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Updated 29 Sep 2020

4 Ways to establish a strong culture without sacrificing start-up success

Your culture should help you strike a balance with financial concerns. But it shouldn't be dominant.

TX Zhuo, Entrepreneur, 26 November 2015  Share  0 comments  Print

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"Culture" permeates every facet of your organisation – from employee recruitment and retention to brand awareness and advocacy.

So, it makes sense that you’d place a high importance on cultivating it. But basing the majority of your business decisions on culture alone may do more harm than good. Take Zappos, for example.

In an effort to maintain the nonhierarchical culture, the shoe company instituted a “holacracy” in which the traditional linear structure was replaced with a circular one.

Related: The ultimate test for your company culture

The result, however, ended up being circles within circles, where no employee had a job title. Instead, everyone took on autonomous roles. This new self-management system didn't work.

In fact, it apparently led 14% of the company’s staff to pack up their belongings and go – with a three-month severance package in tow.

Many then questioned why CEO Tony Hsieh chose to embrace a radically different management structure when Zappos already had become a fixture on “best companies to work for” lists. Unfortunately, focusing solely on culture led Hsieh to embrace change for the sake of change.

While culture is essential to keeping staff engaged and satisfied, it should by no means negatively impact your financial future.

It should be about striking a balance, which itself often stems from four distinct strategies:

1. Allow culture to evolve with growth

What works for a five-person startup won’t work for a company of 100. As your business grows, your culture will take on a life of its own. Although it’s important to provide direction, trying to exact control will only stifle your culture's natural progression.

As your business grows, bring in some “fresh blood” to challenge the pre-existing culture, to help it evolve. Then, re-assess culture and business practices at every milestone to ensure everything aligns with the company’s current needs.

Airbnb addressed its own growth by hiring a "head of employee experience," to help maintain the company’s unique culture. With 90 percent of employees recommending Airbnb as a “great place to work,” the new position has obviously paid off.

This isn’t to say your 15-person start-up needs a dedicated head of culture. But, like Airbnb, you should keep tabs on your company’s cultural needs at each stage of growth.

2. Use culture as a guide, not a rule

Culture influences many business decisions, but it should never mandate them, especially when it comes to the long-term viability of a company.

Remember that your company’s success will have a greater impact on employee happiness than any short-term culture goals.

3. Create a performance-based culture

Regardless of how you define culture, it should always be performance-based, at least to some degree. So, first, set clearly defined standards and expectations.

Second, structure compensation based on merit, and keep it transparent. Above all else, empower employees to take ownership of their responsibilities, and hold those employees accountable for their work. 

Related: 5 Tips to create a company culture in a virtual business

If any one of these facets is missing, the success of your entire organisation could be affected.

4. Become customer-centric

Make customers a core tenet of your business. Providing better customer service, engaging in actual conversations with your target audience and solving pain points for consumers will make it easier to hit your revenue and profit goals.

This focus will also challenge you to innovate and stay ahead of the times. Otherwise, you may very well fade into obscurity.

Profits and revenue are necessary to drive the long-term success of your business. When culture takes centre stage in all your decision-making, it’s easy to lose track of your ultimate goal: Making the business a profitable entity, with healthy revenue growth.

Rather than a cool office space or unnecessary perks, then, figure out what’s really important to your culture. And be thoughtful in how you promote it.

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About the author

TX Zhuo, Entrepreneur

TX Zhuo is a managing partner of Karlin Ventures, an L.A.-based venture capital firm that focuses on early-stage enterprise software, e-commerce, and marketplaces. Follow the company on Twitter.

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