How to build a powerful culture for your startup business?
Company culture has become one of the hot topics in the startup and business world. It’s not just a buzzword. Culture certainly impacts organizations in very tangible ways. It frequently makes or breaks them. It can open up their potential, or quickly tank even very successful and trendy organizations.
So, what is company culture all about? What makes it so pivotal in the success and failure of so many ventures? What are its main components? How do you build a great company culture, and maintain it?
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Here is the content that we will cover in this post. Let’s get started.
- 1. What Is Company Culture?
- 2. Why Is Culture So Important?
- 3. The Consequences Of A Weak Company Culture
- 4. Key Components Of Company Culture
- 5. Who You Hire
- 6. Who Is On Your Board
- 7. Who Your Investors Are
- 8. How You Operate
- 9. How You Make Decisions
- 10. Who You Sell Your Company To, Or Merge With
- 11. Why Company Culture Falls Apart
- 12. Financial Pressure
- 13. Installing The Wrong Decision Makers
- 14. Hiring Poorly
- 15. Losing Control With Growth
- 16. How To Construct A Powerful Culture
- 17. Create A Strong Foundation
- 18. Lead By Example
- 19. Hire For It
- 20. Reiterate It Often
- 21. Create A System
- 22. Be Flexible
- 23. Reward For It
- 24. Fire For It
What Is Company Culture?
It is increasingly being talked about, but what is it?
While frequently talked about, it is rare to find anyone talking about and defining what it really means. Especially in this context.
It could be most simply put as behavior.
It is how a company behaves and operates.
This is based on its beliefs, values, and structure. It is evidenced by how it acts and engages. Perhaps even in the language, dress, and wherever design shows up.
HBR describes culture as one of the two most critical levers executives have at their disposal to use. The other is strategy. It is one of the main ways that leaders can influence outcomes in their organization.
Why Is Culture So Important?
Highly successful entrepreneurs frequently point to culture as one of the most important things in business. Why is that?
Culture dictates and influences many things in an organization, including:
- Quality versus quantity
- How decisions are made, and what decisions are made, even when you are not there
- Sustainability of a company
- NPS scores
- Customer loyalty
- Who you attract
- Infighting versus cohesiveness as an organization
The Consequences Of A Weak Company Culture
What are the potential downsides of not intentionally building and maintaining a powerful company culture?
The common side effects and outcomes of a weak culture include:
- Infighting among team members, shareholders, and executives
- Under-serving customers
- Poor quality product and experiences
- Being ousted from your own company
- Being forced to sacrifice the mission and long term for short term decisions
- Business failure
Key Components Of Company Culture
What makes up and determines your company culture? How to build a powerful culture?
Your company values are perhaps the most influential element in your company culture. At least they should be. This is one reason why so much more emphasis is being put on establishing great and effective corporate values today.
If they are designed and implemented well, your values will guide company culture. If not, then they may not make much difference.
They should be the basis of your decision-making framework for everything.
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Who You Hire
The people in your company live the culture. They reflect and show what the culture is to others. That comes through their personal interactions with investors, customers, and personal contacts. It comes through the product, experience, and service.
The people on your team are your culture. Who you hire will greatly dictate what it becomes, and is seen as by everyone else out there.
If they are out there bad-mouthing customers, taking advantage of people, or engaging in activities and behavior which negatively impact your company’s reputation, that’s what the world will see as your culture. Regardless of what your values say on paper.
Who Is On Your Board
The board of directors of a company is largely responsible for making decisions, and guiding the company. That in turn determines actual behaviors throughout the organization. As well as what outsiders perceive the culture to be.
The board can often overrule or decide what the founders can do, and how.
They will also determine who will lead the company in operations, and to who it can be sold in the future. As well as who else can become shareholders and have voting powers.
Who you allow on your board will craft the culture. So, make sure they represent the culture you want to create. Consider how they have done this in their previous and other concurrent roles. Work out how they can contribute and build a powerful culture.
Who Your Investors Are
Similarly to your board, your investors are very influential in the culture.
This can be purely based on the culture that others associate with them. Such as how other companies they’ve invested in have behaved. Or it can be in the votes they cast and decisions they force in the company.
Do not underestimate this. If you take on investors with different values, they will soon be a part of the DNA of your company. For better or worse.
Their culture can be far more important than the amount of dollars that they may bring to the table.
How You Operate
Regardless of your intentions, how you operate is what people see your culture as. It is just as real to them as what you intended it to be.
For example, if you run into a habit of not paying your vendors or employees. Or you can’t deliver the product on time. Or, customers are often treated rudely or ineffectively by your customer service department.
In contrast, if you refuse to try and cut out intermediaries that have been providing good services. Or you always strive to make things right with customers. That also speaks volumes about your culture.
How You Make Decisions
It is impossible to have a consistent culture, without a consistent framework or guide for making decisions.
