Wednesday, August 09, 2006

Fit versus Proven Performance

Update: Brad Feld sent me a link to Will Herman's blog that provides great detail and insight to the thoughts below.

Today, I sat through a classic early stage start-up discussion. The company, an unannounced early stage software company, is in the process of bringing on the first key hires post-funding.

Work is piling up, the opportunity awaits, time is of the essence...but, there remains an underlying tension with respect to the profile and capabilities of the first key hires.

Two profiles emerged in the discussion
- a proven performer with deep domain expertise and a track record of achievement in the given function versus
-a high-caliber athlete with incredible drive and passion that can be shaped into a high-achiever but without the defacto track record and resume.

Whom to hire - the proven performer or the eager, malleable beaver?

During the debate, one of the Hummer Winblad partners reminded the group of a mental framework Jack Welch employed at GE to help structure and clarify the issues.

He used a two-by-two diagram that plots cultural fit on the x-axis and proven performance on the y-axis. There then fall out four types of people:
  • proven performers who are lousy fits = type A
  • unproven performers who are lousy fits = type B
  • proven performers who are great fits = type C
  • unproven performers who are great fits = type D
Ideally, we all want to hire type C's. Type B's need to be flushed immediately. The question comes down to, given the choice, do you take Type A or Type D?

Jack Welch concluded that type D trumps type A all day long. Type A hires are disruptive, wreck culture, and the short-term productivity gains do not justify the long term damage to the company's psyche. Type D hires, with the correct investment in mentoring, training, and coaching become, over time, the jewels of the company.

The risk for a start-up is do you have the time, competence, and resources to develop talent?

We will look for Type C employees all day long, however, reality and time pressures often dictate a choice between fit/potential and performance. Management wisdom suggests that fit and culture can become competitive weapons in building great companies.

Do the CEO and board of early stage companies benefit from hiring unbridled passion/malleable natures over mercenaries who get sh*t done but queer culture?

I certainly know whom I would rather work with.

5 comments:

  1. Will Herman - who several of your partners know well from Scopus - has a similar and detailed post on this from a few weeks ago. Well worth reading also.

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  2. Thanks Brad. Will's article is well done.

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  3. I have had a few experiences as a CEO and a board member with A's, proven performers who don't fit. They should NEVER be hired in a startup. In a big company, you might be able to beat them into shape and have them get the HP Way or whatever they are fitting into. In an early stage company, there is not time for it and the fragile nature of a small team is that thier lack of fit will instead change the team..they will beat part of the team into thier way. So if you don't have an Oracle culture, bring one in no matter how proven and you will massively damage the culture. In fact the more proven, the bigger the damage becuase they are better at forcing people to bend to thier way and it is harder to can them.

    So to put it blunt, unless you want to change the team they are fitting into (yes this is sometimes require and then be prepared to remake the entire leadership team you just invested in)---never ever ever hire an A into a team.

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  4. Ben - great comment and words to live by. Will

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  5. I once heard a story that I think is appropriate. In the olden times, when arranged marriages where more accepted, a poor father who was marrying of his daughter stopped by the wise man of the town and told him that there were two potential suitors for his daughter, one was sweet and kind, but came from a terrible family and the other was mean and harsh, but came from a splendid family. He asked the wise man who he should pick for his daughter. To which the wise man said “who says you have to pick the lesser of two evils, wait for the sweet man from the good family to come along.”

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