Culture Eats Strategy for Breakfast

Culture Eats Strategy for Breakfast

What’s in it for me:

  • Why is culture so important for startups?
  • What is a Culture of Growth?
  • What are the traits of a Culture of Growth?

“Culture eats strategy for breakfast”, I heard this phrase some days ago and since then it stuck in my head. This quote is attributed to the management guru Peter Drunk. I really appreciated because its highlight the importance of the culture in the success of a company.

I’ve been studying about the topic, especially focused on startups.

First of all, let’s understand better what is a startup. There are a couple of different definitions, here follow two relevant ones:

“Startup is an organization formed to search for a repeatable and scalable business model.”

Steve Blank,

serial entrepreneur and professor of entrepreneurship at the University of California Berkeley.

“A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of “exit.” The only essential thing is growth. Everything else we associate with startups follows from growth.”

Paul Graham,

co-founder of Y Combinator

Both definitions above, as most of the startup’s definition, consider growth and scale an essential part of a startup. The reason is that startups are focusing on a market opportunity that is based on technology with a limited window of opportunity and in a market with some degree of winners-take-all characteristic.

Although growth is so important, startups don’t have as many resources to achieve their growth as big corporations.

I guess the important question then is: How can a few guys in a garage not only fight but defeat big corporations?

Startups rely only on highly motivated and skilled team, so do many big corporations.

So, what is the difference? The difference is in their culture. While a startup has a Culture of Growth, most big corporations have a culture that undermines innovation and disruption, limiting their growth.

Culture is what drives how a team works and what it can accomplish. Most people already heard about the importance of culture, but what exactly is a corporate culture? The simplest and best definition of culture that I’ve seen is:

“Culture is what your employees do when you’re not around”

Robbert Sutton and Huggy Rao,

authors of Scaling Up Excellence

As companies grow, the founders won’t always be around to help the employees decide what to do, however, in a fast paced environment that changes all the time, such as in an innovative market, the company can’t rely only on the decisions made by the management team. Therefore, making sure that employees make the best decision for the company in incredible fast starts to be surprisingly important.

Based on that, my definition of culture is:

A set of values and behavior in a corporation that influences employees decision-making not only on big decision moments but also in daily activities.

Companies that have a culture that enables fast and reliable decision-making have an unfair competitive advantage.

Not only that, the right culture is a valuable asset to hire the best employees. People are motivated in two different ways: Intrinsic motivation and Extrinsic motivation.

Extrinsic motivation is related to rewards such as money, fame, and others. Startups don’t have enough resources to fight big corporations for the best talent regarding this kind of motivation.

On the other hand, intrinsic motivation is related to internal rewards such as a sense of accomplishment and belonging. Studies by Karl Duncker show that intrinsic motivation is more effective when working on a problem that needs innovation and hard thinking, which are the kinds of problems faced when disrupting a market.

Great people are more motivated by intrinsic values than extrinsic ones, therefore, startups use their culture to foster intrinsic motivation to attract the best talent and also to empower them to perform at their best.

 

Ok, but what is a Culture of Growth?

A Culture of Growth is a culture developed to enable high growth in a company, especially startups. Although each company will have its own and unique culture, I have identified 10 traits that are present in most companies with strong cultures that foster high growth. Below follow the list in no specific order:

  • Owner’s Mindset
  • Talk Straight and Feedback
  • Customer Centric
  • Communication and Transparency
  • Result-Oriented and Data-Driven
  • Trust
  • Excellence and Big Thinking
  • Accountability
  • Alignment
  • Test and Learn

In the next few posts, I will detail each one of those traits and how a startup can implement tools to cultivate them.

I would like to hear how is in your company? Does it have all these traits? Does it work well?

Key Takeaways:

  • Culture is a set of values and behavior in a corporation that influences employees decision-making not only on big decision moments but also in daily activities;
  • A Culture of Growth is a culture developed to enable high growth in a company;
  • A great culture is an unfair advantage and helps attract the best talent;

 

 

 

 

 

 

The Importance of Communication in a Startup – Part II

The Importance of Communication in a Startup – Part II

What there is in for me:

  • Why communication is a key attribute for entrepreneurs
  • Good news and bad news, which one to share with my team
  • How to build trust and motivate your team using communication

Continuing my last Communicating with Investors, now let’s talk about:

Communicating with the Team
If you’re really aiming to create a great company, you and your team are onboarding in a very tough journey. The problems with communications usually start in setting the expectation. As working in a startup is cool nowadays, everyone wants to work in one, but few are willing to face the struggle and work the long hours necessary to create a great company.

Startups need a talented and dedicated team, so it’s important to set the expectation to the new employees upfront and make sure they are willing to commit together with the rest of the team in this endeavor.

The other problem that many entrepreneurs face related to communication with their team is the difficult to inspire the team toward the dream the entrepreneurs have. Sometimes the entrepreneurs can’t articulate in a proper manner his mission, and other times is just a lack of communicating it well to the team.

If a CEO wants their employees to give all their sweat and blood for the startup, he needs a clear Big, Hairy, Audacious Goal (BHAG) and communicate clear and constantly to all members of his team. Elon Musk uses SpaceX BHAG to motivate his team to achieve unthinkable results, here follows its statement:

“SpaceX was founded in 2002 to revolutionize space technology, with the ultimate goal of enabling people to live on other planets.”

That is a quite powerful goal to motivate SpaceX team, even during the many arduous times they face!

Another common communication problem entrepreneurs have is not delivering bad news.

Is part of the human nature to not like it to deliver bad news; we don’t want to disappoint people or make them feel bad.

Therefore, founders tend to only communicate good news to their team. When a big account is won, they celebrate; when an investment round is closed, they celebrate even more! However, when they lose the most valuable client or when the startup has a month of cash…silence! During these situations is exactly when you can identify the great entrepreneurs. They inform, take responsibility, and work together with their team in a plan to turn the situation around!

If you worked hard to hire an amazing team, don’t expect them to be stupid and don’t discover what is happening in the company. Also, remember the equation from the post Part I:

CHANGE + UNCERTAINTY = CHAOS

Although there will always be change, good and bad, in a startup, entrepreneurs can reduce the uncertainty by communicating the situation, preventing gossips and speculations that can lead the team into chaos.

Google has a meeting called TGIF ( “Thank God is Friday”) where any employee can ask any question to the founders, that shows a culture of communication and transparency.
When times are hard, it isn’t the lack of information that will save a company. Rather, a great leadership and a motivated team are needed to overcome this situation. For your team to work hard for you, they need to trust you! And they won’t trust you if you’re hiding the situation from them.
Concluding, communication problems with team can have a huge impact on a startup performance, for better or worst! Start a culture of communication while your team it isn’t that big, changing it in the future is going to be a bigger challenge!

Key Takeaways:

  • Have a great Big, Hairy, Audacious Goal (BHAG) and communicate it
  • Sharing bad news is as important as sharing good news
  • Don’t hide bad news; your team isn’t dumb
  • If you hired the right team, trust them
  • Change + Uncertainty = CHAOS