How is culture defined for a start-up? Start-ups evolve as collaborative leadership of two or more individuals with a shared objective.

A question that often strikes is Whether start-ups with two or three people do actually have a culture. It is the collective behaviour of people that frames an environment - a way of doing things which is called culture. Often a start-up begins in dorm rooms with entrepreneurs working late nights to pull off errands. This is the first cornerstone of a start-up which is struggling against lack of human resource. When a company is in its inception, the collaborators are involved in a multitude of tasks, and the thought of putting down a formal corporate culture is the last thing that generally comes across in their mind. So, it is the actions of these individuals, and the working environment that they create, which constitutes the initial corporate culture. It is the organisation founder, who by virtue of his or her personality creates a groups culture and this keeps evolving over the various crises of growth and survival by coping with problems like adaptation, working set of relationships, etc. Every person hails from a different background and prior experience, and hence, tends to modify the organisation culture according to prior perception. Only a strongly grounded organisation can help new employees realise what the organisation truly stands for, so that they can imbibe the values and work towards the common goal of organisation. For this, it is essential that the founder lays down the core mission and vision of the organisation. This is not just to be put down in pen and paper, but is to be reflected in every day to day action and also the strategic planning of the organisation. As the first step, it is essential that the founder lays down the desired culture from the very day of inception. While dissents are usually good for organisation, the first set of employees will be laying down this desired culture. It is important that the first employees impart consensus to the founders criteria of allocating power, creating an amicable

working environment, criteria of work standards, rewards and penalties, and most importantly, the ideology of the organisation. It is this initial group which later creates the criteria of inclusion and exclusion. For example, a founder who wishes to have a work group that pull out hard all-nighters will have to initially collaborate with people who agree to the idea and realise the importance of this action. Only a close-minded group of individuals will be able to understand the essence of hard work in times of need, so that they give in the requisite efforts when needed. Any dissent among the work-force will be damaging when a crisis arises in the very first inception stage, though a well debated discussion becomes imperative when the organisation grows later. As the organisation size increases, the founders need to organise the employees for their specific activities in the company. The founders cannot spell down specific job descriptions for each and every role in the company, so this requires the employees to be flexible. The employees will appreciate the need to be flexible only if the founders had given them some head-room to be flexible in the first stage. At the same time, the founders themselves need to give up the tendencies to rein power. They need to communicate their dream, and make it clear to employees what they stand for - profits, sales volumes, customer relation or a preferential sequence of one over the other. How to do this is the difficult part, since it is easy to communicate ones ideas, but it is difficult for the other person to imbibe them. This can be achieved by training employees. Training need not be a formal process; every interaction is a training event if the employee can be coached on how to improve the outcome the next time. From personal experiences at office, there are some symbolic events/functions which create excitement in employees, and at the same time, impart a sense of direction. It is essential for the team to know the final goal so that they take steps to reach there. For a culture to be scalable, it is

imperative that it is accepted by a majority of people and does not require a policing activity A personal experience of one of the team members reveals that the actions of the founders were ingrained in developing a culture of mutual trust, transparency and belief. These went a long way in inculcating the desired culture. 1. The founder used to interview every single employee to make sure that they were a correct fit into the organisation. When the organisation grew in size, this task had to be delegated, but the founder made sure that the person interviewing the prospects was a correct reflection of him. 2. He used to have a collective lunch with employees to know more about them, their working styles etc. More importantly, he also used to have a well-knit relation with every new employee by personally speaking about the development and clarity of goals in the organisation. 3. He used to conduct monthly meetings. The meetings were presided not by him, but other senior executives used to take rounds in interacting with the employees. This probably helped him evaluate whether the senior management was on the right track as envisaged by him. Every meeting used to have a vision-goal-strategy roll out session in the beginning. Start Up Challenges - Creating/Building Desired Culture While working on this report, we took the inputs of few persons who experienced this challenge. Most of them agreed that, at the inception stage organizations dont care for culture and their major goal is survival. Often companies adopt Guerrilla Strategy and give less emphasis on culture formulation and management system design. The problem arises when organizations grow and the new recruits could not find any structure and clarity

