Startups for Sale

By: Nathan McCall, Bennett Reeber, and Victoria Liew

    In today’s economy with more and more startup businesses constantly trading ownership, it has become more important for startup teams to understand what it takes to make a business appealing to potential buyers and venture capitalists. We can see this trend with high profile websites such as Tumblr and Instagram, both of which have been purchased for over $1 billion each within the past 2 years.

    A few of the factors necessary to building an attractive brand include knowledge of your customer, a unique model, passionate development, and exposure. According to Jayson DeMers: “Finding the right branding approach requires first understanding the target market.” [1] In the case of Instagram, the developers knew their target audience very well. They were able to identify that the majority of their users were mobile phone users so they built an interface that catered to those needs. Also according to DeMers: “Creating an identity within a niche doesn’t demand a revolutionary idea. It simply needs to have one special thing that separates it from the competition” and “[a] successful brand is the ability to reach consumers through multiple channels.” [1] This especially stands out with Instagram because the product they are providing doesn’t do anything revolutionary, but by allowing people to easily share photos and apply stylistic filters, they are providing the same features in a new way. Couple this with the fact that by the time of its sale the site had over 30 million unique users and one can see why a company such as Facebook might value this company as high as they did.

    One startup company which knew what it took to strike it rich was Tumblr. Recently acquired by Yahoo, Tumblr created an attractive interface which allowed users to express themselves through the process of “blogging.” Tumblr, created by David Karp, is currently worth over $800 million. With this startup company, Karp knew who his target audience was, and what he wanted to promote. He drew up a catchy design and outlook which would be aesthetically pleasing to bloggers, while allowing them the freedom to design their blog in whatever way they felt reflected themselves the most. In Tumblr’s case, the fact that each user’s blog reflected who they were as individuals created the uniqueness and no blog was identical to another. This proved valuable to Yahoo! who acquired Tumblr this past summer for $1.1 billion. Interestingly enough, in an interview with David Karp, he stated that  he wasn’t “expecting to sell the company this year, but a really remarkable opportunity presented itself”.[3] “When companies aren’t purchased solely for their engineering talent, a couple of equations come in to play “possible calculations were used to determine a valuation. The first requires exploring how much time and effort it would take to build the product from scratch and attract new users. The second is potential cash flow.” [2] With Tumblr, the site itself doesn’t generate a ton of revenue, however the value for Yahoo! lies in Tumblr’s roughly 140 million unique blog channels and over 85 million posts created each day. Through the acquisition of Tumblr, Yahoo! is providing itself with millions of additional users, which is necessary at a time when products such as Yahoo! Groups are losing market share to alternatives such as Reddit, Facebook, and Tumblr itself.

    Above are just a couple of examples of the dynamic economics that surround startups and web-based businesses today. The development teams and executives behind both Instagram and Tumblr managed to be highly profitable and were able to develop a brand that became highly desirable and successful.

In conclusion, with expanding online and mobile markets, it is easier than ever to create something small online that could turn into a multimillion dollar company.  With precision marketing and advertising, a large target audience receptive to what you are offering, and the desire to succeed, you too could create the next Twitter.

[1] See “The Top 7 Characteristics Of Successful Brands” by Jayson DeMers, http://www.forbes.com/sites/jaysondemers/2013/11/12/the-top-7-characteristics-of-successful-brands/

[2] See “Disruptions: The Logic (or Lack of It) in Appraising Start-Ups” by Nick Bilton, http://bits.blogs.nytimes.com/2013/04/07/how-deal-makers-put-a-value-on-start-ups-disruptions/

[3] See “David Karp: Why I Sold Tumblr” by Issie Lapowsky

http://www.inc.com/issie-lapowsky/david-karp-why-i-sold-tumblr-yahoo.html

Pricing Competitively in Today’s Tech Craze

By: Vishal Chollera, Shuntong Lei, Samantha Ramos, and Christina Zhu

In today’s tech gadget obsession, companies such as Apple and Google are able to provide an image of who they are by marketing to specific demographics. The fight to gain consumer’s interests, and more importantly, their money, is one of the top priorities of tech companies to show that their product is “cooler” than those of their competitors. In order to stand out from their competition, tech companies need to efficiently market their products to certain demographics by pricing competitively in context.

