Case in Point: The Heartland Angels

Heartland Angels, Inc. might be described as a private equity network that helps investors identify companies in which to invest. However, the focus of the individuals who make up Heartland Angels extends well beyond investing. While the “core” of Heartland Angels is its network of investors, it is also a network of mentors, advisors, and consultants who work together to provide knowledge, share expertise, and introduce a slate of management assets to enthusiastic entrepreneurs and newly established management teams.

Ronald L. Kirschner, MD, is the president of Heartland Angels.3 In some ways, Dr. Kirschner’s career has been similar to those of typical physicians. He has practiced medicine for 23 years. He has served as the president of the Irving Park chapter of the Chicago Medical Society. He taught at the Illinois Masonic Medical Center and was previously an assistant professor at Southern Illinois University School of Medicine. He also completed residencies in emergency medicine at the University of Chicago and in anesthesia at West Virginia University.

That is where Dr. Kirschner’s career as a typical physician ends. Throughout his life, Ronald Kirschner has had an unquenchable thirst for knowledge and an equally demanding curiosity. He has always been interested in how different methods might improve the quality of life for individuals, families, and entire communities. His studies in medicine, science, and business have prompted his interest in how to best set the stage for individual, team, and organizational success. He has confidence in the potential of science and technology to improve life but realizes there are many situations in which the right resources aren’t available to innovators.

This realization led Dr. Kirschner to broaden his focus beyond the practice of medicine. He became actively involved in health care innovation and development, startups, and private equity. While still practicing medicine, he established three companies dealing with nutrition, managed care, and health care resource utilization. He served as a subject matter expert on health care issues to the Illinois State government. He served as a VP of technology development for a biotechnology company and was involved with the board of directors of a company that develops FDA-approved cancer treatment drugs based on traditional Chinese medicine. He has also helped the owners and leaders of a slate of early stage companies make funding, planning, and development decisions. After spending time on these various activities, Dr. Kirchner recognized the need for a network of investors, mentors, advisors, and consultants to help stimulate local innovation in a more coordinated way. To do so, Dr. Kirschner established Heartland Angels.

The Heartland Angels business model is unique. It brings human, intellectual, and financial capital together to achieve two important objectives: to serve as a catalyst of innovation and to provide the means by which early stage organizations will not only survive but thrive. Heartland Angels targets companies that focus on three areas: scienceand technology-based innovations; retail, manufacturing, and distribution; and telecommunications and information technology. Heartland Angels has established a track record of identifying promising startups and helping them succeed. Heartland Angels’ approach consists of four components:
1. The team establishes a highly structured approach to funding viable innovations.
2. A comprehensive analysis is conducted with early stage management teams to identify the opportunities, blind spots, biases, and challenges needing action.
3. Experts and executives with deep expertise provide real-time guidance and assistance.
4. Protocols are established to ensure optimal communication and leveraging of resources and capabilities between the investor network and portfolio company.

These four components form the basis for accelerating the success of each new venture.

Dr. Kirschner realized early on that Heartland Angels’ network of mentors, advisors, and consultants would have to set it apart from other private-equity firms. To succeed, they would have to work together to gain the trust, confidence, and commitment of entrepreneurs and newly established management teams. He recognized that to gain trust, his network would have to prove through its words and actions that it is on the side of the entrepreneur. They had to help
each management team with both their short-term and long-term
success.

To execute on this goal, Dr. Kirschner established several key priorities to help ensure that the Heartland Angel network would deliver value:
■ All investment opportunities would need to fall within the three core priorities for the Heartland Angels: science- and technologybased innovations; retail, manufacturing, and distribution; and telecommunications and information technology.
■ A structured evaluation for investors was necessary at the front end of the process. This front-end evaluation would assess risks associated with the opportunity.
■ An analysis for entrepreneurs was also necessary. This wouldsurface both the internal strengths and weaknesses as well as the external opportunities and threats that the management team would need to address.
■ A deeper operational review would evaluate matters of technology, systems, processes, governance, and management practices. This evaluation would define a blueprint for management and also would reveal the founders’ biases and blind spots.
■ The completed analysis informed an evaluation of the management team itself, surfacing both strengths and competency gaps that would need to be addressed.

