How do founders go from a couple of people toying with an idea, to managing a great team with values, good rapport, and everyone’s favorite phrase, strong culture?
Recently I set out on a fool’s errand to gain some insight on building organizational culture in startups. The truth is, this field of research is still in its infancy — not a lot is known.
We know a lot about organizational behavior in established firms and how they design their culture. But, startups are trying to build something that’s never been built before and they are brand new companies. By nature, startups are super weird and hard to make sense of in a way a researcher would like to.
There are lots of organizational culture theories out there when it comes to startups. It is 80 percent the founder of the company. It is established in the first 20 people. Things get weird after 150 employees.
A while back, researchers published a study in the California Management Review about different models of organizational culture in high-tech startups, which I believe are still hold relevant lessons for entrepreneurs today.
The study looked at five types of organizational models: Star, Engineering, Commitment, Bureaucracy and Autocracy. The researchers identified how each model retains, selects, and controls talent.
Star model employees are high-skilled talent that will grow and develop with the startup.
The Engineer model has high-skilled employees producing high-quality work, but they may expect to have beer and ping pong tables around.
The Commitment model treats employees like they are family.
The Bureaucracy model formalizes the work environment.
Finally, the Autocracy model pays their employees a lot for more transactional assignments.
Many companies choose a hybrid of these employment types. I will share some of the study’s findings and the implications for startups.
Choice Model of Startups
While startups vary on the model they choose to use, the Engineering model seems to be the Silicon Valley default. Furthermore, while VCs more commonly bureaucratize startups, VCs also attract many other different types of cultures and like the emotional bonds of the Commitment and Star cultures.
Does the Founder’s Background Impact the Model?
Founder background does not link to a particular employment model. The founders’ intended business strategy seemed to have the most bearing on the employment model chosen — marketing, service, and customer based models went more toward a Commitment employee model.
Think Zappos, which continues to be a company that is known for their organizational culture and customer service.
How HR is Leveraged in Startups
Companies that had a Star or Commitment model brought HR expertise in earlier than the other employee models. According to the researchers, star companies need HR expertise to recruit and attract Star talent. Commitment companies use HR to build a strong culture as a talent and retention plan. Engineering companies make sure employees have access to enough caffeine, sugar, and alcohol to fuel their startup environment. Bureaucratic companies rely on HR mainly for administrative purposes.
Success and Pitfalls of Employment Models
According to the research, companies with a Commitment model are the fastest to IPO. Companies with the Autocracy model were most likely to fail. However, Star and Commitment models can be more difficult to scale. Star models deal with turnover issues because of the need to screen out the non-stars, and they rely most heavily on equity options, so when it does not look like the equity will work out, employees are more likely to leave.
Transitioning to a New Model
Transitioning from one model to another can be negatively disruptive and costly. Companies that were founded on Star or Commitment models that switch to another model have a hard time with the transition. Bureaucracy, for example, would be a difficult adjustment from the Commitment model, particularly because this often involves the departure of their founder-CEO.
The researchers explain that it is incredibly common for startups to not put the thought into culture and HR, however they cannot imagine a scenario where a startup does not have a strong and thought-out plan for marketing, pricing, fundraising, and the milestones attached to those things.
Knowing how important talent is for startups, this non-strategy strategy can be a big limitation down the road.
At Techstars, we try and help companies think through organizational culture and other points along the way to success. By helping companies understand the type of organization they want to run, hopefully they will think more about their plan to build a sustainable organizational culture.
What model does your company follow? If you could have thought more about this earlier into your startup, would you?
The BBVA Open Talent, is a startup competition inspired on the open innovation model of BBVA, with the main objective to identify the most innovative projects, support them, look for sinergy and implement them in the organization. The three concepts that best define the essence of BBVA Open Talent are entrepreneurs, startups and open innovation.
