Why Organisational Culture Is Important for Tech Start-ups

Why Organisational Culture Is Important for Tech Start-ups

01 Apr 2022

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This informal CPD article Why Organisational Culture Is Important for Tech Start-ups was provided by The Tesseract Academy, providing executive training in data science, AI and blockchain.

Take two companies that are similar in size, operate in a similar market, and sell similar products or services — even though there are massive resemblances, the experience of dealing with those companies as a customer or supplier will be completely different. The experience of employees will also be different. This is because of organisational culture.

Organisational culture is the values, beliefs and principles of a company and how those values, beliefs and principles define expectations and practices.

Organisational Culture in Tech Start-Ups

Organisational culture is important to the success of any company. However, there needs to be extra focus on it if you are a tech start-up. As a tech start-up, you will have a minimal track record to trade on. You might not have sales, customers or even a product.

There are things you do have, however, including the idea for the company and the character, skills and passion of your founders. You also have your organisational culture. This will help you attract investment, and it will help you recruit the talent you need to drive your company forward.

Yet, it's not just about achieving these milestones. A positive, dedicated and people-focused company culture will also help you get through the tough times and challenges you will need to deal with. Your organisational culture will help you retain the talent you need, as well as motivate your team to push forward in a collective effort to achieve your goals.

The Microsoft Example

The days of Microsoft being a tech start-up are long gone, but this example demonstrates the importance of organisational culture to the success of technology companies. Before Satya Nadella become CEO of Microsoft in 2014, the organisational culture in the company was cutthroat. Departments were at loggerheads with each other, and employees were constantly pressured to prove themselves.

Satya Nadella set about changing this by encouraging employees to improve (rather than prove) themselves in an organisational culture that centred on having a growth mindset. Did it work? If the market value of a company is any indication — yes, it did. Microsoft has grown from a $300 billion company in 2014 to a $2 trillion company now.

Benefits of a Positive Organisational Culture in Tech Start-Ups

Good financial performance isn’t the only benefit of fostering a strong and positive organisational culture. Some of the other important benefits include:

Talent Acquisition and Retention

Finding the right talent for your start-up is often difficult, but it becomes considerably easier if you have a good reputation for having a positive, people-focused organisational culture. In fact, the companies with the best organisational cultures find talent is eager to come to them.

When you get high-quality people, it's important to keep them. This is getting more difficult as it is now the norm for employees to change jobs regularly. A positive organisational culture will ensure that employees feel valued as being a part of what the company is trying to achieve, and they will also feel they are getting opportunities to reach their full potential. This will help you retain the talent that you need.

Improved Productivity

If your organisational culture is negative, employees will be demotivated, which will hamper productivity. The opposite happens in a company with a positive organisational culture, where collaboration will improve and there will be energy and enthusiasm throughout. This will deliver a massive productivity boost.

More Engaged Workforce

You will also have a more engaged workforce if you have a healthy and positive company culture. This helps both the points above — staff retention and productivity improvements. However, there are additional benefits that come from having a more engaged workforce. This includes greater alignment with business objectives and a more unified effort to achieve goals and deliver on customer expectations.

Reduced Absenteeism

Having a good company culture will ensure you have a happy workforce that doesn’t feel under stress. This doesn’t mean everyone coasts along with as little effort as possible. Instead, there will be a healthy drive and ambition to push the company forward — just what you need in a tech start-up. This happy workforce will also keep absenteeism rates low, particularly absenteeism that is the result of mental health and stress-related issues.

Improved Teamwork

When employees compete with each other or have an us-or-them approach to completing tasks, teamwork suffers. This is often most obvious when you have one team that achieves its goals at the expense of other parts of the business. In a small tech start-up, this problem can be catastrophic.

A good company culture brings teams and people together and prevents divisions and rivalries from developing. In this type of work environment, teamwork will thrive, so you can get more done, faster and with a higher level of quality.

Benefits of an organisational culture in start-ups

Better Decision-Making

Bad decision-making can occur when decision-makers are distracted by rivalries or members of staff that are in conflict with one another. For example, a manager could make a decision that is good for his or her department yet is a poor decision for the business overall.

When you have a good company culture, there will be more of a feeling of everyone being in it together. This improves overall decision-making, as it encourages those making the decisions to look at the bigger picture. It also ensures that those making these decisions are not distracted by individuals and teams that are in conflict with each other.

Improved Customer Satisfaction

A more engaged, productive and experienced team will help push customer service levels as high as possible, improving the customer experience. Members of your team will also be more likely to come together to deliver on a customer’s expectations and requirements when you have a positive and healthy company culture.

In fact, company culture can even impact sales. Whether customers hear stories about the culture in your organisation (good or bad), or they get a sense of what the culture is like during interactions with your staff, they will get a feeling of whether they want to buy from you or not.

It’s important to remember in this regard that customers increasingly want to buy from brands that have values and priorities that are similar to their own. If your organisational culture is negative or toxic, customers will sense it and may stay away.

Better Employee Experience

The overall employee experience will also improve when you have a good organisational culture. Again, this is becoming increasingly common as the modern workforce continues to evolve. Fewer and fewer people are willing to put themselves through hell to climb the corporate ladder. Instead, they want to achieve a healthy work-life balance, where they are paid a fair wage and are happy with the work that they do.

As a result, optimising the employee experience is very important. You will need to do more than create a healthy organisational culture, but the culture in your company will play a significant role.

Better Industry Reputation

People tend to hear about the culture in organisations, particularly if those cultures are very good or very bad. We have already talked about employees and customers and how having a good company culture can help you attract both.

Having a reputation for a positive company culture can also help you build relationships with partners and suppliers — relationships that will help accelerate growth in your tech start-up and achieve your goals.

Improved Adaptability

This point probably wouldn’t be included on this list if the overall blog were about organisational culture in general. But the blog is specifically about organisational culture in tech start-ups, so this point is essential.

In any tech start-up, adaptability is crucial. To ensure you create a product that resonates with customers, you need to be able to move quickly to meet customer demands and react to marketplace changes. Adaptability also helps you improve the customer experience.

Change is not easy in any organization, though — even in small tech start-ups. A positive organisational culture will improve your agility, with team members on board from the start and ready to do whatever they can to adapt as necessary.

Finally, Don’t Try to Fake It

“Fake it until you make it” is a mantra in the tech industry, but organisational culture is not something you can fake. You can't send out press releases and write mission statements in an attempt to define your organisational culture, nor can you do these things in an attempt to change a negative organisational culture into one that is positive. Organisational culture is not about perception. Instead, it is the true character of your tech start-up.

We hope this article was helpful. For more information from The Tesseract Academy, please visit their CPD Member Directory page. Alternatively please visit the CPD Industry Hubs for more CPD articles, courses and events relevant to your Continuing Professional Development requirements.

The Tesseract Academy

The Tesseract Academy

For more information from The Tesseract Academy, please visit their CPD Member Directory page. Alternatively please visit the CPD Industry Hubs for more CPD articles, courses and events relevant to your Continuing Professional Development requirements.

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