Being a Strengths-Based Entrepreneur

I haven't been writing for some time. The reason is that I am quite busy with building up my new company, a distributor of medical products in Brazil (to be seen in the picture below).

It has always been my declared goal to build this company as a strengths-based organization. After years of working in a large multinational company where any strengths-based initiative has to be carefully embedded in the larger context of the company, I have been very much looking forward to this opportunity of building a company from zero.

So how is it going? Well, to share with you some of my experiences so far is the purpose of this post. But let me briefly say a few words to those who may not be familiar with the idea of a strengths-based organization.

What is actually a strengths-based organization? Essentialy, it is an organization that is built around the strengths of each employee.

The importance of focusing on employee's strengths rather than weaknesses is not really new. For instance Peter Drucker emphasized it already in his book "The Effective Executive" (see the quote on the right column in this blog). But the idea of building a whole organization around this idea is -at least to my humble knowledge- something more recent. I understand that it was born out of the extensive leadership research that Gallup conducted in the 90s and whose findings were published in the bestseller "First Break All The Rules" by Marcus Buckingham and Curt Coffman.

Gallup identified 12 questions that employees in high-performance organizations consistently answer differently than employees in mediocre-performance organizations. One of them, and possibly the most important one is: "At work, do I have the opportunity to do what I do best every day?" It seems to be an obvious, almost trivial question, but it turns out to challenge conventional management wisdom in complicated ways when consistently put into practice. Most of the book "First Break All The Rules" deals with this question and its implications, and it has also become a center-piece of Gallup's Consulting practice.

Chapter 7 "Building a Strengths-Based Organization" in the book "Now Discover Your Strengths" of Marcus Buckingham and Donald Clifton provides a concise "operating manual" for such an endeavor. The authors highlight the following four pillars which I would like to call...

The Four Commandments of a Strengths-Based Organization:

1. "You should spend a great deal of time and money selecting people properly in the first place".

2. "You should focus performance by legislating outcomes rather than forcing each person into a stylistic mold".

3. "You should focus your training time and money on educating [each person] about his strengths and figuring out ways to to build on these strengths rather than on remedially trying to plug his "skill gaps".

4. "You should devise ways to help each person grow his career without necessarily promoting him up the corporate ladder and out of his areas of strength"

I try to follow these four commandments in my work as an entrepreneur. What is my experience so far, what can I share with you?

It takes quite some persistence to keep focused on these four commandments in the heat of the battle of building up a company, especially in Brazil. There are so many things you have to worry about, from regulatory affairs, bureaucracy, implementing the IT system to hiring the right people and of course kick-starting sales. I confess that I frequently wonder whether building a strengths-based organization really should be a priority at this time. Yet, I believe it should be because it is such a great opportunity for competitive advantage.

I find the most important starting point for any strengths-based entrepreneur to "select" her business partners based on complementary strengths as much as circumstances may allow. If that choice is determined by other factors (capital, skills, network), then great efforts should be made in defining each partners' role and contribution based on his strengths.

For example, my business partner's strengths are spread over "Execution", "Relationship Building" and "Influencing", while my strengths are more concentrated in the fields of "Strategic Thinking" and "Influencing" (I use here the terms of the four demains of leadership strengths as defined in the book "Strengths-Based Leadership"). As a consequence he feels at his best with sales and supplier relations, whereas I naturally gravitate towards general management, marketing, employee selection and development. A blank spot for both of us is talent and patience for repetitive, administrative chores with an eye for detail (which I suspect to be not uncommon for start-up entrepreneurs). Yet the strengths-based mindset has helped us to identify and own up to this weakness and to find ways to compensate for it. Of course, our analysis went beyond these four domains.

Venture capitalists frequently say that, rather than business plans and financial forecasts, they are most interested in the entrepreneurs themselves, their track-record and how they combine as a team. A strengths-based mindset is therefore an excellent basis for entrepreneurs.

So much for "strengths-based partner selection". What about employee selection? Marcus Buckingham and Donald Clifton highly recommend a "psychometrically sound" and objective system to measure talent. Although they claim that “a number of such instruments exist”, I actually know few of them and anyway they seem to be more of an emerging phenomenon here in Brazil (readers are welcome to correct me and point out to interesting solutions affordable to smaller companies). In my training with Gallup, I was always advised not to use their Clifton StrengthsFinder® as a selection tool (although it seems that Gallup itself uses a tool that has some similarities with it). Unfortunately, at this moment we have neither the time nor the money to build such a sophisticated system, although it nevertheless remains high on our list of priorities.

