The more you look at reverse mergers the more you start to understand that reverse mergers compare favorably with the classic venture capital model for venture funding.

Venture funding is obviously key to the success of any new or growing venture. The classic venture capital model seems to work like this: The entrepreneur and his team formulate a business plan and try to get it in front of a venture capital firm. If they are well connected, they may succeed, but most venture capital firms are overloaded with funding requests.

If the entrepreneur is not in a business that is the latest fad among venture capitalists, he may not be able to find funding.

If the entrepreneur is very lucky, he will be invited to pitch the VC. If the venture survives this trial, it will receive a venture capital terms sheets. After prolonged and adversarial negotiations, a deal is struck and the venture company signs hundreds of pages of documents. In these documents, the entrepreneur and his team give up most of the control of the company and usually most of the equity in the deal. Their stock is locked up and if they want to sell to get some cash, they probably have to offer the buyer to the VC first. Time from start to finish – 90 days or more.

If the company needs more money, it must negotiate with the VC and the entrepreneurial team may lose ground in the deal. The company may have to reach certain set milestones to get funds. If the company falls behind of schedule, it may lose equity share.

As the venture develops, the venture capitalists may or may not add value, and most likely will second-guess the entrepreneur and his team. If the venture succeeds, the venture capital firm will reap most of the rewards. If the venture does not succeed, most of the capital will be lost forever. Some ventures wind up in the land of the living dead – not bad enough to end, not good enough to succeed.

Worst case scenario, the venture capitalists take control at the outset, become dissatisfied with management, and oust the original management which loses most of not all of their position and their jobs.

The Reverse Merger Model

The entrepreneur finds a public shell. He has to come up with some cash to do this and pay the legal and accounting bills.

He buys control and merges into the shell on terms he determines. He keeps control but he has the burdens of a public company.

He determines how to run his company, including salaries. He can offer stock options to attract talent. He can acquire others companies for stock. He determines when he cashes out.

Instead of having to report to the venture fund, he has to report to the shareholders.

Subject to the limitations of the securities laws, he can sell part of his stock for cash.

He can seek money whenever he wants; he is in control.

Problems: He may be attacked by short sellers. He may buy a shell with a hidden defect. He has to pay for the shell.

From the Investors’ Point of View

Venture capital funds are typically funding by institutional investors seeking professional management. They do not have the time to manage a number of small companies and delegate this task to the venture capital partners. Small investors are rarely permitted. Venture capital funds allow the institutional investors to diversify.

Venture capital fund investors are locked in over a period of years. If they make 30% per year returns, they have done very well.

The venture capital model encourages the venture capital firm to negotiate hard for a low price and harsh terms. A venture team seeking funding that knows it has a big future may not submit to such terms. However, for a weak company that is just looking to collect salaries for a few years before folding, in other words a company that is a bad investment, can accept any terms, no matter how harsh. Thus, the venture capital model is skewed toward selecting out the worst investments and repelling the best.

Small investors can buy stock in reverse merger companies. They must take the time to investigate these companies but may lack the resources to do so intensively. Most small investors lose money. If they win, they can win big. They can, if they choose do so, diversify their investments. They have no influence on management, except to sell when they are displeased.

Summary

The reverse merger model compares very favorably with venture capital. Whereas venture capital is perpetually in scarce supply, reverse mergers are always out there for any company that can interest investors. The company can usually raise money on better terms from the public than from venture capitalists.

Overall, the big advantage of the reverse merger is that the company has total control over its destiny. The team can be assured of being rewarded well for success. The company sets the terms, can sell stock whenever it sees fit on whatever terms it merits, the insiders can sell too, and the venture team is not second-guessed by amateurs in their field, and the venture team does not have to fear losing equity or jobs.

Another advantage is less risk to the investor. The investor is in a publicly trading stock. If the investor does not like what is happening, he can sell. He may sell at a loss, but he can get out. The investor can also pick and choose companies himself, instead of

Debt Capital

What is debt capital? Well, you can think of debt financing as a loan from a bank that you have to pay back with interest. In reality, that’s exactly what debt capital is. Many entrepreneurs often resort to getting some debt financing to start their business. Debt capital, depending on its size, can be obtained from your regular bank or if it is a large sum of money, you might have to go to a special bank known as an investment bank. As far as the investor who is giving you the debt capital is concerned, debt financing is a much lower risk investment compared to equity capital. This is because debt capital is funding that is lent to you, just like as if you are taking a loan out for a car or a mortgage on your home.

What is the interest rate on debt capital? In most cases, when in investor who invests debt capital to a budding company, he expects to make at least ten percent off of the sum that was invested into a given company. Furthermore, debt financing is usually given to those entrepreneurs, who the investor believes is most likely believes will pay the debt off in due time.

Equity Capital

Equity capital, on the other hand, is different because unlike debt capital; you do not need to pay anything back to the investor. Equity capital is funding that practically every company gains as its business grows. Equity is usually invested out of a particular fund and is classified as either private equity and venture capital.

Private Equity and Venture Capital

Basically, private equity is an equity fund that belongs to either privately owned institutions or private individuals. Usually private equity is invested by institutional investors, who are people that specialize in investing private equity from such institutions. Institutional investors usually work for a private equity or PE firm that manages private equity. Venture capital is also private equity but is managed slightly differently than private equity. Venture capital is actually private equity that is usually reserved for investments to companies that have the potential for high growth.

For those of you who need financing and do not want to have to worry about debts, you would like to have some kind of equity capital, be it private equity or venture capital. This funding is much better than debt capital, because unlike debt capital, you do not have to pay the investors back. Instead, with equity funding, an investor makes money when a company cashes out. This usually means that when a company is bought by another company or is prepared for public offering, that is when equity firms make their money. The other side of the coin, however, equity capital is a much more risky investment for the investor than debt financing, because with equity capital, an investor makes money only with a buyout, initiate public offering or IPO, or an exit strategy.

Investors

As mentioned before, there are different investors and investing institutions. Some investors are wealthy individuals who invest their own money to entrepreneurs whom they like, whereas others work for institutions, such as private equity or venture capital firms and invest money from their institutional funds.

Angel Investors

Angel investors are wealthy private individuals who invest their money into a given entrepreneur for whatever reason. Some angel investors invest in a particular company because they might like that particular entrepreneur or feels charitable and wants to share their own entrepreneurial experience with other budding entrepreneurs to get on their feet. Other angels might invest in a company because a particular company might fit into that angel investor’s values, ethics, or other personal interests. If you have a wealthy relative and he invests in your company simply because he wants to help out a member in his family, he is also an angel investor.

Venture Capitalists and Institutional Investors

Unlike angel investors, venture capitalists and institutional investors do not invest their own money. Institutional investors usually work for a private equity firm and invest equity from funds that are usually parts of a pension fund or other types of funds. Venture capitalists are investors who solely invest in venture capital and work for venture capital firms.

Where Does the Money Come From?

Well, that is a good question. In the case with most successful private equity and venture capital firms, the money for investments comes from venture funds that these firms have raised. When a venture capital or private equity firm is successful with their investments, they are able to raise new funds for future investments. Again, as mentioned before, equity investors cash in on their investments when a company is liquidated by either being bought out from another company, etc.

How Do You Contact Investors?

