When diversity fails

Wind the clock back to 2003 when the world felt very different: the US was responding to 9/11 by invading Iraq, the Columbia Space Shuttle had exploded horrifically, SARS threatened global disaster. And five Harvard students were working day and night to launch an innovative product that would make them all billionaires and change the world forever. Five like-minded, very bright young men; if there had been a middle-aged woman amongst them, their concept of an online platform to rate the attractiveness of fellow female classmates would never have got off the ground and Facebook as we know it would not have been born.

In the early stages of a startup, the debate that diversity brings to decision-making can be an unhelpful distraction. But as the business matures, there comes an inevitable tipping point (illustrated schematically) where, without new perspectives, growth will stall. Maybe it will be needed to understand the competition, or the customer base, or to develop new product lines. And then diversity of thought becomes essential.

But diversity of thought, by definition, brings its challenges. The cosy clique evaporates and people disagree with each other, sometimes quite heatedly. Managed well, this cognitive friction sparks the innovation that elevates a business to the next level. Managed poorly, and it creates factions and toxicity that will tear the business apart, a risk intensified by the very special – sometimes obsessive and controlling – dimension that founders can bring. And this is where the importance of workplace culture comes in.

Defining great culture

The good news about creating and managing a thriving workplace culture is that there is a common view of what good looks like: openness, transparency, fairness, and respect. A psychologically safe environment for people to air their constructive alternate views without fear of reprise. A workplace that supports its employees through mentorship and training. One which recognises how flexible working allows employees with outside commitments to thrive, by assessing success on the quality of their production, rather than where or when their work was produced.

This is a great cultural foundation for a startup to build on and can be adapted to suit particular preferences and needs. Define how you want your workplace to feel, what you want your employees to say about it. Write down your core values, then live with them for a bit to see if you uphold them. If they are not the values you actually abide by, then they are not your values: if you want them to be, you’ll need to change.

Not just a ‘nice-to-have’

Attracting and retaining top talent goes well beyond the essential hygiene factors of financial reward. What motivates us is purpose and team, and what demotivates us is the micromanagement of an overzealous boss coupled with a poor culture. Getting it wrong will not only cost you your pick of the best hires, but it will increase your turnover and impact your bottom line, as your managers waste time in hiring and training to plug unwanted departures. Remember, it is the most employable, high performers that you will lose first.

A great culture will also smooth the sometimes rocky, but inevitable, path of CEO succession planning. The perfect CEO for the startup phase might just be the same one for the scaleup, but is almost certainly not the right leader for a mature business. The ability to engage in constructive, honest, low-ego planning is essential to get this right.

So culture can’t simply be regarded as an optional add-on, something to pay lip service to via a list of fluffy values on your website. It is the very real binding thread that unites employees in a common purpose, that impels them to go that extra mile. As a startup grows and seeks external capital, investors are increasingly factoring culture into their funding decisions. Creating cultures people want to work in has truly become the difference between business failure and success.

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