Are you a first-time Scaleup CEO? Or an entrepreneur taking your business from startup to scaleup?
Revolutionize the way you scale your business and learn to evolve your culture with The Resilient Scaleup:
Learn the untold scaleup secrets for stacking your business with talent at the top of their game.
Uncover the hidden tactics of the ruthless recruitment industry and learn which recruiters to avoid.
Utilize techniques for building and retaining a strong company culture while onboarding new employees
Master exclusive strategies for improving talent acquisition over the long term.
Techniques for converting employees into enthusiastic supporters of the company
Your company culture is a key component of your brand and reputation. Maintaining a cohesive company culture can be difficult when expanding from a single-country, local business to a global organization. However, If you manage the growth well, your company culture can emerge better and support your scaleup journey.
Are you a first-time Scaleup CEO? Or an entrepreneur taking your business from startup to scaleup?
Revolutionize the way you scale your business and learn to evolve your culture with The Resilient Scaleup:
Learn the untold scaleup secrets for stacking your business with talent at the top of their game.
Uncover the hidden tactics of the ruthless recruitment industry and learn which recruiters to avoid.
Utilize techniques for building and retaining a strong company culture while onboarding new employees
Master exclusive strategies for improving talent acquisition over the long term.
Techniques for converting employees into enthusiastic supporters of the company
Your company culture is a key component of your brand and reputation. Maintaining a cohesive company culture can be difficult when expanding from a single-country, local business to a global organization. However, If you manage the growth well, your company culture can emerge better and support your scaleup journey.
Why you donât need a culture like Google or Amazon to attract and retain the best people.
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Regardless of your written company values, the organization will be guided by the values of its founders and owners.
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On multiple occasions, I consulted with a very large and successful privately owned technology company on leadership and organizational design. This firm called me in because they felt they needed to reorganize themselves. They believed that if they found a better way to structure their departments and organize their projects, they would be much more effective at delivering critical business systems. Their primary problem was that they struggled to deliver their technology projects to the cost and timing expectations of their business stakeholders. This caused their business to hemorrhage cash and angered their investors.
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I routinely approached these engagements by conducting a round of interviews. I always began with top leadership and worked my way down to individuals at the coalface. As was often the case, my client's leadership team wanted me to spend most of my time with their people. They wanted me to wave a magic wand and âfixâ them. Somehow, I was supposed to miraculously make them more productive.
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In interview after interview with their employees, I heard the same stories.
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âOur leadership is authoritarian, and I think this company is going in the wrong direction.â
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âThey are so top-down here. This is such a frustrating place to work!â
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âThey donât listen to us when we tell them about problems with project delivery.â
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âThe leadership style here is command-and-control, and people simply do as they're told.â
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This wasnât the first time Iâd seen this. It seemed to be a reasonably common problem in many of the technology companies I consulted for.
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The employees were timid and afraid of their leaders. They could tell me where the problems in the organization had originated, but they were fearful of speaking up. There was a persistent threat of retaliation from their senior managers.
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They told me about the different controlling personalities among the executive team. One woman teared up while speaking to me. I could tell these interviews were cathartic for them. Finally, someone was willing to listen to them about the painful realities of working in what felt like a modern-day sweatshop.
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Soon, I would share my findings with the CIO. For what itâs worth, the CIO was a friendly and personable guy. I found him rather cheerful and easy to talk with. He seemed full of optimism, though I noticed he was frequently missing during our engagement with his team.
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What I learned from speaking with him was shocking. Although he was the CIO reporting to the CEO, the power dynamics of that organization didnât follow traditional titles. They rarely do. A powerful group within their new customer experience division had a lot of power and influence, as their business unit brought in the lionâs share of the companyâs overall revenue. They had been unsatisfied with IT for quite some time, and they treated the CIO with the same command-and-control style of leadership that plagued the rest of the company. Because of their lack of faith in him, they kept his department desperately underfunded. Instead, they frequently utilized external, third-party agencies to deliver on their critical initiatives.
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Later, I consulted with several more of this companyâs business divisions. The more I worked with them, the more I heard horrible things about the culture and its leadership. Having done so much work as a transformation consultant, I was pretty used to this sort of thing. But my surprise came a year later when I learned that the company won a prestigious âBest Place to Work in Australia[SB1]Â â designation.
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I was stunned. Amazed. I barely wanted to consult with that company. It wasn't easy to imagine anyone was truly enjoying working there, especially after all the stories Iâd heard.
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Weâve been conditioned to believe that building a successful business requires an outstanding company culture. Weâre told by leadership experts that we must adopt the latest workplace fads to develop an attractive workplace. However, this was one of several examples where Iâd seen the opposite was true[SB2]Â . Sure, company culture is important, but at some stage, improving it becomes obsessive.