Professionally managed venture capital firms generally are private partnerships or closely-held corporations funded by private and public pension funds, endowment funds, foundations, corporations, wealthy individuals, foreign investors, and the venture capitalists themselves.

Venture capitalists generally:

- Finance new and rapidly growing companies;
- Purchase equity securities;
- Assist in the development of new products or services;
- Add value to the company through active participation;
- Take higher risks with the expectation of higher rewards;
- Have a long-term orientation

When considering an investment, venture capitalists carefully screen the technical and business merits of the proposed company. Venture capitalists only invest in a small percentage of the businesses they review and have a long-term perspective. Going forward, they actively work with the company’s management by contributing their experience and business savvy gained from helping other companies with similar growth challenges.

Venture capitalists mitigate the risk of venture investing by developing a portfolio of young companies in a single venture fund. Many times they will co-invest with other professional venture capital firms. In addition, many venture partnership will manage multiple funds simultaneously. For decades, venture capitalists have nurtured the growth of America’s high technology and entrepreneurial communities resulting in significant job creation, economic growth and international competitiveness. Companies such as Digital Equipment Corporation, Apple, Federal Express, Compaq, Sun Microsystems, Intel, Microsoft and Genentech are famous examples of companies that received venture capital early in their development.

Private Equity Investing

Venture capital investing has grown from a small investment pool in the 1960s and early 1970s to a mainstream asset class that is a viable and significant part of the institutional and corporate investment portfolio. Recently, some investors have been referring to venture investing and buyout investing as “private equity investing.” This term can be confusing because some in the investment industry use the term “private equity” to refer only to buyout fund investing.

In any case, an institutional investor will allocate 2% to 3% of their institutional portfolio for investment in alternative assets such as private equity or venture capital as part of their overall asset allocation. Currently, over 50% of investments in venture capital/private equity comes from institutional public and private pension funds, with the balance coming from endowments, foundations, insurance companies, banks, individuals and other entities who seek to diversify their portfolio with this investment class.

What is a Venture Capitalist?

The typical person-on-the-street depiction of a venture capitalist is that of a wealthy financier who wants to fund start-up companies. The perception is that a person who develops a brand new change-the-world invention needs capital; thus, if they can’t get capital from a bank or from their own pockets, they enlist the help of a venture capitalist.

In truth, venture capital and private equity firms are pools of capital, typically organized as a limited partnership, that invests in companies that represent the opportunity for a high rate of return within five to seven years. The venture capitalist may look at several hundred investment opportunities before investing in only a few selected companies with favorable investment opportunities. Far from being simply passive financiers, venture capitalists foster growth in companies through their involvement in the management, strategic marketing and planning of their investee companies. They are entrepreneurs first and financiers second.

Even individuals may be venture capitalists. In the early days of venture capital investment, in the 1950s and 1960s, individual investors were the archetypal venture investor. While this type of individual investment did not totally disappear, the modern venture firm emerged as the dominant venture investment vehicle. However, in the last few years, individuals have again become a potent and increasingly larger part of the early stage start-up venture life cycle. These “angel investors” will mentor a company and provide needed capital and expertise to help develop companies. Angel investors may either be wealthy people with management expertise or retired business men and women who seek the opportunity for first-hand business development.

Investment Focus

Venture capitalists may be generalist or specialist investors depending on their investment strategy. Venture capitalists can be generalists, investing in various industry sectors, or various geographic locations, or various stages of a company’s life. Alternatively, they may be specialists in one or two industry sectors, or may seek to invest in only a localized geographic area.

Not all venture capitalists invest in “start-ups.” While venture firms will invest in companies that are in their initial start-up modes, venture capitalists will also invest in companies at various stages of the business life cycle. A venture capitalist may invest before there is a real product or company organized (so called “seed investing”), or may provide capital to start up a company in its first or second stages of development known as “early stage investing.” Also, the venture capitalist may provide needed financing to help a company grow beyond a critical mass to become more successful (“expansion stage financing”).

The venture capitalist may invest in a company throughout the company’s life cycle and therefore some funds focus on later stage investing by providing financing to help the company grow to a critical mass to attract public financing through a stock offering. Alternatively, the venture capitalist may help the company attract a merger or acquisition with another company by providing liquidity and exit for the company’s founders.

At the other end of the spectrum, some venture funds specialize in the acquisition, turnaround or recapitalization of public and private companies that represent favorable investment opportunities.

There are venture funds that will be broadly diversified and will invest in companies in various industry sectors as diverse as semiconductors, software, retailing and restaurants and others that may be specialists in only one technology.

While high technology investment makes up most of the venture investing in the U.S., and the venture industry gets a lot of attention for its high technology investments, venture capitalists also invest in companies such as construction, industrial products, business services, etc. There are several firms that have specialized in retail company investment and others that have a focus in investing only in “socially responsible” start-up endeavors.

Venture firms come in various sizes from small seed specialist firms of only a few million dollars under management to firms with over a billion dollars in invested capital around the world. The common denominator in all of these types of venture investing is that the venture capitalist is not a passive investor, but has an active and vested interest in guiding, leading and growing the companies they have invested in. They seek to add value through their experience in investing in tens and hundreds of companies.

Some venture firms are successful by creating synergies between the various companies they have invested in; for example one company that has a great software product, but does not have adequate distribution technology may be paired with another company or its management in the venture portfolio that has better distribution technology.

Length of Investment

Venture capitalists will help companies grow, but they eventually seek to exit the investment in three to seven years. An early stage investment make take seven to ten years to mature, while a later stage investment many only take a few years, so the appetite for the investment life cycle must be congruent with the limited partnerships’ appetite for liquidity. The venture investment is neither a short term nor a liquid investment, but an investment that must be made with careful diligence and expertise.

Types of Firms

There are several types of venture capital firms, but most mainstream firms invest their capital through funds organized as limited partnerships in which the venture capital firm serves as the general partner. The most common type of venture firm is an independent venture firm that has no affiliations with any other financial institution. These are called “private independent firms”. Venture firms may also be affiliates or subsidiaries of a commercial bank, investment bank or insurance company and make investments on behalf of outside investors or the parent firm’s clients. Still other firms may be subsidiaries of non-financial, industrial corporations making investments on behalf of the parent itself. These latter firms are typically called “direct investors” or “corporate venture investors.”

Other organizations may include government affiliated investment programs that help start up companies either through state, local or federal programs. One common vehicle is the Small Business Investment Company or SBIC program administered by the Small Business Administration, in which a venture capital firm may augment its own funds with federal funds and leverage its investment in qualified investee companies.

While the predominant form of organization is the limited partnership, in recent years the tax code has allowed the formation of either Limited Liability Partnerships, (“LLPs”), or Limited Liability Companies (“LLCs”), as alternative forms of organization. However, the limited partnership is still the predominant organizational form. The advantages and disadvantages of each has to do with liability, taxation issues and management responsibility.

The venture capital firm will organize its partnership as a pooled fund; that is, a fund made up of the general partner and the investors or limited partners. These funds are typically organized as fixed life partnerships, usually having a life of ten years. Each fund is capitalized by commitments of capital from the limited partners. Once the partnership has reached its target size, the partnership is closed to further investment from new investors or even existing investors so the fund has a fixed capital pool from which to make its investments.

