The Relevance of HR in Early Venture Buildup

by Lisa Raschke

Together with our internal and external experts, we want to take the opportunity to share our insights and learnings on business buildup in Chemovator: for corporates and startups. In the frame of our Entrepreneurship Program, where we teach our ventures relevant skills for turning ideas into businesses, Lisa shares her view on the relevance of human resources.

According to an analysis of CBInsights, the reasons for startup failure are diverse and vary greatly. But did you know that nr. 3 of the top reasons to fail is the team itself? Those of you who thought it's the competition or the business model might wonder: How can such an obvious component account for the failure of about 23 percent of all startups?

Frankly speaking, there are many reasons. Only to mention a few: team constellation, skills, resilience, motivation or a common culture. And, just to make my point clear, many other top reasons for failure can be prevented with a great team. HR topics are the most underestimated value driver in early venture development. Remember: 23 percent.

Luckily, there are as many reasons for failure as there are many possible ways to prevent it. For instance, in Chemovator - the incubator of BASF, we developed an Entrepreneurship Program, teaching intrapreneurs the essentials of business buildup: from legal to branding, from finance to product development. One of the modules is about “HR & Teams”. We also encourage our Venture Teams to learn from experienced external founders and experts, like our Entrepreneurs in Residence, to decrease the likelyhood of making the same mistakes that they have already made and observed in their prior career.

What makes teams “better”, if we assert some of the top reasons for failure can be prevented with a great team?

There are many influencing factors - soft and hard ones. I could talk a lot about hard factors, such as recruiting service providers, managing contracts or absence. What I decided to focus on instead, is probably just as underrated as HR itself: It's the culture. Culture usually entails many dimensions. We constrain ourselves to the most important lessons learned from our experience with the startup and corporate ecosystems we operate in.

To provide an overview on all HR relevant topics, the Engagement Bridge by Glenn Elliott & Debra Corey can support you as a valuable tool. Every entrepreneur should bear a structure of this kind in mind, if he or she wants to travel along a successful venture journey. Wellbeing, workspace, pay and benefits are the important underpinning elements, but there are seven other highly relevant elements. You can't handle all elements with the same effort at the same time. But, the quote I like the most from Glenn Elliott can help you to prioritize:

“The most important thing you can do as a leader is to take action. Today. Right now. So start where you can make the biggest impact the fastest.”

The following top 5 best practices, shared by our Entrepreneur in Residence Tanja Bogumil, can be used as the first food for thought to start immediately. Don't hesitate to contact us for more information. We're also happy to discuss with you.

• Working culture: Establish a working culture from day one by creating habits. Might be hard work in the beginning, but it's a true game changer in the long run.
• Transparency: Find your way between moderated and radical transparency and then behave consistently.
• Skillset: Who are the best people to hire for a venture? The best employees are versatile in mindset and skills. Successful teams recover quickly from blows.
• Functions & roles: Recruiting is the key, so let functions follow people. First who, then what. Use environment-based thinking instead of experience-based thinking: Where to hire from?
• Ecosystem: Find your community outside your venture team and your common ecosystem to overcome hard times – because being an entrepreneur can be lonely from time to time.

Use the early stages of your venture to set up the basis for your company culture. It becomes increasingly harder to change something later along your venture journey that already became a habit. Do it now!

If you want to learn more about HR and team topics (there is so much more to it, believe me) within startups and corporates or if you do not believe in the value of soft factors for managing HR in the early stage of a venture, we suggest reading (at least one of) the following books:

• Build it – The Rebel Playbook for World-Class Employee Engagement by Glenn Elliott & Debra Corey
• Good to Great – Why some companies make the leap … and others not by Jim Collins
• The hard thing about hard things – Building a Business When There Are No Easy Answers by Ben Horowitz

Here in Chemovator, we really place emphasis on HR topics. The next step of our module "HR & Teams" entails a workshop for deep diving into the different personalities of our founding teams to get to know and understand each other better. This also helps to understand and identify missing competencies to create successful and diverse teams.

Sounds simple and I bet lots of you think "Well, I already did that a thousand times, it's always the same".

Then I have a great advice for you: Leading a venture or any kind of team, even just working in one, you know there is and always will be people surrounding you. You work together towards a united goal (at least that's how it should be). They rely on you. They support you. And, they trust you. It's a people's business - and people change, people have different roles, people adapt and develop or the other way around. So, it is and never will be the same people you engage with, the same stories you hear or the same learnings you make. It's never the same.

If you want people to perform as a team, you have to give them the chance to grow together as a team. Culture is the fundament making this process possible – in good and bad times.

I hope I could spark some inspiration in you to get started right away!

I also have some questions for you: What is your biggest challenge or concern when it comes to managing HR?
In your experience, what does work best, what doesn’t at all?

Get in touch with me lisa.raschke@chemovator.com or comment on our social media postings.

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