Great product. Rubbish culture

Most start-up founders obsess over their product. They continually iterate, test, pivot and refine. This is completely understandable in the early days of their business as they seek to perfect a market offering that will ultimately lead to profitability. 

However, when the business (and headcount) grows they wonder why the wheels start to fall off.

The answer, more often than not, is culture.

Recent research from McKinsey shows that over a quarter of start-up failures are directly linked to cultural issues.

Having worked with a number of start ups, the problem is that culture in the early days is invisible. When a founding team is small and mission-driven, values don't need to be written down, behaviours don’t need to be articulated, everyone just knows and the expectation is that this will continue. But as more people join, what was once instinctive becomes inconsistent. 

New people arrive with different habits, assumptions and expectations, and nobody has done the work to tell them what good looks like here.

Leaders compound this by treating culture as a personality trait rather than a system. They believe they are the culture (as they were at the start) and that simply being in the room is enough. It isn't.

What founders should do instead is treat culture design with the same rigour they apply to product development. Define the vision, values and behaviours that will make the business continually successful. Hire for values match, not just capability. Train managers on how to create something special. Build rituals that reinforce the ‘right’ norms from day one. And revisit all of it as the business evolves.

The data is clear. Companies in the top quartile for cultural health deliver three times the total shareholder return of those at the bottom. Culture isn't something ‘soft’ or to be ignored until the business starts to fail. It's a proven competitive advantage. It needs to be treated as one.