Like a mutual fund company, a venture capital firm may have more than one fund in existence. A venture firm may raise another fund a few years after closing the first fund in order to continue to invest in companies and to provide more opportunities for existing and new investors. It is not uncommon to see a successful firm raise six or seven funds consecutively over the span of ten to fifteen years. Each fund is managed separately and has its own investors or limited partners and its own general partner. These funds’ investment strategy may be similar to other funds in the firm. However, the firm may have one fund with a specific focus and another with a different focus and yet another with a broadly diversified portfolio. This depends on the strategy and focus of the venture firm itself.

Corporate Venturing

One form of investing that was popular in the 1980s and is again very popular is corporate venturing. This is usually called “direct investing” in portfolio companies by venture capital programs or subsidiaries of nonfinancial corporations. These investment vehicles seek to find qualified investment opportunities that are congruent with the parent company’s strategic technology or that provide synergy or cost savings.

These corporate venturing programs may be loosely organized programs affiliated with existing business development programs or may be self-contained entities with a strategic charter and mission to make investments congruent with the parent’s strategic mission. There are some venture firms that specialize in advising, consulting and managing a corporation’s venturing program.

The typical distinction between corporate venturing and other types of venture investment vehicles is that corporate venturing is usually performed with corporate strategic objectives in mind while other venture investment vehicles typically have investment return or financial objectives as their primary goal. This may be a generalization as corporate venture programs are not immune to financial considerations, but the distinction can be made.

The other distinction of corporate venture programs is that they usually invest their parent’s capital while other venture investment vehicles invest outside investors’ capital.

Commitments and Fund Raising

The process that venture firms go through in seeking investment commitments from investors is typically called “fund raising.” This should not be confused with the actual investment in investee or “portfolio” companies by the venture capital firms, which is also sometimes called “fund raising” in some circles. The commitments of capital are raised from the investors during the formation of the fund. A venture firm will set out prospecting for investors with a target fund size. It will distribute a prospectus to potential investors and may take from several weeks to several months to raise the requisite capital. The fund will seek commitments of capital from institutional investors, endowments, foundations and individuals who seek to invest part of their portfolio in opportunities with a higher risk factor and commensurate opportunity for higher returns.

Because of the risk, length of investment and illiquidity involved in venture investing, and because the minimum commitment requirements are so high, venture capital fund investing is generally out of reach for the average individual. The venture fund will have from a few to almost 100 limited partners depending on the target size of the fund. Once the firm has raised enough commitments, it will start making investments in portfolio companies.

Capital Calls

Making investments in portfolio companies requires the venture firm to start “calling” its limited partners commitments. The firm will collect or “call” the needed investment capital from the limited partner in a series of tranches commonly known as “capital calls”. These capital calls from the limited partners to the venture fund are sometimes called “takedowns” or “paid-in capital.” Some years ago, the venture firm would “call” this capital down in three equal installments over a three year period. More recently, venture firms have synchronized their funding cycles and call their capital on an as-needed basis for investment.

Illiquidity

Limited partners make these investments in venture funds knowing that the investment will be long-term. It may take several years before the first investments starts to return proceeds; in many cases the invested capital may be tied up in an investment for seven to ten years. Limited partners understand that this illiquidity must be factored into their investment decision.

Other Types of Funds

Since venture firms are private firms, there is typically no way to exit before the partnership totally matures or expires. In recent years, a new form of venture firm has evolved: so-called “secondary” partnerships that specialize in purchasing the portfolios of investee company investments of an existing venture firm. This type of partnership provides some liquidity for the original investors. These secondary partnerships, expecting a large return, invest in what they consider to be undervalued companies.

Advisors and Fund of Funds

Evaluating which funds to invest in is akin to choosing a good stock manager or mutual fund, except the decision to invest is a long-term commitment. This investment decision takes considerable investment knowledge and time on the part of the limited partner investor. The larger institutions have investments in excess of 100 different venture capital and buyout funds and continually invest in new funds as they are formed.

Some limited partner investors may have neither the resources nor the expertise to manage and invest in many funds and thus, may seek to delegate this decision to an investment advisor or so-called “gatekeeper”. This advisor will pool the assets of its various clients and invest these proceeds as a limited partner into a venture or buyout fund currently raising capital. Alternatively, an investor may invest in a “fund of funds,” which is a partnership organized to invest in other partnerships, thus providing the limited partner investor with added diversification and the ability to invest smaller amounts into a variety of funds.

Disbursements

The investment by venture funds into investee portfolio companies is called “disbursements”. A company will receive capital in one or more rounds of financing. A venture firm may make these disbursements by itself or in many cases will co-invest in a company with other venture firms (“co-investment” or “syndication”). This syndication provides more capital resources for the investee company. Firms co-invest because the company investment is congruent with the investment strategies of various venture firms and each firm will bring some competitive advantage to the investment.

The venture firm will provide capital and management expertise and will usually also take a seat on the board of the company to ensure that the investment has the best chance of being successful. A portfolio company may receive one round, or in many cases, several rounds of venture financing in its life as needed. A venture firm may not invest all of its committed capital, but will reserve some capital for later investment in some of its successful companies with additional capital needs.

Exits

Depending on the investment focus and strategy of the venture firm, it will seek to exit the investment in the portfolio company within three to five years of the initial investment. While the initial public offering may be the most glamourous and heralded type of exit for the venture capitalist and owners of the company, most successful exits of venture investments occur through a merger or acquisition of the company by either the original founders or another company. Again, the expertise of the venture firm in successfully exiting its investment will dictate the success of the exit for themselves and the owner of the company.

IPO

The initial public offering is the most glamourous and visible type of exit for a venture investment. In recent years technology IPOs have been in the limelight during the IPO boom of the last six years. At public offering, the venture firm is considered an insider and will receive stock in the company, but the firm is regulated and restricted in how that stock can be sold or liquidated for several years. Once this stock is freely tradable, usually after about two years, the venture fund will distribute this stock or cash to its limited partner investor who may then manage the public stock as a regular stock holding or may liquidate it upon receipt. Over the last twenty-five years, almost 3000 companies financed by venture funds have gone public.

Mergers and Acquisitions

Mergers and acquisitions represent the most common type of successful exit for venture investments. In the case of a merger or acquisition, the venture firm will receive stock or cash from the acquiring company and the venture investor will distribute the proceeds from the sale to its limited partners.

Valuations

Like a mutual fund, each venture fund has a net asset value, or the value of an investor’s holdings in that fund at any given time. However, unlike a mutual fund, this value is not determined through a public market transaction, but through a valuation of the underlying portfolio. Remember, the investment is illiquid and at any point, the partnership may have both private companies and the stock of public companies in its portfolio. These public stocks are usually subject to restrictions for a holding period and are thus subject to a liquidity discount in the portfolio valuation.

Each company is valued at an agreed-upon value between the venture firms when invested in by the venture fund or funds. In subsequent quarters, the venture investor will usually keep this valuation intact until a material event occurs to change the value. Venture investors try to conservatively value their investments using guidelines or standard industry practices and by terms outlined in the prospectus of the fund. The venture investor is usually conservative in the valuation of companies, but it is common to find that early stage funds may have an even more conservative valuation of their companies due to the long lives of their investments when compared to other funds with shorter investment cycles.

