What I really want to guage is how much reponsibility one feels as a founder/leader to deal with team members melting down over criticism or other factors vs how much responsibility one has to driving progress on the product.
Any thoughts would be greaty appreciated.
Anyone whose feelings are easily hurt through criticism will never be good at what they do. I write good code a lot of the time. Sometimes I write bad code when the situation calls for it. Sometimes I write bad code because my head is up my ass (but I almost see light!)
With that said, sometimes you need to just shut up and keep your head down, even if you're in charge. In the short term, it can be not only an effective strategy but the only way to do business.
In the long term, obviously you need to correct the problem. Whether that's through helping to grow the sour team member or culling them from the flock is of course a case-by-case decision.
2. make it clear code criticism is a collective learning process and is never personal (we all write terrible code).
3. Make sure everyone is clear about objectives both short and long term.
4. Encourage everyone to have fun doing what they are doing.
<edit> 4a. If you are the manager/team leader - make sure you spot when things are going right and give praise and encouragement. Try catching people doing things right instead of wrong. </edit>
5. If someone is consistently failing or getting in the way of the others then it is time for them to part - quickly.
Read this: http://strengths.gallup.com/110242/About-Book.aspx
You're there to get things done, not make each other feel happy and have neat lunches. If you're more interested in going to fun parties and having fun lunches, go work at Google or Facebook or another dying company.
If you want to get things done, focus on the strengths needed to get things done.