Startup Board Insights: Navigating Organizational Culture for Effective Transformation with Dinette Tams

One of the important questions in business has been why some organizations succeeded while others failed. Organisational performance has been the most important issue for organizations⁹. For this article, two assumptions are taken from a study¹ that linked the relationship between organizational culture and organizational performance and the second assumption³ states that having an organizational culture is imperative to build a transformative culture.

Combining literature review and own relevant experience & observations are concluded in recommendations to the Scale-Up Board Member: questions that could and should be asked to support the Scale-Up in managing organizational culture to support an effective transformation. This article adopts the “organizational culture” definition* of Hofstede².

Key learnings from previous literature

In the review paper¹, “Organizational Culture and Organizational Performance”, the authors confirm that “organizational culture is not just an important factor of an organization, it is the central driver of superior business performance”. Having this as a principle and belief is powerful to discuss and confirm organizational culture. Mark Frissora³ describes the power of organizational culture in a different way. He states that many things can be copied, changed, and impacted over time, like technology, product & service, and how to scale a business, but that “culture cannot be replicated” and “it is imperative to build a transformative culture”. This is a message that should sound like music to the ears of scale-ups and their board members.

Organizational culture is not only a pretty phrase for entrepreneurs but various authors confirm that organizational is hard work, especially for management [3, 4, 5, 8] and, in my experience, for the board members. However, it pays off, and in the terms of Frissora³, is the fabric of the company. The fabric is a visual of a framework & structure with its own colors, patterns and materials, and potential. In so, it shows the uniqueness⁵ of your scale-up and provides a compass for your next steps.

Insights from practice

I had the opportunity and the privilege to join various international companies, multiple merger and acquisition activities. I can compare the different cases from due diligence to and include integration/consolidation. For example: Is the transformation managed as building a new company or just adding activities and people to the existing one?

Based on limited and personal observations, I can state that understanding the approach “NewCo” versus “Grow the existing”⁷ is important to be able to understand the direction and everyone’s role and contributions.

This is both beneficial to the existing organization and its employees as it confirms the current culture and the “how” to the new joiners and the joint future organization. Clarity from day one reduces issues and surprises late in the game. For example, which corporate culture elements are a given versus new elements and open for development or even discussion?

Beverly Goulet⁷ turns this into practical guidance of having a culture diagnostic right at the start of the planning process. According to her experience at American Airlines, “it would have eliminated some of the misperceptions about both company cultures” by speaking based on facts and figures rather than anecdotes or beliefs.

Recommendations to the (independent) Scale-Up Board Member:

Remember when preparing to talk about strategy and organizational culture that orientation (short-term v.s. long-term) is already an important component of organizational culture [2, 9]. Understand the orientation of the current organization and tailor your questions and constructive challenges to this approach.

Ask questions and provide constructive input related to organizational culture, after the business strategy has been defined. Remember that organizational culture is how your organization executes its strategy:

•  As a force, to be managed during transformation: discuss the role of the management team and board members:
  • How can the management and board be visible during the full process, like hosting sessions to share the mission, vision, and aspirations?
  • What can they do from start to end to contribute, steer and learn?
• As a competitive driver, culture is your unique competitive advantage to drive performance and to discuss it as part of the reward & recognition agenda:
  • To confirm the competitive advantage of the organization and the view on the contribution of employees.
•  As a tool during transformation, to guide, join and energize the organization, the existing and new employees:
  • The organization can use this moment of truth to share what culture is needed to accomplish its goals
  • To reflect and assess the organization’s current culture and to develop, hire, train, and manage current and future employees

• Based on facts and figures, to have as management and board a dashboard to discuss organizational culture and progress during the transformation:
  • Quantitative: data on information sessions, communication to the various stakeholders and questions, answers, and concerns & their follow-up
  • Qualitative: the feedback of employees and other stakeholders during the process, e.g. by organizing surveys and feedback sessions

Knowing first your own organizational culture⁷, acting upon this, and building it, is needed to support major changes like growth & transformations for scale-ups. An important role for the (independent) board member is to support this transformation from an organization culture perspective.

*According to Hofstede, organizational culture refers to the collective programming of the mind that distinguishes the members of one organization from another. This includes shared beliefs, values, and practice that distinguish one organization from another