Management Fees

As an investment manager, the general partner will typically charge a management fee to cover the costs of managing the committed capital. The management fee will usually be paid quarterly for the life of the fund or it may be tapered or curtailed in the later stages of a fund’s life. This is most often negotiated with investors upon formation of the fund in the terms and conditions of the investment.

Carried Interest

“Carried interest” is the term used to denote the profit split of proceeds to the general

If you are a counselor of venture capital firms or entrepreneurs who owning start-up companies that are targets of venture capitalists, you might already be familiar with the high rate of failure associated with such investments. Nonetheless, you may be surprised to find out that 50% of all money invested in venture capital is a loss.(1) This figure, which is based upon separate research projects by a Chicago Graduate School of Business (“GSB”) professor and a former Chief Economist at the Securities and Exchange Commission, indicates that the actual return on venture capital investment is not much different from the average annualized returns on the smallest NASDAQ stocks. In particular, the return on venture capital investment from 1987 to 2001 in these smallest stocks was 62% as compared to the 59% mean return of venture capital funds.

This 59% figure certainly does not reflect the investing public’s general perception that venture capital return on investment markedly outweighs what one can obtain on the stock market. And, it is this apparently erroneous assumption of perceived higher return that presumably justifies the higher risks your venture capital and entrepreneurial clients associate with venture capital. Investor perception certainly does not match investment reality for your clients who play in the venture capital space.

Why this disconnect between perception and reality on venture capital returns? Professor Cochrane, the Chicago GSB professor, posits that, in effect, traditional methods of measuring venture capital return do not take into account the fact that ventures that are a total loss disappear and are not measured. Because these losing ventures are not around to be measured for calculation of rate of returns, Professor Cochrane states that this survivor bias significantly skews the rates of return on venture capital. His simple explanation of the effect of these missing numbers is telling (quoting from the Jacobius article): “They collect the returns for everybody that is around,” he said. “It is like collecting data from everyone still in the casino: They’re not asking the people on the bus … who are on their way home.”

How Your Clients Can Improve The Quality Of Their Business Decisions

From the Jacobius article, it appears that there is much room for improvement in your venture capital clients’ investment decision-making, as well as the quality of entrepreneur’s decisions regarding their start-up companies. As an IP Business Strategist and Consultant, I am a strong advocate of using knowledge and information to reduce risk and improve the rate of return on investment. I firmly believe that venture capitalists, and entrepreneurs who are seeking venture capital investment, can improve the quality of their business and investment decisions by collecting and analyzing business information available in published patent data.

When one knows how to extract and analyze the right data in patents, significant business insights are effectively “hiding in plain sight.” In short, valuable business information is available for the taking by smart entrepreneur and investors. And, why wouldn’t your client seek to gain knowledge that could reduce the strategic uncertainty of her investment decisions to better manage decision-making risk?

In particular, before your venture capital firm client invests in a new business idea for a new venture, why wouldn’t she want to know whether the business idea is ownable in the long term or whether she will possess the opportunity to innovate freely in relation to that business idea? Or, why wouldn’t she want to know whether another firm has invested $100K or more in patent rights alone in the new business idea that she is investigating for investment? This, and other, valuable business insights and information are embedded in published patent filings.

For your start-up entrepreneur client, patent filing information can also provide valuable insights to provide enhanced long term business value and raise the value of her start-up company to venture capital investors. For example, patent filing information can reveal where the entrepreneur should focus her patenting efforts beyond the parameters of her specific inventive concept. By undertaking a competitive review of what others have sought to protect in her relevant product or technology area, your client can better understand the full breadth of patent rights obtainable. This can allow your client to gain enhanced patent claim scope that can serve to prevent competitive knock-offs of her product or technology concept. As a result, her start-up company’s value to venture capital investors can be significantly increased.

Your Clients Don’t Just Need Patent Analytics, They Need Patent Analytics That Provide The Right Business Insights

However, it is not enough for your clients to collect and graph published patent data to obtain insights that will improve the odds of making the right investment decisions. Rather, specific business-focused data collection and analysis methodology is necessary for successful use of patent data for use by your clients. This is easier said than done.

In my experience as an actual purchaser of patent analytics costing upwards of $20K per single business question, I found that the vendors that collecting and analyzed the patent data generally had no basic understanding of the business questions that my company required answering. As such, these patent analytics vendors’ products were effectively useless to answer our business team’s investment and innovation questions. Put simply, these vendors’ products did not provide my team with actionable business insights. I thus learned an expensive lesson about patent analytics: the data collection must be based upon the right foundation for the results to have any value. In other words, with patent analytics it is “garbage in, garbage out.”

As one example of patent analytics “garbage,” one vendor, who offered a patent analytics product for $25-30K for a single business question, presented example data to us in his sales pitch regarding complex patent portfolio where the business conclusions were based upon published patent assignment information. The analytics vendor affirmatively stated that because the primary inventor named on this portfolio’s moved from Tennessee to Arizona, we should be concerned because he likely had gone to work for a major competitor of ours. He further stated that our company should be concerned that our major competitor was entering a new technology area in which the inventor was a renowned expert.

These conclusions seemed reasonable because they were supported by Patent Office assignment data, as well as other signals informally observed by our marketing team. We therefore considered investigating this competitive threat more thoroughly and addressed making preliminary steps toward evaluating a new product introduction in our competitor’s apparent new technology area. Before doing so, however, one of our team members contacted a former colleague of his who had worked in the same department as the inventor who now worked for our competitor.

Our team member found out that the inventor moved to Arizona not to work for our competitor, but to tend to his ailing mother. This intelligence revealed that the inventor was working in a wholly different product area at our competitor than he had worked at while being a prolific inventor at the Tennessee company. The technology area did not pose a competitive threat to our company. Fortunately, we found out this was the case before investing significant time and effort into the patent analytic vendors’ conclusions from patent assignment data.

Interestingly, the patent analytics vendor did not consider any alternative reasons for the inventor’s change of residence, other than that he presented. In his view, if the data revealed by his analysis said it, it must be true. But, it wasn’t the data that was the problem, it was the conclusions he presented to us. If we would have been more credulous about his conclusions, we would have wasted considerable corporate resources chasing his erroneous assumption about our major competitor’s activities.

How Your Client Can Select the Right Patent Analytics

In the world of start-up company management and attendant venture capital investment, information is undoubtedly power that can fuel your clients’ decision-making processes. But before your client spends good money on patent analytics to improve the payback from her business decisions, she must ensure that the data and insights she obtains are based upon methodology that extracts actionable business insights from patent filings. As shown above, selection of the wrong analysis methodology could be worse than her not conducting patent analytics at all because her investment decisions could be influenced by information that provides the wrong business conclusions. Only those methodologies that are founded on methodology that extracts the business purpose from patent filings can provide your client with investment-grade insights from patent filings.

Methodologies I recommend to my venture capital and entrepreneurial clients use a combination of data and legal analysis to extract the business information from patent filing data. Importantly, the business question must be well defined prior to starting the analysis. A broad business question will lead to comparably, and likely non-insightful, answers. Anyone seeking business answers from patent information should therefore spend considerable time up-front clearly defining the business or investment question they seek to obtain an answer to, and also in communicating this to the patent analyst.

