Masterclass: Shaping startup culture

‘We are customer-driven’, ‘we are data-driven’. Those are typical refrains from companies. But are they really? It all boils down to culture

Founding Fuel

Over the last decade, India has witnessed an explosion in the number of startups. As consumers, we have experienced a new level of convenience and personalisation from some of them. However, for every few startups that do it well, the majority don't get a lot of it right. So that made us ask the question, how do startups that do well do it right?

That was the broad theme of Founding Fuel’s Masterclass on Shaping Startup Culture, where three seasoned practitioners shared perspective on how culture fuels that success:

Hari TN, CHRO at Bigbasket, a startup veteran, and co-author of Saying No To Jugaad

Sandeep Murthy, Partner who drives Lightbox Venture Capital

Subramanian MS, Head of Analytics at Bigbasket and co-author with Hari of Saying No To Jugaad. 

The conversation was anchored by CS Swaminathan, Co-Founder at Founding Fuel.

Why does culture matter?

  • Doing culture intuitively and doing it well, is far better than putting things on paper, and not doing a great job of it.
  • Bigbasket decided to articulate who they are, and also bring in an aspirational component.
    • That they are maniacal about customer focus
    • Want people to take ownership
    • Freedom, but with personal responsibility. Because as you scale, you cannot rely on policies to figure out everything; you can't rely on audits to get people to do the right thing,
    • And speed and agility as aspirational components.
  • Founders and companies in the early stage are only focused on survival. They don’t really think about culture.
  • The minute you raise some money or your business scales to a certain level, you now suddenly have to codify to an extent the things that you intrinsically know—that process is often overlooked.
  • It's the rare investor or situation that allows for the opportunity to say, hang on a second, how are we thinking about how this is going to last for the long run?
  • You're trying to say, ‘I want to do it differently.’ And so, blindly following Silicon Valley's culture or another company’s culture is not the right answer. You culture needs to identify who you are.
  • You also need to reflect on who you’re not.
  • Artefacts (open office, for example) and espoused values mean nothing. Open office does not indicate it’s an open culture.
  • It’s all about what you do every day, how you do it, what are the behaviours that are recognised and rewarded.
  • People learn by watching, imitating and improvising. If the top 10-15 people at the company are committed to doing the right things every day, over time, everyone else will begin to do that.
  • No culture is right or wrong. It’s about organizational personality. At an early stage a startup’s culture reflects who the founders are.
  • Humility is deeply ingrained in Bigbasket. However smart you may be, it is very important for you to work with humility, with people who've had less privileged education.
  • As an equal opportunities workplace, every company would have a POSH (prevention of sexual harassment) policy. But what you do when there's a violation, determines whether people believe in it.
  • Data-driven culture really means
    • Using analytics to make better decisions. At Bigbasket, it’s critical because it provides a competitive advantage vis-à-vis offline players.
    • How do we use this information to become more efficient, and more importantly, deliver a superior customer experience?
    • It’s about leveraging data to draw insights and convert them to actions.
  • How do you sustain and permeate a data-driven culture? The biggest challenge is that people tend to make decisions on gut instinct. So you need to build a culture that gets everyone to build a hypothesis-based approach to decision making.
    • An example: how do you improve the average basket value (ABV, or how much do customers buy per order)? How do you make it sustainable? Data gave Bigbasket powerful insights.1) Customers who place orders on desktop have higher ABV. 2) The deeper insight: these customers are more planned and have access to more real estate than on the mobile app—which helps them identify products better. 3) The decision therefore was to build additional tools on the app to give customers a similar experience
  • Analysis paralysis is another challenge in a data-driven culture. So, you have to be able to step back every now and then, and look at what is the real question that we should be answering here.
  • Challenges in driving Bigbasket’s customer-driven culture:
    • People shop at Bigbasket because they want to avoid visiting a store. So Bigbasket needs to provide everything a store would provide. That means a wide assortment—from fresh produce to chilled and frozen foods
    • That means the supply chain and distribution centres must be configured to support this.
    • It meant a lot of experiments with chiller boxes, IoT devices to track that foods were stored at the right temperature during delivery, etc.
    • Having a no-questions-asked returns policy.  

