Culture Coding for Startups
Dear Startup Founder,
You've got the vision, the company, the team, and unwavering drive. Your ambition is sky-high, and your passion is palpable. You're ready for growth and willing to do whatever it takes to succeed. You’re off to a great start.
However, the days don’t seem to have enough hours. You feel stressed and pressured by clients, investors, and, of course, your team. There’s always something.
You’ve given your culture some thought, and sometimes it keeps you up at night. Is the culture where it needs to be? Is your company and team ready for growth and prepared for the future? Do you have the culture you need to make your vision a reality? Then you fall asleep, and the next day is piled up with people to meet, challenges to solve, and things to think about. And culture probably isn’t one of them.
Facts about Culture
The 106 Must-Know Startup Statistics for 2024 reveal a stark reality: 90 percent of startups fail, with the highest casualty rate occurring during the hyper-growth phase, and when teams reach sizes between 11-50 employees. One out of four founders attribute their startup's demise to organizational or team-related issues, and many say they lack skills in how to lead, build, and sustain the kind of culture they need to succeed.
So, what exactly is culture? It's simply put as "the way we do things around here" – the (often) unwritten rules and norms that shape team behaviors, priorities, and how decisions are made. It's the (usually) silent rules guiding collaboration, problem-solving, productivity, and how things get done. It’s what people do when no one’s watching.
Studies show that companies that take a strategic approach to culture by aligning it with their purpose and strategy average a 44.5 percent change in revenue growth over three years, and achieve three times higher total return to shareholders. Studies from Gallup show that highly engaged teams are 23 percent more profitable and have 50 percent higher retention of talents than less engaged teams. Culture also impacts recruitment. 77 percent of job seekers consider a company’s culture before applying for a job, and 56 percent of employees think culture is more important than salary.
A MIT Sloane School of Management study shows that 80 percent of executives consider culture as a top driver for financial performance. Yet, 84 percent say their culture is not where it needs to be. And in spite of the undeniable ROI of taking a strategic approach to culture, the most widespread strategy is, strangely enough, to hope for the best and let the culture develop by chance.
As a startup founder, you may have gotten away with this approach for the first few years. After all, the people who joined you in the early days are almost as passionate and committed to the success of your startup as you are. Many of them probably have a stake in your company too.
But then you start to grow…
The Growth Dilemma
You’re fully aware that growth is the only option, and you know that growth pain is only to be expected. However, there is a well-known growth pain you might want to pay extra attention to. It is referred to as The Growth Dilemma by the serial entrepreneurs at Protonic Partners: “Growth creates complexity, and complexity kills growth. Companies often lose their way as they grow due to increasing complexity. This complexity creates layers of bureaucracy, slows down decision-making, and hinders customer focus.”
Complexity and bureaucracy also tend to dim the entrepreneurial spirit that once fueled your startup's fire. Regrettably, for many, the growth phase turns into the beginning of the end.
Peter Thiel, the renowned entrepreneur and author of "Zero to One," offers a stern warning: "A startup messed up at its foundation cannot be fixed." While there might be room for debate, one thing is clear: your odds of success dramatically increase when you establish a strong culture from the beginning that is poised for growth, change, and innovation, so you can avoid that the growth dilemma becomes your death trap.
OK, enough of scary talk. What is the solution? The answer is simple, yet profound. It’s time to start coding your culture with the urgency and importance as if your startup's very survival depends on it—because, in truth, it very well may.
Why Culture Code
A Culture Code is like a blueprint for how things are done in your company, in support of your Purpose, Vision, and Mission. It’s a set of guiding principles that defines who you are, what you value and believe in, how you think, and how you DO things. It is the fundamental principles you aspire to build your company on.
Some of the benefits of having a Culture Code:
1. Helps Minimize Growth Pains: A well-defined culture code acts as a compass for strategic decisions, priorities, and day-to-day behaviors, helping to smooth the bumps that come with scaling.
2. Team Involvement and Alignment: Creating a culture code fosters team involvement and builds a collective commitment to "your way of doing things," ensuring everyone is pulling in the same direction.
3. Attracting and keeping the Right Talent: A clear culture code makes it easier to attract, hire, and onboard the right people, quickly integrating them into the team and making them feel at home.
4. Scaling Without Losing Essence: A robust culture code is a tool that facilitates scaling, ensuring you don't lose momentum, motivation, or the unique qualities that set you apart.
5. Fostering an Inspired Culture: Cultivate an environment where fun, innovation, and business success feed off each other, energizing your team and propelling your startup forward.
How to Culture Code
Drawing from two decades of experience in culture coding across startups and Fortune 500 teams, I've developed a straightforward yet impactful process that I invite and encourage you to adopt as your roadmap for crafting your own Culture Code.
1. First, engage the entire team in crafting the Culture Code to include the full spectrum of roles, perspectives, and diversity, boosting motivation and fostering a deep sense of ownership and commitment to the collectively created code.
2. Start with your foundational WHY by clearly articulating the reason behind your company's existence, its overarching aspirations, and the difference it aims to make. Understanding your core purpose is crucial before shaping the culture to support it.
3. Proceed to define WHO you are as a team, your collective beliefs, and values. Then, outline HOW these principles guide your strategic choices, priorities, and everyday actions. Identify what needs to be prioritized or minimized to prepare you for growth.
4. Delve into the specifics of WHAT actions will embody the values, beliefs, and principles you have agreed upon as a team. Use real-life and hypothetical scenarios to explore and align team actions and reactions with your established why, who, and how.
5. Finally, distill all the insights and discussions into a Culture Code. Aim for a concise, impactful code that captures some essential principles, reflecting the essence and spirit of your team – and make sure to evolve it as you grow.
Making your culture a strategy by creating a Culture Code prepares you for growth and boosts your startup's chances of being among the few that not only survive but THRIVE.
Can you afford not to?
I'm Annicken R. Day, leadership and culture strategist and founder of Corporate Spring. I have been shaping global work cultures for over two decades. As one of the earliest Chief Culture Officers and Culture Strategists, working for Tandberg and Cisco, I spearheaded innovation in the culture and leadership space, leading to Best Places to Work awards and extraordinary business outcomes. For the past decade I have helped leaders worldwide, ranging from ambitious startup founders to Fortune 500 executives, cultivate thriving, high-performing innovation cultures, prepared for rapid growth and business success.
Learn more at www.corporatespring.com and please feel free to reach out for a chat if you want to learn how I can help you too.
