Culture Void

This is 2nd part of this installment series on 5 Mistakes of Scale-Ups. And this one, I'll dive into culture at a scale-up, why it matters, what are signs that you might have a culture void problem, and how you might want to think about defining the culture at your company.

The other day, I asked a pickleball friend if he'd like to play on Saturday morning. He had to decline as he was interviewing at an AI startup in San Francisco on that day. I asked him a few questions - with who, how many interviews, what was he expecting to do during it, was the date his choice. I learned it was a most of the day interview with 6 people up in the city (about 50 minutes away for him). And it wasn't his choice of dates. That's when they interview folks. I relayed to him that at least they are giving some insight into their culture. They are saying their work and their community must be prioritized. It wasn't only my friend who had to go on Saturday, it was all the people involved in the interviews - likely including managers, engineers, HR, etc. Of course, that wasn't the only defining characteristic of their culture, but it can't be ignored.

Generally, culture is defined as a shared set of values, attitudes, standards, beliefs and behaviors on how things get done at a workplace. Most early stage, i.e., pre-seed, < 50 employees, tend not to have a defined culture as it is still evolving. But as you grow into that scale-up size, smart companies will go through the process to define their culture and work to make it pervasive in how people work. Culture can and should be felt from the time a potential employee starts the applicant process to date they quit/fire/retire from the company. It will be felt by prospective customers from the time they become a unqualified lead through the deal cycle, through implementation and renewals and onward. It's even felt by your suppliers from the minute they want to do business with you.

I first experienced a strong company culture during my time at Amazon. On my first day, we had employee orientation. As I walked into this big conference room in Seattle, a person from HR handed out these badge sized plastic cards with Amazon's "Leadership Principles." There were 14 of them back then, and someone gave a presentation on how these principles align how people work and interact at the company. I barely took note, thinking that this was standard HR talk. But I was really wrong. That first day, I joined in some meetings and started hearing some familiar words. Employees were using the actual words of these leadership principles in meetings! In one meeting about a potential AWS service, an employee asked if we were thinking big enough. Think Big. A second meeting explored why startup times on an instance type were slower than other instance types. In the 2-pager writeup, the engineer talked about how she deep dived into all the processes and had isolated some issues. Dive Deep. Finally at a staff meeting of AWS leaders, there was a heated discussion about why we weren't hitting our hiring goals and what to do about it. Let's just say there were strong opinions on few options. Eventually a leading "decision" emerged. Towards the end of the meeting, a VP stated, "Glad people came and voiced their perspectives with as much data as we have at this point. I know some of you disagree with the path forward, but we have to commit to it." Have Backbone; Disagree and Commit.

I soon learned that my first day experience was the norm. Every interview, every performance review, every narrative/6-pager, every yearly planning document, every all-hands had the Leadership Principles' fingerprints all over them. Diversity of thought, backgrounds, experiences, is critically important and so is alignment. People are individuals. The organization needs those leadership principles or a culture to be able to be able to row together on a initiative, and at the same time, have a set of norms on people hiring, building and interacting that will sustain it through its natural ups and downs.

At a scale-up, culture becomes incredibly important. Your organization has grown to a size where, for the first time, natural linkages between people are limited. The pandemic and work-from-home has further tested the strength of these bonds. If you haven't described your culture and communicated it, you likely have a culture problem. How do you know if you might have a culture void? From my experience, the top two signs are:

1. Hires that don't last - A common thing I hear from scale-ups was that a new hire that they were so excited about 6 months ago has left the company. I ask them about it, and they say that it ended up not being a good fit. That's an organization problem, not a problem of the new hire in most cases. The interview and on-boarding processes failed the culture fit more than the functional fit.
2. Colonels who complain - As I've studied businesses over the years, I've found that next level or two down from the CEO to be an incredibly vital linkage between the overall direction and the execution at the ground level. They are the conduit of information, planning, and encouragement. If you have leaders who aren't on board, who subtly sabotage plans because it didn't go their way, who focus on protecting their people over everything, then you will have a problem.

If you are scaling-up and you haven't defined gone through the process of defining your culture, then it's time to do it. Don't overthink the process. You don't need an expensive consultant to come in and do it. Start by organizing a cross-functional team who will be responsible for drafting the values. They can come up with those behaviors that describe the organization and how it tackles problems. Focus on the inputs rather than outputs. If they need some starting ideas, go out and grab Amazon's, Netflix's, Snapchat's. You might see some common themes. Then find the ones that best reflect your scale-up (and in some cases, where you want to go).

After defining the company culture and values, it's critical to communicate and embed into company practices. You can easily think of some ways to communicate - every all-hands, new hire orientation...but also think about giving out rewards and recognition to employees who have done something special with respect to these values. At the same time, embed the values into the way the company works. Interviewing is key to avoid mis-hires. Every person on the interview loop should be assigned one or two of the culture points to deep dive with the candidate. Even if you have to understand does the candidate really know how to code or build a marketing funnel or sell, you need to know how they will fit with the culture. Make sure your employees have a solid bank of questions on each company principle. People will soon be experts on testing for company culture fit. Back to an Amazon example, I would often ask a candidate about a time when a decision didn't go their way. If he or she said that never happened or they were right all along, then it was a clear mismatch on Earn Trust and Disagree and Commit. So make sure you have good coverage on culture during interviewing. Another obvious implementation point is performance reviews. Employees should know they are being evaluated on these culture points as much as they are their output. And finally, I would encourage leaders to use the actual words from the culture/values/principles in everyday meetings. Soon you will find that it spreads and your newest employee will be using those words to help make a meeting productive.