“Attrition is expensive: as well as recruiters, there’s the cost in morale and productivity. Culture is the factor which will keep people who aren’t purely compensation-driven working for you.”

Culture & Expansion with Abbie Pugh

“Attrition is expensive: as well as recruiters, there’s the cost in morale and productivity. Culture is the factor which will keep people who aren’t purely compensation-driven working for you.”

Abbie Pugh is a founding Partner at Multiple, a boutique strategic consultancy devoted to helping high-growth businesses achieve scale without falling into painful pitfalls along the way. She and her colleagues are all ex-investors, startup founders and operators in bluechip technology businesses; Abbie herself served as Chief of Staff to angel investor, Shakil Khan, and Facebook EMEA Managing Director, Joanna Shields.

In conversation, she reels off a raft of ways in which SaaS businesses can slip off the rails.

There are external factors – market scenarios like being too early or having a large competitor moving into the space; and internal factors: failing to articulate a product or service in a compelling way to the target audience, hiring the wrong staff, hiring at the wrong speed and failing to envision the market horizon.

Then there’s customer acquisition: spending on the wrong channels, not spending enough (or too much) and neglecting to leverage every opportunity to engage – for example via PR.

Why culture matters

There’s plenty to go wrong, so it’s perhaps surprising that Abbie puts culture at the top of the list of resources to manage.

“Culture matters because it’s all about optimising team performance”, she says.

“It exists whether you want it to or not, and whether you cultivate it or not. Culture enables you to fulfil your ultimate purpose as an organisation.

Therefore, the ‘warm fluffy stuff’ of everyone feeling happy to work there is a byproduct, not the core aim, of getting a culture right. And the nature of your company culture will be different and must be managed and nurtured accordingly, depending on that ultimate purpose.

An army of PhDs in machine learning are not going to enjoy working in the same environment as the trading floor of Morgan Stanley.”

(Abbie is clearly on-the-money here: the week after our interview with her, Goldman Sachs announced that it was relaxing its dress code in order to attract what the press called ‘hipster coders’…)

“If people hold the knowledge and ability to build the business and deliver value, culture is how we create conditions in which they’ll deliver their best work. It’s not immutable and it will change over time, but culture fundamentally unlocks value.”

Culture becomes acutely more important when a business scales internationally. The ‘home team’ should represent a repository of business best practice, one of the few firm foundations which the new office can rely on as it ploughs forward into an emerging market.

Get it wrong, and instead, you will have two divergent and possibly competing cultures. This sort of confusion does not attract and retain the best talent.

“If you don’t know and constantly reinforce who you are; your narrative is unclear as you move into a new market, you’re more likely to attract the wrong people”, Abbie explains. “Without a vision, you’re creating an opportunity for highly subjective individual perspectives to run riot on the strategic direction of your business.”

There’s a retention cost too. “Attrition is expensive: as well as recruiters, there’s the cost in morale and productivity.

In San Francisco, in particular, it’s easy to find good talent but very hard to retain it, because the competition is so high. Culture is the factor which will keep people who aren’t purely compensation-driven working for you.”

A weak corporate culture also sacrifices collaboration – an essential commodity in a high-growth venture. Abbie says, “People who don’t feel aligned with each other are less likely to be proactive in reaching out to each other. Humans want to see consistency, and managing communication and strategy in distributed offices is much easier when you have a clearly codified culture and narrative.”

Nurturing your corporate culture

Of course, culture isn’t enforceable, but you can create a direction, a banner around which the company can congregate. It’s amazing how little is required to create this momentum (upfront hint: it’s not a 200-page document).

• Purpose: Start with the purpose of the organisation. It may not be a formalised Mission Statement, but it’s certainly an answer to the question: “why do we get up in the morning?” Says Abbie, “As you grow or move into new markets, this purpose will help you judge new opportunities. It’s particularly good for early-stage organisations which can fall prey to mission creep and being pulled in different directions. It can be very powerful in driving focus and helping the team to understand what they’re really not here to do”.

• Vision: “Next comes a vision: if we succeed, what does the world look like? These things may not be achievable, but they are the fuel that pushes you forward. Google’s purpose, for example, is to make information more open and accessible. In a world in which that happens, everyone can access everything”.

• Values: “And then we create values: how we will behave to make that purpose and vision a reality. What are the characteristics we want to see in the candidates that we’re hiring which will give us a greater chance of success? If, for example, our purpose is altruistic, hiring people who value individual success over collective benefit is unlikely to yield fruit”.

“Attrition is expensive: as well as recruiters, there’s the cost in morale and productivity. Culture is the factor which will keep people who aren’t purely compensation-driven working for you.”

A company needs no more than five values to live by – and they should offer realistic guidance.

“Imagine a junior staff member working out whether to spend time on something or not. One of Facebook’s values was ‘Move fast and break things’. The business prioritises shipping quickly. That tells the junior staffer exactly what to do: get it out the door and move on. That’s when values can be really powerful.”

Everyone can survive in the good times – culture sustains the tough times

Culture will also hold your team together during the bad times. All of our Founders have war stories: some have been days from the brink of financial ruin; all will testify that there will be bad news someday. Employee perks like a Fussball table will power up the good times, but they won’t be remembered when life gets tough.

“Especially in America, you can be outgunned on perks all day long. So to compete with corporates, you need a cultural offering: learning and development opportunities, more autonomy, respect, freedom to set your own goals etc. And when staff are signed up emotionally, they’ll stick with you for much longer through the tough times.

That’s why streams of people are passing out of corporates and going to startups; and why corporates are looking at their own cultures and asking what they need to do to stop seeing people as human capital and start seeing them as actual humans.”

Leaders are also human and, among their mistakes, most Founders will admit that at some stage they have stuck too long by a bad hire. Abbie says that a defined culture will both prevent bad hires and give leaders a metric against which their suspicions can be quantified.

“You just can’t be in every interview after a certain number of hires”, she says. “Invest heavily in onboarding and hire slow, fire fast. With a culture codification in place, you can hire more successfully because you’ve got a better employer brand and a clear idea of who you’re looking for.

And when firing, it brings confidence and conviction but it also brings perspective and clarity by removing any psychological bias when you’re under the huge pressures of running a business. It can really hold you to account.”

The move to a new territory – particularly the US, where time is poor, talent expensive and competition fierce; is an inflexion point for any business. It’s one of the hairpin bends in a company’s evolution during which it is most vulnerable – particularly to hiring mistakes.

A strong corporate culture will insulate the business, making complex questions easier to answer and providing guidance to a new and often inexperienced remote team.

Key takeaways

• The culture of a business will attract the best employees and optimise their performance.

• A company culture keeps distant offices aligned around common goals.

• You can’t dictate culture, but it’s not hard to define and influence.

• Culture is worth more than incentives – it will keep employees motivated during bad times as well as good.

This story was taken from Notion’s Crossing the Atlantic Report

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