One of my favorite management books is Patrick Lencioni’s The Five Dysfunctions of a Team. The easiest dysfunction for a team to address is “Fear of Conflict”, described as, “…people spending inordinate amounts of time and energy trying to avoid the kind of passionate debates that are essential to any great team.” In my past operating roles, “healthy debate” was considered a sign of high team performance. And in the teams I was a part of, I heartily jumped into disagreements like a gladiator preparing for battle. Unfortunately, I would seldom “..emerge from heated debates … with an eagerness and readiness to take on the next important issue.” Instead, I felt worn out and beat up but told myself it was all in the service of avoiding team dysfunction.

About a month after I joined Impact Engine, I disagreed with my partners about a prospective investment. I just couldn’t get comfortable with the company’s growth strategy and I steeled myself for the coming debate. I prepped my arguments and breathlessly rattled them off. I tensed up preparing for the counterpunch. One of my partners simply said, “I can see how you arrived at that conclusion.” Stunned, I thought, that’s not how things are supposed to go.

Since then, we’ve had many passionate debates but they are always about getting to the right answer and not about who’s winning or who’s losing. One of Impact Engine’s key demographic differences is that we’re a women-led firm (and have a women-led board). As the sole man among the partners (a rarity in investment firms), I’ve observed that how we resolve differences is different from every previous position I’ve held; all of those were with teams led by men.

Aside from how we settle arguments, there are many other differences I’ve noticed. Our talent pipeline for both full-time and intern employees tend to have even gender representation. In the 2019–2020 academic year and this summer, we’ve had 12 MBA interns with 6 women and 6 men. When I spoke to our summer interns, one surprising thing to several of the interns was how flat our team feels when discussing deals. Interns and associates were encouraged and expected to weigh-in on potential investments. Another noticed that secretarial tasks, from note taking to scheduling events, were shared up and down the organization.

All of our partners have families with working spouses and school-aged children. This is also different from most leadership teams I’ve experienced, where it was more typical to have a spouse managing the household. At Impact Engine, we understand that there’s a need for balance and there’s no stress when we schedule meetings around school or other personal events. Not having to worry about what your coworkers think of your commitment to work because of family priorities like soccer games allows me to do my best work.

45% of our investments have had at least one woman founder. It’s not something we set out to do but it is an outcome we are proud of. It’s substantially different from the industry norm and it shows that those investments are out there.

All of these observations have made it apparent to me that greater diversity of leadership naturally leads to greater diversity of thought and outcomes. In addition to gender diversity, we are doing well on diversity of professional backgrounds, which greatly adds to our breadth of understanding of industries and deals.

When it comes to racial diversity in our portfolio, we are proud to exceed industry averages, with 27% of our portfolio companies having at least one non-white founder (including 9% Black and 4% Latinx), but we need to do better. While we do make it a priority to include racially diverse candidates when hiring for full-time roles, those positions don’t come up very often. Our intern recruiting process represents an area where we can effect change more quickly; we are actively seeking underrepresented candidates. We are also working to diversify our board. In the meantime, we’ve redoubled our efforts to source early stage companies founded by members of underrepresented racial groups, through building and strengthening additional sourcing connections.

I believe that the diversity of our team has been core to our strength as a firm. We have had several spirited debates about how we can do better to reflect racial diversity in addition to gender diversity in our team, our investments, and our portfolio companies. We will continue to push each other to raise the bar, even when it makes us uncomfortable. I like to think that we would make Patrick Lencioni proud.

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