In the latest of YFM’s recently launched series of webinars that brings together execs and non-execs from the 40-plus businesses we support, we discussed how companies can create a positive culture that adds value and adapts as the business scales up. These sessions are designed to support our portfolio and provide opportunities to benefit from the experience and learnings of peers who have been there before and subject matter experts. In our latest session, we were fortunate enough to be joined by Jane Sparrow, founder of The Culture Builders and renowned author, and Sarah Willingham, serial entrepreneur, investor and chair of our very own Tonkotsu.
Here are some of the key learnings and insights that Jane and Sarah shared with us.
Culture is not just about doing certain things, rather it is about how we do everything. It’s about who you are as a team and as individuals and should guide us to do lots of small things that add up to something significant.
Jane shared that at The Culture Builders, they have concluded that the invisible force that governs all our actions, termed culture, consist of ‘the Three Pillars’;
The end goal is to create a culture where you turn ‘savers’ – employees who do not necessarily do a bad job but are mainly there to earn a paycheque – into ‘investors’ – people who are dedicated to making the organisation incrementally better every day. ‘Investors’ play their part in consistently investing in themselves and their team to drive performance, while maintaining a focus on people.
Jane believes that culture has some very tangible outputs for a business – getting it wrong can hit your bottom line in a very direct way. We all know the impact that poor retention can have on our bottom line; from the direct costs of additional training and recruitment to the opportunity cost of losing valuable skills and experience, while someone else must get up to speed. More importantly, the culture you have created truly is the heartbeat of your business. Having an empowered team who share the same core vision and values enables the business to flourish beyond what might look possible when there is an over dependence on a handful of people. A good culture is a key ingredient in scaling the ‘magic’ that founders bring to a business.
Jane also identified that growth could cause culture issues – it’s easier for smaller companies, especially where teams are in close physical proximity, to form and guide culture, even when not following a structured approach. As a company becomes bigger, it is more important to become intentional – you should define your culture in writing to ensure you know what you believe as a team and help guide behaviours to match those beliefs.
Once an organisation starts growing – or when people work remotely – allowing culture to evolve through osmosis is very risky. It is also almost impossible to recruit effectively for culture fit when there is no common understanding of it. If businesses manage to create and maintain a strong culture, it is easier for founders to have the necessary confidence to empower the team – instead of feeling the need to be in every detail – which can often mean the difference of a business growing or stagnating.
Jane also advises that writing down your ethos will help guide you through decisions and steer you in the right direction. Having a well-defined culture will also take the strain out of solving questions like: how should we be recruiting, developing and rewarding our people; how should we be empowering and engaging them?
Having empowered teams is particularly important in post pandemic working models. Not only should senior leaders be role models; to ensure your desired culture reaches through the entire organisation, middle management should also display the same values.
Sarah discussed how it is easier to back a very good person or team with a mediocre business idea than a good business idea with a mediocre team.
When Sarah set up her holding company Nightcap, she acquired several bar groups, each with its own culture and it is proving challenging to create one common set of beliefs. Working through this, it is important for her not to compromise on openness, self-awareness and having a ‘learners’ mindset.
Sarah says that it is critical to understand the culture that you have acquired, see how closely it matches your own and identify where the teams can learn from each other. Unless there are irreconcilable differences, this can be a great opportunity to take the best of each and build one stronger culture together. However, it requires openness, and the teams will need to recognise the other’s brilliance in respective areas, celebrate it and try to adopt it – rather than feeling threatened by it. If this is not possible, you will be forced into recruiting in order to avoid culture clashes, otherwise, it will be almost impossible to ‘steer the ship’ effectively.
Sarah and Jane agree that the key to deliberately changing culture in a positive way is self-awareness, openness and the discipline to keep learning. This remains the case whether you are trying to correct a misstep, fundamentally change the culture of a business or integrate acquisitions.
Sarah then used Tonkotsu as another great example of the impact culture can have. Before the YFM investment, the founders felt they needed a seasoned MD to help navigate the business through its next phase. While the MD appeared to appreciate the culture and fit in, ultimately he didn’t share the same values which made the business vulnerable when the founders stepped back. Once identified, It was decided that the founders should step back into the business and the team was built up to support them in running the business once again. Getting that ‘founder magic’ back had a profound positive impact on the business. While an unusual move to bring the founders back in, it showed the benefit of having a common understanding of the business’ culture. It helped guide them through making an important decision, decisively and with confidence.
Sarah believes putting your culture in practise in this way helps to strengthen it even further. They now have a brilliantly self-aware, open team, eager to improve all the time, who knows their culture and works hard to protect it. Their distinctive culture drives them forward and she knows it will endure long after the founders are no longer in the day to day of the business. A good culture creates a confidence in a business which is hard to achieve in any other way.
Jane adds that a good way to protect culture is to celebrate success. This is not just about recognising the achievement of financial and performance KPIs, but also to acknowledge the way things are achieved and behaviours that you want to replicate. It is also up to you and your team to make sure you hold each other to account when there are misalignments with the culture.
Great leaders are self-aware and open to learning. They accept that they are human, that things often go wrong, and they always maintain an eagerness to use every opportunity to improve.
This principle is also part of the value system that Tonkotsu’s founders created. As authentic Japanese Ramen restaurants, obsessed with mastering the art of producing the perfect bowl of ramen every time, they chose ‘Kaizen to the end’ as one of the pillars of their culture and they apply this to every aspect of their business. Kaizen roughly translates from Japanese into English as ‘the relentless pursuit of continuous improvement’. To achieve this, you need the self-awareness to identify areas to improve, the openness and maturity to see these as opportunities rather than threats and the discipline to consistently re-assess and improve. It’s something Sarah looks for in every team she works with.
Sarah also points out that being a founder can often be a lonely job, full of demands from every direction and people are always looking to you for guidance. It is full-on and while she, like many entrepreneurs enjoy that aspect of it, it’s also important to avoid burn-out and to stay in the moment as much as possible for your team. Being an adrenaline junkie, she must be self-aware enough to know when her adrenaline level is high and then ensure she regulates it and recalibrates often. Sarah manages her wellbeing by ensuring she diarises one nature walk at the same time every week. This allows her time to think about the bigger picture or just enjoy the now and to re-energise. For the same reasons, taking planned holidays are always important.
Sarah has also found it useful to have a safe space to ‘brain dump’ her thoughts and feelings when there is a lot going on. This could be a spouse, a mentor a friend, sometimes even a chairperson, as long as it is someone you trust implicitly, who you know wont judge you and who understands.
Everyone needs to know themselves and find their own release. Making sure you find ways to be present for your team, which involves taking care of yourself, will make you a better person and leader.
With businesses around the world trying to figure out what the post pandemic working model should look like for them, Jane says she sees two opposing views: while some want to bring everyone back into the office, others are asking, where are we going as a business, what do we need as a culture and how do we achieve it? Being intentional, involving your teams in this process and seeking, through trial and error, a good balance that works for your business and people is key.
Building a strong culture is ultimately about people and human connections. Like anything that impacts the culture of your business, finding the right post pandemic model for your business should have this at its heart.