So you’re all pumped up about creating the culture you need to fuel the growth of your company… Well, sooner or later you’re gonna come across a sceptic who’s determined to burst your bubble. It might even be someone on your board.
For the sake of this blog, let’s call him Alan. Alan the Sceptic.
Alan’s super smart and he’s been there and done it. He’s scaled two companies and now he sits on your board as an advisor. He always turns up wearing the same combination of: white shirt, quilted gilet, jeans and smart brown shoes… but he never seems to wear the same item of clothing twice. Yeah that Alan, you know the one. How many quilted gilets does one man need?
You’re chummy with Alan, but you’ve never really bonded. You suspect he has an agenda, but you can’t work out what it is.
It turns out Alan’s been waiting until your efforts at creating a great culture hit the rocks. You’ve invested a bit of money and a lot of effort, but to be fair nothing seems to have really changed. Then Alan’s going to drop the bomb… “you can’t create a culture, all that soft fluffy stuff is a waste of time. It’s all about leadership - you’ve either got what it takes to scale a company or you haven’t”.
So is Alan right? Well yes and no.
What is true is that you can’t determine what your company culture will be. You can’t spend a few hours thinking about it, then put a piece of paper on the wall titled “our culture” and think the job’s done. (Although, to be fair to Alan, you’d be surprised how many consultants encourage leadership teams to do a more expensive version of exactly this.)
You also can’t control your culture. Culture is an emergent property of the group. It doesn’t belong to anyone. No one owns it. It emerges out of the complex interplay of your people and their interactions with the outside world.
Nor can you define or capture what your culture is or should be. You can (and should) have a good idea about what your culture is and isn’t, and where you want to get to. But any attempt to document your culture will impoverish it. And any attempt to observe it, will change it!
Let’s go back to the definition of culture we follow at The Pioneers:
For your business to survive and grow the people who work for you need to learn how to do two things: how to engage successfully with the outside world (users, customers and investors) and how to work together effectively as a team. Over time norms emerge that define what people need to notice, think, feel and do in order to fit in or belong to the company - thats your culture.
Culture is distributed shared learning. It sits in the minds of everyone who works for your company. That’s not to say that every one of your employees has an equal influence or responsibility for your culture, but as a leader, you can’t control what other people think.
The right attitude as a CEO is to try and influence your culture. To try and influence the learning that takes place about how people ought to work together and to deal with customers. You’re trying to guide people’s discovery. You can be a preacher, a teacher and a role model. But you can’t work out the answer and tell it to everyone. That really doesn’t work! Being an effective cultural leader requires practical wisdom and it’s quite a different skillset to the analytical capabilities that typically characterise executive roles.
So now you’re in the right mindset… it’s worth understanding the 4 factors that influence company culture and what you can do about them...
Let’s get the most obvious one out the way first… start-ups tend to reflect the personalities and characteristics of their founders. The first people who joined your company, came to work for you and your ideas… let’s be honest that’s really all the ‘company’ was. They bought into your passion, your vision, your values and your capability.
Reid Hoffman calls these early start-ups ‘families’ and just like families they tend to inherit the deeply held values, traits and assumptions of their founders in the same way as parents pass on these qualities to their children.
These traits quite often become so deeply embedded in the cultural DNA or soul of the company, that even when the company grows to tens of thousands of employees it still carries the mark of the founder’s personality.
Only one thing really matters to a start-up and that’s getting the business off the ground. Most successful start-ups develop a ‘we’ll do whatever it takes’ mentality that keeps them pushing through rejections, disappointments and frustrations until they discover that elusive product/market fit.
Referencing back to what we mean by culture you’ll recall that Schein’s definition of culture talks about “the accumulated shared learning of the group as it solves its problems of external adaptation and internal integration”.
Well from this perspective, the cultural challenge for start-ups isn’t really about “internal integration” it’s about “external adaptation”. People are so emotionally invested in making it work that they’re ready to pivot away from habits, ways of working or hypotheses that don’t appear to be working. The cultural litmus test in a start-up that wants to grow significantly, isn’t whether a particular way of working makes the team happy or more effective… it’s whether it wins customers or users.
In the race to win and keep customers you encounter problems and you try to solve them. If you try something and it seems to work, you stick with it. If it doesn’t work, you try something else. The more something seems to work, the more embedded it becomes in your culture. Something that may have started as a deliberate experiment, purely by chance or even by mistake, can relatively quickly (and unintentionally) become a core part of your culture.
A great example comes from one of our favourite clients - Honest Burgers. One of their values is simplicity. It’s reflected in the menu, the set up of the restaurants and the way everything operates behind the scenes. It’s a value they actually live by and it’s been a huge driver of their success.
But Tom and Phil (Honest’s founders) didn’t set out to create a simple business. While they were planning how and where to open their first restaurant, Tom spotted an opportunity in Brixton Market. The location was off the beaten track and the unit was tiny, but that meant it was cheap enough that they could get started straight away.