Addressing these priorities in a proactive manner allowed Dr. Kirschner and the network to identify the best ways to provide support for each new venture. Achieving success as a startup is no small task. Each management team must address competitive challenges, prepare for short- and long-term growth, apply leadership and management capabilities, plan and coordinate resources, distribute products or deliver services, hit key milestones, and execute an agreed-upon exit strategy.

To raise the likelihood of success, Dr. Kirschner established a network of individuals to provide needed guidance and support. Although Heartland Angels’ broad network of resources stands ready to provide needed assistance and support, new ventures typically receive initial guidance and direction primarily from Dr. Kirschner. He uses this time to sensitize the management team to deficiencies and capabilities that need to be addressed in the organization’s business plan in order to give them initial credibility when presenting to prospective investors. For example, a management team might add a CFO before presenting its business plan so that the team is better equipped to firm up the financial forecast.

Dr. Kirschner helps each new venture prepare in order to present a compelling case for its founders’ vision to prospective investors. From his perspective, a compelling case requires speaking from both conceptual and tactical perspectives. Conceptually, Dr. Kirschner helps
ensure the entrepreneur can tell others about the vision for their product, service, or company. It is important for prospective investors to understand why it should exist, where it currently stands, and where it is headed into the future. It is important for the entrepreneur to demonstrate a thorough and well-considered understanding of the problem they are going to solve. Tactically, Dr. Kirschner helps ensure the founder can prove to others that the management teamhas thought through the full spectrum of business issues, considerations, and implications involved in successfully executing their strategy. Here, Dr. Kirschner tries to expose personal biases and blind spots likely to impede their success. This could include gaps in research and development, transfer of knowledge and technology, marketing, supply chain management, manufacturing, distribution, or scaling strategies.

The range of capabilities that Dr. Kirschner helps them consider extends well beyond the topics taught in a typical MBA program. To garner the interest of prospective investors, the entrepreneur must do the following:
■ Share insights, realizations, and lessons that go beyond the technology, services, products, or financials. The entrepreneur must share something meaningful, something likely to resonate “with folks outside of the room.”
■ Tell a credible and believable story about where the idea came from, how the product or service will meet a need, how many individuals are willing and able to purchase the product or service, and the challenges the company will face on the road ahead.
■ Describe how the product or service will benefit society. Simply generating revenue or gaining wealth is not compelling for the type of investors Heartland Angels works with.
■ Demonstrate through experience and commitment that the entrepreneur has the fortitude to take this idea from concept to reality. The catalyst for this falls outside of dollars and cents—it falls within the heart and mind of the leader.
■ Address how any technology-related aspects of the plan are a viable solution to an everyday concern, challenge, or problem. Technology for its own sake is a trip to be avoided.
■ Create excitement with the prospective investors. A good idea will compel them to ask questions. The best ideas will prompt follow-up questions. Dr. Kirschner watches for both.

Only after the founder and management team have demonstrated an ability to tell a conceptually and tactically compelling story are they allowed access to the Heartland Angels’ broad network of alliances, mentors, advisors, and consultants.

Heartland Angels has established relationships with professionalmservices firms, service providers, and academic institutions that help amstartup with execution and the necessary coordination of resources.mThese alliances are mutually beneficial in that they allow organizationsmto showcasemdiscoveries and innovations, establish strategic relationships in adjacent industries, source prospective employees, and share mutually beneficial information within the alliance. These alliances also provide information and data likely to prove useful to management teams preparing to present to prospective investors. Alliance members frequently work together to identify opportunities to join forces. To enable these connections, Heartland Angels will frequently sponsor social events that allow entrepreneurs from different industries and disciplines to network and share stories.

