As your startup grows, the one thing you can count on is change. You’ll likely have a larger workforce and a larger customer base. Many parts of your company will naturally evolve with growth. However, creating a clear and consistent company culture is one aspect that is hard for many growing companies to figure out as they scale.
Scaling is an exciting and challenging time for startups. Founders often worry that the existing company culture that they’ve worked so hard to cultivate will be altered by the rapid changes that come with growth. Others may not have started with a culture code that is strong enough to withstand growing pains.
What is company culture?
Company culture is what defines a business, so it’s ironic that company culture itself is a hard term to define.
In simple terms, culture is the personality and beliefs of your company. It is made up of your core values, mission and goals. It’s also about how those qualities are conveyed and communicated internally and externally. Think of culture as your company’s DNA. You can better understand your own by answering these questions:
1. Who are you?
2. Why do you exist?
3. What do you stand for?
For instance, if your company culture says that it values collaboration and feedback, then you may have an open floor design. Leaders may establish an open door policy and teams from different departments may be cross-functional and frequently collaborate on projects together.
“People don't buy what you do; they buy why you do it. And what you do simply proves what you believe” - Simon Sinek
Why Culture Matters
Great company culture is vital to any business, especially a growing startup. It has the power to boost employee engagement, creativity, productivity and overall performance. It impacts how your customers and clients see you, and even whether or not they’ll stay with you in the long-run.
One study from researchers at Duke University found that 90% of company leaders believe culture is important to their business success. Another 78% said it is one of the top five characteristics that make their company valuable.
Our questions is…what do the other 10% believe?
Startups with poor culture are often doomed to failure. Fostering a poor or ambiguous culture has been linked to employee turnover, unhappiness and decreased performance. A study from Columbia University found that the rate of turnover at companies with poor culture was over 48 percent, compared to 13 percent at firms with a strong one.
Culture is a particularly important consideration when scaling. Weak cultures stunt growth and can even be the primary cause of business failure. Scale without a strong culture code and it could even fuel opportunities for damaging conduct and devastating mistakes.
Scaling & Culture
When scaling a business, it’s easy to get stuck in the day-to-day of hiring more employees and acquiring new customers. Six months in, you may realize that your company culture has gotten lost in the process.
First, entrepreneurs should understand the true point of scaling. It’s not just about getting bigger. Growth is a byproduct of the real goal – getting better. Companies that grow for the sake of growth are more likely to lose sight of why they started their business in the first place and neglect their culture in the process.
Startup Scaling Challenges
When you look at startups that scaled big like Facebook, Slack, Netflix and countless others that grew rapidly and successfully, it may seem like scaling is an easy process. Just hit product/market fit and you're off to the races. That assumption is wrong. Scaling can be one of the most trying parts of the entrepreneurial journey. Founders face many challenges while trying to balance the changes of growth with the desire to preserve the foundation on which they are building.Financial Concerns
Yes, scaling usually means that you will be making more money. But, it also means that you’ll need more support, resources and infrastructure to handle the increased workload. Scaling can be expensive. You should set a budget for growth initiatives that includes hiring costs, marketing spend and other possible expenses. Setting a budget can also help you minimize those costs and find effective growth solutions at costs that aren’t impossible to manage.Planning for Growth
They are called growing pains for a reason. As you grow, problems are going to pop up. Develop action plans for when potential problems arise. If the number of users on your platform or app grows significantly, you should have the infrastructure in place to support it. If not, you’ll likely experience issues and outages that will not go unnoticed. If you don’t prepare for growth before scaling, it can hurt your customer experience, reputation and ultimately increase customer churn.
There are a few problems that you may not be able to predict. Prepare for the unexpected with the right infrastructure and a skilled team that can handle them when they arise.
Entrepreneurs sometimes get so obsessed with rapid growth that they lose sight of what motivated them to start it. Scaling can be an extremely stressful time for founders. They risk getting stuck on autopilot. They may be working so hard on building their idea that they lose the passion that they felt in the early stages. A great culture will be designed with mission and vision at the forefront of everything that you do. In times of exhaustion and doubt, a great culture will help founders and their team pull through it by unifying around a shared set of principles.Finding the Right Team
With more customers to support and products and services to manage, you’re probably going to need a bigger team to manage it all. One of the most common growth challenges is building up your team. Startups have several options to consider. Some organizations may choose to hire in-house employees. Some founders take this route because they can train and oversee their progress in a more controlled environment, but what about routine, back-office work?
At CloudFactory, we call it a Do-It-For-Me Approach or DIFM. Instead of taking on the burden of managing everything, especially tedious tasks, businesses are increasingly creating a competitive advantage by offloading this routine work. Fortunately startups can outsource tasks that require less critical thinking but may require a lot of time, costs and resources to complete in-house or by herding a bunch of autonomous freelancers like cats.Successfully Balancing Growth and Culture
With so many challenges to overcome, growth can be overwhelming. But, companies that rise to the challenge more often than not, have one factor in common – a strong culture. A strong culture is what differentiates companies that fizzle out and those that make it through growth stages and downturns, only to emerge even more successful than they had ever dreamed. Rapid growth can change startups in drastic ways. But, how does it affect company culture?
There are some that believe that culture should stay the same when scaling. In some cases, maintaining the same culture from the early days can prevent you from losing sight of your long-term vision and increase your chances of success. But, there are also times when it it’s OK and even crucial to change your culture.
Some founders are so committed to an idea that they are unwilling to modify it, even when data and analytics show that it isn’t working in its current form. Others may have an attachment to the early days when they were building their company from the ground up. But, don’t let nostalgia be the reason that your culture becomes stagnant.
The bottom line is your culture may have to change as you scale. If the change will make your company better, without completely throwing away the values it was founded on, take a stand and be willing to evolve, your team will thank you on the other side.
What challenges have you faced when scaling your company? Do you agree that your culture has helped you pull through the toughest of times and made you more successful?