I also believe that the best patent analytics vendor is not the one who demonstrates that its data analysis techniques are the most efficient in analyzing 1000′s of patent documents to provide attractive and succinct pictures of the data in landscape form. Indeed, rarely would a well-defined business question lead to more than several hundred relevant patent documents at most. This number of patents typically can be reviewed at a high level by a trained patent analyst. As such, when selecting a patent analytics vendor, your client should move past the charting and picturing aspects of the sales pitch, to better understand how the vendor will work with your client to define and answer the specific business question.

Furthermore, I strongly recommend that your client seeks a patent analytics vendor whose methodology centers on reviewing the patent filing documents not for what they say, but for what they claim. The claims provide the relevant business information because that is what your client’s competitors seek to prevent them from doing. In other words, this exclusionary aspect is what matters because it defines what your client can and cannot do (or patent). In my experience few patent analytic vendors truly understand that this aspects of patents, a fact which significantly lowers the value of most product offerings.

Only after the patent analytics vendor analyzes the claims for relevance to the specific business question does your client care about who might own the patent filing or what they might wish to accomplish with it. This means that the vendor should present your client not with graphs, pictures and analysis of 1000′s of patents, but rather, with substantive analysis of a fraction of this number of patent documents that are directly or substantially directly related to your client’s business question. In my experience, better analysis of a more precisely generated library of patent filing documents provides clients with more readily actionable business insights from patent information.

Conclusion

Given that more than 50% of venture capital investment is lost, there is certainly room for improving the quality of the decision-making processes involved. I believe that patent analytics can serve a critical need in this regard. At a minimum, those entrepreneurs and venture capital investors who use such information are obtaining an additional piece of information that is not commonly used to make investment decisions today. The critical factor for those seeking to use patent analytics to improve their investment decisions is to make sure the vendor they choose for such information is providing them with the right information in accordance with the methodologies set out in this article.

[1] Arlene Jacobius, Pensions and Investments Online, September 19, 2005, available at, http://www.pionline.com/apps/pbcs.dll/article?AID=/20050919/PRINTSUB/509190734/1031/TOC, retrieved April 20, 2009.

“It’s not about IP, it’s about IP that makes you money.” Jackie Hutter is Principal of The Hutter Group ([http://www.JackieHutter.com]), a leading provider of strategic IP (“Intellectual Property”) business counseling to organizations and entrepreneurs that wish create and maximize asset value by capitalizing on the power of IP in today’s market. Jackie has also founded Patent MatchMaker (http://www.PatentMatchMaker.com) to assist companies and entrepreneurs to identify opportunities to sell their patents. She has over 13 years experience counseling innovation-driven companies, universities and business development and investment professionals in maximizing their firm intellectual asset value. Jackie was named a SuperLawyer(R) in Intellectual Property in Georgia in 2004, and she has been a frequent speaker on IP issues to her fellow lawyers.

Jackie was formerly Senior Patent Counsel at a Georgia-Pacific LLC, where she had sole responsible for Dixie(R) patent matters and, later, the company’s Chemicals business. Prior to joining Georgia-Pacific, Jackie was a

What’s Wrong With Today’s Team Building

Team building is not something new. However, the ways that it is done today more often than not does not achieve its goals. The reasons for this are many; however, interviews with people who have attended building exercises have revealed some common factors. In a number of cases the building exercises had nothing to do with the company’s culture. In other cases the exercise placed staff in situations that they found either embarrassing or uncomfortable.

What a lot of our current building exercises are missing is an understanding of just exactly what we are trying to accomplish. The purpose behind making an investment in a building exercise is that you want to boost both communication within your team and camaraderie within your team.

Any building exercise is only going to last for a brief period of time. When it’s over the staff who participated in it will be going back to their offices. These offices may be located anywhere on the globe or everyone may already be part of the same office. As an IT manager, you are going to want to see improvement in how everyone works together once they’ve participated in the team building exercise.

How To Go About Building Teams The Right Way

So if we can all agree that it is easy to go about trying to do team building the wrong way, then what becomes most important is finding ways to go about doing this type of activity the right way. A lot of this starts with having you understand that within your team, there will always be people who don’t want to participate. Whatever exercise you do, you’ll need to make sure that it appeals to them and draws them in.

The team building exercises that your team is involved in need to reflect your company’s culture. You need to keep in mind that a team building exercise may be one of the few times that the various team members have to work side-by-side with each other. This means that you need to use this opportunity to have the exercise to allow them to discover things about each other such as how they prefer to make decisions. The thinking is that after the team building exercise is over, this information will allow everyone to work together more closely.

When you understand that in order for your team to work together smoothly, they need to understand how each other thinks and feels. The purpose of any team building exercise has to be to place the members of your team into a situation where they can’t succeed by themselves. Instead, they need to rely on others to achieve a goal. This may be a new situation for many of them, but developing this kind of skill is critical to showing your team how they can be successful by working together.

What All Of This Means For You

As an individual IT manager there is only so much that you can get done in a given day. If you are able to get the people who work for you to cooperate and work as a team, then you’ll be able to accomplish a lot more. It’s creating this team that can be the real challenge…

A lot of what passes as IT team building today does not accomplish what it is intended to do: build a team. There are a lot of different reasons for this but the most common ones are that the team building that was done had nothing to do with what the company does or that it made the people participating feel embarrassed. IT managers are finding new ways to engage their team members in team building activities. These new methods tap into pop culture and are more likely to draw all members of the time into the exercise.

As an IT manager you are not going to be effective if you don’t have a team to manage. Trying to manage a collection of individuals will be too hard and will consume too much of your time. Instead, you need to take the time to find the right team building exercises that will cause your collection of individuals to fuse into a smoothly working te

For example, if a team is assembled under the auspices that the exercise is to build cohesiveness, respect and to define/clarify goals, there should not be any hint of any underlying motives. Specifically, if management is wanting to evaluate inherent management skills of candidates for future promotions, the team building exercise is not the place for this kind of search. Such moves will render the tool of team building worthless. People today are cynical and cautious about being manipulated; they will spot insincere motives immediately and that feeling will last a very long time.

Thinking about these comments: How effective would it be, if announcing to a group of potential new managers, they were participating in a test to evaluate their management skills that were to be used in receiving a future promotion? In essence, management is trying to determine who is the best leader based on some undefined criteria. Now let’s all have fun… I don’t think so.

To be clear, I am not intimating that some non-destructive competition between teams is not appropriate. I am saying that pre-determined competition within a team for personal recognition, monetary gains, or promotion is destructive.

Many years ago I lead a team in a new start-up company I had founded. One person on the team, who had previously retired and then came back into the workforce, looked at his job as a social endeavor more than a job; it was something to occupy his time. We would occasionally socialize after work; most conversations were work related–financing, website design, etc. Nonetheless, this created a very powerful rift amongst the team as they felt I was relying mostly on one individual and their input was less valued and would ultimately impact their stock participation plan. Fortunately, it was corrected before permanent damage was done.

The problem was solved when I restructured the organization to visually and viscerally demonstrate that the team was most important. I got the feeling that the team thought I was grooming one of the team for a senior role at the diminution of very important other team members.

