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 two 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 new 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:
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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.
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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.
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Who gets to drink from the information reservoir? Information is a key recourse 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.
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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.
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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, and provides award winning customer service. Tony Hsieh, Founder of Zappos, has confirmed 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 it be about earnings or what brands that Zappos will be selling next. Through careful culture matching during hiring and training, Tony built a company full of employees who actually enjoy working there and believe in the brand wholeheartedly.
