Culture is the foundation on which every startup is built. It becomes the soul of the company. It guides the company. It brings the company together. It binds the company together in good times and bad.

Culture is a common set of behaviours and values. Culture creates a shared understanding of how employees make decisions and work together. A common culture enables a startup to scale execution, by guiding the team to make day-to-day decisions in a decentralised way. Culture is what makes everybody in the company, from the chief executive to the receptionist, feel the same thing: We’re all in this together.

Setting and delivering against goals is an obvious driver of execution and growth. But so is culture. Goals are the “what” the team needs to do.  Culture drives “how” the team executes against the goals. As the company scales goals get harder to communicate successfully. They get diluted as they get passed down into the company from the top, layer by layer. In contrast, culture becomes more powerful as the company scales.

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So how do you drive a company culture?

1) Choose cultural statements that mean something to the team

Often I meet startups who know what a good company culture should look and feel like but struggle to cultivate one. Putting up posters and giving presentations using abstract words like “courage” and “ambition” won’t do.

The trick to defining culture is to use real words and concepts that mean something to the team and are actionable. Don’t let culture be defined too abstractly or conceptually. A powerful question to help catalyse a concrete culture discussion is “Tell me about past companies you have worked for and the culture — what did you like and not like?”

At MobileIron, a company I invested in and nurtured from whiteboard to initial public offering, one of our cultural statements was “intellectual honesty”. By this we meant “celebrate the good and talk about the bad”. In previous startups we felt that there had been a lack of discussion about what hadn’t been working. Although it’s uncomfortable for the company, the only way you can improve is to analyse and discuss what’s not going well. And of course, celebrate the good. The founders of a startup might come up with a dozen or so cultural statements like this one.

2) Convey the culture through company lore

On a day-to-day basis there are ways leaders can convey their culture through referring to what I call ‘company lore’. Families transmit culture through stories. Companies do the same. Company lore comes from real-life situations that reflect the culture. For example, an employee going the extra mile to make a customer happy; spending the weekend in the office to make a big deadline; the all-hands-on-deck couple of weeks to win a big customer deal; saying no to a big deal because it didn’t reflect the company ethos; the customer meeting that catalyses an entire new product and business opportunity.

Culture can be explicitly described to new hires and often repeated at executive offsite meetings through the repetition of company lore. Relaying these stories helps the chief executive make explicit the culture which holds a company together.

3) Interview for company culture

Human resources should interview for cultural fit as well as technical skills. Each new addition to the startup team either reinforces or undermines the culture. Hiring is a culture moment.

The risk in encouraging leaders to hire for culture fit is that they can understand the directive as “hire people like myself”, which creates an overly homogeneous team.  How to avoid that? Ensure that the company culture is well-defined and transcends any individual personality and that fit with it is made an explicit requirement in the hiring process.

As drastic as it sounds non-culture fits may undermine and fracture the culture for everyone else.

4) Leverage “cultural moments”

There are certain moments when company culture will be given the opportunity to shine and others when it will come under threat. Some expected and others a surprise. Cultural moments could include decisions to hire or fire someone; dealing with bad news; recognising good news; tradeoffs between short-term and long-term gain or dealing with conflict or issues where there isn’t a straightforward answer.

How we handle mistakes and failures creates powerful cultural moments that test the reactions of leaders, reinforcing or undermining the beginnings of a culture. Losing a major existing customer is a painful moment. As part of the leadership team do you own the failure and use it as a teaching moment? Or revert to finger-pointing and defensiveness? If you mess up a major product delivery or miss a target, how do you react? Drop the hammer and fire people? Dig in to find the problem and fix it? Use it as a learning moment to prevent future recurrence? All are potentially legitimate responses.

Each response encodes a significant cultural moment as to how the company deals with mistakes, failure, accountability and learning. Everyone carefully watches how the chief executive and leadership team respond to mistakes and failures.

5) Recognise the cultural leaders

The chief executive and the founding team must also remember that they aren’t the only ones who influence culture. Sometimes less obvious cultural leaders have a huge impact. For example, the office manager is the one person every employee interacts with on a regular basis and gets guidance from. These less obvious cultural leaders are crucial in conveying culture.

Finally, although culture is the foundation that holds the company together, it cannot be rigid and dogmatic. Culture must evolve over time in response to company changes. The culture is the company.

Tae Hea Nahm is cofounding managing director of Storm Ventures, investing in early-stage tech startups, and co-author of Survival To Thrival: Change or Be Changed.

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