How To Maintain Culture As You Scale

We’ve all been there - we joined a great team, and everything was going swimmingly, and then one day the company prioritized growth over culture, and things went downhill from there…

And because we’ve all been there, we all know that without good culture, everything else is a slog.?

Yet, for some reason, too many companies sacrifice culture as they scale. I don’t think these companies sacrifice culture on purpose. Rather, it’s more like death by a thousand cuts – they accept the small culture dips that happen and fail to invest to ensure they maintain culture as they scale.?

So the question then becomes - how do we maintain culture as we scale?

The answer boils down to 3 pillars:

1. Value culture above strategy
2. Measure culture and anticipate changes
3. Invest in culture to continuously improve

Pillar 1: Value culture above strategy

“Culture eats strategy for breakfast.” ?

~Peter F. Drucker (1909-2005)?

Step 1 is understanding that culture trumps strategy. Why? Because each company is made up of people. We can craft strategy all day long, but unless we have a team of people who are willing to implement this strategy, all we have is words on a page.?

Strategy is executed by teams. And I believe that the best teams win, not the best strategies.? The best teams are made up of the right people, surrounded by good culture.

We don’t want to skimp on strategy, but the saying “The best laid plans….” exists for a reason.?

Further, good culture isn’t just a fluffy ‘nice to have’ off to the side. Culture has measurable impacts.?

Here’s a visual I created based off of data from Harvard Business Review showing the true impact of bad culture:

If you have time, and want a good laugh or cry, put these percentages up against your company’s P&L to calculate the real dollar cost of bad culture.

Pillar 2: Measure culture and anticipate changes

Moving on to pillar 2. Once you are comfortable with the notion that culture trumps strategy, pillar 2 helps us learn how to measure culture over time.??

And yes, it is possible to measure culture.?

I also want to state the obvious: culture, like most things, is a sliding scale, it’s not black and white. Most company cultures ebb and flow, getting better and worse throughout time, tied to both internal and external influences.?

eNPS

In order to anticipate and see culture changes, we first need to know where we stand today.?

The most effective way to start to measure culture is to do an eNPS (Employee Net Promoter Score) survey 1-4 times per year.?

You can also dive deeper and do a pulse survey 1-4 times per year, which is essentially a set of questions, whereas an eNPS is just the 1 question:

“On a scale of 1-10, how likely are you to recommend working at ##CompanyName ## to a friend?”

Any employee who answers with a 9 or 10 is a promoter, a 7 or 8 is passive and anyone who responds with a 1-6 is a detractor.? Usually, eNPS is answered anonymously.

If you’re looking for an easy to use tool, Lattice has a good eNPS tool , and their website also goes into more detail on how to interpret the eNPS results. There are many other eNPS resources on the internet.?

The important thing is to ask the question(s) in the same way, on a predictable cadence, and view trends over time.?

If eNPS or another score is low, or decreases, pay attention and add to your strategic priorities a concrete plan to improve your score.?

eNPS will get you a snapshot of culture. As if not more important than a snapshot is a wholistic picture of your culture as it shifts over time.?

Culture Debt

Culture is something that often quietly moves up or down, and is sometimes hard to see shift.?

As a result, teams can unknowingly or knowingly take on what I call “Culture Debt”.?

Culture debt is like tech debt, but with people instead of code. And, just like with tech debt, neglecting culture leads to rapid build up of culture debt.

Also just like with technical debt, taking on culture debt is a CHOICE. Bad culture doesn’t ‘just happen’. The more culture debt we take on, the harder it is to pay it off.??

My definition of culture debt:

Culture Debt:

The cost of rework caused by choosing a low quality culture solution today, instead of choosing a high quality culture solution.

Anticipate culture shifts

Wouldn’t it be great if we could anticipate culture debt? It’s not easy but there are signals you can look for.?

There are leading indicators that a culture shift might be on the horizon, including some hidden gems that may not be obvious at first. For each of the leading indicators below, it’s important to notice themes and trends, rather than focusing on one data point. It’s also important to take a wholistic view of each of these indicators. While they ‘may’ be a leading indicator of a culture dip, they also ‘may not’ be. If you want help digging into root causes for any of these, reach out to me via LinkedIn or email and we’ll talk through it.?

