Musings on company culture, development and sales

I got back late last night from a weekend away in Sicily with the ICE networking group and one of the main topics of conversation during the presentations and panel sessions was company culture.  We came at this via talks on recruiting developers by Andy Young and Damian Tanner and on OKR by Sam Barnett and for me the key takeaways from a culture perspective were ‘hire people who love coding’ and ‘when a business starts to scale past 20-30 it is critical to implement people formal management processes like OKR to align goals and facilitate communication’.

Then I had another think about culture this morning after reading Mark Littlewood’s summary of David Russo’s thinking on the subject.  The key piece of that post is David’s list of the five types of company culture:

Bureaucracy Model – selection based on current competence. Coordination and control through policy and procedure. Most public institutions work on this basis. Attachment/retention based on the work and its value. BORING!

Autocracy Model – selection based on current competence. Coordination and control is direct – “When I want your opinion, I’ll give it to you” – WalMart. Attachment/retention based on money. No consensus management.

Engineering Model – selection based on current competence. Coordination and control is cultural. Retention based on doing cool stuff. Value is on achievement.

Star Model – selection based on potential upsides – stars from elite sources – Harvard, Stanford, Cambridge, Hull (I lied about that last one). Coordination and control is about professionalism. Push me, pull you. Attachment/retention based on meeting the challenge and being all that you can be. Value – autonomy, independence, rapid growth.

Commitment Model – selection based on fit – one heartbeat for whole tribe – Southwest Airlines. Coordination and control is about cultural fit – a band of brothers. Horizontal management – WH Gore doesn’t have job titles. Push me, pull you. Attachment/retention based on love. Value – long term relationships, a family. Ithurts when people leave.

If you work in and around startups the chances are you quickly dismissed ‘bureaucracy’ and ‘autocracy’ as old hat, thought that ‘engineering’ sounded kind of cool, ‘star’ sounded exciting and that getting some stars is probably a pre-requisite for success, before finishing with ‘commitment’ which sounds nice, but maybe a bit fluffy and hard to make work.

I say that because in my experience the majority of startups start with the engineering model and then most graduate to a star model as they scale.  Playing back the conversations from this weekend the discussion around hiring engineers was closely aligned with Russo’s description of the engineering model.  Hiring decisions are primarily made on the basis of coding tests and cultural fit and the attractiveness of the job is working on the latest technologies.  Then when the commercial side of the business starts to scale a part of the organisation typically becomes based on the star model – getting the best out of a sales team is in large part a story of getting the best out of star performers. 

This change comes when the go-to-market side of the company starts to scale beyond the CEO and founders, and sales and marketing personnel become a significant percentage of the business.  This can often be a challenging time for a company as sales folk in particular are typically more hard nosed and performance oriented than developers, and sometimes development and sales can end up falling out, with each side thinking that the other doesn’t really understand the business.  As with many conflicts the key to avoidance and/or resolution is better communication and the beauty of processes like OKR that everyone can see how everyone else’s work contributes to the company’s goals.

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  • GREAT topic, and one that’s rarely thought of until it’s [often] too late. The most interesting line of all from Mark’s blog post:
    “Commitment models have shown that they are fastest to go public, are most financially successful and are least likely to fail.”

    I’ve had some experience with this and happy to give advice to others thinking about this. Here is a blog about I talk I gave recently to The Entrepreneurial Exchange on the subject of company culture: http://theentrepreneurialexchangeblog.com/2011/08/31/company-culture-the-heart-of-your-business/

  • Thanks Scott

    Commitment models have the highest potential, but are the hardest to execute on, it seems to me. From a practical perspective most startups can learn to better implement an engineering or star culture, but have a hard time figuring out how to shift to a commitment culture – at least that’s my experience. What do you think?

  • I agree it’s hard to execute on commitment model, especially early on. I think you need to see a bit of momentum building with a core team and leverage that. I think maybe 5 people and up is the right time to start solidifying who you are. 

    I’m certain that you want to start implementing it before you scale up. I was talking to a startup recently about this and they are aiming to double the size of the company from 20 to 40 in a very short space of time. That’s a huge challenge to any company, and very risky (not to mention expensive), so it’s an ideal time to solidify your company culture and values. If you don’t the risk is  you’ll run into a whole load of people-related challenges and it will end up with employes leaving (either the early hires who don’t like the influx, or the new hires who aren’t gelling with everyone else). Of course, you could be really lucky and find it all goes smoothly, but you can’t bet on that! Ignore at your peril.

  • Interesting – we usually invest when there are 20-30 people and rarely when there are less than ten. I guess by then the company culture is already largely set.

  • So it could be really interesting for you to start asking CEOs you’re looking at to define their company culture and once they’ve done that ask if all the team would give the same answer 😉

  • I might do that. A suspect a lot of them won’t have thought about it in these terms.