Navigating Cultural Challenges as Startups Grow

Dr Ajit Mathur, April 2020

 

The culture of startups is often characterized by relentless pace, affinity for experimentation, loose structures, and disdain for processes--all supposedly enabling the founders and their team chase their dream. However, if a startup survives, its growth brings a cultural challenge that if not handled well can severely affect its trajectory:

 

How to keep the “startup culture” alive, especially flexibility of thinking, organizing, decision making, and action, despite added complexities—more people, new locations, inevitable processes, some degree of decentralization?

 

At the CEO level, how does one face up to these challenges?

 

Driving with a mission

When the organizational is in its early years, all that matters is working towards a mission because that’s how businesses start in first place—a desire to solve some problem or satisfy an unmet need. However, success brings growth, which in turn brings numerous challenges, such as, managing large number of people in multiple locations or functional specialization that the organization is not used to, and especially the loss of personal touch. While the founder provided the answers to all the thorny issues in startup’s infancy, now it’s no longer possible to micro-manage. 

 

Apple’s story is all too familiar—from a team driven by a mission in its early years to losing the way when confronted with growth. 

 

The key at this stage is mission. Says Jack Welch, the legendary CEO of GE, “Mission balances the possible (the short term) and the impossible (the long term) …gives people a clear sense of direction…it absolutely has the power to excite people and motivate them to stretch.” 

 

As the CEO, you ought to communicate the mission a hundred times, a thousand times until it sinks in everybody’s psyche, and show how your key decisions are driven by it. If there is a new business challenge, show how mission guides your choices. If there is a setback, bring mission front and center to rally your troops. If people get stuck with issues that are of less significance at that point, use the power of mission to motivate them to steer clear. As you grow, mission provides the vital energy and direction. It integrates older employees with the new. It acts as a catalyst to go the extra mile.

 

Summary: Mission is the key to get started on a long, arduous journey of building a truly outstanding organization of your dreams. It connects today to tomorrow in every sense. As the founder CEO, it’s your responsibility to bring clarity to your organization’s mission and energize everyone with it. Keep hammering it.

 

Adaptability is the key 

Organizations that work to cultivate “adaptability” as one of their values are more likely to successfully face newer or unanticipated demands or a volatile business environment. Nobody likes change, leave alone frequent changes in working style or structure or roles, etc. that might be the key to your survival and growth. This brings us to the question: What are the specific behaviors related to adaptability?

 

Research indicates that there are three behaviors central to adaptability: trust, transparency, and psychological safety. 

 

Trust, often the starting point, is a behavior that broadly describes positive relationship between groups of people, and at another level between the organization and its employees. It is developed mainly through another complementary behavior, transparency—sharing information in two-way exchange so people feel nothing of significance is being hidden and a sense of involvement in decisions that affect them. Finally, psychological safety, the freedom to express one’s ideas freely in team settings, without any fear of reprisal or embarrassment, helps set the tone for frank debates and meritorious evaluation of ideas, a kind of “rapid processing factory” [1] of ideas, issues, opportunities. 

 

Finally, hire for talent and adaptability both, not just talent. It means building a large coalition of people who are comfortable with change. To assess this key quality during recruitment, look at their previous career and understand how they navigated personal and professional challenges when something new or uncertain came their way [2]. 

 

Summary: Pay special attention to build trust with transparency. Encourage free and frank evaluation of ideas and issues. Make people comfortable with change as a way of life. Consciously expand your adaptive capacity.

 

Leading through mission and building adaptability should be the two cornerstones of a growing startup’s cultural priorities. It will allow the senior leadership to focus on other major business issues and grow at a pace without sacrificing entrepreneurial culture.

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  1. Contrast this with an organization which either ignores new ideas or issues, or simply does not have the cultural bandwidth to debate variety of issues quickly enough. Or might think of it as a messy process they can’t cope up with. We can easily see lack of adaptability in such organizations, which will hamper them whenever faced with uncertainty or rapidly unfolding newer business demands. 

  2. The other quality to look for is “curiosity.” Curious people are generally more adaptable.

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