            A great example of this would be Google’s infamous product, Google Glass, a product that is designed to create smartphone-like visuals onto the consumer’s glasses, which will display useful information such as the time and weather, and even take pictures. However, where Google failed was not in delivering the brand image and product to Google’s target demographic of “16 to 24 year olds” with over “60% finding it appealing” (Bold). Google failed in effectively selling their product because of the high price tag that came along with it. When the price tag is high, Google and other tech companies are forced to sell their expensive, wearable tech to “an older, more affluent audience” (Bold). Instead of helping them sell their product, Google’s high price point has only limited them in their ability to effectively price their product to their consumers.

In an attempt to market to a less luxurious demographic, Apple designed the new iPhone 5c, which is a variety of their famous iPhone, but is a much cheaper version due to its plastic casing. By creating a less expensive product in their line of iPhone, Apple hoped to gain consumers who otherwise would not buy their product due to the expense. Along with the release of the 5c, Apple also announced the iPhone 5s, which is much more costly than the 5c. This way, Apple could seek to keep “those who would pay more without losing those who will only pay less” (Worstall). This strategy of marketing is referred to as positioning, wherein a company adheres to the needs of different subgroups in the market by providing more of a variety in products. However, where Apple went wrong is that they over-estimated the demand of this cheaper 5c product. Since its release, Apple has had to cut back on production on the 5c and increase production on the 5s (Worstall). This exemplifies that the average Apple consumer will not settle for less than the greatest product available at the time.

            However, from others’ perspectives, the iPhone 5c does have a great effect in selling the 5s. In the last several years, when Apple would release a new iPhone, they would still offer the old one with a reduced price. This year, however, the new strategy is that they offer a new iPhone 5c with colorful plastic case at a cheaper price altogether. The difference is that the iPhone 5c can stimulate people to an imagination and expectation that 5s is more powerful and beautiful. Therefore, “it’s no coincidence that this is when the company decided to unveil a gold case”(Thier). Besides, with people’s expectation, new technology of fingerprint identity and the high price of the 5s, Apple will not damage its high-end brand. As Dave Thier said in his article, “people have worried that a cheaper iPhone will ultimately damage Apple’s brand, but I think in a strange way, it actually reinforce it while picking up larger market share at the same time” (Thier).

Overall, it is clear that marketing is a vital process utilized by technological companies in promoting their products. In our modern society, there are constant advancements in fields of technology and companies, such as Apple and Samsung, who largely spearhead these developments. Apple recently hired Nike’s Fuelband designer, Ben Shaffer, triggering rumors of a possible iwatch in the market (Gamet). From this, it is visible that hiring the high profile designer itself may just be enough to enhance the value of Apple’s product, before it’s even released. However, competition in the industry is so stern that Samsung launched its own smart watch, entirely based on rumors that Apple would enter the market.

            From these articles, it is easy to conclude that marketing and pricing competitively is crucial to selling products effectively and capturing your target market’s imagination. Although it is not an exact science, and sometimes may backfire -- as seen with the Google Glass -- more often than not, it succeeds. Competitive pricing is vital to getting a customer’s attention, and perhaps more importantly, their money.

Works Cited

Bold, Ben. "Wearable Tech Such as Google Glass 'too Expensive' for Target Audience."Marketing.  N.p., 31 Oct. 2013. Web. 21 Nov. 2013.

Gamet, Jeff. "Apple Hires Nike’s Ben Shaffer, but He Isn’t a Wearable Tech Guy." The Mac Observer. N.p., 30 Sept. 2013. Web. 21 Nov. 2013.

Thier, Dave. "Apple's IPhone 5c Is Great Marketing For The IPhone 5s." Forbes. Forbes Magazine, 21 Oct. 2013. Web. 20 Nov. 2013.

Worstall, Tim. "Apple's Market Segmentation Difficulties With The New IPhones." Forbes. Forbes Magazine, 20 Oct. 2013. Web. 18 Nov. 2013.

What Makes an Innovative Workplace?