If you are just honest when it suits you, but rip people off when money is tight, then you’ll have some seriously fragmented culture issues.
However, if you have a set of values, and clear priorities which you check off to make decisions you can have a consistent and intentional culture.
For example, if one of your core values is integrity, all decisions, including your marketing campaigns should be done with integrity. That shouldn’t change, just because you are having a tough month.
Or if transparency is a top value, you might ask whether the outcome of this decision is something you are going to be willing to share or not. If you won’t want to be transparent about a questionable decision, maybe it isn’t in alignment with the culture you want to build.
Who You Sell Your Company To, Or Merge With
Your culture doesn’t just end with an exit. In fact, the decision to exit, who to, and how, should all prioritize your culture.
Going public can make it difficult to maintain culture. Especially with so many investors.
If you are going to merge or sell your company, then if you want the culture to continue, you are going to have to carefully select who you do that with. As well as who will be operating and managing your brand, products, and other parts of the business after the closing.
This can take a series of meetings in different settings over a long period of time to really assess. Testing the match with various partnerships or collaborative ventures over time can be smart too.
Figuring out how to institute the ideal company culture is just one of the different aspects of how to write a business plan to ensure success for the company. If you would like more information on how that’s done, check out this video I have created.
Why Company Culture Falls Apart
In spite of the best intentions and good initial efforts, company culture frequently falls apart. This can happen for a variety of reasons. Understanding them will help you resolve the pitfalls, so take the time to build a powerful culture.
It is easy to have good values, ethics, and business practices in good and easy times. It seems all too easy to throw that all out the window with a little bit of financial pressure.
If you’ve taken on too much debt or spent frivolously, then there can be a lot of temptation to just do whatever it takes to make the bills or avoid closing the doors.
In other cases startup founders just take in capital from any investor they can. Only to end up being forced to sacrifice their culture to satisfy investor demands. Often to be cheap, reduce the value, and charge more for less, to make aggressive monthly and quarterly targets. Rather than thinking about the long term.
Installing The Wrong Decision Makers
Whether it is cofounders, executives, shareholders, or board members, giving people that don’t share your culture power to make decisions is going to break it, and fast.
The same applies to all roles in your company. It’s not just c-suite roles or even department heads.
Put all the wrong people in your customer service team and your culture is gone. The perception of your company and the experience for customers is going to be very different.
This is frequently compounded by giving team members the wrong metrics to focus on.
Losing Control With Growth
Whether it is after 50 hires, 100, or 150, at some point you are probably no longer involved in the hiring and screening process. You don’t even know the names or faces of the people working in your company.
You can grow out of touch with them, and your customers. If you aren’t controlling the culture, the culture will evolve and take on a life of its own. Normally not for the better.
How To Construct A Powerful Culture
With culture being so important, what can you do as a founder and business owner to establish and build a powerful culture?
Create A Strong Foundation
The first step is to create a strong foundation.
This means establishing and defining the culture you want to have. Which also needs to be authentic to what your culture is as your founding team, and the customers you aim to serve.
Laying out a crisp and clear mission and vision statements, and core values are a big part of this.
They will guide everything else you do.
Be sure they are actionable, meaningful, and are something you can really stick to. It helps to be specific. Like if you say one of your core values is transparency, you may add, “always and completely.”
Lead By Example
Regardless of what you say, and what’s on the official posters, in the brochures, or employee handbook, your culture will be led and created by your personal example.
People will copy your behaviors and habits.
Live out those you want to be a part of the culture.
Hire For It
Entrepreneurs who take culture seriously and who make it a priority hire for it.
Hard skills and experience may only make up 20% of the hiring decision. The other 80% may be based on their fit in the culture.
You can teach and build on skills. It’s really hard to teach someone humility, integrity, and taking pride in their work.
Be clear about this from the job description upfront and beyond. Those who aren’t the right fit ought to bow out of the process before it comes down to the offer stage.
Reiterate It Often
Leading CEOs say that one of the most important things that they can do with their time is to reiterate their culture to their employees often. Keep it visible to all. Keep them on target.
Create A System
Create a system that keeps it being passed on as you grow. Systems for hiring, managing, and reiterating down through department leaders.
As you grow with different cultures and international or regional offices you will have to be flexible. You can remain firm on your values. Yet, each can have its own flavor of style.
If you are late on this, engage everyone. All of your team can have their say in what your culture is, and in how they live it out.
Reward For It
You get more of what you reward. So, reward your teams for living out the right culture. Give them recognition, and tangible incentives.
Fire For It
When people aren’t adhering to the culture and values, fire them. It is the best way to preserve your culture, and get out the bad apples before they spoil the whole batch. It will motivate others to stay focused. So, take the time to learn how to build a powerful culture and ensure the success of your venture.
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