Most entrepreneurs agree that building a business starts with a motivated leader and a good idea – one that solves a problem and creates real value for customers. The next steps are usually tactical: writing a business plan, building a prototype, testing the idea, getting access to capital and setting up efficient processes.
While all of these elements are important for a sustainable business, they miss the most critical piece – people. And it’s not just finding people with the right experience or background. Building a business requires much more than that. It requires finding people with an entrepreneurial mindset; with a leader’s mindset.
Peter Drucker, the iconic father of modern management, characterized the difference between management and leadership, saying, “Management is doing things right; leadership is doing the right things.”
The challenge when building your team is that the behaviors that make someone an effective manager are often in conflict with those required to build a business from scratch. To identify leaders with an entrepreneurial mindset you need to change your approach to hiring.
1. Play down the resume.
Use a candidate’s resume as a mere starting point. Go ahead and touch on the basics, but more importantly, seek out something that you have in common to start a real conversation. Your goal is to get to know who candidates are and how they think rather than what they’ve already done. Odds are, their resume focuses on their skill set. You want to understand their mindset.
A resume may get someone an interview, but it’s their mindset that enables them to solve problems.
2. Apply the UFO test.
The UFO (uncertainty, failure, ownership) test is a great way to get a sense for how candidates think and how they’re likely to respond to the challenges inherent to starting a business.
With regard to uncertainty, ask the candidate to solve a problem in real time. Not a technical problem, but a thinking problem. For instance, ask them: “How many barbers are there in New York City?” Then have them talk you through how they would figure it out. (You can have a whiteboard on hand, too, if you like.) How they respond is a good indicator of how they deal with the unexpected — a predictable occurrence when building a business. Keep in mind that you’re not looking for the correct answer. You’re looking for the ability to tackle problems, and the uncertainty that comes with them, in the moment.
With regard to failure, ask candidates to describe a profound professional failure and what exactly they learned from it. (Warning: You may need to nudge them.) Their “lessons learned” provide insight as to how effective they are in dealing with disappointments and risks, as well as their ability to be introspective and self-aware. They also tell you how well they’re likely to learn from any failures to come and, likewise, about their resilience and temperament.
With regard to ownership, look for something on candidates’ resumes that shows they were part of an organization that ran into business trouble. It could be a bankruptcy, a corporate scandal, a collapse in market share, a disastrous product launch or the like. Then ask them why they didn’t do more to prevent that problem. They’ll probably say that wasn’t their job, but keep pushing them. They should be able to come up with at least something they personally could have done. You’re looking for someone willing to do what it takes to help a company succeed, and not merely what is in their job description.
When building a business, you need people who will go above and beyond their stated responsibilities. Identify those who can work with uncertainty, embrace failure and take ownership of outcomes.
3. Spot non-resisters.
Entrepreneurs naturally push for more and better, and never settle for “good enough.” Conversely, a candidate’s long tenure at a large company can be a red flag. Big corporations may be full of great managers, but they rarely know how to build a business from scratch. They understand how to operate within the system, but have no idea how to actually create the system. To linger in a large organization for a long time usually means accepting the system, not actively resisting it or pushing for something better. And that’s anathema to entrepreneurs.
Those who excel inside systems will struggle to create them. And when building a business, you need people that can create.
4. Beware candidates seeking titles.
When all is said and done, building a business is hard work. Those who succeed at it understand that recognition comes from the accomplishment, not a title or a position on an org chart. In fact, by and large, the best entrepreneurs don’t even think of themselves as “entrepreneurs.” Instead, they see themselves as being good at coming up with solutions to problems that create value for others, and sometimes even society at large. Real entrepreneurs, in other words, can’t be bothered with titles. They’re too focused on what they’re doing today to make the business more successful tomorrow.
People on your team should not be looking for validation in their job title. They will find validation in solving big problems.
Hiring, to be sure, is an imperfect science. But if you’re serious about selecting talent to help you build your business, turn tradition on its head and focus on mindset, not skill set. Only then will you find true entrepreneurs.
Chuck Swoboda is Innovator-in-Residence at Marquette University, President of Cape Point Advisors and retired Chairman and CEO of Cree, Inc. He is co-inventor on more than 25 patents covering LEDs and lighting technology, and has over 30 years of experience in the technology business. Additionally, he is an author, speaker and host of the “Innovators on Tap” podcast. His new book is “The Innovator’s Spirit: Discover the Mindset to Pursue the Impossible” (Fast Company, May 5, 2020).