Cook reinventing Apple and taking it to market dominance.

I’ll detail these and other successful partnerships between Vision Masters and Execution Masters throughout this book. But are you beginning to see the pattern here? We haven’t yet proven our theorem, but we are gathering substantial evidence.

Let’s see what some of the world’s most successful investors have to say about this.

Evidence from investors

I’d like you to stop reading for ten seconds and answer this question – whether you are knowledgeable about the world of investment or not. Don’t ponder this, just see what name, if any, pops into your head first as you answer this question:

Who is the most successful investor in the world?

Did a name come to mind? Most people who don’t operate within the realm of high finance (and many who do) tend to think of the same person: Warren Buffet. Buffet is legendary, iconic and enormously successful. He is the “rock star” of investing, whose advice is sought by Presidents, International Banks and Fortune 500 CEO’s.

I’m fairly sure that the name Charlie Munger did not come to mind.

Charlie is not well-known outside the world of finance and investing.

He is anything but a “rock star” in the eyes of the world. But he is one-half of the business partnership (Warren Buffet being the other half) that has made Berkshire Hathaway the most successful investment funds in history. Here are the differences between these two complementary partners:

Buffet thrives on new ideas and enthusiasm for entrepreneurs. Munger prefers the world of analytics. Buffet wants to explore the possibilities. Munger wants to know if it will work as a business. For that reason, Buffet often refers to Munger as “the abominable no-man.” (He says “no” a lot.) But the partnership works for that very reason: it’s made up of two exceptionally talented people practicing complementary thinking styles. Buffet and Munger apply their complementary thinking styles whenever they contemplate an investment. It matters, big time.

Savvy investors like Buffet and Munger routinely apply this very same litmus test to the teams running the businesses into which they consider investing, though with less precision in my observation. Recently I attended the New York Venture Summit, held in New York City. One panel discussion I attended is particularly relevant. A panel of highly successful venture investors was queried on the most important attributes of their investment targets. The first answer? A strong management team.

But what attributes specifically made for a strong team in the eyes of the panelists?

Strong teams had both “managers” and “leaders” at the helm. “Teams” comprised of just one person trying to play both roles were considered weaker and riskier. But the panel did not go the full mile and create a general principle out of this observation. This eBook does. Here’s the first conclusion:

A successful business leadership team needs at least two players, and they must be complementary.

In support of this idea, we know of Bill Draper, a legendary venture investor in the Silicon Valley. Draper was the founder of Sutter Hill Investments, one of the first VC’s in the Valley. Fifty years later Sutter Hill still produces some of the best returns on investment in the world of venture capital. Draper and his team have a knack for picking winners and avoiding losers. In his recent book “The Startup Game,” Draper talks at length about the importance of teams with the right composition. He says:

“You have to make sure that you have the right entrepreneurial team.” Draper writes. “Nothing is more important. In fact, nothing [else] is even a close second.”

These are strong words from some of the world’s most successful investors, people whose money has funded Microsoft, Apple, Facebook, Google and hundreds of other iconic companies. But even Draper did not in his writings connect the dots as we have done here:

Our message to you, the Vision Master, is “don’t try to go it alone,” because you probably won’t win and you probably won’t get investment dollars. But just having “partners” is not enough.

We assert here that as a Vision Master, you MUST team up with an Execution Master, one single individual who expresses complementary skills and work preferences while sharing your business values.

Let me say this in a different way: A Vision Master without an Execution Master a like a high-performance car with no brakes and no steering. There’s a great deal of forward motion but no way to control it. No way to avoid obstacles or change direction when needed.

The smartest investors recognize this already and are going to evaluate you and your team based in part on this assertion. As an example of how they score you, we have created a proprietary Intelliversity Executive Team ScorecardTM that is used confidentially by a number of investment funds. (The Scorecard can be found in the Born to Star complete guide when you download it.)

You’ll notice that:

1. Having an Execution Master on team is explicitly included as a criterion;
2. The key elements of an Execution Master skillset and mindset are included as separate criteria. It would be very difficult to incorporate these skillset and mindset elements without actually having an Execution Master on the executive team.

So let’s briefly review where we are:

We considered the sad case of Nikola Tesla, the ultimate visionary whose incredible ability to create from nothing was perhaps only equaled by his immense failure to properly manage his business affairs.

I then posited that team composition – specifically the presence of and relationship between a Vision Master and an Execution Master on a business team – predicts winning performance in business. I didn’t ask you to buy this theory but invited you to explore it.

We began by looking at the research of Wagner and Muller on successful collaboration and found a strong correlation between success and a partnership with complementary skill-sets. We then looked at examples from the world of investment and found a wealth of agreement among the world’s foremost investors that team composition (not just having a team) strongly correlates to success or failure. We then connected the dots and drew our innovative conclusion:

If you are a Vision Master, you MUST team up with an Execution Master, one single individual who expresses complementary skills and work preferences while sharing your business values.

Key takeaways: We assert that:

• A combination of vision and execution skills are present in the best partnerships;
• Few individuals have the requisite skill-set, desire or time in both of these areas to succeed;
• The smart money is invested into teams that have high talent in both positions.
• The best teams have an Execution Master in the most senior role, just below the founding Vision Master.

For you to believe this and take it seriously, you’re going to need some examples from businesses that you’ll respect, and a clearer picture of the differences between Vision Master and Execution Master.

Let’s begin with a look at just who the Vision Master and the Execution Master are and what inherent qualities each bring to a successful business team.

Next – Part 4: The Vision Master & the Execution Master – The Challenge of Self-Awareness 

*Click on book image to go to download page. This eBook is offered in its entirety, including bonus materials and Leadership Scorecards?, at no charge for a limited time, exclusively to Intelliversity readers.

 This article originally appeared on the Intelliversity website on August 8, 2016. You can enjoy this and other articles on our website here.

Robert Steven Kramarz - Angel investor and fund manager; advisor on impact investment, Reg. A+, Equity Crowdfunding and Revenue Royalties. He’s currently Executive Director of Intelliversity and active team member of the Water Impact Alliance, Pacific Royalties, 22nd Century Ventures and Vantera Partners. He works tirelessly to increase the amount of private funding available for innovation, science and impact investments.

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