By Sally Cai, Thomas (Spencer) Kennedy, Nicki Padar, and Yuchen (Cloud) Guan

Critical to the ongoing success of any company is cultivating and maintaining an innovative and creative work environment.^[1] From the booming startups to well-established companies, it is important that companies foster a workplace that allows for the constant exchange of ideas and keeps an open mind so that employees can be in the right frame of mind.

A team’s workspace can be helpful or harmful to innovation. Usually, an office or cubicle is the main environment for work, but recently more and more companies have started to use innovative workplaces and offsite locations to foster innovation. In a company called Avado, people have joined them due to their team’s vision and mission, and at the same time want their offices to be another plus to the package. There are challenges that come with creating an innovative workspace for example, being able to satisfy all the different types of personalities of people. CoCo Minneapolis, a coworking space that provides companies with offices and meeting rooms has become a popular place for jumpstarting successful companies, including Zipnosis, a diagnostic site that contacts clinicians and patients online. CoCo can connect students to internships that will provide hands-on experience in the world of start-up companies.^[2]

Technology is now intrinsically intertwined with any company’s daily activities; it allows for easier, clearer, and faster communication, and is rapidly transforming company culture and is expanding the definition of what “a team’s workspace” actually is. The high connectivity technologically permits is even allowing for what is known as “virtual companies,” whose employees’ workplace is their home computer and work hours are flexible around family and social commitments.^[3] New companies that focus on culture—and how it affects employee happiness and productivity—have shifted the paradigm of what it means to work. By being more easygoing, encouraging employee bonding, and making sure employees take time off, new companies are cultivating creativity and paving the path to future innovation.

However, while new companies are springing up left and right, also important is to examine how and if larger, older companies are keeping up with the rapidly increasing rate of innovation in today’s business world. Tech giant Broadcom is regularly on Fortune’s list of fastest growing companies in this country, and with increases in revenue, employees, and assets, the principles that CEO Scott McGregor utilizes are invaluable to the study of innovation in companies. ^[4] Like in the new companies’ business model, extremely important to larger companies is to hire with multiple things in mind; not just a potential employee’s specialized skills, but also his or her aptitude with general business skills, like communication and critical thinking, and contribution to company culture. Also similar to the many startups, Broadcom has a geographically diverse workforce, and instead of trying to co-locate all employees, Broadcom takes advantage of the different time zones and cultures such that different teams around the globe can be working on the same project all throughout the day, increasing productivity and allowing for the sharing of new ideas. McGregor favors decentralization, favoring a more local, team-based approach, and believes that trying to control everything form the center discourages ownership.

It goes without saying that innovation is critical to staying competitive in today’s business world. While each company needs to assess its goals and build up company culture, it is evident that keystone to effective culture is communication. With this in mind, every company can work to create an environment more conducive to productivity and innovation.

[1] See 6 Ideas to Promote Innovation In Your Workplace This Year, By Christian Springub | 11:00 AM November 20, 2013, http://www.forbes.com/sites/theyec/2012/12/31/6-ideas-to-promote-innovation-in-your-workplace-this-year/

[2] 100 Cool Offices and Offsites Fostering Innovation, By Dave Chase | 11:00 AM November 20, 2013, http://www.forbes.com/sites/davechase/2013/09/17/100-cool-offices-and-offsites-fostering-innovation/2/

[3] 8 secrets of running a virtual company, By Corey Blake | 11:00 AM November 20, 2013, http://upstart.bizjournals.com/resources/advice/2013/09/27/creating-a-powerful-internal-community.html?page=4

[4] How Large Companies Can Stay Innovative: 5 Lessons from Broadcom, By Rob Asghar | 11:00 AM November 20, 2013, http://www.forbes.com/sites/robasghar/2013/09/23/how-large-companies-can-stay-innovative-5-lessons-from-broadcom/

LEADERSHIP AND DECISION MAKING: AN INDEX OF CORPORATE SUCCESS

By: Ryan Christophe Babida, Pranay Kejriwal, Jay Miyazato, and Shelly Zeng

At the head of any business or corporation, the executive(s) must guide his or her workers for the future scope for that corporation. Efficiency and profit maximization can be achieved depending on how these executives lead their employees. Thus, we can safely say that leadership is a very important aspect when it comes to a company’s success. We will analyze and compare two different types of leadership: directive and participative leadership. Directive leadership involves a hierarchical approach, where the chief executive has the most control over his subordinates. This form of leadership is great for workers who are inexperienced, as the higher ups of a business will be more knowledgeable. Participative leadership on the other hand features a more collaborative approach, where bottom-ups may present input to the executives.

