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Cultural DNA: The Hidden Key to Start-up Success – Part 2

The Exponential Power of Values

In highly successful companies the internal company values overlap with the values of the team members, resulting in a strong psychological contract being developed between the individual and the company. Shared values create greater engagement, dedication, and commitment, and these combine to produce better results. Shared values build trust; trust in the strategy, trust in the leadership and trust in the team. When the values of the company do not match the values of the team, you create a dysfunctional, distrustful, and ultimately destructive environment.

 Zappos 10 Core Values

A company’s cultural DNA is a social system that is enhanced and strengthened if new employees have similar overlapping values. With the Zappos 10 Core Values you know exactly where you stand in the company and as a potential new employee reading the list below you clearly understand whether you do or do not fit in with the company values, one of the pillars of cultural DNA. There is no doubt about the type of individual Zappos are trying to hire and the type of cultural DNA the company continues to build.

1. Deliver WOW Through Service

2. Embrace and Drive Change

3. Create Fun and A Little Weirdness

4. Be Adventurous, Creative and Open-Minded

5. Pursue Growth and Learning

6. Build Open and Honest Relationships With Communication

7. Build a Positive Team and Family Spirit

8. Do More With Less

9. Be Passionate and Determined

10. Be Humble

Values are deeply held views of what we believe to be important to us as individuals. Values reflect a person’s sense of right and wrong. Values can originate from many sources: parents, religion, schools, peers, people we admire, and culture. We learn values over time as children and later as adults. Values tend to influence attitudes and behavior. It is therefore imperative that a company’s values overlap significantly with their employees values.

How aligned are these value sets?

 

Note, there is nothing wrong with the above employee’s values. The employee’s values are simply different to the values of the team and the core values of the company. In high growth start-ups it is vital that decisions are taken quickly. The employee above will, in a high pressure situation, use her values as the baseline to make decisions and there is a strong chance that the decisions she takes will not match the decisions that would have been taken by the rest of the company because her values don’t match.

Values based hiring

If you understand the predominant values in your team you have a better chance of hiring individuals who match the job description and more importantly match the values of the company. If the hiring process is designed and handled correctly, the values of the new hire will match the founding team’s core values, which in turn are strengthened and enhanced as they add more team members. The best management teams realize and take action quickly if a new employee’s values do not align with the core values of the team. It is therefore critical to a successful hiring strategy that the founding team clearly understand what they value and how that translates into the company’s cultural DNA.

Team Values Analysis and Development

Use the list below to do a simple analysis of the values in your founding team. Ask each team member to select ten of the following values/behaviours that most reflect who they are now.

This is a great first step to understanding the individual values and combined values of the team.

•             Review each of the individual results as a team.

•             List the values, highlight the values that overlap.

•             Discuss amongst the team what the overlaps and the different values indicate

•             Use these to define what your values are and what your values should be in future.

Cultural DNA: The Hidden Key to Start-up Success

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 “For us, our #1 priority is company culture. Our belief is that if we get the culture right, most of the other stuff — like delivering great customer service, or building a long-term enduring brand and business — will happen naturally on its own.” Tony Hsieh, CEO of Zappos.

No matter how elegant or well thought out a company’s strategy is, it will only succeed if it’s aligned to the culture of the company. As Peter Drucker wrote, “Culture eats strategy for breakfast”. One of the most important factors for the success of a start-up is to build a robust cultural DNA, where cultural DNA refers to the combination of values, motivation, team spirit and behaviour shared by the team.

At its most basic, cultural DNA is the collective programming of the mind, which distinguishes the members of one start-up team from another. Cultural DNA exists within a start-up, whether the founding team takes the time to clarify and define it or not. The values, beliefs, motivations, and behaviour of the founders are the first genetic strands that form the backbone of the company’s cultural DNA. A company’s cultural DNA develops from the initial social structures inherent within the founding team. It is a product of such factors as orientation to life, behavioural conventions, policies/processes/procedures (or lack thereof), how the team communicates and works together, how the company deals with failure, mistakes and learning, and even national culture. It is counterproductive to try and borrow another successful company’s cultural DNA because the founding team consists of unique individuals, and therefore the cultural DNA of each company will be unique.