Team building is an important tool in any organization, whether formalized or ad-hoc. Don’t fall into a trap of using team building exercises to rank or evaluate employees for promotions; there are more effective setting for that to be done in a less destructive way for an organization. Even after extensive employee testing (if you chose to go that route) such as extensive interviews (as a group or round-robin) or considering outside recommendations; face it, not all management personnel decisions are correct.

Employers that try to manipulate employees will always get less than desired results and the impact can be felt in long-term results that are also less desirable and impactful long-term. Matt Alderton wrote an article in Successful Meetings Magazine entitled-How to Enhance Your Workplace. One of his points in the article is that “Managers would be well-served to learn… the skills of relationship management, consulting and communications. Being able to work with colleagues, as well as manage others, is very important.” A skill learned in part through team building not in hand-to-hand combat on the job.

Further, don’t promote people that do well in team building exercises and forget that team building is not, in-and-of-itself, the only indicator of a good manager. Management should define all the tool sets of a management position for their organization, by function. Realize not everyone will have all those tools so for the sake of the organization train new or potential managers toward the total tool set. Team building is not necessarily the place to train, but it can be a place to help build confidence in potential new managers.

My rules of the road:

· Don’t use team building as a competition amongst individuals to determine potential new managers.

· Be transparent with setting goals and directions in training or team building exercises. People are too smart to allow management to take a surreptitious approach in trying to manipulate them.

· There might be a time and place for large team building experiences but small group approaches seem to improve results and communication.

· There is a difference between team building and building management skills; they are not the same.

Steven S. Lay has been in the travel and corporate meetings business for 30 years and is now focused exclusively on small luxury corporate gatherings in Wine Country. More information about his company, Symtrek Partners, is available at: http://www.symtrekpartners.com

Symtrek Partners is a resource to any company contemplating a highly effective

Planning a team building session but do not know how and where to start? Do not despair. This “dummy’s guide” to planning a team building session will give you important areas to consider and make you look like an expert.
The O.P.T.I.M.A.L. approach:

1. Objectives of team building

“Why are we holding this team building event, and what do we expect to achieve?”

To have an end in mind, a purpose, is crucial to planning a team building session. Having objectives mean that you can skew or tailor the activities to meet your expectations.

Having clear objectives would also help to set the tone for the team building session, and establish the expectations of participants involved, so everyone is moving in unison towards the same direction/ goal.

Having conducted team building sessions for a variety of organisations, some of the more common reasons why team building is required, are as follows:

a) To create synergy in a new team/ team with new members

b) To create an opportunity for staff from different departments/ functions to interact

c) To address certain work issues

d) To reinforce their corporate values

e) As a form of training

f) To reward their staff with a day away from the office

g) To interact and have fun

Each of the reasons listed above will result in emphasis on different aspects during the team building session. Spend some time to decide on the main focus of the team building session before deciding on the team building activities.

2. Profile of Participants

“Who will be attending the team building session?”

Another important factor in planning a successful team building session is the profile of the participants. Age range, gender mix and other background information like educational level and job scope, should be taken into consideration while sculpting the team building programme, to ensure that the programme would be suitable and relevant.

Physical conditions of the participants of the team building session should also be considered.

One other important factor to a team building session which organisers frequently overlook is FOOD. In a multi-racial country like Singapore, participants may be Chinese vegetarians or Indian vegetarians, while others only consume Halal food (food that is lawful and allowable under Muslim law) or even Kosher food (food that has been prepared so that it is fit and suitable under Jewish law). There may also be participants who are allergic to certain types of food. The best way to find out about dietary requirements is to check with the participants directly.

3. Time Frame for planning the team building event

“What is the targeted date of the team building session and its duration?”

Dates are important, especially when there is a need to secure venues and check the availability of key personnel or speakers. Typically, we would recommend a lead time of about 2 to 3 months to plan for a small to medium-sized team building event, catering for less than 80 participants. If the event is large-scale, the lead time may escalate to 6 months, or even a year before.

When conducting team building outside working hours, some organisations may wish to consider dates of school holidays or school exams, especially for organisations, which place emphasis of balanced work and family life. To encourage maximum attendance from participants, organisations may wish to leave the school examination and vacation periods untouched, for their staff to spend that extra time with their spouse and children.

Duration of the team building session should also be taken into account – is it going to be a half-day or full-day event? If there are specific issues to be tackled or other forms of planning or training involved, it may be good to consider a 2-day or even 3-day programme.

4. Inclinations of the participants

“What will the participants prefer to do during team building?”

Having information about the profile of the participants is usually sufficient. However, whenever possible, unearth the type of activities the participants are inclined towards – are they indoor-games type of people or the outdoor adventure type or do you have a good mix of both?

One can derive such preferences by having a poll or survey with the participants if you have an intimate group size, or by gathering the views of a sample group if your group size is overwhelming. Alternatively, reviewing previous team building sessions and the feedback received could also give a good indication of what is preferred (and what not to do again).

The rule of thumb is to have a good mix of indoor and outdoor activity especially if your size is big, unless you are deliberately exposing the participants to a particular type of setting, or you know their specific preferences.

5. Money Matters

“What is the indicative budget for the team building?”

The budget would have a significant influence on the venue, food and beverage, as well as duration and type of team building activity. If there are no figures to work on as yet, use the previous years’ budget as a guide. If no such information is available, then plan for something not too ambitious, and adjustments can be made from there.

Next, you have to decide if the team building portion is to be handled in-house or to be outsourced to an external vendor. Of course, if the budget permits, there are many advantages in outsourcing the team building portion.

Firstly, to run a team building event, you would need manpower and chances are, if your colleagues are running the event with you, they cannot participate. External vendors would likely be more experienced in conducting the activities and less likely to make mistakes. The vendor would also provide all the logistics involved, leaving your team and yourself free to participate with all your other colleagues.

team building vendors also bring with them sufficient experience in knowing what works and doesn’t, so you are not only paying for their services, but also their rich experience.

6. Assessment of Success

“How would you measure the success of the team building session?”

How would the success of the session be measured? Is it considered a success as long as the participants enjoyed themselves, or if the participants got to know at least 3 other colleagues better?

While the effects of team building are generally intangible and the takeaways are somewhat more subtle, measurements of success can be derived from verbal feedback from participants, surveys or observation reports. Observation reports comment on behaviors and attitudes displayed during the activities. Pre and/ or post-event surveys track the effectiveness of the team building session based on the same set of questions they organisers wish to enquire about.

7. Location for team building

“Where should we hold the team building session?”

The location or venue would have an effect on the atmosphere of the team building session. The previous six factors mentioned above would have shaped the decision on where to hold the team building.

Other issues relating to location for consideration would be accessibility, function set-up and layout and contingencies for wet weather (if you are having an outdoor session).

With the O.P.T.I.M.A.L. approach developed by änergy, we trust that you would be able to plan for your team building event effectively. If you are running the team building event with your committee internally, be sure to draw up a detailed work plan and budget, with clear responsibilities for every task.

Next, remember that one of the key ingredients of effective team building is rehearsals. You would need to do a site-visit and rehearse the day’s activities, as it would help you trouble-shoot any potential issues, so that improvements can be made on event day and contingency plans are already in-place to tackle any glitches.

We wish you a resoundingly successful team building session!

