So, why should startups care about Culture?

Reading Time: 5 mins

By Ganes Kesari

From the Leaders’ Desks

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“Organizational culture eats strategy for breakfast, lunch and dinner ”— Peter Drucker

An organization’s culture is that secret sauce that differentiates the best of companies from the rest. I have been intrigued by this concept and have been studying the influential role culture plays, in not just growth and scale, but also in deciding whether a company would stay afloat and see the light of the day.

From my experience of observing organizations small and large, I try and explain this with a simple parallel in this post, and trace the path to see how it forms at inception, what decides its evolution and when it could turn so dangerous that it warrants its destruction.

So, what is Organizational Culture? 

Is this what you put into your employee handbook or code-of-conduct? Is this influenced by what you carefully message in leadership emails and preach in your town hall meetings? Is this shaped by your marketing team’s top-dollar spends on branding and positioning?

No… all of the above may have short-term effects at best, but is unlikely to seep into the organizational culture, which is as deep as the human DNA. As a simple parallel, think of culture as equivalent to an individual’s character.

Character dictates how a person behaves, when no one is watching. It is something that comes naturally to a person, without any effort. It is a bundle of traits (say honesty, chivalry, self-respect..) that a person has formed over years, possibly since early childhood.

In a similar vein, Culture dictates how anyone in an organization behaves, when there is no oversight or managerial review. It is the natural way of addressing business-as-usual in every function or team. It is the set of qualities (say innovation, customer focus, empathy to employees..) that a company has formed & emphasized since its founding years.

Having defined culture, let us now trace its path over time…

I. Forming a Culture

Just like kids who learn the most in the initial 5 years after birth, an organization’s culture has its conception early on, in the initial months, when the founders are grappling with dire circumstances, for mere survival.

Surprisingly, the decisions taken by the founding team on whether to beg, borrow or steal to make ends meet, have repercussions much later. The core intent, ethos and actions are encapsulated and passed down, from a 5-member organization to a 500-member one, many many years later.

Fred Wilson summed this well in his post on Cultural differences:

“…the decisions a founder or founding team makes in the first few months of a company’s life are among the biggest decisions. They are setting their destiny in place, often without even realizing it.”

II. Evolving a Culture

Having formed fully in the initial years, culture then incrementally builds up in later years based on the philosophy and actions of the leadership team. Not very different from an individual who builds upon the innate character through his/her life experiences, and by exposure to new situations.

Simple ongoing decisions on how much the leadership trusts and empowers employees, the pains they take to make clients happy, how much they tolerate failure in the path to innovation, the integrity they hold while responding to difficult market forces: all of these have a profound influence on the entire organization.

The leader’s actions are taken as the unsaid word and mimicked down the line, much like how kids emulate their parents or their role-models through life. A leader must realize that with every small action taken in the apparent confines of one’s cubicle, he/she is actually playing out in the theatre of the company stage, in full glare of the entire organization and the employees.

Given that this is how culture incrementally gets shaped throughout the company’s journey, there is no obvious effect of any lip-service emails, town-hall proclamations or project-review posturing, if leaders live and act to the contrary. Ben Thomson in his excellent post The Curse of Culture, sums it well:

“…it can be argued that the only thing of real importance that leaders do is to create and manage culture; that the unique talent of leaders is their ability to understand and work with culture.”

III. Destroying a Culture

Since culture forms much like the path cut on rock by water, by flowing consistently over the years, its a mammoth task to bring about any changes to it. After all, don’t we all struggle greatly when we attempt to change any of our deep ingrained habits? Similarly, there are way too many failures of org-wide change initiatives, of teams rejecting new leadership, or of organizations imploding when a massive change contravenous to its culture or DNA, is thrust upon it.

Just like individuals who must shed ill-formed habits before it grows monstrously to consume them, it is inevitable that organizations must reform in order to do a course-correction before its too late. And real change can happen only when its culture amends. Here again, it is the leadership’s prerogative to bring about this change, by destroying a part of the very culture that they were instrumental to create and shape.

There’s this excellent example of Steve Jobs’ first keynote as interim CEO in 1997 after he got back for his second stint, wherein he announced Apple’s shocking partnership with Microsoft. Years of Microsoft (and IBM) bashing by Jobs had seeped indelibly into Apple’s culture, and with Apple fighting for its survival and badly needing a lifeline, the same leader was now destroying this very trait.

That this was considered sacrilege by die-hard Apple supporters was amply demonstrated by the audience who booed so loudly that Jobs had to stop speaking. Looking back, this was such a marked departure from the fanboy response he received in his later keynotes.

But this was considered a brilliant leadership move by Jobs to slay the culture dragon that he had raised over the years, and which had then turned destructive to the extent of sinking the company. Ben Thomson continues in the same post:

“…it is an ultimate act of leadership to destroy culture when it is viewed as dysfunctional.. This ability to perceive limitations of one’s own culture and to evolve the culture adaptively is the essence & ultimate challenge of leadership.”

This is the most difficult task of all, since it requires slaying of the internal demons that have been lovingly nurtured as pets, over the years. This requires the leader to shed undesirable character traits, be vocal about it and repeatedly demonstrate through action that this is now out of bounds for every single person in the organization. This then the moves the needle for the organization to amend, albeit slowly.

Summary

In conclusion, culture is THE secret sauce of organizations, that is essential to not just make them successful and stand out in the market place, but is crucial for their very survival in the longer run.

And it is the primary responsibility of leadership to nurture the right traits, to lead by example, and resist the urge to live-by-the-quarter or just existentially focus on the next deal around the corner. They have a bigger duty to read the subliminal messages, slay the rising demonic traits early and shape the culture.

Much like an individual with an impeccable character, an organization primed with the right culture can charge-up the rank and file, unleash an unstoppable internal force and become a rising tide that can go on to conquer the world.