My colleagues and I recently published an article in Strategic Entrepreneurship Journal which explores the relationship between the dynamics within a new venture team and the company’s ability to innovate. We reason that new ventures rely on innovations to establish a market presence and compete against established firms. Even though team members are an essential source of inspiration, ideas, and resources to foster innovation, teams often change substantially as the venture evolves. We ask the question—does modifying the make-up of the team make it more likely that the venture can innovate? We contend that such change significantly shapes the cognitive and interpersonal processes by which team members contribute to innovations. Our results suggest that new ventures undergoing member change can boost innovation in three ways: adding new members to the team with relevant experiences, taking advantage of opportunities to pause and reflect upon team processes in the wake of change, and mitigating the disruptive effects of change.

One figure that I think is enlightening from our work is considering a number of qualitatively different patterns of change in the management team. As the table below shows, in almost every case there is a net positive effect on innovation when these changes in team composition occur, but especially so when the factors for success described above seem to align.

A recent blog post draws upon this work and a fun interview I had with the author to explore these ideas a little futher.

The intent of this workstream is to better understand the interrelationship between top management team experience distributions, the pattern of competitive actions that a firm develops and executes, and the consequences for firm performance.

Our first investigation, set in the context of the 3D printing industry, has recently been published in the Academy of Management Journal. In short:

This study develops and tests a thesis derived from the law of requisite variety. We contend that the greater the experiential variety of a top management team, the more likely the complexity and consistency of the firm’s competitive repertoire will be calibrated to relevant external variety. In addition, for firms that achieve such calibrated repertoires, we expect that their financial performance will be superior to that of their peers. We then integrate these arguments and examine whether top management team experiential variety indirectly, through calibrated repertoires, contributes to firm performance. Analyzing hand-collected data for firms operating in the 3D printing industry over the past three decades (1986-2017), we find support for the overall thesis and associated hypotheses. The discussion section elaborates on the study’s contributions, limitations, and future research potential.

(Abstract)

One of the more interesting findings is that teams who are able to appropriately parlay their greater reserves of experiential variety into competitive repertoires that match the complexity of the environment receive a dividend in the form of enhanced performance. The Figure below sketches the effect that we find:

A copy of a recent presentation based on an earlier draft of that paper is located here.

If you would like further details about the study or the setting, feel free to contact me here: bfox [at] bentley [dot] edu.