It’s a well know fact that stuff like motivational talks don’t last or add any real value – so why then do people waste their money paying anything up to R15,000 for a 1 hour motivational talk? Motivation is like manipulation!

And who wants to be manipulated right now? If you were to invest in your team building, would you not want to get the best value you could for your investment of time, money and people resources? Any intelligent person would want the best return (ROI) on their corporate team-building expenditure.

So, imagine for a moment a scale from 0 to 10. The zero side is “light group entertainment” or motivational stuff. On the other side – 10 is HERO a “transform-your-people-and-your-team” process that impacts Heads, Hearts and Souls, lasts a life-time – and enhances performance, productivity, resilience, relationships and your workplace. Now make an intelligent decision…What level of results would you choose if you were to embark on a team-building?

Whats the best way to blend your team cultures into a cohesive whole?

Group Entertainment – NOT Real Team Building! If we consider, what is thought to be, a typical team building event; people go on some planned outing for a day, somewhere offsite. They may get a little revved up, wear colored arm-bands or shirts, paint faces, play some games, shoot arrows, walk planks, laugh a little or a lot, have a free meal or braai, a few drinks and then go home…klaar!

On the day, what we don’t see, just under the surface, is that the office politics and people issues are still alive and well. People still fear; appearing useless, being uncomfortable or making a fool of themselves. Staff accumulate in their usual clans, and the office-clown is again, thoughtlessly, even more mordant with their jabs and jousts. Often greater barriers to real team-building and a friendlier, more productive workplace, are created.

Intollerence prevails – and never the cultures shall blend!

All in all, when Monday comes around, the old dynamics, office politics and factions remain as before. The people are as jaded as ever, if not more so now! And the “TEAM” is just a pretense. Life goes on just the same as it did before the group outing.

People know nothing new about each other or their cultures. So what was it all really about? This is treating the symptom – not the foundation or real causes. So why even do it? Why would you spend money on something that does not solve your problem or deliver real value?

Lack of; relationships, inclusion, trust, truth, engagement and inspiration is a problem – A real problem for your team-building and your improved results delivery in a diverse multi-cultural reality we call our Rainbow Nation.

Alternative – The HERO side…An Uncommon but REAL Team Build Process. Imagine a team-building process that would remove barriers and change your office energy, work environment, attitudes, trust levels and team-spirit forever.

Consider…What’s the best way to really build your team. What aspects would need to be addressed to ensure long-term impact and profoundly positive results? In a real team-building process the following core aspect must be addressed in order to build a sustainable and strong workplace foundation that fosters optimal team effectiveness.

TRUST! – #1 issue to be addressed is TRUST. True authentic trust and communication between the people, as well as the team and management is critical. If you have no trust your team could bust! Trust is the anchor-stone of success. It’s a proven fact that trust makes or breaks relationships.

Trust’s the business lubricant, just like the super lubricant Teflon I hear you think…is TRUST really more important than our great systems, policies and organisational structure? Absolutely Yes! A low trust workplace and mistrusting culture can, and will, sabotage and disrupt any system. Just look at the number of CRM (Customer Rel Mngmt) initiatives that fail – IT’s the people who make it happen from a Head, Heart and Soul level. No/low trust and engagement = no real team, not really sustainable in a human manner.

Is TRUST really more important than our great Vision & espoused Values?

Absolutely Yes! I don’t care how impressive your vision is or what your Values are, the drag of a low trust workplace will hold you back you from truly attaining that vision and walking those values – authentically and fully. Values are for everyone, all of the time, not some of the time and some of the people. TRUST is a MUST to thrive.

Is TRUST really more important than a good strategy? Absolutely Yes! All strategies have to be executed. Efficient and optimal execution is built on high trust and high levels of certainty. High trust cannot transform poor strategy, but it can make it better. Give me a team of fools on fire vs a group of indifferent, mistrusting, disengaged rocket-scientists, any day!

Is TRUST really more important than COMPETENCIES and skills?

Again absolutely Yes! Skills and competencies are a head-based issue. No matter how skilled a person or team/group, the “drag” or friction of a low-trust workplace will ensure that those skills are not optimally, if ever, fully applied. Trust is a heart AND head based issue. And let’s be real here…nothing will deter real talent like a dictatorial-high-control, low-trust, low-engagement workplace.

If you consider what is impacted in a team-building event, it behooves us to make optimal use of the time, efforts, expense and team-building opportunity by really growing your people. That’s why our Life Masters team-building is designed as a powerful, unique, transformational process…and not just a light event. Our Team building is designed to change lives and workplaces on a long-term basis. You can do the light fun, group entertainment stuff, but we’d favor adding real value and results to your business and your team-building / blending efforts. Trust is the “must” of the 21st century.

Aspects Vital to a True Team Building Process

In order to truly build a strong team and foundation, the following core areas offer valuable results when addressed…trust levels, truth, attitudes, anger, limiting beliefs, misunderstandings, disappointments, judgments, personal politics, unresolved issues, honesty, constructive feedback, interpersonal relationships, satisfaction levels, self-awareness, self-esteem, confidence and confidentiality, resilience / Adversity Intelligence (AQ), engagement levels, caring, Emotional Intelligence, hidden agendas, outdated

management-styles, transgressions kept secret, blockages, cultural intolerance, conflict, consciousness & energy levels.

REAL Team Building Is Predicated Upon These Perspectives

” …that all people are precious, valuable and can be your greatest assets if developed effectively;

” …that work is a platform for people to enjoy, grow, love; and to experience higher levels of self-worth, self-esteem, value and happiness;

” …that work is an opportunity for people to make a positive contribution whilst making a profit for the shareholders;

” …that you spend more time awake with co-workers than the ones you apparently love – why not also love your co-workers? Keep your mind clean here please!

” …that people bring their Heads, Hearts and Souls to work – So for optimal engagement grow and build your people on a Head, Heart & Soul level. Discover and support their CAUSES to gain maximum commitment and participation.

Whilst it’s true that profit is the “lifeblood” of your business, consider that it shouldn’t be the only purpose and aim of your business. You don’t get too much engagement from people when the only reason for them working is survival, and to make the shareholders and bosses wealthier – That’s GREEDERship, not LEADERship! No Soul in that goal!

REAL Team-Building Follows A Clear & Systematic Process.

” Research the environment, the people, the issues and the desired outcomes and intentions of the team build. We use: EQ, Resilience, Higher Ground Leadership, C.A.S.T.L.E. workplace scan, Human Energy Levels Project, team fitness, stress & JQ20 Engagement

” Build Trust and truth between the facilitators and the participants.

” Explore what people would really love to have in their workplace and what’s currently working well.

” Reveal what their current workplace really has in existence right now – The good, the bad and the ugly!

” Examine the GAP between desire/ ideal and current reality

” Design an encounter that is confidential, powerful, fun, engaging, transformational and life long last in results.

” Deliver the processes designed to build trust, address the issues, resolves the conflicts, opens communications remove barriers, builds and renews relationships based upon a “clean slate” with a joint vision and destiny.

” Follow-up with coaching, feedback, email tips and gatherings to celebrate and strengthen relationships, trust, truth, engagement and results.