of goals. The problem becomes adverse when there is a rapidly growing market and there is a fast growth in the organization. In that case organization could not get the sufficient resources to look into culture, long term goal etc. A person, who owns few chemical production units in Daman, told us that it all started with a small unit and few contract labours. However, he was very sure about the ways of working. He told initially his aim was to get the market but at the same time he didnt want any controversies. He ensured safety and other emission norms at the plant because accidents and deviations during regulatory inspections come with hidden costs. He chose similar suppliers as well. He told me though I lost few opportunities but I built my reputation in the area. After 12 years also the cornerstones of his organization is intact. There is only one difference, earlier it was understood now its written - Safety and Integrity. I asked him how you successfully scaled your organizational culture and how its transmitted to your employees from you. He simply says hiring right people and retaining them. He also mentions that he doesnt need extra talented people but the people who can be fit into the frame. Analyzing the above case it is important to understand the notion of building the organizational culture at startup phase and taking it to future. After analysis it has been inferred that defining the culture of organization in early phase is important. We agree that initially entrepreneurs dont have much time and resources to formalize the organizational culture, but defining doesnt mean formalizing, but it implies defining few cornerstones of your organizations which directs your actions and reduces ambiguity. Since practitioner and makers are the same group of people so it may remain unstated and easy to incorporate. While choosing its suppliers, clients and other collaborators, it is important to stick to stated and unstated core values of the organizations. It is

advisable to choose parties chose organizational culture should not negate or weaken yours. This strategy may lead to lesser gains in the short run, but establish your reputation in business ecosystem. Such strategy works well in longer run and may lead to stronger and longer relations with clients, suppliers, and other business stakeholders. As the organization grows, founders need to hire people to run business. While hiring it is important to look into the people if they are right people for the organization. Right doesnt only mean technically right and competent but it also means conforming to the culture of the organization. Therefore while hiring it is important to understand the behavioural aspects and goals of the people and to decide if he/she can bolster the organizational culture. It is important to understand that a successful organization does not comprise of top brains and talents. A group of mediocre understanding the requirements of organization can bring more success. After recruiting right people it is important to communicate explicitly what are the expectations from them as employee. Stating goals and expectations explicitly will reduces the assumptions and brings clarity of scope. Gradually such practices get assimilated in the organizational culture. It is not only important to acquire and assimilate right people into organization but to retain them. Those employees who understand the culture of the organization and help in strengthening it as organization grows become the proponents of organization. They are the people who help in training new employees, nurture and develop an ecosystem where new recruit learn the stated and unstated parameters and norms of the organizational culture. Moreover retaining employees will increases productivity and increases efficiency. Since most of the start-ups comprises of very few people so in general organizations are agile. Everybody knows the work of other. Many times such system gives rise to conflicts. However, it is

important to initiate discussion over the conflict early. If too much wait begin to involve in the process initiation itself then solutions are even harder to find and there are chances that organization may lose some founder member or key employee. Moreover, such system will help in developing a culture where no person feels being ignored and help in developing a conflict reconciliation mechanism and gradually it will become a part of culture. This system will also help in building a Listening Culture. Change is only constant in world and so in business environment and organizations. Therefore startups should be open to change in business environment. What- If analysis and How- Why will help organizations in coping up with the change. However organizational changes should be such that it will not negate or in conflict with basic cornerstones of the organizational culture. Most of the successful organizations modified their strategies with changing market but on the pillars of their basic foundations the cornerstone of the culture. These are some strategies which are common and followed by people in the past. However different organization has its different story. The story of family business and developing its culture is different than that of a technology startup started by a group of same minded people. However, all above mentioned strategies can be modified and a new strategy pertaining to a particular culture can be derived. Innovation Culture at Start-ups Start-ups in general and tech start-ups in particular, begin with an innovative idea. During the early years of its foundation, the roles are not defined. The workplace essentially consists of a relatively small number of people, doing cross functional work. The structure is flat, with the entrepreneurs looking after the day to day routines with a group of support staff in assistance. Generation and propagation of ideas isnt an issue because the think tank is small, with all