A Cultural Obsession with Culture
There's no doubt about it. We are a culture-obsessed society. Everywhere you look, people are talking and writing about culture. We can't get enough of it. But what is culture, really? Great Place to Work, a global authority on workplace culture, defines company culture as: âHow you do what you do in the workplace[SB3]Â .â (Lute, 2022) Itâs the sum of your formal and informal systems, behaviors, and values, all of which create an experience for your customers and employees.
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There are hundreds of really great books about company culture that can expand on that definition, so weâre not going to discuss that in any more depth here. Besides, most of these books are irrelevant to your scaling organization. Thatâs not to say there isnât useful information there or that you shouldnât bother reading them. However, most authors who write on this theme claim that your company culture is the single most important factor, and unsurprisingly, itâs financially advantageous for them to say so.
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Recently, the marketplace has exploded with solutions for measuring and improving company culture. One of the latest fads in the last decade is the so-called cultural transformation. Many large enterprise organizations have undertaken massive cultural change programs. Weâve also seen an explosion of tech businesses promising to improve company culture such as Cultureamp. Cultureamp claims to do this through understanding the employee experience and managing employee performance and development, all through data and analytics.
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The foremost thinkers on culture will insist that you constantly improve and build your company culture. They believe this will determine your success in the marketplace. The well-known[SB4]Â phrase, âCulture eats strategy for breakfast[SB5]Â ,â (Teasdale, 2002) comes to mind. But perhaps culture isnât everything.
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In the 1970s, Firestone, a leading tire brand, had become a victim of its own success. Harvey Firestone Sr. founded the company with the vision that its culture and operations would reflect treating customers and employees as part of the âFirestone family.â The Firestone country club was open to all employees, regardless of rank, and Harvey himself maintained close friendships with the top executives of the big carmakers.
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Firestone created managers who were fiercely loyal, steeping them in the company's family values and its Akron, Ohio-centered worldview. The company was able to quickly bring new production capacity online by exploiting the booming demand for tires. Frontline employees, for example, would identify market opportunities in the capital-budgeting process and translate them into proposals for investing in additional capacity. Top executives tended to speedily approve the middle managersâ recommendations after they selected the most promising proposals.
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Firestone's long-standing success gave the company a strong, unified sense of its strategies and values, its relationships with customers and employees, and its operating and investment processes. Since the turn of the century, the company had had a clear formula for success, which served it well.
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But, almost overnight, everything changed.
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The radial tire was introduced to the U.S. market by Michelin, a French company. Radials were safer, longer lasting, and more economical than traditional bias tires due to a breakthrough in design. When Ford declared in 1972 that all its new cars would have radials, it was clear that they would dominate the U.S. market, effectively decimating the market share of Firestone.
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By all accounts, Firestone had built a successful, healthy, family-oriented culture that contributed to its seven decades of success, yet it still failed to maintain its market share. Well, how could this be?
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The truth is that familial company cultures often lead to difficulty in making hard decisions that impact employees. While Firestone executives were fully aware of the changing tides in the market, and they did move quickly to invest in a new competitive product, their family-oriented cultural norms impeded them from taking drastic measures. They failed to eliminate underperforming factories, some of which were only operating at 59% capacity. They failed to redesign their production process, which would have meant retrenching large parts of their management and workforce. Firestone clung to their old ways of working.
Survivorship Bias (Being a Copycat)
When theyâre not obsessing over company culture, these leadership experts are busy promoting the most renowned tech companies as the pinnacle of cultural success[RJ6]Â . However, as a scaleup business, aiming to become the âbest place to workâ or develop a company culture like Amazon, Google, or Netflix is doomed to failure. Aspiring to be like any other company with a well-known cultural identity is a poor aspiration. Why? Because it is quite literally the definition of survivorship bias.
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One of the earliest examples of factoring survivorship bias into decision-making is from Abraham Wald, a statistician at Columbia University. Wald was born in 1902 in Austria-Hungary. He graduated in mathematics and then lectured in economics in Vienna. After the Anschluss between Nazi Germany and Austria in 1938, Wald and his family faced persecution as Jews and emigrated to the United States after he was offered a university position at Yale, where he joined the Statistical Research Group (SRG).
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During World War Two, the U.S. military and the SRG joined forces and attempted to solve problems with a research methodology. The key problem the U.S. military faced was how to reduce the enormous number of aircraft casualties during the war.
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The SRG researched the damage their planes received upon returning from conflict. Most of the bullet holes sustained by their planes were in the wings and tail. The engine was not damaged. The U.S. military naturally concluded that the wings and tail were obviously most vulnerable to being hit by bullets.
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Figure 1.1[SB7]Â Â (Add caption)
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They therefore decided that they needed to increase the amount of armor in these areas. Wald stepped into the room and offered a different perspective. His conclusion was surprising: the wings and tail shouldn't be armored. Shield the engine. Wald's understanding of survivorship bias led him to insightful and reasoned conclusions.
