Building Company Culture During the “C Round”

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The “C Round” of financing is usually associated with companies' efforts to expand and ramp up. But this round is also an opportune time to establish and build a lasting company culture.

The evolution of most startup companies can be marked by the various rounds of funding that are needed to move the company forward. A startup begins to grow up and mature when it hits what’s known as the “C Round” of funding. It is at this point where a startup needs to raise, as an example, 50 to 100 million dollars. The influx of cash usually is needed to ramp the company up from 100 employees to 300 and perhaps more. This is a good sign in the maturation of a startup. It means the company has gained experience and momentum and it is time to really hit the ground running.

It is also a time where the pressure is on company officials in so many areas such as hiring, training, and, ultimately, production. But CEOs sometimes ignore a particular challenge the C Round of funding presents—how to create the culture and work processes that will serve the organization for the rest of its existence. 

You may ask, why hasn’t this particular exercise been handled previously? The answer is simple. It was not really necessary. When a company is starting out, the “circle” of people is relatively small. Everybody knows everybody. And information flows freely. The long hours, the days and nights spent working closely together naturally creates a culture of trust and communication that works well for the time being. Egos are generally kept in check while you are in the middle of building something from the ground floor.

The Growth Storm Opportunity

But then you grow up. It can happen fast. Sometimes too fast. And the sheer number of people involved can create a “new” company. Certainly a different one. A number of CEOs have wistfully remembered the niche culture they once had while lamenting not dealing with the challenge of creating a similar culture during the “growth storm.”

The growth storm is a time where remaining a continuously learning and improving company can get away from the leaders of an organization. Amid the chaos, it is an opportunity to build the culture with them, during the onboarding process and not after they have been there for a while. The CEO has to deal with the business of gaining and pleasing customers (and, of course, dealing with employees). So sometimes they are not in a position to work on the culture and processes, but it should be done because the “C Round” is an optimal time to do it.

Installing Accountability into an Organization

If done properly, a company will cultivate a culture of continuous learning and improvement. But it starts with providing the ability for people to best speak in terms of accountability. It is allowing people to say, “This is what I should have done,” or “This is my part of [something that didn’t go the right way].” Quite simply, an organization interested in self-learning and improvement will systematically provide employees the opportunity and a fundamental way to talk about mistakes, share them, and thus learn from them. Process has to do with providing the structure of where and when employees get to speak freely about specific projects. So the culture is encouraging people to speak and learn from what they do and the process is to define the occurrences of such exchanges– we want to learn after every meeting, after every sale, after every customer we lost. Process is when we want to learn and how we conduct the learning.

Process is sometimes the bigger challenge. There is never enough time for learning, especially when a company grows so fast. How do you create a methodology of learning in a stout time environment? And even if such a methodology is set up, then there is the problem of human nature.

Rising Above Human Nature

People, naturally, don’t want to share their mistakes which, unfortunately, puts companies into situations where mistakes are repeated. People must not have it in their head that they will get fired if they speak about sensitive issues or mistakes. It takes more than the CEO imploring his or her employees to speak about mistakes. There must be an understandable and sustained real process to implement such a culture.  Third party assistance can help them build the composition of a strong culture and the concept behind it. Besides the hesitation to bring up mistakes, many managers are ingrained with the idea they don’t want to hear about mistakes, only results. A strong company can certainly be taught to build a fast and effective methodology for learning.  It can be taught to foster a refreshing culture of accountability that provides the experience that produces learning.

It’s important to understand that instituting a culture during the growth storm has to come from the CEO. He or she may not be the day-to-day manager because the CEO has other priorities—like having money in the bank, increasing sales and insuring product efficacy. But the understanding that learning and accountability are top priorities while the company is quickly growing has to come from the top. Companies will save a lot of resources and have much better chance to succeed if they do it while growing. In the long run, companies that succeed are companies who have great people, who work within a great culture. Companies that pay more than lip service to a culture of accountability will have employees that learn and grow constantly.

 

Yes, the old saying “honesty is the best policy” applies to the establishment of a culture of accountability and learning. But it is much more than that. I like to say “Improvement begins with an I.” It means that if you want something to improve, look at yourself, what can I do? And if you create a culture where everybody asks themselves what they can do better, it will keep an organization in good stead during the growth storm and well beyond.

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