The competition is thought for entrepreneurs and startups with technological, innovative and centered on the fintech topic projects. This is the seventh edition of an international contest aimed for entrepreneurs and startups. We want to foster innovation in the financial ecosystem, in these topics:
- Mobile banking
- Payments and money transfer
- Consumer Loans
- Alternative loans
- Risk analysis
- Investment managementes
- Financial inclusion and education
- Fraud management
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BBVA Open Talent takes twenty finalists per region and provides them an opportunity to present to reputable judges. All finalists will spend the day before the competition interacting with key global BBVA executives and decision makers. Even if you don’t walk away a winner, you’ll walk away having gained new experience and insight that can’t be found elsewhere.
During the immersion course, winners will spend a week in Mexico gaining first hand experience with the LATAM market and international scaling. This is paired with a week spent in London, spending more time with venture capitalists, embracing the local startup ecosystem. It’s access to powerful thought leaders like none other.
Winners will also have the opportunity to enjoy a unique experience in El Celler de Can Roca, appointed as the best restaurant of the world in 2015, with the Roca brothers in the heart of their restaurant and in La Masía, their innovation center.
Also, the Special Award for
En septiembre de 2014, UP Global en conjunto con Google for Entrepreneurs, lanzó el White Paper, anunciando 5 ingredientes que ayudan al fomento de un ecosistema de innovación y startups. En este documento, se ofrece un esquema de trabajo y lenguaje común para las comunidades de emprendimiento alrededor del mundo. La publicación resalta cinco ingredientes críticos que soportan a los ecosistemas prósperos de emprendimiento: talento, densidad, cultura, capital y ambiente regulatorio.
En Latinoamérica buscamos lanzar la versión 2.0 de este proyecto a finales de 2015; teniendo en cuenta las ciudades principales de Latinoamérica e incluyendo diferentes tipos de mercado en la región, hemos estado trabajando en conjunto con Google Latinoamérica para el análisis de problemas y soluciones en la región dentro de los cinco pilares.
La semana pasada, se llevó a cabo el primer workshop de la Ciudad de México en WRK, espacio de co-working anfitrión de la oficina regional de UP Global. Dentro de este taller, tuvimos la participación de representantes de la comunidad de emprendimiento, instituciones universitarias y de apoyo al emprendimiento, inversionistas, aceleradoras, gobierno, y más.
La dinámica, liderada por Leticia Gasca, de Fuckup Nights, tuvo un gran resultado; se obtuvieron los principales problemas de cada pilar en la primera parte del taller y durante la segunda se crearon grupos de trabajo para generar soluciones a esos problemas específicos.
Este proyecto, que ha llevado a cabo sesiones en otras 5 ciudades latinas, incluyendo Bogotá, Buenos Aires, San José de Costa Rica, Lima y Guatemala, se realizará además en Guayaquil, Guadalajara, Medellín, Viña del Mar y Santo Domingo; y continuará con una serie de Hangouts y Mesas Redondas en las que se discutirán las soluciones para así crear un segundo documento enfocado en la región.
It’s lift off at the April edition of Startup Weekend Dublin and the ideas to go through the weekend are finally decided on.
Day 1 saw participants get into the #SWDub spirit with Half Baked. The winner Prison Post, a paper based social network to help inmates get ready for the world outside won.
The game is however over and it’s time to get down to business. 32 ideas were pitched and after voting these 11 have emerged as those to be worked on during the weekend:
1. Gymy – Airbnb for Gyms
2. Health Assist – Health professional directory with online booking
3. Car Safari – Keeping kids engaged while on a long journey
4. Sober Sean – Uber-type service to get you and your car home after a night out
5. Be My Hermes – Last mile postal service via commuters
6. 11th Hour – Connecting local businesses with last minute temporary/shift workers
7. Skills Bank – Peer to peer skills swap
8. Startup Compost – Liquidation platform and knowledge repository for failed startups
9. Twirle – Social network connecting shoppers from the fitting room to fashion enthusiast
10. Xiron – Virtual coaching platform for gaming
11. Local Mi – Connecting customers to local businesses
The teams have been formed and it’s time to get into the trenches to validate ideas, build products, get customers, and priceless feedback from our on-the-ground and virtual mentors.
Many thanks to our sponsor Domino Pizza, Google for Entrepreneurs, DCU Ryan Academy, Bank of Ireland, and The T-Shirt Company for the support so far.
Keep up with the action on twitter via hashtag – #SWDub.