Jeff Bezos, the leader, founder, and CEO of Amazon, seems to be following a rather directive approach when it comes to leadership and decision-making. Bezos seems to be the one issuing the orders for various departments. He has a high-level of involvement with his employees. Not everything is left to the experts. Be it a marketing strategy, a new product design or acquiring a new company, Bezos seems to be spearheading it all. [i] This may eventually make him fall prey to the so called “leadership traps” of control, consistency and competence but seems to be working just fine at the moment. Amazon is showing steady growth. His leadership style can be characterized as shrewd yet effective.

McDonald’s is one of world‘s largest chain of fast food restaurants. McDonald’s is run by participative leadership, in which all members of a team work together to achieve a common goal. In this case, the leaders and CEO of McDonald’s make decisions as a whole to make the corporation bigger and better. The corporation has remained one of the highest ranked in the fast food industry by implementing programs and strategies for human resources and leadership. In the article, the author talks about how McDonald’s makes strong corporate efforts in developing leaders within the corporation. [ii] McDonald’s gives many job and training opportunities for employees to develop their leadership skills and apply it in their job position. With this we can conclude that McDonald’s is a successful corporation because of its focus on participative leadership.

Apple also uses participative leadership by approaching innovation with a collaborative philosophy. The shift from Steve Jobs to the new CEO Tim Cook was rough for many Apple fans because their different philosophies regarding leadership. [iii] According to the article, “Tim Cook's Leadership Determines Whether Apple Hits $100 or $1,000 Next”, Arora explains that Apple may drift to a more participative, decision-by-committee environment. With Steve Jobs, Apple had a more authoritative, direct leadership. With the current CEO, Tim Cook, Apple uses a much more participative, collaborative approach. Managers within Apple would rely on shared decision making and use different branches of the companies in charge of a part of a large-scaled project. An example is with the new iPhone as Apple makes different departments of the company fully in charge of the new iOS7 and another department fully responsible for the design of the product. [iv]Although changes with leadership style within a small period of time can bring failure, Apple is still able to innovate with new products and is more importantly, still a successful “tech-giant” that many companies hope to follow.

Given these two methods of leadership, we conclude with our findings that neither method is particularly more superior than the other. Instead, the success of a business seems highly dependent on the innovative quality of its ideas rather than how the business is led. Both methods are not perfect by any means, but they both have their own unique strengths.

---

[i] An example of Directive Leadership. Amazon's Jeff Bezos: The ultimate disrupter, by Adam Lashinsky I 5:00 November 16, 2012

http://management.fortune.cnn.com/2012/11/16/jeff-bezos-amazon/

[ii] Observation of Leadership and Organizational Behavior at McDonald’s, by Eric Goldman, Tiago Santos and Sara Tully  l  9:00 November 09, 2008,

http://www.ericgoldman.name/non-technical/28-leadership/34-observation-of-leadership-a-organizational-behavior-at-mcdonalds

[iii] Tim Cook's Leadership Determines Whether Apple Hits $100 or $1,000 Next, by Nigam Arora || 9:50 October 12, 2011

http://www.forbes.com/sites/greatspeculations/2011/10/12/tim-cooks-leadership-determines-whether-apple-hits-100-or-1000-next/

[iv] Steve Jobs vs Tim Cook – If X worked the Y use a collaborative style?, by Sarah Baker |  October 23, 2013

http://www.righttrackconsultancy.co.uk/blog/2013/10/23/steve-jobs-vs-tim-cook-if-jobs-was-effective-with-x-then/

Investment Decisions - Future Beats Past and Present

by Evan Aylsworth, Desiree Torrecampo, Sarah Meechan, Fiona Ke

The stock market is increasingly being turned to as a means of primary investment because of the low interest rates caused by the economy. Although the stock market can provide a strong return on investment, many stocks can be interestingly “deceptive”. Meaning, a strong current and past quarterly profit period may not lead to a strong or high stock price. Contradictorily, a poor earnings report could still mean a high stock price. These examples can be displayed in three social networking stocks: Facebook, Twitter, and LinkedIn.

