By admin
Partner, Next Step Partners
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There’s plenty of research verifying how culture drives performance. One study found companies that proactively manage culture demonstrate revenue growth over a 10-year period that’s 516% higher than those that don’t.1 Another study found companies that actively manage their culture have 30% higher levels of innovation and 40% higher levels of retention.2
While leaders intuitively understand how important culture is, very few know how to build their own. In Deloitte’s Human Capital Trends of 2016, nine out of ten executives cited culture as important, yet only 12% of companies believed they understood how to develop a performance-driving culture.
We investigated how young, successful organizations in high-growth environments use culture as a growth driver and compared what they do with more established companies in lower-growth environments. In high-growth environments, companies operate in a constantly changing context. Competitive sets and customer needs both evolve quickly. Companies must be fast, flexible, and agile to keep up with this pace of change. Culture has a critical role to play.
Finding the unicorn focused our study on unicorns: former start-ups that have achieved a valuation of US$ 1bn or more, often reaching this scale within the first 6-10 years of their existence.
There are 411 unicorns globally and 57 across EMEA, at the time of producing this report. Unicorns all start out with a great idea and disruptive business model. They are hugely successful and are increasingly winning the war on talent. They’re putting a lot of pressure on established organizations, being more innovative, more flexible, and able to respond to change faster. Most importantly, they understand the importance of culture in building their brand and business.
Unicorns grow at breakneck speed. This rapid growth trajectory means they open new offices/locations in quick succession, often quadrupling their workforce in the space of just a few months. When funding is required, investors become stakeholders. Growth is then influenced by non-founding board members and accelerated through M&A activities.
These developments mean an increased need for a consistent, sustainable culture to drive performance. This entails the definition of operating principles, values, beliefs, behaviors and rituals, the management of relationships, and an understanding of how culture is operationalized.
We took an insight-led approach to our study to better understand the thinking behind unicorns’ commercial success, as it relates to building cultures and the role brand plays in that process.
We developed hypotheses on how culture and brand might fare in rapidly growing environments, using them as a basis to develop our interview guide. We then divided our interviewees into two groups, speaking to 2-5 individuals from each group within each organization.
Culture creators: founders and/or early employees, involved in building the existing culture. This study is largely based on their insights.
Culture receivers: employees who recently joined their respective organizations, could communicate their experiences of organizational culture, and give us a balanced perspective. These interviews helped us understand how the intent of culture creators permeated day-to-day life. Put simply: did the vision for culture match the reality?
