4 ideas from psychology that can help your startup

Rich Littledale
11 min readJun 8, 2020

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About two years ago I was on a product management course being delivered by a highly respected silicon valley product guru. It was a great course — albeit most of it went over my head — but one exchange really stuck with me. We were talking where product hypotheses come from (product team, customers, engineers) and it seemed to me that there was a gap: social sciences research and theory about how people think and behave. I asked a question along the lines of: “how do - or should - the behavioural sciences shape the product hypotheses you choose to test?”. The answer was “they don’t”. I asked a follow up at the end: “How have thinkers like Daniel Kahneman — Thinking Fast and Slow for instance — influenced your approach to product development?”. He’d never heard of him.

Broadly speaking, there is a disconnect between social sciences research and theory and how companies think about their teams, products and customers. There are notable exceptions to this: “Hooked” by “Nir Eyal” talks about how the tools of operant conditioning can be applied to product design; 15Five and Applied are great examples of tech firms taking an evidence based approach to product. But these remain exceptions. Over the years, people like me — psychologists and other social scientists — have not been great at stepping out of their research or their niche and communicate in a way that is pragmatic and persuasive. This is why Bruce Daisley’s podcast and book is a breath of fresh air, as it applies a layperson’s perspective to a wealth of interesting and useful ideas.

In the spirit of bridging that gap, here are four ideas from psychology that I have found useful in how I think about people and teams, particularly in startups.

The Minimal Group Paradigm (Social Identity Theory)

One idea that I have seen play out in a variety of contexts throughout my career is Social Identity Theory: the idea that a person’s sense of who they are depends on the groups to which they belong (and do not belong), and that this can shape their behaviour in powerful ways. An example of this is found in the Minimal Group Paradigm and a story of children and painters: the Klee vs Kandinsky Experiment, created by the social psychologist Henri Tajfel¹.

Several Circles By Wassily Kandinsky — http://www.fertomniavirtus.com/vassily-kandinsky/, Public Domain, https://commons.wikimedia.org/w/index.php?curid=37610966. (I vote Kandinsky every time. Down with those Paul Klee idiots.)

In the Klee vs Kandinsky a experiment the participants (48 boys, aged 14–15) were asked to look at a set of paintings (by either Paul Klee or Wassily Kandinsky) and indicate which they liked and disliked. They were then split into two groups, and were told that the groups were based on their artistic preferences. In fact the subgroups were random.

Each individual was then asked to award points to two other boys, one from his artistic in-group, and the other from his out-group. Looking at the decisions they made showed two key themes: a) in-group favouritism (they favoured their own group), and b) a desire to maximise the difference between the two groups — to beat the other group — rather than to maximise the total amount allocated. For instance, in the example below members of the Klee group would systematically choose option 1, which has a difference in favour of the Klee group (7–1), over option 2, which gets them more points overall (19–7).

Individuals in the Klee group would — in general — choose option 1 over option 2. They prioritised “beating” the Kandinsky group over maximising rewards for their own group.

The conclusion: people will seek to maintain an advantage for their in-group even if a) the group membership is arbitrary b) and it results in a disadvantage in absolute terms.

This effect was duplicated three years later in a study where the participants were even told that the group allocation was random.

We really, really, want our in-group to win.

Nach der Überschwemmung, 1936, wallpaper glue and watercolours on Ingres paper on cardboard. By Paul Klee — [1], Public Domain, https://commons.wikimedia.org/w/index.php?curid=12529180 (Fine, but if you prefer this to the other one you are not my kind of person.)

How this idea can help:

How can this theory help companies? By making you be very careful about the in-groups and out-groups that you create. Any time you are splitting your team into groups — for rewards, for communication, for socialising, for anything however arbitrary and seemingly unimportant — you are shaping your team members’ identities and their behaviour. When relations between your product and engineering teams start to get strained, this might be because being part of “engineering” is more salient to their identity than being part of a bigger team, and it is worth thinking about how to change this. This goes for company vs customer too. No doubt this gets harder as the organisation grows and functional teams develop, but the in-group should be the whole team, and this should be reinforced by the way you speak and the way you treat them.

The Babble Hypothesis

Have you ever had the feeling that the people who talk the most in meetings have the most influence, no matter what it is that they say? You are not the only one.

In psychology, this is known as the “Babble Hypothesis”, and some recent research has found evidence that this effect is real².

The study authors set groups of students either a military map-based problem, or a low fidelity business problem. At various stages participants were asked to nominate leaders. Total Speaking Time (TST in the table below) had the strongest association with leader emergence of all the factors analysed, including measured intelligence, personality traits and experience.