members having relatively similar acumen, with all them having equal say in decision making. The passion for innovation and entrepreneurship is the chief driving force. Need for innovation Building an innovation culture is crucial for start-ups. It helps them in creating a barrier for competition and helps create value for money. It is a breeding ground for ideas that sets these organizations apart from its contemporaries. At tech start-ups, innovation can either be technical or businessrelated. Either form is important as it allows the start-up to set itself apart from the rest. Elements of innovation culture 1. One and all: During the early days, everyone is included in driving innovative solutions. Since cohesion is the key to any start-up, it is critical to make every member part of the idea generation and subsequent decision making processes. 2. The team spirit: Due to the strong cohesion, which made them come together in the first place, members do not seek to compete with one another. They collaborate. 3. Solution driven orientation: In order to differentiate, start-ups look at creating solutions rather than looking to avoid failures. As an illustration, when Amazon was still a yetanother-Silicon Valley-start up, its founder Jeff Bezos asked his employees to be less concerned about profitability and more about ingraining a culture that would pay off in the long run. This motivated his employees to take their chances and create innovative solutions to seemingly mundane problems. 4. Cohesion: Since start-ups are usually founded by a group of friends or former colleagues, they do not need adherence to strict rules to keep themselves in check.

5. Open discussion forums: Most tech start-ups have the big white boards where members put up their ideas and take it up for discussion. This facilitates early feedback which sometimes proves crucial in the ideas selection. Also, communication is arras with a multitude of colours woven together. Issues with continuing the innovation 1. New employees: Once the organization grows, it needs to hire new employees for the increased work. In most cases, the recruitment process is not sound and employees are hired on the basis of intuition. Technologically, since the start-ups usually work on the bleeding edge of technology, the new employees are not as adept as the existing ones. Worse still, they might not be on the same page w.r.t. their vision for the organization and expectation from the job. 2. Increased size: Due to the increased sized, spatial constraints come into effect. Frequent interactions, which earlier led to generation and filtering of ideas are now few and far between. 3. Need for hierarchy, rules: As the organization matures and as more people become part of it, formulation and enforcement of a chain of command becomes imperative. This is in stark contrast to the existing hands-off style of control. This eventually proves as a hindrance to free thinking and innovation. 4. Growth pangs: A growing organization needs to spend more on non-core activities like administration, sales, employee benefits etc. As a result, only a part of the profit which used to be invested back in the venture now goes there. The growth in innovation, therefore, is not proportional to the growth in bottom line. Hence, relatively small organizations which used to spend 30-40% of their budget on R&D spend only 5-10%.

5. Craving for stability: A few years later, having made their mark and having established a sizeable market share, most organizations crave for stability. As a result, innovation gives rise to consolidation. 6. Outsourcing: As witnessed in the case of a few organizations, the R&D department is outsourced and from a producing company, the organization becomes a trading company. Measures to ensure continual innovation 1. Large yet small: Even during their growth stage, organizations have been successful in fostering innovation via building small teams for dedicated tasks. Even though the organization in itself is huge, the team size is really small. This helps in mitigating the effect of growth in size. 2. Retaining the vision: Steve Jobs, the pioneer of innovation at one of the worlds most innovative companies after re-joining as the CEO in 1997, ensured that ventures, which did not fit in with the vision of the company, even though very profitable, were discontinued. This helped him in motherboarding many options to get one cohesive strategy. 3. Thinking together: Platforms should be created to ensure that debates, and not aggression, are encouraged. It is through the tension of that creative conflict that new ideas take birth and new angles are explored, thereby mitigating risk. Thinking together implies that conflicts are dealt with up front, rather than countering passive criticism at a later stage. 4. Technology: If the need arises, teams can be formed across locations, cutting across the distance barriers with seamless communication and data transfer. This way, spatial constrains would cease to be a barrier to innovation.

5. Outsourcing: Outsourcing, discussed as a potential issue, can turn out be very useful for start-ups. The companies can outsource their non-core department, thereby doing what they do best. 6. Sturdy hiring process: The hiring process needs to be streamlined to ensure that the new recruits not only have the requisite technical knowledge of the company, but their long term goals coincide with those of the founders. 7. Keeping it flat: To boost innovation, a bottom-up approach, wherein ideas propagate from lower levels to higher levels, rather than the other way round, is a must. Organizations can opt for horizontal linkages in a traditional structure or customer-centric horizontal structures for the purpose. Creating a clan culture In a study conducted on the effect of organizational culture on project performance, it was found that clan culture unlike many other cultures has an association with project success. Many IT experts do agree to that. This does not necessarily emphasize on to develop a clan culture solely for success but lays stress on including its attributes towards attaining faster success. Discussions with employees of a clan culture gave us some meaningful insights regarding the problems that were faced by its founders during the initial phases of inception and its growth into a larger flourishing organisation. The main thoughts that booted out from the leaders were as follows: 1. Keeping trust: As clan culture is based on virtues of shared values and trust, the employees are expected to work in cohesion. The biggest challenge comes in, while the organisation has to exhibit and embed in itself a trust towards employees, it should also keep a check on the

