Toronto-based tech startup System-3 recently raised $3.6 Million seed fund. System-3 is empowering companies to objectively identify and evaluate current and emerging leadership talent.
How did the idea for System-3 come about?
Our founder, Elan Pratzer, is a veteran of the executive search industry and a former Managing Partner of Caldwell Partners Canada, and Korn Ferry Canada.
Throughout his career, he was frustrated with the evaluation process of executives, which is often based on informal interviews and references rather than objective data. Experience (have you done this before?) and subjective judgment always reigned supreme in the decision-making processes. Yet, the net result of this methodology for companies has been lower than acceptable rates of successful hires and promotions, resulting in economic loss and opportunity cost, as well as the failure to identify up-and-coming and diverse internal talent.
This frustration led Elan to found System-3 and the development of a predictive system to provide unbiased, objective data on leadership competencies with a team of I/O psychologists and technologists.
Huge congrats on the recent fundraising round! What’s the traction been like with System-3?
Thank you! We are incredibly pleased to have Brahm Klar, of Round 13 Capital and other private investors as our partners. We are continuing to deploy System-3 and add to our growing list of clients. Our clients include enterprise companies and consulting firms using our predictive technology to evaluate team effectiveness and inform decisions for succession planning, talent selection and talent development. We are also working more with the VC community; with private equity and venture capital investors using our product to understand the leadership and culture of their portfolio companies and companies they are evaluating for potential investment. We are also continuing to build out our partner channels.
How do you help companies when it comes to leadership?
Our mission is to provide companies with objective and predictive data about leadership competencies for talent selection and development. Currently, there is too much subjectivity when evaluating leadership. Often leaders are selected or promoted for subjective reasons or personal preferences. This can restrict companies from selecting the best people, as well as precluding diverse and younger candidates. By bringing objective data to the selection and development process we help companies mitigate bias and build a lager pipeline of diverse and up and coming executives. For individuals within companies, we offer the opportunity for them to develop and prove their leadership capacity in a fair manner.
Why is leadership excellence in today’s workplace more important than ever?
If I have learned anything from my 30+ years in the industry, leadership and people are the core assets of accompany. It has been estimated that human capital and culture can comprise over half of a company’s market value. Research from McKinsey indicates that the business case for diversity in executive teams remains strong and companies with diverse talent and leadership are more likely to outperform less diverse peers in terms of profitability.
Great companies understand that leadership talent is their most important asset. They know that excellent leadership and culture as a business imperative, not as a “nice to have”.
Where do you see the HR tech space heading in the next few years? What are the trends?
A key trend we are seeing in the market is the significance of objective data. Companies are utilizing data and blending it with HR operations in a more thoughtful way. Executives and boards are looking for objective data and clearer insights into their talent. Including their bench strength. They are no longer satisfied with subjectivity and opinions.
The increasing complexity and rapid evolution of the business environment and workplace require objective and accurate data to support accurate leadership decisions. The cost of human capital mistakes, given the pace of change, is just too expensive.
Many companies and vendors are considering utilizing AI for these goals. While there is an important role for AI in HR, the models underpinning the technology must be sound, built carefully and constantly evaluated so as not to create adverse impacts. Humans still need to remain deeply involved in talent decisions.
What’s next for System-3?
We are consistently enhancing and refining our Leadership Simulation and undertaking ongoing research and analysis for further product development. We are completing the development of a System-3 certification program for coaches and consultants, providing training to enable them to use System-3 to enhance their provision of services. We are pursuing partnership opportunities. We are always looking for new partners! We see great value in partnering with diverse communities and talent service providers. Please connect with us for any further information or if you are curious about how we can work together.
How can people learn more about System-3?
Visit our website or Linkedin Page. You can also reach out to us directly at info@system-3.com
