Building culture as an asset in startups

Translated from original blog

https://note.com/smochi_pub/n/na1d2cde44b46?magazine_key=mde22e35d256b

I’m Mochizuki (@smochi_pub), a Machine Learning Engineer in the data science team at Ubie. I joined Ubie in the early days of the company, and have witnessed how the culture of a startup changes and evolves with the business. I’ve been a part of the team that is mainly responsible for culture-related measures, as I’ve strongly felt the benefits of such measures.

In this article, I would like to introduce the creation of the culture guidebook that I was involved in as a member of the latter team, and what I thought about during the process.

Outline of this article and intended audience

Recently, Ubie has created a document called the Culture Guidebook. It was created as a guide for internal and potential hires to understand the company’s organization and culture in a coherent structure based on business goals.

By clarifying the culture-related systems and policies through structuring

• Expanding the target group for sustainable recruitment
• Flexibility for the culture to follow changes in organizational assumptions
• Minimizing the number of rules

The following benefits were obtained.

In addition, through the creation process, we came to the conclusion that culture formation as a strategic asset is an effective way to counter the so-called “N” barrier (N=50, 100, etc.) of startups. I hope this article will be helpful for startups who face the trade-off between hiring expansion and culture formation on a daily basis, as well as for those who are struggling with their business goals and organizational structure.

What we learned from structuring the culture

Expanding the target audience for sustainable recruitment

For a while after the company’s founding, we naturally attracted people with a high affinity for web-based engineers and startups because we had been expanding mainly through referral hiring. On the other hand, by the time we were getting a good response from PSF and aiming for PMF, we started to feel the limitations of achieving our business goals with an organization of people with similar experience and skills. Therefore, we decided to expand our hiring targets, mainly in the areas of marketing and BizDev, and hire people with a wide range of backgrounds and skills. The attempt was a success and we were able to gain new capabilities as an organization.

On the other hand, a challenge arose in the form of more time spent in discussions on aspects of work procedures and cultural understanding. We had to choose between continuing to incur the costs associated with understanding the culture, or reducing the hiring target and slowing down the progress of the business.

The Culture Guidebook was created to build an asset that would continue to eliminate the cost. Although it is an ongoing process, the costs associated with understanding the culture during onboarding are clearly decreasing as the values of existing members and the organization can now be shared in a structured manner during onboarding. In addition, we have been able to expand our hiring targets sustainably as an organization because we have been able to create a situation where people from any background with a certain learning ability can quickly understand the culture and play an active role.

Flexibility of the culture to follow the changing assumptions of the organization

At Ubie, we sometimes adopt measures that have little precedent, such as strategically dividing the organization and introducing holarchy. This has led to issues such as sharing assumptions and discussions about the necessity of the measures when they are introduced, and difficulty for new employees to understand the background that led to the introduction of past measures. In the future, when we want to introduce new measures, we can now verify the consistency and rationality with the existing culture based on the guidebook. And if there is a change in business or organizational assumptions, we can more easily explain the need for corresponding improvements or new measures.

There are many aspects of Ubie’s behavioral guidelines that are different from what is expected in a typical company, which may conflict with the values you had before you joined. In such situations, the Culture Guidebook can help you answer the question of whether you should improve your values or your behavioral guidelines. The Culture Guidebook can also help you answer the question of whether you should improve your own values or your behavioral guidelines, because you only need to consider which is more rational for realizing your higher aspirations (values and business strategies).

Minimize the number of rules

Human resource requirements and behavioral guidelines are now structured in a way that connects to business goals, making it possible to minimize rules. At Netflix, a company famous for its unique culture, there is a department that has a motto of “freedom and responsibility” and a system where “any expense is approved as long as it is used in a way that maximizes Netflix’s profits. The key to this approach is that it removes the cost of setting detailed rules and complicating the rules by setting a higher goal of “maximizing profits. The Culture Guidebook is similar in concept, with the existence of action guidelines and organizational design structured from business goals, and a structure that allows each individual to make decisions quickly according to the actual situation, without having to set detailed rules and approvals.

Culture as a strategic asset

I feel that the problem of the “N” person barrier that startups are said to face as they scale is exactly due to this culture formation and its penetration.

The optimal strategy and action guidelines will always change depending on the situation. Even if you stick to a particular strategy or action guideline, it may not work due to changes in the assumptions. And even if you are able to formulate strategies and guidelines that are appropriate to the business environment, if you fail to instill the reasons and interpretations of those strategies and guidelines, problems will occur where they conflict with the way things have been done in the past. The tragedy that occurs in the latter case is a pattern of internal misinterpretation of the new organizational assumptions and action guidelines, and in the worst case, a state of civil war and self-destruction.

I believe that the formation and penetration of a culture that is consistent with business goals is an effective strategy that can eliminate such sterile internal battles. With a logical system that will always be the basis for everyone, if any problems arise, we can refer to it or sequentially improve the parts that depend on changes, and we will have a sense of security.

Through the creation of the Culture Guidebook, I felt that the process was similar to refactoring in software. The organizational measures that had been implemented sporadically to meet specific requirements were organized into functions and roles from a bird’s eye view, and even though there were no major changes in the output that had been achieved, I think that the guidebook gained scalability for future organizational changes. In this sense, culture, like software assets, must be maintained and improved according to the situation, or the debt will accumulate and become obsolete. We will continue to develop a strategic culture that is consistent with our business goals as an asset that generates significant flow.

Regardless of your job title, Ubie is looking for people who are interested in building culture as a strategic asset. If you are interested in joining our company after reading this article, we would love to talk to you.