BRAND & CULTURE

- 100 million businesses are launched each year globally - 3 every second.
- In the U.S. about 1/5 of startups fail in the first year, 1/2 in 5 years.
- Only 1/3 of startups survive 10 years or more.

Major reasons for failure:
- Lack of market need
- Insurmountable business/economic issues
- Inability to secure funding
- Organizational culture

Let's key in on Culture

From first employees to 100+ people the culture that fueled early growth becomes ineffective and diluted. Founders take organizational culture for granted and/or get consumed with other demands of scaling. One day, they wake-up to find their small startup is now larger with 20, 30, 50 employees who are disengaged and unproductive.

Scaling Culture

There are 3 factors that play into the scaling of culture: Clarity, Design, and Practices.

Clarity of Culture: any business's desired culture must be defined precisely and communicated consistently.  Why the business exists? What are its goals/core values? These should be communicated and be the prescribed mindset for everyone in the company - through consistent communication.

Culture Design: it's not enough to talk about the desired culture, leaders must also role-model and create an environment that supports and nurtures it. Employee Experience (EX) is another design feature. Just as companies now identify Customer Experience (CX) organizations must do the same for employees.

For example, Airbnb was able to scale so quickly and successfully because its management imbued their mission - to create a world where anyone can belong anywhere - into every step of its employee experience including extending hospitality to potential recruits.  Providing "landing stations" where employees store their personal items so they can work wherever in the building they want. These are but a few things that assist in designing culture.

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Culture Practices: merely intending to make culture a priority doesn't ensure it will happen. Leaders must engage specific practices to build culture into the way their business is run, and include:

- Value-centric Recruiting : in addition to skills, experience, and job fit, potential employees should be screened for 'values' fit - their personal values should align with the company's core values. Companies must develop ways of identifying the attitudes and behaviors that indicate alignment (or lack thereof) with the company's core values and using them to evaluate every candidate.

- Founders' Vows: documented promises that keep the company's founders aligned with the culture. For example: 'admit mistakes and unknowns immediately' and 'not hinder company growth for any reason (personal or professional)', 'try no to do everything yourself', 'slow down and be thoughtful, collaborative, and patient'. This goes a long way in achieving culture.

- Culture Audit/Assessment: like financial performance, a firm's culture needs to be assessed - preferably on an annual basis. Walking around offices and work areas, taking notes of what is seen and heard. How are employees reacting to each other and their environment. The audit should be conducted by a cross-functional team with outsiders  who can offer fresh, objective input. Management should review the audit and assess if the health and values of the culture are what is desired.

Summary  

Scaling is impacted by things that are outside the control of management such as competitive developments and market conditions. However, culture is within the control of management. By implementing culture clarity, design, and practices, management can scale culture - and successfully go from start-up to scale-up.

Fund-House Ventures, LLC
Jim Lavorato, Principal