The Role of Behavioural Science within Founders’ decision making — 2. Why Human Capital should be treated as the main assets for Start-ups.
Author: Kavedon Kapital Behavioural Science Team
This is the second in a series of articles that Kavedon Kapital Behavioural Science Team will release periodically.
Seeing the importance of Human Capital
An organization is often said to only be as good as its people. We probably both agree that ‘Human Capital’ plays an important role within Start-ups, right? However, when things come to terms, the importance of people is often subjective. The thing is, not everybody wants to, or knows how to invest in their people. Because, let’s be honest — people can be a tricky business. Behaviour is not straightforward like an equation, or a law. We, people in general, like things to be easy and straightforward. Therefore, we are subjected to biases, they help us navigate through the jungle of people, behaviour and communication. As a Founder it requires effort, work and getting out of your comfort zone to understand people and to guide them well. So, if it is such a hassle, why should you bother?
Reach of Human Capital
The answer is quite clear; without the right people, you can’t build a healthy Start-up. But who are the right people? Of course, it is important to look at education, skills and knowledge. However, it is essential to look at other subjects such as their mindset, a (long term) vision and personality. Creating a diverse team based on these different factors mitigates tunnel visions (and thus the risk of failure) and creates an opening for innovation. Taking the time hiring people is crucial since they are the foundation of your Start-up. This investment time will pay out eventually since the early team members will transfer the desired culture, values and behaviour to new employees. Eventually, this reinforces the desired behaviour which gets passed onto the next team members. It’s like a magic positive circle.
There is more
Maybe you still struggle to see the “real” added value as yet. Well, positivity leads to motivated people which increases productivity and by that, profitability. Also, job satisfaction provides more advantages, namely, better problem solving, lower absenteeism, greater self-regulation, enhanced creativity, and lower turnover, just to name a few. That does not mean it is easy to establish job satisfaction, particularly since it is influenced by (task) complexity, stress and uncertainty (rapidly changing) contextual factors. The good news is that Founders do have an impact on the level of positivity within the team, even in stressful situations. Investing in your team makes them more resilient, creative to overcome challenges and keeping a positive mindset.
So how do you make sure you are doing the right things? One of the most important factors with building teams, is trust. Leading by example is the best way to gain trust as a Founder: talk the talk, walk the walk.
As a Founder you not only have to be aware of the desired behaviour you want, but also gain insight in your own way of thinking and judgement. Kavedon’s behavioural science team work with Founders from day 1 to understand their decision making, adopting a process of continuous improvement and identifying potential behavioural biases which could impact future decision making. Most importantly though, we don’t believe individuals can overcome biases through education alone. The critical ingredient here is identifying practical steps to overcome biases, which is central to our Circular Economics philosophy of building value the first time we work with our Founders.
If you are an Investor realising the importance of switching to a Venture Capital model built on Circular Economic principles, get in touch with us to learn more about how Kavedon Kapital can help.
Our deal room is also open, so all high tech early stage Founders please head over to this page to submit your deck.