As a start-up gains traction, the team will spend an increasing amount of time focusing on growth, expanding the business and bringing in new employees, so investing time in shaping an attractive cultural DNA will make the start-up more effective, a great place to work and increase the company’s chances of building the best possible team. Cultural DNA should be treated like a valuable asset within a start-up, an asset that will appreciate over time if it is managed and developed correctly. Cultural DNA can be strengthened or weakened by adding new team members. If a team member acts in accordance with the fundamentals, then that culture resides in them; if they do not share those values or behaviours, then they do not share that cultural DNA.

The first strands of a start-up’s cultural DNA are defined by the founding team, yet the cultural DNA is not static; it develops over time and it is critical that the founders invest time to develop and nurture their cultural DNA. To build the strongest foundations for their start-up, the founders first have understand what their cultural DNA actually is, decide how they want to develop it, and then start to move the team towards the desired culture. The first step in that process involves understanding the values of the founders, the team and the company.

Part I of a multi blog post.

Next blog – Cultural DNA and Values.

 

 

“If you’re a great fucking developer…”

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In the war for talent, employers are having to be more creative about how they catch the eye of top level candidates. Job descriptions can sometimes be your first opportunity to communicate not only the day-to-day responsibilities of the role you’re hiring for, but more importantly why an exceptional candidate should join your start-up over any other. Recently there has been a lot of furore around Snapchat’s inventive ways of trying to poach Uber’s software engineers, and hilarious, forthright software developer job descriptions like this, which went viral recently, show there are ways and means to stand out from the crowd when recruiting.

The software developer job description is great, as it makes it really stand out from the crowd. In the competitive business of trying to attract top talent, it is a great, light-hearted way to get attention, as well as giving a good idea of what the company culture is like, and what it would be like to work there. By also describing the other people who work there, and the perks and rewards of success there, the description answers a lot of questions that a prospective employee might have. Whilst we can’t condone the amount of swearing, we think it’s a great idea.

Another unusual method of recruitment which has been in the news recently is the attempt by Snapchat to poach engineers from other tech Unicorns, especially Uber, but also Twitter, Airbnb and Pinterest. Using their Geo-filter technology, whereby a special overlay for a Snap can be added on in certain geographic locations, Snapchat targeted employees of these companies by painting their rivals in a negative light on these geo-filters, and attempting to entice people to Snapchat instead. This is a good example of using new technologies to try new ways of attracting top talent.

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With the battle to hire Software developers and engineers fierce, it is often Job descriptions and adverts for this role that are the most interesting. There are a number of examples like the one below, where a maths problem is used as a test for engineers. This quirky way of advertising both makes the ad stand out, and help to attract the right calibre of candidate.

Another new interesting way of trying to attract candidates to your job, is through a new range of apps, such as http://blonk.co/ and http://www.jobrapp.com/, which are attempting to tap into the popularity of Tinder and create an equivalent “tinder for recruitment”. As a recruiter, this would require treating your job description like you would a dating profile. You want it to be compelling, and to communicate to the reader your values, sense of humour, what you’re looking for, the benefits you offer, and why they should consider you a tempting prospect as an employer. Use the fact that so many employers use dull, run-of-the-mill job specs to your advantage, by creating a profile which allows the culture and potential of your company to shine through.

Blonk App Screenshot

It remains to be seen as to whether these apps become a success, as it is difficult to be able to assess a lot about a candidate in such a quick fashion. Then again, the same could be said for dating. As an initial method of registering interest, this could very well work, and it will be interesting to find out how apps like these, and other innovative ways of recruiting, will be implemented in the future.

How consumers are embracing the mobile banking revolution

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The banking industry is going through an unprecedented change at the moment, with technology at the forefront. Previous Forsyth Group blogs have detailed the Fintech explosion in Europe, with the UK, and London in particular at the forefront. A recent infographic by Econsultancy shows the way that consumers have embraced mobile banking, something unimaginable a mere decade ago.