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Bias can be defined as any factor in the research process that skews the results. The error of survivorship bias is in looking only at subjects who've reached a certain point without considering the (often invisible) subjects who haven't. The U.S. military were only studying the planes that had returned to base following an encounter with the enemy. Or, simply put, the survivors. What their diagram of bullet holes showed were the areas in which their planes could sustain damage and still be able to fly home, saving their pilots.
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Wald surmised that it was actually the engines that were vulnerable. If the engines were hit, the plane and its pilot went down and didnât return to base to be counted in the research. The military listened and armored the engine, not the wings and tail. Over 88,000 casualties were suffered by the U.S. Airforce during the Second World War. If Wald was unaware of survivorship bias, this number would have been higher.
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While understandable[SB8]Â , our tendency to study and emulate the culture and leadership practices of just a few well-known companies is still driven by survivorship bias. It leads us to an overly simplistic approach to developing culture. We are collectively blind to the multitude of companies that were not successful but have also been great places to work. Our survivorship bias causes us to ignore the companies that prioritized culture, yet no longer exist. Similarly, it causes many culture and leadership experts to ignore otherwise successful firms that donât promote remarkable company culture. By seeking to define your company culture based on the successful methods of a few, youâre working [SB9]Â without complete data.
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In my management consulting days, I was called in to help restructure companiesâ product and software delivery practices. During that time, it was popular to be a self-organized, nimble organization. The shining light in this space was Spotify and its way of working, dubbed âthe Spotify model.â Big, behemoth enterprise firms decided they needed to replicate this approach, filled with its tribes, chapters, guilds, and many other funny-sounding names. Banks like ING and Australia New Zealand Bank hired droves of agile consultants to help them get results like Spotify.
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As it turns out, many large banks suffer from deep, systemic issues that prevent them from moving like an already nimble, digital-native company like Spotify. The Spotify model, as confirmed by employees, was no longer a model they even used[SB10]Â when people were trying to emulate them. The model only made sense for a season. Spotifyâs famous tribes, guilds, and chapters were disbanded in favor of a structure that served them better.
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Equally interesting was the Netflix employee handbook that became extremely famous on SlideShare, a website that allows its users to share presentations. It stated that there were no maximum number of days an employee could take off. In addition, employees were not required to seek approval for days off. At the time, these practices were uncommon. Iâve witnessed many companies copy the practices described in Netflixâs handbook, which led to detrimental effects. This is because Netflixâs mission, its people, its goals, and its collective view of the world are vastly different from any other company. The culture set by Reed Hastings, the CEO, is admirable, but not replicable. Most companies do not have a culture that is psychologically safe enough, supportive enough, or responsible enough to have an unlimited leave policy. [SB11]Â Implementing it often leads to worse work-life balance, where employees take less time off than before.
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Many scaling businesses fall into this survivorship bias trap. The truth is that you donât need to obsess over your company culture. Youâre scaling. Youâre growing. Everything is changing, constantly. The last thing you want is to imitate someone else or be overly focused on the type of company culture youâre creating. The answer isnât to ignore culture, but rather to ensure your focus on company culture gets the appropriate amount of airtime alongside all your other countless responsibilities. To accomplish this, we turn to The Scaleup Culture Cycle.
The Scaleup Culture Cycle
The Scaleup Culture Cycle is a simple framework designed to ensure your business is well-positioned to attract and retain the right people as you go through the different stages of scaling. As Iâve said before, your business will go through many iterations as you seek to build toward your vision. To ensure youâre building the right team, youâll need The Scaleup Culture Cycle.
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Figure 1.2 The Scaleup Culture Cycle
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This book is organized to take you through the three steps of The Scaleup Culture Cycle. [SB13]Â I encourage you to reflect on them regularly. Probe deeply to understand where you sit with each one. Throughout your scaling journey, you must continually come back to each component, review them with your immediate leadership team, and systematically plan to ensure your business is ready to transition to the next level. These components are designed to keep you on track.
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The first activity is to ârefine your North Star.â This activity requires you to think very clearly about where you, as a leader, a founder, or CEO of your scaling business, are heading because, whatever the answer, it will form your cultural foundation. It will be your greatest asset or biggest inhibitor to your ability to attract and retain the right people.
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The next activity is to âgather your crew.â This activity forms the bulk of what youâll focus on in your scaling business. As your business grows and changes, your people are going to have to grow and change with it. And if you cannot change people, you need to change the people. You will not be able to take everyone with you into the next phase of your business. As your culture must be refreshed, you must also refresh your workforce[SB14]Â . Weâll explore this and more related concepts later in the book.
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The last activity requires you to âupgrade your captain.â This final activity is about improving yourself and your leadership ability.
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Some quick takeaways from this chapter:
¡      Culture is important, but itâs not the most important thing at this stage of your business.