Now this is just one study, and further evidence will need to be built up to understand this effect and when and why it occurs. Also, the authors did not evaluate quality of contribution, just quantity. But, if this effect is real it is risky for businesses, particularly those with flatter structures and where autonomy and team problem solving is prized over command and control.

How this idea can help:

You are likely to have a value around collaboration (most companies do!), but it may be worth codifying what this means in terms of turn taking in meetings. Also, leaders should role play as much listening as they do speaking.

Also, consider how you evaluate social sensitivity when you hire people. Barbara Williams Wooley’s research³ has shown that teams with greater social sensitivity — the ability to detect when team members are included, or struggling to be heard — are better at solving problems. Better even than teams full of cleverer people with less “EQ”.

The g-factor

You probably already know about the g-factor, and even value it highly, even if you don’t recognise the term. It is also known as General Intelligence or General Mental Ability (GMA). This is a variable that is theorised to lie behind people’s performance on different cognitive tasks i.e. that explains the fact that if you do well on one cognitive task you are likely to also do well on another. In layman’s terms, it’s about how bright a person is, or their intellectual horsepower.

Charles Spearman, English Psychologist and Statistician, and original proposer of the g factor.

And we all want these people in our teams, right? In a 2016 working paper — an update on their seminal 1998 meta-analysis — Schmidt et al say “research evidence for the validity of GMA measures for predicting job performance is stronger than that for any other method”. So easy, just use cognitive tests and hire for intelligence.

Of course it is not as simple as this. Here are the key reasons why:

Firstly, the question of adverse impact. There is a body of evidence that different demographic groups perform differently — in aggregate — in tests of GMA. And these differences disadvantage minority groups. There are also differences on gender lines, but these are for specific aptitudes (verbal reasoning, spatial rotation). This fact has been leapt on gleefully by those whose right-wing politics makes them want to find reasons for one ethnic group’s superiority over others. (In fact, there is a long and fairly ignominious association between psychometrics and politically suspect “race science”. See Superior by Angela Saini for an examination of this large can of worms.)

But for businesses this means that using GMA tests in a blanket and clumsy fashion can have a negative impact on diversity, and can get them sued (particularly in the US). Startups can afford neither of these.

There is also a philosophical question here about what constitutes talent. Ever since McKinsey and Co coined the phrases “War for Talent” in 1997⁴ (and probably even further back), “talent” has been seen as the exception, the creme de la creme. The Pareto principle suggests that 80% of output comes from the top 20% of talent. I call this “talent exceptionalism”, and the startup ecosystem — with its MBA grads and ex Googlers — has embraced it.

My personal perspective is that this approach is wasteful, impractical and not borne out by the evidence of my eyes. It is also an insult to the hardworking, creative, emotionally intelligent, clever-enough majority. As a coach and leadership consultant I have seen people thrive in one context and fall on their face in another. Startups are scrabbling around competing with corporate and big tech for the same small pool of talent, which has inflated salaries and egos. I see some startup leaders with a clear mental separation between the talent (i.e. developers and designers) and more disposable employees (sales, customer satisfaction — the people who really understand how the customer thinks). And overall I see a self reinforcing cycle of sameness that is hard to break out of⁵. What the ecosystem needs is to cast the net wider, to find talent that previously would not have been noticed.

How this idea can help:

So how can you use the g-principle, given all these risks and issues?

Assess GMA, but in one of two ways.

  1. At the sifting stage you can use as a minimum threshold rather than a way of filtering out the elite, Startups are full of ambiguity, so for some it is just not going to be a suitable environment. However, not many startups will have enough applicants to make this useful, and choosing the assessment tool and setting the threshold is something you should get expert help with.
  2. At a senior level you can use it as additional data to help you understand the strengths that your senior hires are likely to bring to the team.

However, you use these tools, pay very close attention to your diversity numbers, and get advice on the legal and technical issues.

Lastly, while it is right to value GMA appropriately; don’t fetishise it. There are many traits that startup leaders and teams need to be successful. Look just as hard for these — curiosity, resilience, ability to communicate and connect with people — and value them just as much.

The Dark Triad

There is a growing body of research about what happens when leadership goes wrong, and why it goes wrong in the first place. The — always great — Science for Work have published a blog summarising some of the key research findings on toxic leadership⁶. Unsurprising, toxic leadership is bad for organisations. It is associated with:

  • Lower engagement
  • Increased turnover intention

There can be enablers — conducive followers and an environment without checks and balances — but at its root, toxic leadership is about toxic leaders.

But what does this mean? The dark triad can help us understand. The dark triad is a set of three personality traits: narcissism, machiavellianism and psychopathy⁷. These traits can overlap but are conceptually distinct.

Narcissism is characterised by grandiosity, pride, egotism, and a lack of empathy.