Possible culture debt leading indicators:

• eNPS dip - as discussed above
• Negative Glassdoor reviews - don’t get hung up on one bad review. Rather, if there are common themes in the “Cons” section, bubble those up and address them.
• Decrease in accepted offer percentage - if your offer acceptance percentage decreases, and no other factors have changed in a meaningful way, this can signal that your current employees who are interviewing candidates are not engaged at the level they used to be, and it’s showing in their interviewing skills.?
• Average rate of promotion slows down - if employees aren’t getting promoted at the rate you expect, the effort they put into their jobs may be decreasing due to lack of engagement or motivation in their job.
• NPS (Net Promoter Score) dip -? if you clients are less happy, it could be a signal that your employees are less happy.
• Profit margin dip - There are many reasons for profit dip. One of them could be employees are putting in less effort than prior months due to lack of engagement.
• Increased sick days - as the graphic above shows, employees take more sick days in poor culture organizations.
• Increase in ‘conversations after the conversation’ - this is hard to observe. This is when you have a meeting and make a decision, and then after the meeting, there are lots of side conversations. This is often a signal that trust is poor.?

Greiner Curve

Another way to anticipate culture debt is to pay attention to where your company is along the Greiner curve. The Greiner curve (see image below, and read more about it here ), created decades ago by Larry Greiner, illustrates how all businesses go through six distinct phases of growth and relative calm (evolution/growth) alternating with six distinct phases of chaos (revolution/crisis):

It is during the periods of chaos that most companies’ culture suffers. It is also during the chaos periods that most scaling companies fail.?

Going through each phase is unavoidable. All businesses go through each phase. The only variable is how long it takes your company to go through each.?

Read through each phase above, and in the article I link to above. Which phase do you think you are in now? Are you in a period of chaos or calm? If you aren’t sure if you are in a period of chaos or calm, here’s a quick back of the napkin test:

Do 'things' seem easy or hard?

Do people seem happy or unhappy?

Do procedures help or get in the way?

Is management aligned or not?

If you answered the negative for any of these four questions, you could be in a period of chaos and should assume you have a possible culture dip.?

Pillar 3: Invest in culture to continuously improve

Pillars 1 and 2 help teams measure culture over time and anticipate shifts in culture. Pillar 3 ties it all together with an actionable plan to invest in your team’s culture so that you can continuously improve over time.?

Given that many teams are partially or fully distributed these days, it’s wise to proactively invest in culture annually, even in times when your culture is doing well.?

There are many ways you can invest in your team’s culture.? The teams who can anticipate culture debt can be proactive about what they change.?

Stop | Start | Continue

One relatively easy, high ROI exercise to do with your team is an agile exercise called “Stop | Start | Continue”.?

It’s just what it sounds like - and can be done in a meeting, or via google doc, etc. Write down 3 column headers - Stop | Start | Continue. Ask everyone in attendance to brainstorm things the team wants to stop doing, start doing, and continue doing.? This allows the team to give input into ways they spend their money and time and helps increase alignment moving forward.?

Some of the most impactful areas of your business to consider starting, stopping or continuing are around:

• Meetings - just because a meeting was useful 6 months ago, doesn’t mean it’s useful now.? Also look at meeting length and frequency. Maybe that hour-long monthly meeting should be 30 min quarterly now. Maybe the agenda should change, maybe attendees should change.
• Seats on the bus - Jim Collins says to first get the right people on the bus, then make sure each person is in the right seat. And then figure out where to drive the bus. The seats on the bus change over time. Here’s a great read on it.? Make sure you have the right people in the right roles, and have them each held accountable to the right things. If you are scaling, it’s likely you need roles you didn’t need a year ago.

Other ways you can invest in your culture

• 1:1s with every employee - I’m talking about having someone who’s not their manager do this. At Stride, we took on culture debt a few years back. I did a 30 min meet with every employee. Took me several months to get to everybody, but in the first month I saw noticeable and actionable trends.
• Increase transparency -> over communicate, say the same thing over and over again in different formats
• Part ways with employees who are a bad culture fit?
• Show humility for successes and failures
• Proactively seek out negative feedback - ask employees disconfirming questions like - “What’s the top thing you’d like to see improved here?”
• Foster social connections - This is even MORE important if you are remote/hybrid.
• Iterate - conduct small experiments, have visible wins, measure outcomes, repeat

Takeaways

Each culture is both unique and not unique at the same time. At the end of the day, companies are groups of values aligned individuals working together to achieve a goal. Culture is at the center of these achievements and is important in a measurable way, both to the organization and to you as an individual. The concepts here are among those I've seen work best, but they are by all means not one size fits all nor the only answers out there. I hope they give you a starting point from which to iterate.

For further ideas and reading, check out these 3 books and a blog on culture:

• No Man's Land: Where Growing Companies Fail
• The Advantage: Why Organizational Health Trumps Everything Else in Business
• The Best Team Wins: The New Science of High Performance
• NYT article -? What Google Learned From Its Quest to Build the Perfect Team