¡      You are different from everyone else. Following the latest fads in leadership and company culture will likely produce many unintended consequences in your scaling business.
¡      Ignore what everyone else is doing with their company culture and pave your own way.
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So many entrepreneurs and business leaders set out to design their companies in the likeness of other great businesses. But being the best is never a matter of comparison. Being the best is not something that popular accolades can define for you.
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Being the best begins with knowing where youâre going. My guess is that you believe youâve already got a clear answer to this. But letâs test that clarity. And letâs explore how true clarity will empower and strengthen your hiring efforts.
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References
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Lute, Julian. âCompany Culture â Meaning, Benefits and Strategies.â Great Place To WorkÂŽ. Accessed December 16, 2022. https://www.greatplacetowork.com/resources/blog/company-culture-meaning-benefits-and-strategies.
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Sull, Donald. âWhy Good Companies Go Bad.â Harvard Business Review. August 1, 2014. https://hbr.org/1999/07/why-good-companies-go-bad.
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Teasdale, Sheila. âCulture eats strategy for breakfast!â Journal of Innovation in Health Informatics Vol 10, no. 4 (2002):195-196. Accessed January 3, 2023. DOI:10.14236/jhi.v10i4.259.
 [SB1]I think you need to specify where this designation comes from â is it a business media company that posts this list? Is it governmental? Or are you worried about anonymity?
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If you donât want to name which list it was, then I think you need to change the wording slightly to âthe company won a prestigiousâŚâ rather than âthe company won the prestigiousâŚâ
 [SB2]I felt like this argument wasnât that convincing to me because above you say that people seemed to dislike working there and they were having problems with delivering projects (that you were helping them with). So that example tells me that a bad workplace culture does equal or align with an unattractive workplace and a less than successful business. But here you seem to be saying the opposite (that culture doesnât matter) based on them winning an award. But we donât really know how and why they won that award â it doesnât seem to relate to the reality of their situation. So, it didnât quite add up for me as a reader. But I might be missing something here!
This is a bit of a developmental comment rather than a copy editing comment, so feel free to ignore!
 [SB3]This need to be properly referenced
 [SB4]I might say well-known rather than age-old as it was a modern-day quote to a certain extent rather than an old saying
 [SB5]Iâd add a citation to the source of this quote â itâs from a journal article.
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https://www.researchgate.net/publication/287942641_Culture_eats_strategy_for_breakfast
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 [RJ6]Rewrite. You say âcultureâ too much hereâ
 [SB7]Figures should really be numbered and there should be a caption briefly describing what it is/what it shows for the reader
 [SB8]Noble felt a bit too hyperbolic for me â but feel free to disagree!
 [SB9]Iâve simplified this â I think it has more impact as itâs all implied.
 [SB10]I thnk you needed to specify here when it was no longer used â I add a few words to clarify
 [SB11]This really repeats the above
 [SB12]The wording is wrong on âRifine Yout North Starâ â it should be:
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âRefine Your North Starâ
 [SB13]Merged this sentence into below as it felt a bit repetitive
 [SB14]Didnât want to use âpeopleâ again here
Having worked in digital transformation for well over half a decade, I have seen first hand the raw passion and drive of many new businesses, from those treating it as a side-gig alongside fulltime employment through to individuals who are looking to expand their operation as a means to ultimately become the next big thing.
The Resilient Scaleup: The CEO's Guide to Growing a Business Sustainably (hereafter The Resilient Scaleup) by Reginald James is the guide that I wish I could have given to my peers in the past. It is a business management guide that is not only unafraid to not only state some of the cold realities of scaling up, but also embrace them. James' mantra can be boiled down to simplicities, that every year thousands of small business fail and while you may aspire to be an operation with cult-like following, you're not Apple. At least not yet.
That is what I particularly like about this guide, its no nonsense approach hits you with the truth followed swiftly by reassurance. Take one such example, where the author details how Apple could be classed as a level five firm for employee respect (where employees practically worship the product), most companies fall somewhere between a more modest level two or three. Having low employee morale is not incurable as long as CEOs work rapidly to address the fault lines and, perhaps crucially, do not see recruitment as a cure. In The Resilient Scaleup, James pitches the argument that expansion is not always the answer.
For start-up leaders determined to scaleup, James also covers off in significant detail the right (and wrong) ways to recruit and maintain incoming talent and essential CEO skills to bring existing employees on that scaleup journey. With helpful illustrative drawings peppered throughout, it is a highly consumable guide that can be returned to throughout the scaleup process.
I was a little surprised that, given the title, the content makes no mention of environmental factors (the word "sustainability" presently being synonymous with the climate debate). Despite this, the content in The Resilient Scaleup more than makes up for this oversight and remains a highly recommendable book to business entrepreneurs. Next time someone gushes over their plans for world domination, I know where to send them.
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