How to build a culture roadmap

  • “Let’s run with this” is not always the right mode. Instead, you need to reflect on what matters in your business.
  • The first step is to be willing to change the way in which you operate as a person. And take the approach that ‘Hang on a second, I need to explore this’.
  • Data is one means to do it.
  • Venture business is no different than a startup. Lightbox has three simple rules for itself and its funded companies. 1) Don't run out of money. 2) Don't ever stop running your business. 3) If you don't know ask.
  • Willingness to allow for failure and allow for questions to be asked no matter where it is on that spectrum, is very important
  • Bigbasket modelled itself as a grocery company with an app, and not an app for grocery. (Just like Lufthansa can't behave like a tech company. It's an airline company, which uses technology.)
    • That has dictated the choice that they will use technology to helps enhance the customer experience
    • It means they don't build a tech-heavy product or app, and then try getting customers to use it.
    • Instead of buying some cutting edge technology suite and deploy only 5-10% of its features, they build open source-based solutions ground up and use 100% of it pretty much every single day.
  • If you define your concept correctly, you suddenly start to think about your metrics very differently.
    • This helps you think about the pace at which you grow, the environment you want to create, the people you want to bring in, and talk about the things that matter.
  • Marshall Goldsmith said that what got you here won't get you there. The counter to that is, if you forget what got you here, you will never get anywhere.
    • To induce customers to buy online, you need a 100% fill rate. You can't deliver these kind of fill rates if you just have a very casual marketplace approach.
    • You need to have conviction in your own experiences.
  • Bigbasket used a simple game theory to communicate why culture is important to people, to get the majority of people to align and do the right things when you are not watching.
  • Behaviours are also gradually impacted by the kinds of rewards and recognition you give.
  • As a VC looking at whether an entrepreneur has the chops to build the culture, you're really looking at, do they have the ability to handle variability? How good is a founder at weaving stories and getting people along for the ride? And can you handle the negative situations with grace?

The toolkit for shaping culture

  • Talent management and communication come up repeatedly as the fuel for that culture.
  • One of the biggest make-or-break for a startup that is scaling rapidly is an ability to assimilate lateral hires.
  • The organization, the founders, and the lateral hires themselves have a role to play here.
    • The lateral hire must acknowledge that those who brought this company to where it is, couldn't have done it without being smart. And there’s much to learn from them.
    • Founders need to be patient with the lateral hires, and tell their rock stars to give them some time. And encourage the two groups to work together.
  • When hiring, you can't hire clones of existing folks.
  • There are certain core components of your culture on which there is no compromise. But you should be open to bringing in people who can question the status quo and bring in new perspective.
  • Homogeneity will help you get off the ground quickly in the early stage. But as you scale, the lack of diversity will hurt you.
  • It's important to bring diversity in thought process more than diversity in gender.
  • If you focus on diversity in thought process, over time, gender diversity will automatically happen. (If you focus on gender diversity, it is tokenism.)
  • It's not always an easy journey for the diverse person in an organization. You have to be willing to let that person come in and give them space.
  • Embrace the idea that failure is viable, possible, perhaps even essential to continue to succeed.
  • At Bigbasket, the person making the delivery is the Customer Experience Executive. For the customer, that’s the human face of the company. They are trained, because that interaction is a moment of truth for the customer.
  • How often should one revisit culture, purpose?
    • As long as the founders are active, there’s no need to revisit it in a big way.
    • It's important for companies like Uber, where there has been a huge management transition, or public companies like IBM, where the founders no longer exists, and a bunch of professionals have run this company for decades.
    • In such companies a bottoms up approach may be more relevant.
  • How do you look at culture fit when you acquire companies?
    • Bigbasket looks for businesses that fit their business plans for the long term.
    • The founders of those companies, when they come on board, continue to feel that they are still founders, but within the larger organization

Books mentioned in the Masterclass

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