Heartland Angels established a formal mentoring program designed to provide concrete and timely guidance to entrepreneurs. Like most mentoring programs, the Heartland Angels’ mentor establishes a lasting and trusting relationship with the entrepreneur. The mentor helps develop self-awareness and a better understanding of their context. This can include help to:
■ Outline goals and objectives for moving forward,
■ Clarify personal values that are key to short- and long-termsuccess,
■ Identify and capitalize on opportunities for personal and professional development,
■ Surface and take steps to address personal weaknesses, or
■ Recognize and take steps to mitigate personal biases and blind spots.

Heartland Angels has also established a network of voluntary advisors who are best suited to assist early stage companies operating within a particular industry or sector. These advisors help establish accountability within the management team and ensure that everyone delivers on their accountabilities, achieves their performance objectives, and performs in accordance with predefined outcomes. The advisors’ focus differs from the role the mentor plays. The advisors help teams respond to nuanced situations and circumstances, and address challenges pertaining to specific matters of organizational structure, strategy, technology, systems, processes, and practices. The advisor serves as a trusted generalist and many times is the only person with whom the entrepreneur, small business owner, or management team member is comfortable sharing initial thoughts and ideas. The advisor frequently helps the entrepreneur think through issues, considerations, and implications. They occasionally participate in crucial conversations and help facilitate critical meetings. Advisors typically provide introductions to thought leaders, professional services firms, and consultancies that are likely to prove useful and beneficial to the entrepreneur in the future or when certain situations or circumstance emerge. Heartland Angels advisors have practical experience. They help entrepreneurs translate a raw idea into a compelling vision and transform a group of new employees into a high-performing team. They also help managers think and act like leaders and provide guidance and direction on what the management team can do to help set the stage for short- and long-term success.

In addition to the advice and expertise, the Heartland Angels established a network of service providers who offer support in areas such as business planning, accounting, marketing, supply chain management, and manufacturing. Heartland Angels helps set the stage for a successful partnership with these providers, ensuring that they are more than just transactional relationships. Individual consultants and consulting firms are required to complete a comprehensive and detailed questionnaire when applying to the network, and once accepted they must provide references. The Heartland Angels network database provides a profile of each individual consultant and
service provider, including details on capabilities relevant to early stage
companies.

These are the key actions and steps Dr. Kirschner takes to leverage the hands of his fellow investors and partners. Collectively, they offer greater value to the early stage ventures they work with than Dr. Kirschner could alone. In making these connections, he is constantly expanding and leveraging a wide network for the benefit of these ventures. He gladly gives his own time where he sees the opportunity. By doing so, Dr. Kirschner leads by example. As others follow his lead, he bolsters trust and confidence within the overall Heartland Angels network.

Winning Hearts, Engaging Minds, and Leveraging Hands

Strategic leadership entails enlisting others who can help provide insight and drive change. To enlist others, it is essential to win the hearts, engage the minds, and leverage the hands of others. To win hearts, ask others to contribute to a cause that is meaningful and important to them, think and act as a selfless steward, and take steps to include and involve stakeholders in important decisions. To engage minds, strive to share information others will need and solicit input on how to proceed. To leverage hands, take steps to make connections between parties that can apply knowledge, skills, and abilities where they will have the greatest impact.

Taking actions like these can attract, engage, and retain individuals, which is crucial to success. Enlisting others can also free up capacity for matters of strategic importance. Committed partners can also enhance strategic thinking by bringing creative and innovative ideas. As a close colleague in a professional services firm points out, in some cases 1 + 1 = 4.

We’ve now reviewed the actions that individuals can take to gain insight, drive change, and enlist others. Having examined what effective strategic leadership looks like, this prompts a question we are often asked but have yet to address in this book: How might an individual bolster his or her ability to think and lead more strategically? We address this important question in the next chapter.

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