them that they do not take unfair advantage of the trust developed through this shared culture. 2. Trust vs check-on employees, a trade off: Challenging are the situations when a strength can be influenced to become a weakness. The issue comes up when the trust is being misused. As computer networks and Internet is a boon for disseminating information in a culture with shared values, the organisation should not let the information leak out as the processes are transparent and information available. Hence challenge of keeping tact information confidential within the boundaries of a group or the entire company trades off with the immense open trust culture and less bureaucratic control. 3. Performance evaluation difficult: In the tasks of recruiting people, the road ahead is smoothened if those employees are hired who have a greater affinity towards participative culture and less bureaucratic culture. In the desire towards carrying forward this culture, differentiating people for their tremendous or extraordinary performance gets blurred.
3.

of clan culture. While establishing clan culture, it is desired that while pressure to conform to group norms exist, but individual ideas, and unique solutions should not get dissolved and lost in the group and personal contribution should also be given emphasis. Often later, companies face these challenges, hence every employee should have a say and be given opportunity to voice their ideas or concerns in a group.
2.

Prevent organization structure from dissolving: Amidst establishing clan culture, the organisation faces a grave responsibility to maintain shared values culture, and simultaneously look for evolving leaders within that constrained frame. The very subtle change these strong leaders bring is that they can clarify boundaries (existing or non existing) and encourage that within those boundaries, culture evolves. Often clan companies face difficulties in maintaining organisation structure and not let the reporting procedures and other attributes dissolve. Overlap of roles and responsibilities: While it is important that startups align themselves for the purpose of knowledge and skills in clan culture, but bottlenecks begin when employees confuse roles and responsibilities which results in a slack in control. So companies desiring clan culture should lay not very stringent but guidelines in the initial phases to avoid any confusion as such. More time on decisions: When startups evolve, they need to be firm, on the time taken by decisions to be on the table through consensus. As initial phases of developing a clan culture is very challenging, the decisions should not get lost and consume more time because of the participative structure.

4. No dissent and less competition within: Also, as startups face high competition in the market, the energy in the company should be at its heights. Clan culture lacks competition inside the company due to shared value system and hence the challenge propos up in keeping pace with other organisations. As socialization forms a prominent part of clan culture and infact stress is being laid on employees being accepted by colleagues, rules and procedures should not get dissolve. The threat comes in when the productivity of employees decreases or the focus towards tasks gets hampered as a consequence of the amount of time spent on socialization, gossiping. Hence correct amount of balance is demanded. 1. Pressure to conform to group; individual ideas lost: Group norms are another focus dimension
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Amongst many challenges, clan culture however can face a slack in best corporate performance while the

knowledge conversion is high due to the various scenarios discussed above.

Building a bureaucratic Culture Generally bureaucracy is linked with organizations with large employee base, a long run and established structure. Many people view bureaucracy negatively especially when it is for start-up organizations. But it is very important to have rules and regulations to give directions to new start up. We try to analyze challenges building bureaucratic structure in a start up and approach to deal with them. 1. Conveying mission statement effectively: The aim of start-ups is survival and establishment of the business. For the founder, it is necessary to convey the goal and deliverables of business to all the stakeholders in the company. Stakeholders should believe that the ideas of founder are beneficial for all. This can be done by: Charismatic Leadership: If the leader has influential communication skills, he will be able to communicate his goals. He can maintain the control by making people follow his ideas. They exhibit greater levels of support and loyalty from others. Monthly meets or propaganda: Conveying information about the growth of company will ensure the employees that plans of management are working. This will create trust amongst management and employees. 2. Idea Generation: MacDonaldization of Society: Socialists George points out that Ray Kroc, the founder of McDonalds applied his principles to preparation of food. MacDonaldization does not just refer to the robot like assembly of food. But it is automating the lives of workers working there by not allowing them to use their brains. Thus employees may feel deceived by bureaucratic work culture.