One of the most interesting facts found in the infographic is that 77% of UK bank customers use online or mobile banking at least once a month, and 14.7M mobile banking apps have been downloaded in the UK so far. This marks a massive shift, from the days when you would have to go to the bank in your lunch break just to do simple banking tasks. When there is such a large shift in people’s behaviours, it offers a clear opportunity for the entrepreneurially-minded to take advantage!

In the UK, mobile phone banking transactions in the UK have nearly doubled in a year, with customers of the 5 biggest retail banks downloading more than 12.4M banking apps, and using their mobile phones for 18.6M transactions per week. This firstly shows the convenience that technology has brought to our lives, saving many hours of queuing in physical bank branches and allowing us to manage our finances much more quickly and easily. It also creates a large amount of data, which companies like our client Meniga can use to offer deals and advice around people’s typical spending patterns.

The infographic goes on to talk about the lack of trust in financial institutions felt in the UK, especially since the financial crisis in 2008, when taxpayers money was used to bail out the banks. Some interesting statistics included are that fewer than half of consumers (49%) trust the bank they are currently with, and only 51% saying that their bank makes managing money simple. A higher proportion, 58%, believe that banks do not have their customers’ needs at heart, and 22% say that their bank does not understand their day-to-day financial needs. Whilst these statistics are negative, this provides an opportunity for the banks to regain this trust, and technological advances makes this easier to do.

Suggestions from the infographic give examples of how to do this, such as leveraging data to enhance their product, and using transaction and customer data to offer the right services and products at the right time. This can create more engagement and more personalised services, and keep customers more satisfied with the services they receive. Again this is something that our client Meniga is at the forefront of. Globally, statistics from this infographic suggest, 51% of consumers want their bank to proactively recommend products and services for their financial needs, and this again shows there is a market for this, and great opportunities for startups and entrepreneurs to seize this moment.

 

https://econsultancy.com/blog/65991-how-consumers-are-embracing-the-mobile-banking-revolution-infographic/

SVB UK Fintech Investment Trends Analysis

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Here at the Forsyth Group we have been working with a lot of Fintech startups in recent times, and we have really noticed a momentum building in the sector. Silicon Valley Bank have recently released a report on Investment trends in Fintech, with a lot of statistics that corroborate our recent experiences with Fintech companies.

The report opens by detailing the fact that the fourth quarter of 2014 was the busiest time in the history of this space, with 214 deals taking place globally. The biggest acquirers of new Fintech startups are more established Fintech and payments businesses, and this market saw 211 exits in 2014 alone, making it the most fruitful period of the last five years. Further stats also show that the UK is the hub of Fintech in Europe, with $539M of Venture Capitalist funding in 2014, amounting to half of investment in the whole of Europe in this area.

Perhaps the headline funding round in recent times has been Transferwise, with their recent Series C raising $58M, which is thought to value the company at around $1B. However, this is by no means the only big raise of 2014, with others such as Borro, Funding circle, Nutmeg, Zopa, Block Chain and Powa all raising large rounds as well (see graph below). With press coverage increasing, and the recent FinovateEurope 2015 conference showcasing numerous exciting UK Fintech companies, including our client Meniga who won a Best of Show award, we can only see this trend continuing into 2015.

More positive UK-related stats abound in this report. Fintech is currently worth £20B in revenue to the UK economy, with 18% of this coming from emerging businesses. Due to the City of London’s global reach and reputation, the UK has four Fintech incubators, and it is one of three sectors that the CBI predicts will be worth a combined £300b to the UK economy by 2020. The report points out that whilst Fintech may seem like a new ‘buzzword’, in fact the sector isn’t new. The UK has traditionally been somewhat behind in Fintech, but this is all changing now, with 60% of all Fintech startups in Europe now being based in the UK. With the current support networks in place, such as the aforementioned incubators and the large banking sector, this trend should also continue, and we look forward to watching this space grow.

 

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