Building right culture in early stage companies

We believe a strong culture with the right values is a must for organizations to succeed, and investment in building culture can be one of the highest ROI initiatives. The impact of investment in culture building can be felt across the organization, and it can be one of the differentiators between a highly efficient, highly motivated organization vs. the rest, an organization on the path to success vs. failure.?

Culture building is important equally for large enterprises as well as for early-stage companies. Founders and senior leaders need to be the flag bearers for culture building. At an early stage, they should start investing in building the right culture, and this should be one of their top priorities. A strong culture with the right values can attract talent, build high-performing teams, foster a more positive environment, and foster openness and stability in the organization.

Early-stage companies can fail fast, so building a strong culture is easier said than done. Based on our experience working with various early-stage companies, we work closely with founders to help them understand the criticality of building strong cultures and values, which can enable them on their path to building the right culture for their organization.

Here are some of the enablers for founders to build a strong organizational culture:

1. Lead from the front: The founder needs to set the right example by leading from the front. Culture is not just about putting up posters relating to the company's core values, vision, and mission statements. Founders should define the kind of organization they want to build and demonstrate their commitment to creating the right culture to build a strong organization. They should lead by example, demonstrate the right behavior, and inspire their teams to build a strong culture and, thereby, a highly motivating workplace.
2. Encourage open communication: The founder should foster open and transparent communication, especially in meetings involving policymaking, business decisions, and performance discussions. They should encourage an environment where their leadership and team members are encouraged to share their suggestions and feedback without hesitation or fear.
3. Celebrate success; have a rewards and recognition program. Early-stage companies have a highly intense environment; in order to encourage teams, founders should learn to celebrate success. They should encourage teams to celebrate, appreciate each other, and have a rewards and recognition program in place for celebrating employees who embody the desired performance and cultural outcomes.
4. Interact on a regular basis: The founder should conduct in-person meetings and connect directly with different teams on a regular basis, thereby breaking layers and hierarchies in the organization. This can encourage team motivation, effective communication, and a more open culture.
5. Balance between top-down and bottom-up-driven culture: Founders should encourage flexibility between top-down and bottom-up culture approaches. In a high-complexity environment, a strong bottom-up culture can drive innovation, increase efficiency, and lead to faster responses, but at the same time, during crisis management and driving new initiatives, a top-down cultural approach can be more effective. Organizations that have more structure, defined hierarchies, low complexity, and a top-down culture are generally highly effective.
6. Follow one norm: avoid discrimination and have cultural norms that apply equally to all the employees, irrespective of the founder, senior hires, or junior employees; e.g., if a team has decided to work certain days in a month from the office, all should respect this norm, and they should work from the office irrespective of their designation.
7. Design performance-driven incentive mechanisms: ESOPs and high-variable bonuses can be motivation boosters, especially for critical and senior hires. Founders need to encourage performance-driven incentive mechanisms so that critical talent continues to be excited and motivated. They should align on KPIs and OKRs upfront and have a data-driven performance management culture to minimize any subjectivities and promote the right culture in the organization.
8. Over-communicate: As most early-stage companies continue to work remotely in a distributed environment, clear and direct communication becomes critical. Founders should have regular town hall meetings, team meetings, one-on-ones, and coffee connects to stay connected with their teams and employees. This will help them to drive the right culture and disseminate direct messages to their employees.

To build an effective culture across the organization, the founder should imbibe a few cultural values; in our experience, these have yielded great results for them.

• Transparency, consistency, reliability, and integrity to build trust amongst both the internal employee base and external customers
• Innovation, customer focus, agility, and striving for continuous excellence to outperform peers and quickly scale up
• Flexible work norms, collaboration, accountability, L&D, and empathy to motivate and attract the best-performing talent

It is important to understand that culture cannot be simply copied and pasted. For each organization, the context and business environment are different, the founder's approach to problem solving and interaction with the team vary, and hence the “one size fits all” approach doesn’t work. Founders are at the forefront of setting up the culture they want to build in their organization; they need to be role models, e.g., being punctual in both internal and external meetings and driving discussion in more open environments. We also see ourselves as not just investors but as ones who work very collaboratively and closely with founders to build the right culture in their organization.