Facebook is the most widely used social network in the world with over 1 billion users. It has multiple sources of revenue but most comes from displaying advertisements.

This past quarter, Facebook’s overall revenue increased by 60% compared to last year. With this of earnings report, one would expect the stock price to drastically increase especially considering that Facebook beat analysts’ estimates for the quarter as well. Yet despite these positive signs, Facebook’s stock actually decreased after this earnings report because of news saying that less teens are using Facebook[1].

A large part of Facebook’s user base is teens and young adults. With these numbers declining signals investors to be cautious about buying Facebook’s stock.

Present and past successes have little weight, if any at all, on the decisions made by investors. Investing is based on where the company is heading in the future, not where it is or where it was.

This is why Facebook’s stock is increasingly becoming more bearish and declining since the information on declining teen usage was released[2].

Twitter is a widely used and growing social network and micro-blogging site where users post text message-like blurbs about almost anything. Like many other social networks, Twitter makes its profit through advertisements[3]. In a world that is immersed in its mobile devices, Twitter proves to be a promising investment.

What sets Twitter apart from other social networks is its highly successful mobile platform. With the development of smartphones and tablets, Twitter users are even more capable of tweeting on the go. 75% of Twitter users access its network through their mobile devices[4]. In 2013, Twitter made 65% of its revenue from mobile devices alone. Investor confidence in Twitter was clearly displayed when Twitter opened at $45.10 a stock and reaching a high of $50.09.

However this high stock price is backed on promise alone. Twitter is actually constantly losing money, and has not turned a significant profit[5].  Regardless, investors still believe Twitter will be successful in the future.

LinkedIn is proving itself to be large competition in leading social networking sites as it closed its first day in 2011 on the NYSE at an unbelievable 109% above its opening price of $45. LinkedIn is based largely on professional networking, created so that potential employees could exchange resumes and information with companies.

Its potential for success is shown through its profits, and after its first day on the stock exchange, showed an estimated worth of $9 billion[6]. Investors though, show concern that these high numbers may be suggesting that LinkedIn is enjoying a “tech bubble”, where like during the time of the “dot com boom “, companies related to the Internet sector experienced such rapid rises in profits and investor pricing. Now, two years later after its first opening day, investors
are still hopeful for the company despite what stocks are proving.

Recently,” LinkedIn’s results... showed a net loss of $3.4 million” but “...shares rose 1.7% in regular trading”[7]. This just goes to show that with large, popular companies such as LinkedIn, stock prices and worth don’t necessarily have to correlate steadily with company worth-a risky fact for investors in such companies.

LinkedIn’s IPO is $45 per share, higher than both that of Twitter and Facebook. The stock of LinkedIn has experienced an incredible run this year. Last quarter, LinkedIn’s revenue surged 59%, while its profits reached $44.5 million from $18.1 million last year. Facebook, looking forward to get more profits from ads, plans to sell more than $5 billion in mobile ads next year and has a current valuation of $120 billion. Facebook expects the company to report sales of $10.4 billion next year, up 36% from an average estimate of $7.6 billion for 2013. Twitter twice raised the price of its 70 million-share offering, to $26, giving it a market valuation of $18.3 billion, making it one of the largest tech IPOs in 10 years. According to Wall Street's projection, Twitter’s revenue will rise 53% next year, faster than LinkedIn's expected growth of 42% and Facebook's, at 36% ^[8].

---

[1] Nakaso, Dan, and Brandon Bailey. "Facebook third- quarter revenue surges 60 percent." San Jose Mercury News 30 Oct. 2013. Web. <http://www.mercurynews.com/business/ci_24419933/facebook-third-quarter-revenue-surges-60-percent>.

