Do entrepreneurs use all the tools at their disposal to hire the right people and make the best investing decisions?
It’s safe to say there’s room for improvement, two Kogod faculty members argue.
Nikki Blacksmith and Maureen McCusker, professors in the Kogod Management Department, believe founders and venture capitalists would be far more successful if they more clearly understood the human dynamics surrounding their team and work…whether they’re managing a startup or investing in one.
Their expertise in human capital and entrepreneurship figures prominently into a recently-published study into the effectiveness of leaders’ decision-making.
It’s also at the heart of an upcoming book that examines how a more people-oriented, data-driven approach to doing business might chip away at the astonishing failure rate for startups.
“People are the precursor. They build the product, they come up with the ideas, and they test the ideas. So, we need to have a stronger focus on the human capital aspect in entrepreneurship,” said Blacksmith, co-founder, and CEO at the consultancy Blackhawke Behavioral Science.
Research focuses on high-stakes decision-making.
The research paper published by Blacksmith, McCusker, and several of their colleagues earlier this year stemmed from a multi-year study that started at several US Army bases nationwide.
Surveying 234 officer and enlisted-level soldiers, the team handed participants iPads with scenarios, which prompted them to make decisions.
To be clear, these weren’t choices with a clear good or bad outcome. They were decisions with no clear positive result—the types of decisions, as their study points out, that leaders must often combat when deciding whether to shut down a country during a pandemic or how to handle a hostile civilian or military encounter.
The study showed how decision-making under such circumstances can become derailed, particularly for those in positions of power who regularly face high-stakes choices.
“The findings highlighted the higher power that you had, the more challenging the decision for that individual,” explained McCusker, who also serves as a co-founder of Blackhawke and senior manager of talent analytics at Marriott International.
“We need for these people who have high-powered situations to have more tools to help them aim their decision-making process,” McCusker continued, explaining a key finding from their work.
It’s a philosophy she and Blacksmith share in advising investors through their consulting work, helping Blackhawke’s clients create value and make the right investing decisions with the help of data and science-based analytical tools to help drive decision-making that considers human factors.
“The idea is to help them understand and see the people they’re investing in before they put the money into it,” Blacksmith said.