Machiavellianism is characterised by manipulation and exploitation of others, an absence of morality, unemotional callousness, and a higher level of self interest.

Psychopathy is characterised by continuous antisocial behaviour, impulsivity, selfishness, callous and unemotional traits, and remorselessness.

These traits can be full blown disorders, but they can also exist at a sub-clinical, less extreme, level in the general population. These are traits that can be highly destructive in leaders, but they are also traits that can help a person rise to the top.

So what is the relevance for startups? My hypothesis is that startups have to worry about this more than many companies, due to the personalities of entrepreneurs and their culture and processes. My hypothesis has two parts:

  • Founders are more likely to possess dark triad traits than the general population.

A 2009 study found some evidence that Agreeableness — a big five trait associated with being sympathetic, warm and considerate — is a negative predictor of the ability to implement innovation⁸.

Gavin Belson, from TV’s Silicon Valley. Showing off his signature.

The META is a psychometric tool that is designed to evaluate specific entrepreneurial traits. One of these is Opportunism. According to the META manual, individuals high in Opportunism are more likely to be “somewhat manipulative, superficial, and narcissistic”⁹.

There is also some evidence that narcissists and subclinical psychopaths are more likely than average to want to be entrepreneurs in the first place¹⁰.

It makes intuitive sense that these traits would be useful in an entrepreneur: doggedness, single-mindedness to the point of bloody-mindedness, a belief in their own vision whatever other people say.

  • Startup cultures and organisational systems are unlikely to keep toxic traits in check.

Many startups prize themselves on their cultural cohesiveness, and the strength of their shared vision. These are indeed useful, but they are also the characteristics of cults, where followers’ desire to remain part of the group stop them from challenging things they know to be wrong (see Social Identity Theory!).

Companies which have scaled fast are highly likely to lack some of the checks and balances that mitigate against toxic leadership: robust HR, risk and audit functions; effective people processes; management training; performance management.

How this idea can help:

Founders should take an interest in their own leadership and personality, and use tools to help them understand themselves better*. Every leader has traits that they over play, and it is helpful to know what these are, even if they are not dark triad traits. Even if they are not able to change, they may be able to mitigate the effects. Tools like Hogan HDS or Dark Triad of Personality at Work can give founders data that perhaps makes uncomfortable reading, but their companies will be better for it.

* I would not advise using type based tools (MBTI, Enneagram) to explore this area. My opinion: type tools are popular partly because they make people feel good (I’m an “INTJ” or a “Challenger”, and I’m amazing). These tools are not going to tell you much about the darker side of personality.

If you enjoyed his article and want to hear more about how psychology can help your business, you can get in touch at rich@peopleuphq.com. Alternatively, you can book a slot through the Startup People Clinic, and have 90 minutes with me and the excellent Craig Winterton for free.

References

  1. Tajfel H, Billig M G, Bundy R P & Flament C. Social categorization and intergroup behaviour. Eur. J. Soc. Psychol. 1:149–77, 1971
  2. N. G. MacLaren, F. J. Yammarino, S. D. Dionne et al., “Testing the babble hypothesis: speaking time predicts leader emergence in small groups,” The Leadership Quarterly, Article ID 101409, 2020
  3. For example, Woolley, A. W., Chabris, C. F., Pentland, A., Hashmi, N., & Malone, T. W. (2010). Evidence for a collective intelligence factor in the performance of human groups. Science, 330(6004), 686–688
  4. Michaels, E., Handfield-Jones, H., & Axelrod, B. (2001). The war for talent. Boston, Mass: Harvard Business School Press.
  5. Atomico. The State of European Tech. https://2019.stateofeuropeantech.com/
  6. Science for Work. Ignoring Bad Leadership May Be Risky Business — Here’s Why. https://scienceforwork.com/blog/bad-leadership/ (Includes full references to sources.)
  7. Paulhus, Delroy L; Williams, Kevin M (December 2002). “The Dark Triad of personality: Narcissism, Machiavellianism, and psychopathy”. Journal of Research in Personality. 36 (6): 556–563
  8. Characteristics & Behaviours of Innovative People in Organisations, NESTA/City University/Work Psychology Group, 2009
  9. Ahmetoglu G., Chamorro-Premuzic T. (2013). META. Technical Manual. London: Metaprofiling Ltd.
  10. Kramer, M., Cesinger, B., Schwarzinger, D., & Gelléri, P. (2011). Investigating entrepreneurs’ dark personality: How narcissism, Machiavellianism, and psychopathy relate to entrepreneurial intention. In Proceedings of the 25th ANZAM conference.

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Rich Littledale

Psychologist in startup land, exploring the people side of technology and technology businesses. Consulting at www.peopleuphq.com, co-founder at www.supc.co.uk