The Honest Burgers in Brixton Market is still there. If you go, you’ll discover that it’s smaller than your living room. And because the restaurant was so small, Phil and Tom couldn’t fit in a coffee machine and they couldn’t serve deserts. But it didn’t matter. Before long they had mile long queues and a review from Jay Raynor that described their rosemary salted chips as “the edible equivalent of crystal meth”.
It may have been by chance, but they found a recipe for success (boom boom tish) and simplicity became a core part of their brand and culture.
No company is a cultural island. Every business is influenced by ‘meta-cultures’. Meta cultures are cultural phenomena (i.e. ways of working, shared mental models, values, behaviours etc) that stretch across multiple companies.
Professions are a good example of meta-cultures. Belonging to a profession means signing up to certain shared values, priorities and ways of working. That’s why in industries with strong professional standards, like law or accountancy, the culture of the companies tends to be (often disturbingly) similar.
Countries also tend to have their own work meta-culture. In the US there are different assumptions about how companies should work to those in the UK, or France, Scandinavia or Japan.
There are also generational meta-cultures. Founders in their 50s probably start their companies with a different set of assumptions about how they should work to founders in their 20s.
When you’re a start-up, buying into a meta-culture (consciously or not) is probably a good thing. It stops you having to invent everything from scratch. The Lean Start Up movement is probably the most obvious meta culture that start-ups can consciously buy into. Doing so gives them a structured way of working, a set of beliefs and values that makes it more likely they’ll succeed.
The time to be wary of meta-cultures is when you’re looking to be a disruptor. If you want to disrupt a market, then your culture has to be different to your competitors. You can’t expect to get different outputs if you’re starting with the same values, assumptions, structure and ways of working as the incumbents. The challenge is that the most profound assumptions that sit within meta-cultures are often the ones most hidden from view. If you work in an office environment, the assumption is that you’ll start work at about 9 or 10 and finish at about 5 or 6. The assumption is that most of your people will work a 5 day week and that this will be their only job. There’s an assumption that teams need managers and when you’ve got 8 - 12 managers, they need a manager too.
Very few scaling businesses stop and think about which aspects of their meta-culture they want to consciously distance themselves from. Indeed very few scaling businesses are even aware that meta-cultures are influencing the way they work. If you really want to be a disruptor, then this almost certainly means you’re unwittingly constraining your ability to innovate and challenge the status quo.
When you’re a start-up, everyone on the team knows what’s going on in everyone else’s heads. You have a huge amount of very immediate, shared experience, which means you don’t need to write a lot down or create much formal structure. Everyone tends to be on the same page (or if not it becomes apparent pretty quickly) and people know why things are happening and who they should call in for help with a particular problem.
From a founder's perspective, you know the capability and experience of everyone on your team, you know what motivates them and you know what else is going on in their life. When you’re small, the most effective and efficient way to run your company is through your personal influence. If you introduce too much structure, you slow the company down and it gets in the way.
But this approach starts to break down when you transition from a tribe to a village. As you grow towards 100 people, it’s simply not possible to run your company like the tribal chief. If you continue to act in this way, you become a blocker to pace and progress. Everything seems to need your input, no one seems to want to take ownership of a decision and when they do, they invariably get it wrong.
This isn’t because you’ve lost your charisma as a leader or that you’re not working hard enough, it’s because at 100 people, your company is way too socially complex for you to run it on personal influence. Your brain simply doesn’t have sufficient capacity to stay on top of what’s going on in everyone else’s heads. You can no longer keep on top of who’s in with whom and which interpersonal levers you can pull to make things happen.
At this point you need to focus on the fourth influence on your culture – the systemic or situational influences on your people’s behaviour, what we call the people operating system.
As your company grows, you create processes for managing your people. You create structure and roles. You settle into a rhythm of particular meetings. You use technology to try and collaborate more effectively. And there are things you start to consistently measure and control. Whereas once upon a time you approached every hire with a blank piece of paper, now you’ve got a recruitment process in place and people responsible for it. You’ve probably got a consistent approach to employment contracts, how you manage performance, what to do when people go off sick and so on. We think of these things as components of your people operating system.
The bigger you get, the more process you layer on, the more influential it becomes. When you were a start-up it was easy for individuals to have an impact and to change the way the business works. The more structure you add… the more difficult it becomes for individual employees to effect change. And at The Pioneers, we believe that there’s a transition point in the growth of every organisation, where the influence of the ‘system’ on what people notice, think, feel and do starts to out-weigh the influence of individual dispositions or capabilities.
This typically happens as you transition from a tribe to a village and it’s at this point that you need to think carefully about how you design and build your people operating system so it promotes the culture you want and so you can create a work environment that flows.
Get it right and you fuel the next wave of your growth. Fail to build it out or get it wrong and everything becomes a slog. You’ll either crash and burn or you’ll decide growth just isn’t worth the hassle and you’ll go back to being a tribe again.