Culture and the Start-up

Friday, March 16, 2007

I recently attended a meeting of the New Enterprise Forum here in Ann Arbor. They “link entrepreneurs to management expertise, potential joint venture partners, mentors, business services, capital, and other critical resources.” During the Q&A session, one entrepreneur asked about how to go about creating a culture for his small enterprise. That got me thinking about what start-ups need to know about something as nebulous as culture. So this goes out to all you up-starts as you start up your new venture.

You have plenty of things to contend with as you work to get your business up and running. So let me make a pitch for why consciously creating your company’s culture should be higher on your list of priorities.

First, let’s be clear on what culture is and why it’s important. The practical definition of culture is, “it’s the way we do things around here.” Therefore, behavior and decisions are tangible evidence of the intangible culture.

We often base behaviors and decisions on a set of beliefs and values we hold. Since we all carry around our own unique beliefs and values, the potential for a particular way of doing things is always present. You may be the only employee in your company right now, but you have already laid the groundwork for a culture to take shape, based on how you are currently conducting yourself and how you envision your business operating. A dynamic culture is one that supports your company’s business model and reflects your values as the creator of the business, without being in conflict with each other. Such a dynamic culture can serve as a competitive advantage.

So here are some reasons why being proactive on building a desired culture is a smart idea.

You can’t be everywhere, at the same time, keeping an eye on everything. The benefit to you, personally, of building a strong, intentional culture is that you can have greater confidence in your employees to do the right thing when you’re not around. Having a strong culture is invaluable as your company grows and takes on additional employees because it will be your tenured employees who will convey and reinforce the desired behaviors. Remember, culture is fundamentally “this is how we do things around here.”

Reputation is everything. As a start-up, the reputation you establish with your customers is critical. Reliability, responsiveness, and quality are all factors in what becomes your reputation. It can be a potential deathblow if employee #4 doesn’t buy into “how we do things around here” and demonstrates it at the worst possible moment with one of your more important customers. You could easily lose that customer.

You can be your own worse enemy. Just because you had this great idea and started this new venture doesn’t mean you have the personality or habits to make it succeed. Plenty of start-ups succeed in spite of the founder. You want to force yourself to answer in a conscious, intentional way this question: What are the values and beliefs I want my employees and myself to convey in our behavior and decisions?

If you don’t, someone else will. It is often unintentional, but circumstances can dictate what your culture becomes. It goes like this: you’re busy, absent, or distracted and one of your employees handles an important situation in an inappropriate manner. You don’t say anything or bring it up with the employee because you’re busy, unaware, or prefer to avoid conflict. Your non-response still sends a message, leaving your other employees to conclude, “it must be okay to do that.” Have this happen enough times and you will have a mess on your hands in no time. Now, if this sounds like I am insinuating that your employees are like children who take their cues from mommy-boss and daddy-boss, let me clarify something. I’m not insinuating -- I’m stating a fact. A parent and a boss share something in common: they hold the power. Your employees look to you to establish and enforce what is right and wrong, especially since the company is your creation. Use this to your advantage.

It’s all about congruency. As a start-up, you don’t want your company to convey one thing through your marketing materials and then have your employees act in a way that is counter to the image you are trying to project. If this happens, you will end up magnifying the incongruence because you have little or no track record or reputation to balance out a bad experience. Your customers will experience the incongruence and question whether you have your act together. This may be enough of a reason for them not to take a chance on you.

Building an intentional culture

Here is what you can do to make sure your company’s culture is intentional and designed to support your business plan and reflect the values and beliefs that led you to start the venture. When the time is right (usually about the time you’re ready to open your doors for business), spend some time thinking through a few specific customer scenarios. Your business plan will help to remind you who your targeted customers are, how you plan to identify them and make them aware of your product or service, and how they will most likely contact your business.

Using this information, write up two different case studies; one that describes the worse case scenario of the customer’s experience with your business and the other, the ideal scenario. Then share these scenarios with your employees (or even applicants) and discuss the importance of doing things the way as described in the ideal scenario. Share your perspective on the potential impact on the business if the worse case scenario occurred. Also, be willing and able to openly share your values and beliefs and how you feel they make this business endeavor unique. You can also use the ideal scenario to find out if your employees see any barriers to being able to respond in this manner. You don’t want to set certain expectations and unknowingly place barriers in the way. This can easily foster frustration and undermine your credibility.

Having detailed and relevant case studies also helps you clarify values that have room for interpretation, such as “customer focused.” A thorough case study will help illustrate exactly what it means to be customer focused in this particular company with your particular customers. Start-ups often don’t have the leeway to leave such things to individual interpretations.

Onward and upwards

As you go forward, be vigilant and prepared to address any behavior or decisions that you feel run counter to your desired culture. You need to be able to correct the behavior as soon as it appears so you can send a clear and credible message that you are serious about “how we do things around here.” It doesn’t take as long as you might think to get people on-board. And once that happens, your small start-up takes on a personality and character that makes it stand out in the marketplace. Not bad for something intangible.