The Entrepreneur and Organizational Culture

By Tony Burgess

As an entrepreneur, I have in my mind an image of small team on a river, paddling through choppy water into never-before-seen terrain. The decision to fork right or left, to bypass an obstacle, and to keep pressing forward into the unknown is yours to make; there is no headquarters to call back to. The weight of responsibility—along with the stress and exhilaration that it brings—is on your shoulders. There will be near-death experiences, adventures, and stories to be told. The chances of succeeding are slim, yet the rewards for those who do are great. You were created for this. You are alive!

There is no cookie-cutter “right” way to lead, just as there is no cookie-cutter solution for building a business. But founders who build successful companies can usually look back on their early days and see that their greatest asset was their authentic self—their unique set of values, passions, capabilities, and ways of looking at the world. Who they are—and what they believe—get baked into the culture. For better, or worse, the organization is a reflection of them!

Edgar Schein, a distinguished scholar at the intersection of leadership and culture, writes: “Organizational culture is to a group what personality or character is to an individual…Culture is not only around us, but within us as well” (Schein, 2010). He continues: “The most important force influencing the culture of an organization is its founding leaders. When their values and beliefs are successful, those values and beliefs become taken-for-granted, unquestioned assumptions.”

I will address three questions in this article and will end with a cautionary note about how strong culture can backfire: (1) Why is self-awareness important? (2) How can founders be more intentional about culture? (3) Why start now?

1. Why is self-awareness important?

Deep knowledge of self is the entrepreneur’s wellspring for purpose, direction, and motivation; everything flows from who you are. What are your fundamental core values and beliefs? Your unique strengths and passions? Your weaknesses and limitations? Why are you here? What is your purpose, your bottom-line reason for being?

If in fact who you are is the most important force influencing the organization’s culture, it follows that you should undergo a self-study to unearth and clarify your deeply meaningful answers to these questions. But let’s face it, most of us never carve out time for this kind of deep self-reflection and, therefore, we begin our entrepreneurial voyage ill equipped. Think of it like a sailing expedition leaving port without a compass and a rudder. You will be tossed back and forth by the waves, blown here and there by every wind.

Recommendation: Sign up for a proven program specializing in creating deep self-awareness. I can personally vouch for this because I participated in an incredible three-day workshop facilitated by Nick Craig at the Authentic Leadership Institute, and I reaped massive benefits. I went on to coach students in the Harvard Business School elective, “Authentic Leadership Development,” and I founded the Cornwall Leadership Institute in part to help more leaders get this kind of experience. Finally, if you are not in a position to participate in a formal program, I recommend a book and its companion field book as a starting point:

• Discover Your True North (2015), by Bill George.
• The Discover Your True North Fieldbook (2015), by Nick Craig, Bill George, and Scott Snook. See: https://discoveryourtruenorth.org/

2. How can founders be more intentional about culture?

Founders can apply the same methodology they use to gain deep self-awareness to the organization. What are our core values and beliefs? Why are we here? What is our purpose, our bottom-line reason for being? The organization’s core values, for example, become an articulation of what the founders value—an expression of who they are and what they believe.

Once you are clear on what your most important values and beliefs are, and clear about your purpose, you can then be intentional about designing your organization’s norms, routines, and ways of being to reinforce your purpose and values. Edgar Schein identifies six primary mechanisms that founders use to teach their organizations to “perceive, think, feel, and behave;” in other words, mechanisms to embed culture. As you read these, think about your own behavior. Are you aware of the impact you are having?

Primary Embedding Mechanisms (Schein, 2017)

1. What leaders pay attention to, measure, and control on a regular basis
2. How leaders react to critical incidents and organizational crises
3. How leaders allocate resources
4. Deliberate role modeling, teaching, and coaching
5. How leaders allocate rewards and status
6. How leaders recruit, select, promote, and excommunicate

The founder’s behavior is the single most significant factor influencing organizational culture. Schein puts it this way:

When it comes to culture creation and embedding, ‘walking the talk’ has special significance in that new members pay far more attention to the walk than the talk. Especially important is what the leader attends to, measures, gets upset about, rewards and punishes…In a young and growing organization, the personal behavior of the leader is by far the most important determinant of how the culture is shaped (Schein, 2009).

And,

Even casual remarks and questions that are consistently geared to a certain area can be as potent as formal control mechanisms and measurements (Schein, 2017).

To highlight an important point, you are doing these things already. The question is whether or not you are aware of your behavior and to what degree it is intentional and creating the long-term outcomes you desire.

Schein identifies six secondary mechanisms that founders leverage to support and reinforce the six primary mechanisms. These are more formal and structural.

Secondary Embedding Mechanisms (Schein, 2017)

1. Organizational design and structure
2. Organizational systems and procedures
3. Rites and rituals of the organization
4. Design of physical space, facades, and buildings
5. Stories about important events and people
6. Formal statements of organizational philosophy, creeds, and charters

Although the leader’s behavior is initially most influential, these secondary mechanisms become incredibly powerful over time. If they are consistent and aligned with the founder’s values, beliefs, and behaviors, they will foster a strong culture. However, if they are inconsistent and not aligned, they will foster confusion. Imagine, for example, a founder who values teamwork and collaboration but houses the organization in a building that makes communication difficult. Add to that a compensation system that rewards individual achievement, and you can bet employees will take any talk of teamwork with a grain of salt.

What I am really advocating for here is being a reflective, thoughtful leader. Ask yourself, and your team, questions like, for example:

• How can I behave in this moment in ways that will create the long-term effects I want?
• How can we use this crisis to reinforce our values?
• Will this decision or change we are considering help or undermine the culture we want?
• How can we design every single aspect of our organization to reinforce our core values and purpose?

3. Why Start Now?

Returning to the earlier metaphor, entrepreneurs are like wilderness explorers. And if you are proverbially hacking a path through the jungle, do you really have time to think about culture? Reading this article, you may be thinking that these ideas will apply sometime in the future, but not right now. The fact of the matter, however, is that you are creating the culture already. Right now, it is happening. Your personal example, the values you are practicing, your assumptions about human nature, etc. are cascading and influencing others and shaping where your company will end up in the future.

What I am suggesting is to become aware of what you are already doing and to be more intentional about it. If you can’t be the person/the team/the company you want to become now—when you are small—what makes you think you will magically be able to do it when you have more people?

A cautionary note: Strong culture can backfire!

There is no wrong culture per say; it depends on the environment and what works. When an entrepreneurial venture begins achieving success, it typically follows that its values, norms, routines, and ways of thinking begin to solidify; they become deeply embedded and taken for granted as true and “right.” People get locked in and lose awareness of the deep assumptions driving the way they do things. At that point, the culture controls people more than they control it, and changing it becomes incredibly difficult.

And because we live in an ambiguous world characterized by rapid change, you can bet on the environment changing such that some of the taken-for-granted assumptions driving your culture will begin undermining your success. That’s right, some of the sacred cows that have made you so successful stand to be the cause of your demise. Call to mind Borders Books or Blockbuster video, and there are many more examples.

A quote from philosopher Eric Hoffer captures this well:

“In a time of drastic change, it is the learners who inherit the future. The learned find themselves equipped to live in a world that no longer exists.”

Keep that in mind as you thoughtfully cultivate your culture. And continue to consider these words as you paddle forward into uncharted territory.

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