Get the working capital your business needs–learn more about Entrepreneur Lending, powered by CAN Capital »
Today’s startups, especially in Silicon Valley, face a decidedly chillier funding climate than we’ve seen in recent years. Some experts say that the current slowdown is less of a bubble-burst and more of a realistic adjustment, while others predict a “catastrophic shift downward.” Either way, it’s now harder to raise funds and your profile.
The traditional strategies that many startups have relied upon no longer seem to work. Companies can’t continue to throw money at the problem, dumping cash into everything from R&D to recruitment in hopes of achieving growth. The current VC climate demands not just a minimum viable product, but an actual, profitable business model. They must demonstrate value beyond an impressive seed round, Ivy League degree or cadre of well-networked advisors.
What’s the best way to accomplish this? Build an amazing culture.
Easier said than done, right? Yes and no. The culture of an organization can feel ephemeral, and sometimes develops organically or takes on a life of its own. But it’s equally possible to be precise and prescriptive about building a strong company culture. In my experience, there are three steps you can take to be both people-first, and contribute to that critical profitable business model.
1. Create a shared vision.
Many entrepreneurs have a clear vision of their business, from the people to the products to the platform. That’s powerful, and even necessary to get a company off the ground. But when other employees begin to join the team, they must be involved in that vision.
This can occur informally, over coffee or beers, but should be part of a formal process as well. Choose a timeframe, say every six months, and get people in a room. Heck, lock them in if you need to (not really, but you get the point). Bring in lunch. Ban laptops and phones. Focus, as a group, on a very clear agenda: what is our vision for our organization? Where have we been and where are we going? Where do we want to be in two, 10, or 20 years?
Democratizing the vision-setting process benefits the business in two huge ways. First, business leaders get input from everyone in the organization, especially those who talk to customers day-in and day-out. Everyone shares their unique experience, expertise and perspective, for a dramatically broader view into what’s working and what’s not. This act of sharing engenders the second benefit: a workforce that feels trusted and valued. When your employees’ input matters and they know it, everyone brings his or her best self and whole self to work every day.
2. Encourage employees to act like owners.
To create an amazing company culture, push decision-making deeper into your teams. This makes decisions happen both faster and better. Your employees are almost always closer to your customer, and/or more directly impacted by business-level choices. They know what’s happening, so let them have a say in it.
Delegate decisions to the people, regardless of level, who are best equipped to make them. Empower them to own the process, the choice, and the outcome. We all perform better when we’re trusted and when we feel like our expertise matters. It adds to our purpose and our output.
3. Enable and reward risk.
When decisions are made at all levels of the organization, there’s greater risk to employees; succeed or fail, their necks are out there. That’s good — we grow and develop when we innovate. But what’s more important than facilitating risk is how you respond to it.
When a risk pays off, reward it. Show your appreciation with bonuses, raises, awards and promotions. But don’t stop there. Reward risk-takers with greater ownership and responsibility. Thank them. Acknowledge their accomplishments to their peers and leadership. And do it all with, at risk of sounding cheesy, with authenticity. Prizes and money don’t mean much without genuine appreciation behind them.
When a risk doesn’t pay off, don’t brush it under the rug. Encourage employees to own failures, sharing why they did it, why it failed, what they learned and what they’ll do next. A risk-positive culture only works when people feel safe and they only feel safe when they know it’s okay to fail. That security comes from watching peers and leaders try new things and move forward with purpose, regardless of the outcome.
The current slowdown makes funding harder, but also offers startups the opportunity to evolve in unique ways. Spending money to make money isn’t unique. In this ultra-competitive environment, focus instead on building a foundation that no smart investor can pass up: a culture of invested people.