Imagine the difference in your workplace on Monday after a real team-building

encounter where people actually like, respect, understand, trust and care for

each other. Work becomes enjoyable, and your workplace can become a WowPlace.

It’s hard to not have a great team after that.

Some comments we’ve heard from people after our special custom created team-transformation encounters…

” “Awesome!!… improved my self-confidence and my commitment to clear goals” – Helen
” “life changing. …was mind and life changing”- Bosman
” “My expectations were totally surpassed” – Jenny
” “ABSOLUTELY AWESOME are the only 2 words I can use to describe the feelings, thoughts and energy experiences that I experienced today” – Darryl
” “In every possible way it touched every point in my life. 0 out of 10.
Workshop leader was awesome” – Zelda
” “I never expected to get out what I did. EVERYBODY in business should do this. I call it Lifeline!!! Tony is amazing. I wouldn’t trade anything in the world for what he taught me – Thuli
” “Thanks for your workshop, support and input which have changed my life at home and work. No problem or challenge is to big to overcome in my life. Nothing will get me down!!!!” Regards Chris
” “There is only one word to describe the team building session at Bakabung – “POSITIVE”. My team and I are committed and honest. What I said at Bakabung I will do – I am doing, and so are my team members. My exper

The building of a team requires a great deal more effort than simply recognizing the interdependence among workers and work units. It requires, instead, several carefully managed steps and is an ongoing cyclical process. The team-building process presented in this article offers the members of a work group a way to observe and analyze behaviors and activities that hinder their effectiveness and to develop and implement courses of action that overcome recurring problems.

While the underlying purpose of team building is to develop a more effective work group, the specific purposes of the process will depend largely upon the assessment of information gathered during the initial data collection phase. Typically, team building will seek to resolve at least one of the following three issues:

1. A lack of clear goals and expected performance outcomes: Frequently, interview data from work group members reveal that their performance is generally directed by their individual (and often conflicting) performance goals. In that situation, the team-building model can be directed at establishing overall work group goals, which affect both individual and group effort and behavior, and, ultimately, the performance outcomes at both the individual, as well as the group level.

2. Interpersonal conflict and distrust: A lack of trust, supportiveness and communication not only slows down the day-to-day ability of a group to get work done, but also stands in the way of resolving the conflicts that naturally arise as the group makes decisions about its future efforts.

One way to overcome this is to focus on the work problems and improved interpersonal skills necessary for the team to work inter-dependently and more effectively to accomplish the task. In other words, the interpersonal data would be derived from the work context itself rather than from evaluations directed at individual personalities within the group. It is a concerted effort to uncover mutual needs and desired outcomes … a Win-Win approach.

3. A lack of clear roles and leadership: Obviously, duplications of effort result in sub-optimum levels of productivity. But when initial interviews with work unit members suggest confusion over roles, the issues that surface may go well beyond task-specific problems. They may raise questions about who is providing leadership to the group, who feels empowered to act, what sources of power are being wielded and what interpersonal and inter-group relations underlie the group’s effectiveness. When these issues arise, the team-building model uses group meetings to discuss and clarify members’ roles and responsibilities – both prescribed and discretionary

Who are the “players” in the team building process?

On the surface, a “team” suggests a group of interchangeable individuals of equal status. But in reality, most workplace teams have a supervisor or manager charged with leadership and accountability for the group’s performance. Consequently, the team leader plays an important and somewhat different role than do other members in a successful team building effort. Support from the leader is vital because if he or she does not recognize and accept the need for team building, it is unlikely that other members of the work team will be very receptive to the idea.

The Value and Role of a Facilitator-Coach.

In addition to the leader and other team members, successful team building calls for a third party participant in the process – a Facilitator-Coach, a professional with knowledge and experience in the field of applied behavioral science, but who is not a regular member of the team. This person may be an internal resource person in the organization or be someone from outside the parent company/organization..

There are several roles, which this Facilitator-Coach may perform in team building. Perhaps the most common and critical is that of third-party facilitator, a “gate-keeper.” The Facilitator-Coach also trains and coaches the team in becoming more skillful in understanding, identifying, diagnosing and solving its performance problems. To do this, the Facilitator-Coach gathers data needed for the team to conduct its own self- appraisal and structures a “safe” environment that encourages team collaboration and consensus building. As a change agent, the Facilitator-Coach also serves as a catalyst to help bring about a greater degree of openness and trust and increased communication effectiveness.

Another role of the Facilitator-Coach is that of a knowledge resource person, assisting team members to learn more about group dynamics, individual behavior and the skills needed to become more effective as a team and as individuals.

The Facilitator-Coach should generally avoid assuming the role of the “expert.” That is, the Facilitator-Coach’s major function is not to directly resolve the team’s problems, but to help the team learn how to cope with its own problems and become more self-sufficient. If the Facilitator-Coach becomes the controlling force responsible for resolving the group’s difficulties, he or she has denied the team the opportunity to grow by facing and resolving problems confronting them.

What are the steps in the team-building process?

At the core of the process will be a a well-defined process that is made up of a series of structured experiences and events, ones that will be repeated over time, that have been designed to help the group build and sustain a cohesive, effective, and ultimately, a high-performing work team. This process requires carefully laid groundwork as well as long- term follow up and re-evaluation. And further, team building, to be successful in developing and sustaining high performance, must be viewed and accepted as being a “continuous” and on-going process, not an “event” driven activity.

Team building, from a systems perspective, requires several carefully thought out and managed steps and is clearly understood to be an ongoing cyclical process. The team-building process offers members of a work group a way to observe and analyze behaviors and activities that hinder their effectiveness and to develop and implement courses of action that overcome recurring problems. If successfully implemented, the team building process is integrated into the work team’s day-to-day operations.

Assuming work group manager-leader and team members, after having an opportunity to become aware of what the team building process has to offer and requires of them, have indicated and voiced their support for the team building process, the first preparatory step is the introduction of the Facilitator-Coach to the team. Often this is done by the team leader during a regular staff meeting at which the Facilitator-Coach is introduced to the group. The role of the Facilitator-Coach is discussed as well as the process and potential benefits of team building.

In preparation for the kick-off of the team-building process, the Facilitator-Coach will then take responsibility for the next step – the gathering of data from each team member about the “strengths” and “weaknesses” of the team and barriers to effective team performance. This diagnostic phase will typically make use of questionnaires and/or interviews.

he use of personal interviews has several advantages. First, interviews provide the Facilitator-Coach a better understanding of the team, its functions and its problems. Second, interviews enable the Facilitator-Coach to develop rapport with team members and to begin to establish a relationship of openness and trust. Third, interviews provide the opportunity for each individual team member to participate in the identification of the work group’s strengths and weaknesses. Finally, personal interviews are flexible. On the other hand, the less flexible questionnaire approach ensures that common areas will be covered by all team members.

After conducting the interviews or surveys, the Facilitator-Coach summarizes the information, which is to be fed back to the group during the team-building meeting. A useful way of presenting the comments is according to the frequency with which the items were
mentioned or accorded to major problem areas.

During the actual team-building meeting, the data feedback session becomes a springboard for the rest of the session’s activities. With the assistance and support of the Facilitator-Coach, the group then formulates an agenda and decides on the priorities of the issues raised by the diagnostic phase.

Before the team-building meeting ends, action plans are developed whi