Organizational culture doesn’t have to take a nose-dive to achieve scale.
“How can we scale our company without losing the culture that made us successful?”
We get this question regularly from our high-growth success-story clients. As the conversation continues, they share remarkably similar stories:
That’s usually when our phone rings.
The good news is that these companies are not alone. All high-growth ventures hit a company culture crisis and they all hit it at around the same place in their growth curve; about 2/3 of the way up.
Why is this happening? Two reasons:
The rate of employee growth eclipses the rate at which the culture can replicate itself.
Scale creates tension between structure and culture.
Let’s take a closer look at these reasons. As startups realize they’ve “made it,” they look ahead to becoming a mature company. While they don’t want to become a stodgy traditional company, they do feel pressure to “grow up” and act responsibly. MBA instincts kick in and soon the common characteristics of traditional structure emerge like hierarchy, policy, process, standards, specialization, and silos. The problem is that as structure increases, culture is diminished and engagement erodes.
But organizational culture doesn’t have to take a nose-dive to achieve scale. The natural tendency toward structure can be counterbalanced by investing in culture as a competitive advantage. Focusing on human capabilities such as leadership, principles-based decision-making, and integrated problem-solving can reduce the need for structure while maintaining (or even increasing) engagement.
This is the holy grail—what every prosperous startup wants to get right: scaling without losing the culture that made them successful in the first place. Finding and developing the balance between what the company should keep and where it must change is essential to surviving this initial phase of maturity.
That’s easier said that done.
Most companies have a difficult time getting clear and specific about what the desired culture looks like. This is largely because nearly everyone has a different opinion about which aspects of the culture contributed to past success and which will contribute to future success.
Here’s a helpful tool we use to have that conversation and reduce the ambiguity:
We ask organizations to map their behaviors, values, and cultural norms on this matrix. Then we facilitate tough conversations about what to leave behind and what to take forward into the future.
On the left side, the goal is to look at the things that are expected of all companies of your size and shape. These behaviors, values or practices may be not particular to you, but they’re shaping your culture. For example, as a company grows it may become increasingly impacted by regulations. A culture of diligent reporting of errors may be important to success in a regulated industry. Decide which of these are legitimate best practices that would serve the company well to adopt. As you progress, you’ll realize there is a lot of behavioral baggage, too—the countless business concepts you’ve read about that “all successful companies do” but really just slow you down and distract your focus. Take a good hard look at these and get rid of those that don’t serve your strategy.
On the right side, the challenge is to separate the secret sauce from company mythology. What behaviors, values, and practices are unique to your organization that people attribute to your past success? If every Friday your sales team does cartwheels down the hall and sales have been growing steadily for five years, is that because of the cartwheels? Here is where we try to separate correlation from causation and really investigate what about the culture has been driving success. Those things that pass the test are your secret sauce—the elements of the culture you need to protect and find ways to scale. Those things that don’t actually serve the strategy are elements of the culture that can be allowed to fade away.
Becoming clear (and aligned) around what elements of your culture are unique and serve you well is just a start toward finding the right balance between structure and culture. Nurturing and maintaining this balance may be the key to your next phase of growth.
If you’re at a culture crossroads, we’d love to hear your stories and share more about what we’ve learned. These crossroads are a moment of truth for so many organizations and one in which seizing the opportunity for a little clarity may go a long, long way.