During the last couple weeks, I visited with several technology start-up businesses in San Francisco, Boston and Las Vegas. I’m particularly interested in how start-ups build a culture in their organizations and whether or not it occurs by default or if it is deliberately designed by the entrepreneurial team. What is culture? It is pattern of basic assumptions and beliefs, the learned behaviors, shared values and norms that define the work in an organization (Schein, E. 2006, Organizational Culture and Leadership, Jossey Bass: San Francisco, ). The visible artifacts of culture have to do with stories, ceremonies, symbols, events, the way people dress, and layout of an office. But the roots of culture have to do with beliefs and assumptions that underlie how work is done in the venture. For example, beliefs about time- do people work 24 hours or do they work 9-5? Beliefs about space- no walls or closed offices? Beliefs about people- are they inherently good and work for intrinsic rewards or inherently lazy and have to have be motivated with punishment? Culture is “learned” in a venture from events, and what the entrepreneur pays attention to, measures, and controls. Why is culture important in a new company? The failure or quit rate of new ventures is around 50-60% during the first 2 years http://www.businessinsider.com/small-business-owners-are-optimistic-2013-6ventures. When a business closes their doors, one of leading causes is leadership or management which is often stated as poor team composition, incompetence (living too high for the business or emotional decision-making), all of which can be linked directly to culture http://www.statisticbrain.com/startup-failure-by-industry/ In San Francisco, I had the opportunity to participate in a panel sponsored by the Silicon Vikings where we talked about culture in start-ups. http://www.siliconvikings.com/ One of my co-panelists was Risto Lahdesmaki, founder of IDEAN, a design firm founded in Finland but later located Palo Alto, Calif. The purpose of the company to develop elegant user interface designs for customers and they do this by providing a fun, learning environment for employees that favors both diversity and flexibility. In a word, the culture of IDEAN is “awesome”. The founders intentionally created an environment that met both diversity, learning and flexibility needs of its employees. Notably, the company maintained its culture even in the face of an economic downturn, maintaining its “awesomeness”. http://www.idean.com/ Besides intentional design by the founder, they may be strongly influenced by influenced by where they are located. I participated in a Tech" type="channel" active="false" key="technology" natural_id="channel_3"]Tech[/entity] Cocktail event http://tech.co/ that immerses visitors in the ecosystem revitalization project inspired by Tony Hsieh, CEO of Zappos. The Downtown Project is investing in small businesses and tech start-ups as part of a larger project to transform downtown Las Vegas. http://downtownproject.com/ New ventures locating in downtown area of Las Vegas fit dimensions of “culture” designed by the project “commitment to collectiveness, co-learning and collision.” How is this manifested? Small businesses, tech start-ups and other organizations participating need to demonstrate their commitment to community as much as they need to show how their business model will be sustainable. For instance, Ticket Cake, a company that helps event organizers market and effectively track promotions and increase revenues, originally started in Utah, moved to Las Vegas because of the start-up community and collaborative environment. http://ticketcake.com/ Founder Joe Henriod notes that symbolically, the “cake” in the company name represents a positive image of fun and celebration, which aligns directly with the core values of the Down Town Project. TicketCake is explicit about its culture, deliberately connecting it to strategy for growth. I have two main take-aways. 1. Intentionally defined culture should be linked to the mission and the values of the company- but they also have to be communicated, memorable and “lived”. This can provide the glue helping a company to sustain during the dynamic ups and downs of the start-up process. At IDEAN, culture is “lived”. 2. Culture is a “strategic” resource leading, invested in and central to growth and expansion. It is strategic, just like technology, brand, or people. At TicketCake, it is core to strategy. For entrepreneurs starting new businesses, the tendency is to focus on developing the product, and working on the technology. But, culture needs investment and intentional creation just the same.
Reported by Forbes.com 4 hours ago.
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