The Five Stages of Culture

How your startup’s culture can help you grow

Taking an idea and turning it into a successful company is hard. Culture is the key to navigating growth and scaling your startup successfully.

If you’re currently leading a startup or growing business, you’ve probably heard of the five stages of business growth. It can be great model to understand where your startup is in its life-cycle from an idea to maturity as a company, and what you should focus on to keep moving forward. It’s also a great way to think about culture and how it can help or hinder growth. (And you already know culture is important, right?!)

Transitions between the five stages, especially when there’s rapid growth, are some of the riskiest moments in the life of a business. Those moments of change are when the internal workings of a company are pivotal to success or failure. While this process will always come with some bumps, a culture that is oriented to the future and embraces change will more easily navigate that growth than one that is oriented to something else, like, say, ping pong, which is not fundamental to the actual work of your business.

It can be tempting early on to put off culture for later, after you’ve passed the point of survival and are growing your workforce. But your culture isn’t waiting for you — it starts right at the very beginning, and by the time you get to stage 3 or 4 it’s already pretty well established, whether as an asset or a liability.

But here’s a secret about culture — your culture is your company. It’s not about doing extra work or funding perks separate from the stuff of running a business and building products, it’s about how you are doing the things you already need to do to be successful.

Certainly, there is not enough room in one article to cover all the details of how to build a culture through the life-cycle of a company, but here are some key things you can focus on at each stage that will keep you headed in the right direction.

Stage 1: Idea

Where your business is at

You, a co-founder, and a dream. You’re working on validating and creating a viable product. So exciting!

Your Culture Focus

• Personal Growth & Reflection
• Founder Relationship(s)

The skills that help you weather this stage will set you up to be an effective leader down the line. Know your personal values and purpose, why you are doing this and what you want out of it. Learn to challenge your own assumptions. Have these conversations with your co-founder to build alignment and cultivate your relationship as an asset.

Stage 2: Survival

Where your business is at

You’ve got your MVP, and are ready to focus on marketing and selling.

Your Culture Focus

• Shared Purpose, Vision, and Values
• Relationships
• Personal Leadership Skills
• Hiring

This is the time to build the foundations for a resilient culture. A shared purpose or mission statement, core values, and a vision for the kind of company you want to have can help you stay focused and guide decisions around hiring, funding, and product development.

Going into this you may not have employees yet, and if you do you’re still dealing more with team dynamics than “culture” per se. But the relationships and dynamics you have now will shape the culture to come. Think about how your core values might be reflected in the current relationships between employees, leadership, and customers, and make it real. Little issues and points of conflict will become magnified as you grow, so acknowledge and address them head on while you still can. This can be uncomfortable, but leading people and managing relationships is a key leadership skill you’ll need. Now is also the time to think about what kind of leader you want and need to be to for your business, and to start working on those skills.

Before you do hire, think about the who and how of it — it can be tempting to hire fast and focus on technical qualifications, but your first 10–12 employees will have more influence on your growing culture than nearly any other hire down the line. That isn’t to say you need a fully formalized hiring process before you even start, but do think about diversity, leadership potential, and the full range of skills that will help you build a great product and a great team poised for long-term success. This can evolve as you grow, but a little bit of research and planning on how to do it right can save you a lot of trouble later.

Stage 3: Traction & Early Stage Growth

Where your business is at

Congrats! You have traction and things are looking up! You’re building operations, and it’s a pivotal time for your company and your culture.

Your Culture Focus

• Operational Alignment
• Organizational Structure & Decision-Making
• On-boarding & Inclusion

How you operate is a part of your culture, so luckily your business and culture focus here are the same. As you build out operations to be scalable, work on aligning them with your values as well as your business goals. If transparency is valued, how is that reflected in your communication and management? Do your sales processes support the relationship you want to have with customers?

Your organizational structure and decision-making processes are also worth a look here — they can trip you up as you grow and making changes only gets harder. Will the structure you have now replicate outward and remain agile as you add people, or will it turn into a vertical hierarchy? Does it support flexible decision-making and accountability? Does it align with your values?

This is also a good time to revisit your purpose and values with your team and make sure everyone is on the same page, or edit them if needed. Have some conversations and come up with shared ideals for your culture. These should be tangible outcomes of your values that can inform decisions and guide leadership. Some questions to consider: What is the role of leadership and management? How do people relate to each other? How do people relate to their own work?

One challenge of growth is maintaining a cohesive culture between your original team and new hires. You want new team members to integrate and embrace your purpose and values, but you also want a culture that is open to change and gives new people space to contribute in their own way. Be mindful of this and intentional in how you welcome and on-board new people.

Stage 4: Establishment & Late Stage Growth

Where your business is at

With your operations built out, things are running without so much direct input from top leadership, which means you have space to take a step back and look at the big picture.

Your Culture Focus

• Leadership
• Change Processes
• Employee Engagement & Retention
• Shared Frameworks

Leadership is fundamental to your success. Prioritize competent leadership, and make explicit shared expectations for the role of leadership and management in the company. Work on both leadership development and a leadership pipeline across the organization. (This is still basically true even if you have a “flat” organization)

It’s important to stay connected to your now complex culture, work on positive improvements incrementally, and catch issues before they get out of hand. Ensure there’s a process for ongoing, iterative learning and change. People need a path to bring up issues and new ideas, and employees and leadership need to have meaningful ownership and participation in change.

Employee turnover is a huge cost in both money and morale. At this stage there are a lot of pieces that go into engagement and retention, but it should overall be a priority. Keep working on formalizing your people operations, stay connected, and really listen to employees.

Some challenges here will be preventing silos and maintaining cohesion across teams and remote workers, managing leadership change-overs, and conflicts between emerging sub-cultures. Shared frameworks can help make explicit the way things are done and why across the organization, and are a great tool for building shared norms while fostering autonomy and accountability. Your purpose, values, and culture goals are a framework for your culture. Strategic planning, employee development, diversity and inclusion, are all areas where frameworks are useful.

Stage 5: Maturity & Expansion

Where your business is at

You made it! You’re pretty well established now, and are probably looking to expand in some way — new markets, new products, and acquisitions of other companies.

Your Culture Focus

• Connection
• Participation

You should have your people operations established, with a dedicated people team, so the culture focus here is mostly a continuation of things from Stage 4. The larger your company gets, or the more widespread, the more of a challenge it will be to maintain cohesion. The shared purpose and values are still key to keeping people connected and building shared identities, so make sure they stay relevant and are used to guide strategies across departments and teams.

It can also be easy to slip into top-down directives for change initiatives and strategy, but it’s even more important to keep listening and using processes that offer real participation and ownership. Empowering your employees will be a lot easier and produce better work results than trying to manage and control. Purpose, trust, and autonomy are also key to resilient teams and navigating the changes that come with this stage.

Building a company up from nothing is hard! Fostering the right culture is not without effort, but if you focus on the right things at the right times it can help you work more efficiently on your business and what it needs to succeed.

Brave Founders makes fun and practical tools and games to help founders grow and thrive with their company.

(Credits)

The original 5 stages of small business growth from HBR

Karvel Digital (For providing inspiration)