Looking Forward: Culture Transformation
As 2021 begins, founders are faced with oscillating cycles of urgency and calm. The former coming from executing on Q4/year-end commitments and targets, the latter coming from a natural break that is felt as teams start a new year with a new plan. 2021 is no different in this sense — despite everything that happened over the past year, founders must continue to look forward and understand how their business will continue to thrive in the unknown.
Given the pandemic and the subsequent need to work from home, companies have had to adjust key operations of their businesses. This equated to many changes in a very quick time frame — with much of the focus centered around the tools that kept teams connected, thus limiting disruption and continuing overall operations. (How many Zoom calls have you already been on today?)
This was the appropriate response as it served as a band-aid to help companies absorb the immediate shock brought on by 2020. But as the title suggests, founders and senior leadership must now forge forward and recognize transforming company culture in this new era is as essential as their digital transformation initiatives.
Culture eats strategy
It has been said before, and it still rings true today: Culture eats strategy. Period. A company’s culture governs the unwritten rules of how employees individually and collectively work together to achieve a common goal, from sales targets to a company’s underlying mission. For many founders, the obvious changes in how we work has brought to surface new questions on how they should move forward — and that includes how they redefine or lead culture change in this new era.
If anything positive has come out of COVID, it is that it changed the script on how we live, work, and play. It has given us all the permission to reset. For a founder, it serves as the impetus for a culture overhaul. A clean slate to start anew while making sure talented employees are still valued, appreciated, and supported. I acknowledge that this is much easier said than done; however, from my conversations with founders, executives, and employees from startups (ranging from Seed — Series D), a recurring theme emerged, and that is using trust as a form of compensation.
A Culture of Trust
So how do you use trust to compensate employees? At the highest level it means letting employees stretch beyond their current roles, responsibilities, and skill set. It means building an environment where employees can build skills and “successfully fail” while recognizing their value is not solely tied to an outcome.
One example, shared by a VP of Sales at a Series C company, was allowing a seasoned salesperson to test his hand at product management. This ultimately led to a reduced quota (and therefore less revenue for the company), but this temporary “cost” resulted in significant tangible and intangible benefits. The first-order effect was that the product team better understood how the sales team was positioning the product. Additionally, there was a direct channel for the sales team’s unfiltered feedback. But the second-order effect was much more impactful because it went beyond an organizational change and touched on the fabric of the company’s culture. Not only did it create trust with the individual salesperson, but it had a cascading benefit to the entire company.
The involvement of a salesperson in product development unexpectedly led to the creation of “win teams’’ that consisted of cross-functional members tasked to win high-value accounts and execute on high-priority internal projects. The sales team now had a voice when it came to product development, and engineers and customer success felt a part of the sales cycle, helping build an encompassing support system for a customer.
This type of alignment resulted in better prioritization and execution on initiatives that would move the needle for the company. Culturally, it created buy-in across teams, business units, and the entire organization, allowing employees to view their role and impact in a whole new light. For the VP, the true benefit was the attitude shift: “There is now an appreciation that flows both ways: engineers understand how hard it is for a salesperson to sell and salespeople understand that building features do not happen overnight. This type of empathy is fundamental in building great teams”.
I thought it was just luck that these simple changes snowballed into such a large impact for the company, but after hearing more and more anecdotes, it’s apparent that it was not so much of the actual change, but rather the unspoken message of trust founders and leaders were sending.
Founders can have the best digital transformation strategy, product, or pricing strategy and it may equate to short-term success; however, without proper execution and trust, founders are bound to fail. In my conversation with a Board Member from a Series D SaaS database company, it was reiterated that execution is the hardest task because it is driven by people, and people are “dynamic”.
So my question to him was, “how do business leaders build trust across a diverse employee base while also maintaining accountability around execution of responsibilities?” He noted that there was not a single right answer, but shared that his company implemented an initiative called “20% time”. This provides employees one day a week to work on and develop their own interests outside of their core responsibilities.
He shared that the logic is that if the company keeps employees engaged on both their own interests as well as the company’s goals, this 20% time will spur creativity, happiness, and ultimately productivity for the company. Most notably, he shared, “We have to trust that employees are using this time to actually learn and develop…rather than taking a day off. We have seen so much positive come from this — whether it is abstract idea generation, conversations with other employees, and even prototyping. This 20% time has really built a positive sentiment around empowerment and exploration. None of that would be possible without first trusting our employees.”
Initiatives such as 20% time demonstrate the commitment executive leadership has to the growth of the individual within and outside of the workplace. Culture building is an ongoing journey that founders must actively and thoughtfully lead.
There are many paths to build a culture of trust, and the benefits of doing so are apparent. A culture built around trust can help place flexible boundaries around the internal workings of a business to help provide a guiding light across the different perspectives, attitudes, goals, and visions of the individual contributors who make up a team. Culture comes from the top and company leadership sends a clear message to their teams when they take action: though the road ahead is full of twists and turns, we trust you. This commitment is invaluable, powering the success of their employees, customers, and ultimately the company.
I’m Brent Wu, one of the Partners at Geodesic Capital. I’d love to hear from you and discuss anything software or Japan related. Please don’t hesitate to get in touch via LinkedIn.