[2] Market Watch the Wall Street Journal. N.p., 20 Nov. 2013. Web. <http://www.marketwatch.com/investing/stock/fb>.

[3] Gadkari, Pia. "How does Twitter make money?" BBC 6 Nov. 2013. Web. <http://www.bbc.co.uk/news/business-24397472>.

[4] Barr, Alistair. "Twitter soars 73% in stock market debut." USA Today 7 Nov. 2013. Web. 21 Nov. 2013. < http://www.usatoday.com/story/tech/2013/11/07/twitter-stock-market-debut/3459711/>.

[5] Goel, Vindu, and Michael J. De La Merced. "Twitter reports sharp rise in revenue." 15 Oct. 2013. Web. 21 Nov. 2013. <http://dealbook.nytimes.com/2013/10/15/twitter-picks-n-y-s-e-for-its-stock-listing/>.

[6] Baldwin, Clare, and Alina Selyukh. "LinkedIn share price more than doubles in NYSE debut." 19 May 2011. Web. <http://www.reuters.com/article/2011/05/19/us-linkedin-ipo-risks-idUSTRE74H0TL20110519>.

[7] Anders, George. "LinkedIn's Growth Stays Strong, But Stock Zigzags On Outlook." Forbes 29 Oct. 2013. Web. <http://www.forbes.com/sites/georgeanders/2013/10/29/linkedin-stock-keeps-climbing-on-strong-financial-growth/>.

[8] Shinal, John. "Twitter valuation pricey compared to Facebook, LinkedIn." USA Today 6 Nov. 2013. Web. 21 Nov. 2013. <Twitter valuation pricey compared to Facebook, LinkedIn>.

Fraud in Marketing – More Common Than You Think

By: Pouneh Aghababazadeh, Melody Hsia, Yalan (Mary) Luo,  &Tian (Jason) Tan

Marketing is an important and vital part of any successful company, business, or organization that wants to generate revenue. Any product that a company wants to market must go through a process that includes new product development, product enhancement, sales, distribution, and pricing. Though each step of the process is crucial, advertising and promotion are probably the most significant, since it is the only way in which a product may be broadcasted and shown to the public. With this option, however, many businesses may choose to alter their product advertisement in an effort to trick the consumer audience into purchasing their product. This kind of fraud and deception in the advertising world is unfortunately extremely common, with detrimental effects- to the business and the consumer.

Fake advertising can be found from small to large scale businesses, and even to educational institutions. Even from humble and community-driven business opportunities like the farmer’s markets, a recent article reported that farmers had been lying about where their produce was grown and if it was harvested with or without pesticides. One of the farmers tried selling broccoli that he had purchased from a wholesale producer and then claiming that he had grown it organically himself.  “Lampman asked Uriostegui to show him where he was growing broccoli, but all the farmer could show him was a patch of dry dirt” (nytimes.com). Many farmers may also claim that their produce was grown without pesticide methods, but when asked how, they had no viable response. These farmers attempted to tack on information about their products that they knew consumers would be attracted to.

Marketing scams may often include exaggerating or overly praising the ability of a product. One of the main drugstore Beauty businesses, Rimmel, was also recently filed with marketing fraud due to a decepting mascara ad.”According to the complaint ... the company’s ‘grow lash claim is false, misleading, and reasonably likely to deceive the public’” (lexology.com). These makeup advertisers also attempted the same thing the farmers did- attempting to convince consumers of a false misconception of their product.

Even education institutions like colleges and universities often falsely advertise accreditations and opportunities in an effort to lure students into attendance. Recruitment officers may give off a  “false sense of their future career prospects” and may even “cost taxpayers money when an inordinate number of such students default on their student loans” (myquitamlawsuit.com).

