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How Startup Founders Set the Right Company Culture

 

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Many investors will assert that company culture trumps strategy every time in predicting the long-term success of a new startup. Obviously both are important, so it behooves every entrepreneur to start early in setting the right tone for his own company, and every new team member should be gauging both of these relative to their own interests prior to signing on.

What is a company culture, anyway? Probably the best definition is the oft-quoted view that culture is simply “the way we do things around here.” It’s always amazing to me how different that can be between 2 companies in essentially the same business. There is no ultimate right or wrong in a culture, but there are attributes that will be right or wrong for you or your investors.

I saw some good insights on these in a book by Eric C. Sinoway, Howard’s Gift: Uncommon Wisdom to Inspire Your Life’s Work, which highlights the wisdom of Professor Howard Stevenson and his years of training entrepreneurs at the Harvard Business School. Howard suggests that company culture can be accurately assessed through the following five questions:

  1. Is everyone singing the same hymn? Ask several people on the team for their purpose, values and strategic goals. If you get disparate answers or generic job descriptions, the culture is fragmented at best. The result is that everyone pulls in a slightly different direction. This indicates a lack of communication or leadership.
  2. How do the leaders lead? Check for indications that leader actions match their words. Otherwise there is likely a disconnect between what is said to be important and the ‘informal rules’ made clear through leaders’ actions and decisions. The result is dysfunctional or non-credible leadership which creates a bad culture.
  3. Who gets to drink from the information reservoir? Information is a key resource, and culture is shaped substantially by how and with whom that resource is shared. Good indicators include how bad news is shared and whether divergent opinions are cultivated. Successful organizations have a culture of total communication and honest feedback.
  4. Is this an organization of teams, or of stars and satellites? Howard rebuts a widely held myth that successful organizations are built of stars with a supporting cast, like a sports team. This model constrains the company from fully leveraging the real contribution and potential of all team members, with less collaboration and more conflict.
  5. How does the organization evaluate employees’ performance? The best cultures are marked by transparency, predictability, progress and trust between team members and managers. Performance is measured against objective performance, clear goals and benchmarks. Subjective evaluations leave employees confused and tentative.

Most experts agree that finding the right team members really comes down to finding the perfect culture fit, more importantly than the perfect skill fit. Of course, qualifications and work experience are critical, but the potential for trust and collaboration must come first. The same is true if you are an investor or a professional looking for the right company to stake your future on.

Great cultures don’t just happen. If it’s your startup, you have to make it happen, and it’s worth the effort to start on that first. I assure you that it’s easier to set it right at the start than it is to change it later. Key elements of building the right culture include a written and communicated business plan, defining and practicing company values and measuring your progress.

Zappos has long been recognized as a startup which exemplifies the focus on culture, providing award winning customer service. A while back, Tony Hsieh, Founder of Zappos, confirmed in an interview that his top priority was in fact not customer service, but rather company culture.

To walk the talk, Zappos still has quarterly all-hands meetings in which employees can ask anything they like, whether about earnings or what brands Zappos will be selling next. Through careful culture matching during hiring and training, Hsieh built a company full of employees who actually enjoy working there and believe in the brand wholeheartedly.

It’s time to take a hard look at the culture in your own startup, whether you run the company or are the newest member of the team. If it’s not quite perfect, figure out how you can be part of the solution, or you may be part of the problem.
Reprinted by permission.

Image credit: scarletgreen

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About the author: Martin Zwilling

Martin is the CEO & Founder of Startup Professionals, Inc., a consultancy focused on assisting entrepreneurs with mentoring, business strategy and planning, and networking.

Martin for years has provided entrepreneurs with first-hand advice, mentoring and business plan assistance as a startup consultant. He has a unique combination of business and high-tech experience, and executive mentoring and connecting startups with potential investors, board members, and service providers.

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