Teamwork: An Under-appreciated Factor in the Success of Startups

In Brief  While teamwork has rarely been studied, it’s often a critical factor in the success of startups.

Why This Matters  Many entrepreneurs assume that the growth of a new firm depends largely on the compelling vision of the founder and fail to take into account the importance of a company’s culture. 

The Takeaway  Early-stage firms can benefit from paying more attention to the nature of the workplace environment. And simple steps that help employees feel valued and connected to one another can make a big difference.

In Depth

When many people think about the key ingredient behind the most successful startups of the last generation, their minds immediately conjure up the image of a brilliant, but often mercurial founder—say, Bill Gates of Microsoft, Steve Jobs of Apple, or Jeff Bezos of Amazon. Indeed, these driven CEOs all had a compelling vision of how their company should evolve. At the same time, these tech titans were typically tough on collaborators and employees who did not see things exactly the same way they did. But there is another pathway to spectacular corporate growth, which gets a lot less attention from both scholars and journalists. In contrast, this less publicized approach relies not on the edicts of an autocratic leader but on the teamwork of workers who readily collaborate with one another.    

Take the case of Workday, Inc., the financial management software vendor, which was launched in 2006 and now rakes in $2.3 billion a year. Co-founder Aneel Bhusri personally interviewed the first 500 of his hires—whom he refers to as “cultural co-founders.” Bhusri, who has created an employee-centered workplace, explains “In five to ten years, your first employees will continue to uphold your company’s culture and value system.” Today, according to a survey by Fortune, 95% of Workday’s employees say the company is a great place to work, and one of the key reasons is the welcoming attitude of management to their ideas and input.

According to Kylie King, Assistant Professor of Business & Entrepreneurship at Champlain College in Burlington, VT and a Faculty Affiliate Researcher at the Ed Snider Center for Enterprise and Markets, most studies of entrepreneurship focus on the characteristics of individuals—such as their personality traits for example—even though successful companies often require other resources or expertise beyond that held by any one person. This gap in the literature motivated King to begin studying how individuals work collaboratively with one another. King, who earned her doctoral degree in Measurement and Statistics from the University of Maryland in 2017, wrote her dissertation under the supervision of professors Joseph Bailey and Vijaya Venkataramani of the Smith School on transactive memory systems (TMSs), which she defines as the knowledge of another’s knowledge and the ability to access this information. “This academic construct,” she says, “is a proxy for teamwork. My research focuses on the collaborative process whereby workers who feel psychologically safe with one another can learn from each other.”     

King is now preparing for publication a few academic articles that flow out of her dissertation. One paper now under review is entitled “Measuring Transactive Memory Systems: Using Social Network Analysis,” and aims to help team members evaluate a team’s ability to achieve its goals. Social network analysis (SNA) refers to a series of methods that can investigate the relationships between group members. “Whereas TMS describes the interactions of a whole team, SNA captures the relationships between team members,” she says.  “Information about individual relationships is easier to gather because it is available earlier in the process.” This empirical study examined the behavior of 204 undergraduates who were involved in team projects in four different courses. The students were administered both a TMS inventory and a SNA inventory. King was able to confirm her central hypothesis that a number of the measures included in the SNA inventory correlated with both TMS and with team performance. As King concludes, if we use SNA to measure TMS, we can figure out sooner if a team is likely to gel. “This could be an asset in a variety of business settings where there is a need to evaluate team performance” she says. And teamwork, insists King, is an ingredient that more and more successful companies are relying on.

King has also been exploring the real-world implications of her theoretical work. This past year, she began a pilot study that analyzes the teamwork of early-stage firms, using both the SNA as well as another measure, which is rooted in Moral Foundation Theory (MFT) and assesses the moral values of individuals. Developed by Jonathan Haidt, a social psychologist at New York University’s Stern School of Business, MFT incorporates the six core elements of a moral system—such as beliefs about fairness and loyalty. “Measuring MFT gives us a sense of the diversity of the individuals in the group,” says King. “We are interested in studying whether diversity of moral foundations or values contributes to a team’s progress, detracts from a team’s ability to coordinate, or both.”  This testing has also been done on the members of University of Maryland multi-disciplinary undergraduate teams in The Quality Enhancement Systems and Teams (QUEST) Honors Program, who were doing various assignments for these early-stage firms.

King is now looking for other early-stage firms to include in her study. It’s a win-win situation for both King and the participating firms. King gets to add new firms to her expanding database. And firms get the benefit of her free assessments of their teamwork. “Our insights often have practical applications. For example, a CEO might learn that one team member is particularly well connected to fellow employees so that it would be a major loss if he or she were to leave the company—and that the prospect of this loss thus requires contingency planning,” she says. “Alternatively, our feedback might reveal that the firm consists of a few silos of two or three employees who are connected with one another, but not with the employees in the other silos. And this gap might be something that could be bridged.”   

Firms interested in participating should contact her at kking@champlain.edu.

Joshua Kendall has written on business and healthcare for numerous publications including BusinessWeek, Fortune.com, The New York Times, The Boston Globe and The Washington Post. For more about his work visit JoshuaCKendall.com.