Fraud and deception are rampant in society today and are present in a variety of different scale operations. These advertising scams are detrimental to a company or establishment’s reputation and jeopardizes producer-consumer trust. Advertisement and promotion are key components in marketing as well as business as a whole- that place significant effects on revenue.

http://well.blogs.nytimes.com/2010/09/24/deception-at-the-farmers-market/?_r=0

http://www.lexology.com/library/detail.aspx?g=70695feb-7e2f-415a-ad5a-d15fc5a339ff

http://www.myquitamlawsuit.com/index.aspx?id=education_fraud_fraudulent_marketing

Personality Paradoxes – by Kimberly D. Elsbach

Personality Paradoxes – by Kimberly D. Elsbach

Personality is commonly defined by five traits – what are call the “Big Five” personality traits. [1] These traits have been shown to be predictive of life outcomes, and include: (1) Openness to experience – a person’s degree of intellectual curiosity, creativity and a preference for novelty and variety, (2) Conscientiousness –a person’s tendency to show self-discipline, act dutifully, and aim for achievement, (3)  Extroversion –a person’s tendency to have high energy, positive emotions, urgency, assertiveness, sociability and seek stimulation in the company of others, (4) Agreeableness –a person’s tendency to be compassionate and cooperative rather than suspicious and antagonistic towards others, and (5) Neuroticism– a person’s tendency to experience unpleasant emotions easily, such as anger, anxiety, depression, or vulnerability. 

When constructing a team, it’s often a good idea to find people with the right personalities for the team task.  For example, if you are putting together a team to develop creative ideas for improving your customer service, you might start by finding people who appear to have high openness to experience and high extroversion.  By contrast, if you were putting together a team to de-bug a software program, you might look for people who were high on conscientiousness.  These choices seem intuitively right.

But it turns out that intuitive ideas about personality traits and team composition are not always correct.  Recent findings suggest that some personality traits may benefit teamwork in counter-intuitive ways.  For example, recent research on innovation in teams has shown that the most innovative teams are those that have at least some conformists (i.e., people low on low on openness to experience). [2] Specifically, creative teams that have 10-20% conformists are the most innovative.  This is because too many creative members can be disruptive to a team (i.e., they don’t like to follow rules), but conformists help keep the team on track and make sure the team doesn’t disintegrate into bickering.

Another non-intuitive finding about personality and teams relates to team leaders.  When identifying people who are good prospects for leading teams, you might think that a person high on extroversion (i.e., someone who is outgoing and likes being around others) would be the right choice.  Yet, recent research findings suggest that introverted leaders might actually be a better choice in some situations.[3]  In particular, when leading a team where other members are proactive and have some expertise (e.g., working in a restaurant where all of the staff provide suggestions on how to improve service), introverts may actually outperform extroverts in terms of motivating team productivity.  The reason is that introverted leaders are more likely to listen to others and carefully consider and implement their ideas.  By contrast, extroverted leaders are less likely to listen to others’ ideas and may even be threatened by the prospect that others have better ideas than they do.

In a related manner, business professionals have recently reported that top performing sales teams are often those that have members who are low on “gregariousness” (i.e., preference for being with other people and friendliness) – which is related to extroversion.[4]  In this case, the reason that too much extroversion gets the sales team in trouble is that it leads to lower levels of perceived dominance by prospective customers .  That is, perceiving a salesperson as a “regular” person may lower your perceptions of him/her as a dominant expert, and in turn, may lower your willingness to follow his/her advice.

Together, the above examples illustrate the complexities of personality and the importance of understanding team environments when considering personality in team construction.  The right person for the job is not always as obvious as it might seem.

[1] See Judge, T. A., Higgins, C. A., Thoresen, C. J. and Barrick, M. R. (1999), The big five personality traits, general mental ability, and career success across the life span. Personnel Psychology, 52: 621–652.

[2] See Why Conformists Are a Key to Successful Innovation, by Ella Miron-Spektor  |   9:00 AM October 2, 2013, http://blogs.hbr.org/2013/10/why-conformists-are-a-key-to-successful-innovation/

[3] See The Hidden Advantages of Quiet Bosses by Adam M. Grant, Francesca Gino, and David A. Hofmann, http://hbr.org/2010/12/the-hidden-advantages-of-quiet-bosses/ar/1

[4] See Seven Personality Traits of Top Salespeople, by Steve W. Martin  |   9:10 AM June 27, 2011, http://blogs.hbr.org/2011/06/the-seven-personality-traits-o/