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Unchecked expansion of born-digital companies can trigger toxic patterns of behavior (Part Three)

Part 3: Considerations for strengthening your culture through growth

Scaling into a mature company demands increasing ethical, fiduciary, and regulatory responsibility, particularly when it comes to protecting consumer trust. Meeting these responsibilities can require an inherent cultural shift, sometimes at odds with the entrepreneurial spirit that fueled growth initially. Walking the tightrope between choking creativity and jeopardizing the company’s reputation is indeed challenging, but not impossible.  

Considerations for strengthening your culture through growth:

  • It’s all about alignment. There’s no right or wrong culture. The question is – What are your strategic objectives and what kind of culture will get you there? Be explicit about the purpose of your organization, what you are trying to achieve over the next 3-5 years, how you plan to get there, and at what cost. This is the starting point from which all communications, KPIs, performance management processes, hiring and promotion decisions, and incentives and rewards should stem. If, for example, your strategy requires cross-functional collaboration, but your KPIs for revenue recognition incentivize siloed activities, consider how this impacts behavior across your company. Are the two in line or at odds with one another?
  • Every strategy has its trade-offs, and so does every culture. No company can be all things to all people, all the time. It’s easy to say you want an innovative culture; an ethical culture; a collaborative culture; an entrepreneurial culture – At what cost? What are you willing to sacrifice? For example, a fail-fast, entrepreneurial culture requires rapid iteration in a test-and-learn environment that allows for mistakes, by design. A storied insurance company, on the other hand, may rely heavily on caution and only tolerate calculated risks under highly engineered circumstances. At what point do mistakes become a problem? It depends on your strategy. Identify where you need to land on that spectrum and get comfortable with the trade-offs.
  • Culture change must be driven by the CEO and needs to be on the Board’s agenda. Culture change cannot be solely driven by HR or the Compliance department.  Only the Board and CEO have the necessary authority to reset the company’s strategy or re-define non-negotiable design principals to guide decisions across the organization and hold leadership accountable. If the CEO isn’t the one driving the change and initiating any necessary structural adjustments to support the culture, any initiatives will quickly become a theoretical exercise.
  • For any intervention, consider the following:
    • How will this action change people's perception of their place in the organization and what ripple effects are possible? 
    • Are we encouraging people to behave in a way that's aligned with our strategic objectives or are we inadvertantly incintivizng bad behavior?
    • What are the down-sides of pushing this change? Are we willing to accept those costs? To what end?

Culture change requires a deliberate, multi-dimensional intervention over a prolonged period of time. To start that journey on the right foot, these basic considerations can help mitigate costly exposure to risk and potential long-term damage caused by unethical or careless behavior. As we have learned, devoting the time and up-front cost to proactively understand, measure, and shape your company’s culture, will more than off-set the potential down-side of inaction.

"Business ethics are not something you need to start worrying about when your company reaches a certain size; they need to be sewn into the fabric of your startup from the get-go" -Tech entrepreneur Vivek Wadhwa

Tags

leadership, values, culture

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