As your organization grows, so will your cultural challenges.
You will face new cultural challenges with each stage of growth. It is also much more difficult to intervene a toxic culture with bad habits versus being intentional at the beginning.
You need to be able to figure out where you stand, and what cultural priorities you should focus on next.
Your culture will go through evolutions throughout it's lifecycle. If you live the traditional organizational lifecycle, there will be a time of decline in the future. In order to be a sustainable and resilient organization, it's essential to build a culture of evolution.
At this stage, you are a seed that has yet sprouted and grown. The “organization” is solely focused on figuring out it's initial reason for existence. This typically surrounds an idea that can satisfy a market demand. The risk here is not developing a concept or hypothesis that consumers truly want. Your main cultural challenge at this early stage is defining a core purpose that keeps you engaged and aligned with what you are looking to create. This purpose typically initiates and aligns with solving a specific problem. As you focus in on that problem, this discovery of the purpose will be an evolving experience itself. You will go through a journey taking you in deeper reflection that takes your purpose into something much more meaningful than solving an immediate problem that exists today.
Discovering Your Space:
Reaching this stage means you have found a problem to solve and a market to serve. You are primarily working to gain recurrent customers, generating revenue, gaining as much information, and involving a few employees past the founders. This is your first taste of internal group culture. More people are involved. Individual personal values are starting to interact. There will be friction. Most likely in healthy & unhealthy ways. This is the first time you are starting to expand the space beyond the founder/s. It’s essential to bond the team together through a shared purpose that enables healthy friction to occur. A misalignment with your team in the early stages could cost you all future success. Watch out for ego’s, the need for fancy job titles, non-mission driven individuals, and behavioral red flags. It’s essential the founder/s are compelling and deeply passionate about what is being built.
Starting to Bloom:
Reaching this stage means you found a product market fit, and a distribution model that is scalable and profitable. At this point you are looking to develop processes that are scalable, making sure the business model is ready to scale, and you are looking to grow your team beyond the founder's and other key leaders involved. Here, it's even more important to have a committed mission. Mission without growth is charity, and charity is not a business. Growth without a mission leads to all kinds of scary cultural issues that ultimately lead to failure. With growth, comes new cultural challenges every day. Going forward, managing teams growing at this pace is something very unnatural unless you are a founder who has done it before. Hiring smart and the right people with complementary skill sets is necessary. You need to clarify the right seats to be filled and find the right people to fill them. It's all about creating a nurturing environment that allows the organization to bloom. At this point, you should be building sensing mechanisms into the organization to better understand what does the company NEED in order to flourish.
On top of that, it is going to be the first time the founder starts to empower others to make decisions. There will be new departments forming and new roles established. You need to ensure you are creating systems to bring new members in that creates instant alignment and clarity around the values and purpose of the organization. Otherwise, new employees will establish a culture of their own and threaten the existing circle of safety. Founders should be spending a lot of time involved in the recruitment process, and establish cohesion and cultural assimilation as you mobilize the teams according to the defined and communicated goals.
After your organization "blooms," there is a point where the company is no longer considered a “start-up.” At this point, we are looking to operate like an established organization. This involves expanding departments, driving organic growth, empowering employees, further delegating decision-making, and building processes to sustain growth. Operations of the business should feel more as a series of weekly habits. As a leader, you should be reflecting on the organization's structure and operations; This is a space the founder will spend a fair amount of time. The cultural challenges you will face will expand and change as the organization grows. These include being able to fuel the team and employee’s growth in alignment with the company's growth. Things like ego, company structure, and cultural issues is what stalls the company. Something you may have to accept is that the company will outgrow many of its people; Especially those from the early days of initiation. Outside leaders / hires are going to be necessary; People who have experience in later stages of company growth. The company will have the need to expand, but there are risks to expanding too carelessly. You need to grow in the right ways that are sustainable and reflect the growth of your people internally. If your people are not trained and capable of the next level of company growth, there needs to be a plan to get them there.
Here you are further defining ways to optimize the core business structure for your organization. One of the main goals is to maximize overall profitability within the organization. You do this by maintaining high retention percentages and driving year over year growth. At this point the organization needs to decide if it is pushing for further expansion or maintaining the current market that the business is in. There is a high potential for leadership change here. If so, other leaders and/or board oversight needs to define what type of new leader is needed and a fit for the job. An organization at this stage could face a variety of cultural challenges. If this is the first time the organization has become “culturally conscious,” there might be years, and potentially decades of toxic cultural habits formed. One of the most difficult things the organization will face is keeping a consistent pulse on its health and maintaining high levels of engagement. It's often things become stale at this stage, so reaffirming the purpose and enhancing the employee experience is essential. If this is the first time you are looking into your culture, there is going to be a need for major discovery work to be completed and you will open the door to perspectives that you are not aware of. Let alone, ready for. If this is you, be prepared to be vulnerable, and make some drastic changes for the sake of the company. If you have been proactive and intentional around your culture at this point, it's more about maintaining engagement, and evolving it to what the company and people need next.
Evolve / Decline / Exit:
At this point, you either need to allow your organization to evolve or stay in the status quo and slowly decline. Markets and competition are constantly reinventing themselves and providing new services and ways to differentiate, and you will find yourself having to make some bold decisions.
Expand into new markets? Establish innovation teams and new departments? Terminate or evolve old products that have lost consumer appeal?
Mergers, acquisitions or buy-outs are common business activities here. In order to survive, leaders need to be inspired to re-invent the organization's core business models, develop new products, strengthen the purpose/mission within the organization, and evolve into the next state of being. A HUGE challenge that you will face if participating in M&A activity is the assimilation of multiple cultures clashing together. This can result in high levels of attrition and low levels of productivity.
The biggest cultural need at this point is to maintain engagement and loyalty to the company and drive internal alignment on the new direction / pivots that the organization plans to take. If your people are not fully aligned for the future of the organization, you will not be able to survive the challenges that markets, consumers, and competitors bring. At this point, you are working to stay relevant, and to reaffirm a deeper purpose that inspires and engages people to evolve, which ultimately allows the organization to evolve.
The goal is to become a "Perennial Culture."
The cultural lifecycle can be a choppy sea to navigate. We all hear about cultural transformation and episodes of transformational change and breakthroughs within organizations. But at the end of the day, they merely remain just that, an episode. When you focus on only “culture transformation,” eventually the larger culture system will snap back into the old ways of operating. This is why leaders become so frustrated with culture change - it’s never sustainable. For your culture and organization to develop and evolve, you need to attend to the core foundational elements of culture evolution - Engage, Empathize, Energize, and Empower. It's a constant iterative flow that you and your organization will operate in. Make sure to remember what the definition of a “Perennial” culture is; It’s something that is lasting or existing for a long or apparently infinite time; enduring or continually recurring. That's where you unlock the power of continuous growth. When the external environment changes and throws new challenges at you, this process will enable evolutionary resilience that withstands the test of time and hardship throughout the organizations lifecycle.
Going forward, and living within this paradigm, you will forever have a strong foundation built on purpose, live in evolutionary growth, be nurtured with empathy, and empowered to grow and flourish with sustainability.