3. The main disadvantage of bureaucratic structure is free flow of information and ideas. Innovative minds may feel red tape of rules as binding and may not prefer to work in such organizations. Creating approachable reporting relationships: In a start-up employee base is small, therefore to maintain bureaucracy, reporting relationships can be created so that ideas flow vertically. Directing Ideas: Control can be maintained along with inputs from employees if a mentoring program is created. This will take care of feasible new ideas coming from employees to reach upper management. 4. Bureaucratic Alienation: Many employees find it difficult to deal with others in terms of roles, rules and functions rather than individuals. Therefore they might feel like objects than humans. They might dislike writing mails to convey the idea officially than talking directly. This reduces the satisfaction by limiting their creativity. This makes them feel alienated from surrounding organization. Resisting Alienation: Alienation is not desirable in terms of satisfaction of employees. One way to handle this is increasing interaction of employees and management through interaction at lunch, around desks, for a get together after work. 5. Goal Displacement: Start up organizations need innovative and knowledge striving people for initial product development. In bureaucracy people tend to be more lethargic because of delay in the processing due to rules. Thus bureaucracy leads to goal displacement. This can be handled by creating horizontal structure with process owners or divisional structure focusing on products. Organizations succumb to non implementation in changes of goals. During 1950, March of Dime discovered a vaccine for polio. The purpose of organization was served. The organization was kept intact by creating new

goals fighting birth defects and after some years by Breakthrough for babies. Thus though organization decides to change goals, size and rules make it difficult to bring change in the processes and establishment of new ideas among employees. Such change in goals can be reflected through conveying mission statement effectively throughout the organization. Specialization can be next step which can help employees and management to clearly define job specifications. 6. Size of organization: If bureaucracy is implemented in an organization at its inception, rigid reporting relationship gets established. These organizations are also aimed at growing which increases the employee base. Thus, organization finds it difficult to absorb new employees in existing structure. This creates need of changing structure of organization. Changing structure can create dilemma among employees who are used to bureaucratic culture. New employees can lose focus on innovations and creativeness in attempt of adhering to rules and regulations. There is also difficulty vertical communication because of change in structure. 7. Hiring Culture: It is necessary for founder of start-up to know if he wants people with ideas or he just want them to follow his ideas. It is very important for a start-up bureaucratic culture to hire people who are innovative as well as are followers of ideas. These people should not find that they are in culture unsuitable for them. This can be achieved by routing ideas of new hires to management and giving sufficient explanation of how ideas of founder are superior and if not them accepting the new ideas will be the right option for growth of organization. Secondly, if founder wants only his ideas to be implemented, people with average intellect should be chosen who can work on his ideas. In this case, founder or management should be able to motivate the employees to achieve desired goals.

In bureaucratic organization, top level management exercises a great level of control and strategic management. This can be exercised with rightful results by owners with control and command style. Standardization and best practices can be achieved with low administrative ratio. But no matter how intellect an owner is, it is impossible for a single individual to generate a range of ideas and maintain control over a large organization. He must create a pool of management layer which will be influenced by his ideas .They must capable of implementing the ideas with their strategies. This way owner will be able to retain the control ensuring giving space for management.

Appendix The Role of the Founder lays down some principal cornerstones which decides how culture is embedded and transmitted in organisation. A conflict among the leaders leads to conflicting messages, hence it is imperative that the leaders have a common stance regarding the message to be passed down to the employees. A mechanism can convey its message explicitly, ambiguously, or implicitly, depending on how it is perceived by the employees. They are: 1. Formal statements of organizational philosophy, charters, creeds, materials used for recruitment and selection, and socialization. 2. Design of physical spaces, facades, buildings. 3. Deliberate role modeling, teaching, and coaching by leaders. 4. Explicit reward and status system, promotion criteria. 5. Stories, legends, myths, and parables about key people and events. 6. What leaders pay attention to, measure, and control. 7. Leader reactions to critical incidents and organizational crises (times when organizational survival is threatened, norms are unclear or are challenged, insubordination occurs, threatening or meaningless events occur, and so forth). 8. How the organization is designed and structured. (The design of work, who reports to whom, degree of decentralization, functional or other criteria for differentiation, and mechanisms used for integration carry implicit messages of what leaders assume and value.) 9. Organizational systems and procedures. (The types of information, control, and decision support systems in terms of categories of information, time cycles, who gets what information, and when and how performance appraisal and other review processes are conducted carry implicit messages of what leaders assume and value.) 10. Criteria used for recruitment, selection, promotion, leveling off, retirement, and excommunication of people (the implicit and possibly unconscious criteria that leaders use to determine who fits and who doesnt fit membership roles and key slots in the organization).

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