But what my partner and I do is to dedicate a substantial amount of time to discuss what strengths we should really be looking for. Again, this may sound obvious, but in the heat of the battle and with our eternal lack of time, there is often a temptation to assume that this is clear to both of us anyway and to take short-cuts. Another challenge is to find precise words for strengths, to avoid overly generic descriptions. As we drill down to the real substance of strengths, we are often surprised to discover diverging points of view which -when conciliated- lead us to very interesting new insights. Employees and candidates that were question marks all of a sudden turn out to be much more interesting talent, and “shining stars” are put on our watch list. In a number of cases, we have seen then that these changes in perception were justified by later performance.

There is a learning point that -while not at all new to me- strikes me again and again as a powerful new insight: one has to be very careful not to draw simplistic conclusions about the ideal profile of a sales rep (or any other employee), often based on some stereotype. While there surely are common strengths that make up the top sales men in our industry, these strengths come in people with many different "colors and shapes". For example, one of our better performing sales reps initially left a very reserved impression, almost to the point of being timid and a bit akward. Yet, we discovered that he brought some important customers with whom he had developed excellent relationship over time, through honest communication and living up to his word (Clifton Talent Themes: Responsibility? Belief? Relator?)

A great help for strengths-based selection is behavior-based interviewing. I have written about this elsewhere in this blog. I can recommend the book “High Impact Interview Questions - 701 Behavior-Based Questions to Find the Right Person for Every Job”. The title may sound a bit too much like a trivial, “easy answer” self-help book, but many of the questions are really helpful and what you need as an entrepreneur are practical suggestions (like specific interview questions) rather than a lot of theory.

Another important issue for building a strengths-based organization concerns the second commandment about performance measurement, especially when building up an very sales-oriented organization. In Brazil, a very substantial part of the sales force's revenue is usually a sales-based commission. Its obvious problem is that sales people are tempted to drive down prices to make their sales goals. As a consequence, complicated systems of rules are established, such as different price lists with different commissions and sales reps often have to check with their managers whether they can give certain discounts or not.

We decided to pay commission based on a contribution margin (a gross profit proxy). By replacing sales with profit as the key performance measure, we can give much more flexibility to our sales reps with regard to how to achieve their targets and how to do their work in general. This approach may be nothing special in the USA but is rather rarely and timidly chosen here in Brazil for a variety of reasons. For one, a commission based on some "obscure" profit figure is much less transparent for sales reps than a commission based on straightforward sales figure. Therefore, a profit-based commission requires that sales reps trust in the company's ability and honesty to provide accurate profit calculations, which is unfortunately not as common here as elsewhere. Furthermore, there is a cultural element which makes anything related to profit subject to great confidentiality and obscurity here, to the point where sometimes even the owners themselves have only a vague notion of the real profit drivers of their business. Breaking such deep-rooted habits is not easy but represents an opportunity for competitive advantage for a new player.

Finally a few words about the third commandment about training. It is still too early to make major training initiatives for strengths-based selling and the like. But nevertheless, I make consistent efforts to use a strengths-based language in our communication with employees and even service providers, and thus introduce some of the concepts in a rather low-profile, "stealth" way. I really want the strengths-principled to be lived first rather than talked to death. I avoid any specific “jargon” like the Clifton StrengthsFinder’s 34 talent themes and rather refer to the four domains of leadership strengths: Executing, Influencing, Relationship Building and Strategic Thinking (read the book "Strengths-Based Leadership" for more on this). They are relevant not only for leadership jobs but also for sales and many administrative jobs. People intuitively understand them without major explanations and they can trigger very interesting discussions.

We encourage people to discover and use their own way of doing things. Unfortunately, there are significant cultural obstacles here in Brazil like in many other Latin American countries. The Brazilian executive coach and headhunter Augusto Dias Carneiro gets it down to the point when describing a deep-seated, often unconcious belief here: “those who work, do not think; and those who think, do not work” (if you can read portuguese, check out this interview with him). Carneiro goes on to say that this mindset often drives expat managers here crazy, for it complicates delegation and a pro-active search for solutions. And it results in a instinctive tendency to "force each person into a stylistic mold" rather than "legislating outcomes", completely against our second commandment.

The good news is that the culture of a company can offset such dysfunctional aspects of a nation's culture, at least partially. But it takes a lot of effort, and similar to the education of children, such an effort is probably most fruitful in the early "childhood" of the company. As a result, a cultural obstacle for larger, traditional companies can turn into an opportuntity for younger companies, and start-up entrepreneurs have the outstanding opportunity to implant a strengths-based culture into their company's DNA right from the beginning. But having said that, it also becomes clear why start-up companies should not treat the vision of a strengths-based organization as a "nice-to-have" posteriority for a more mature stage in the company's life-cycle.

I would like to invite other entrepreneurs, managers or leaders to share their experience in building up a strengths-based organization, especially when you don't have the money to pay expensive consultants and have to "adapat, implement and overcome" Please send me your text to olavi[at]gmx[dot]net