55% of Startups fail in the first 3 years. Forbes 11.28.12
The Venture Capital Secret: 3 out of 4 startups fail. Wall Street Journal 9.9.12
Change efforts fail over 70% of the time- Why? Fast Company 12.29.10
Leading Change: Why transformation fails. Harvard Business Review Jan. 2007
So what do startups and organizational change initiatives have in common? By the headlines above, we might deduce it is their failure rate. Fair enough. But the ones that succeed have some common themes as well. Well thought out business plans? Sufficient financial investment? Flexible strategies? Great product or service? Perhaps. But findings demonstrate that while these elements are necessary, they are insufficient.
After gathering a whole series of articles on startup failures and looking at volumes of research on change failure, at the risk of oversimplifying the causes, it really boils down to two primary factors: Organizational Culture and Leadership. In today’s post we will look at organizational culture. Several upcoming posts unpack leadership and its impact on organizational flourishing.
Culture is that nebulous thing that creates the environment where people work and live and the experience that all stakeholders have when interacting internally and externally within the culture (think Starbucks or Apple). This can be true of families, villages, countries and organizations. Perhaps the very best, simple definition of what culture is comes from Riding the Waves of Culture; “Culture is the way in which a group of people solves problems and reconciles dilemmas.”
When it comes to organizations there are really 3 kinds of culture:
- Unintentional- the culture exists, everyone knows it but it is not easily describable. It sounds like “that is just the way we do things around here.”
- Hypocritical- the culture has been defined, usually by a set of articulated values and mission that hang on the wall. But when it gets down to decision making those values are rarely invoked. It sounds like, “yeah that is what they say we value, but everyone knows that it is really_____.”
If either of the above cultures are in place, the implications are very similar— people cannot make good decisions about those things that impact their daily work and the culture breeds reactivity and fear.
- Intentional – the culture has been formed by a set of embodied values that everyone can relate to their everyday responsibilities; decision making is pushed out to the fingertips of the organization. It sounds like “I am empowered to make decisions everyday about the things that matter most to me and to the organization.”
Well thought out values—the HOW—that have been operationalized and that drive decision making are foundational bedrock for healthy organizational cultures. Everyone, including the most senior leaders in the organization must be submitted to the values and be willing to be held accountable to them,
The second and oft missed cultural success factor is helping people increasingly move into roles that align to not just their skills but also their passions and strengths in mutually interdependent teams. This idea of helping people get into their “sweet spots” in service to the organization and their teams is the WHO.
At Serving Leaders we look at these elements—the WHO and the HOW—of culture through a grid of alignment and intentionality:
- Aligned people—those who are doing those things that they are most passionate—about working in an unintentional or hypocritical culture breeds Discouragement; employees show up every day willing to bring their A game and the culture disempowers them at every turn.
- An intentional culture where people are not well aligned in their role breeds Burnout; the culture may be great but there is no one paying attention to helping people align into roles that they can thrive in.
- Both misalignment and hypocritical culture breed Toxicity; in this environment employees are box-checkers and rely on an elite few to make all the decisions.
- Well-aligned employees working with others in environments that empowers them to make decisions and offer their very best contribution is a Healthy, Flourishing Culture.
These are cultures of engagement and the result is high performance. Marks of a healthy organizational culture are one:
- where relationships and results are both evident.
- where employees are bringing their discretionary effort.
- where innovation is occurring and intelligent risk-taking is encouraged.
- where failure is celebrated .
- where people are treated, not as a means to an end, but as an end unto themselves.
- and where excellence is valued over success.
Whether you are in startup mode and may be a small team ( even a team of 1) or you are part of a much larger organization that is growing and implementing change initiatives, just remember Culture—the integration of the WHO and theHOW—eats Strategy for lunch every time.
 Riding the Waves of Culture by Fons Trompenaars and Charles Hampden-Turner