Vertex Perspectives | Is Organizational Culture a Competitive Advantage in a Rapidly Changing World?

In determining the right people, the good-to-great companies placed greater weight on character attributes than on specific educational background, practical skills, specialized knowledge, or work experience.

— Jim Collins, Business consultant and author of Good to Great

All employees have a role in shaping an organization’s direction. Leadership has by far the most significant and direct impact on its culture. Many Vertex portfolio company founders have cited their company’s culture as a key success factor – positively impacting everything from talent retention to workplace productivity.

Leadership inspires confidence. It can influence how employees perceive mistakes – whether these are deemed learning opportunities or simply abject failures. An organization’s culture consists of shared beliefs and values established by its leaders. It is communicated and reinforced through action, shaping employee perceptions, behaviours, and understanding, empowering them to deliver on the company’s mission.

At Vertex, we see culture as a cornerstone in great organizations. An employee’s well-being directly impacts how they perform and engage at work. This is absolutely critical for high-performance teams, in almost any achievement domain (e.g. Formula One racing). For leading venture capital and startup teams - organizational culture, mindset and behavioural norms can be a source of durable competitive advantage, agility and adaptability.

Culture | Change Management & Leadership

Culture typically begins at the top and permeates the organization. It is a shared system where everyone in the organization is engaged. It is integrated into everything from talent selection, professional development, stakeholder interaction, change management, performance orientation, risk management and organizational behaviour.

One of the first things a leader must consider when it comes to culture is if the right team is in place to carry out their mission. Poor habits are difficult to change and highly negative individuals can be a challenge to transform. A command burden includes the decisions about who and what to retain in preserving or changing an organization’s culture. True cultural transformation involves both behavioural and mindset shifts throughout an organization. This requires a clear vision. Unifying and leading a team by example is what ultimately creates organizational culture.

Key leadership qualities include: integrity, domain expertise, care and drive. These factors are critical when leading change. True leaders guide, encourage, mentor, empower and inspire others. With every challenge, there are milestones that highlight improvements or tasks completed worth celebrating. It is important to include them in the transformation roadmap. Without which, fatigue and despondence may set in at some point. It is really an art - a fine balance of work and play, of discipline and dynamism.

Shaping a culture can be an exacting venture. One pursued only by the boldest, most steadfast leaders. That being said, if you are a leader, you will have to decide if you have what it takes to see it through.

It is important to treat people with the dignity and respect that they are entitled to. Leaders also have to create a workplace where everyone can rise to their best. Cultivating a meritocratic, familial environment where all contributions are recognized yet no one is left behind.

It takes years of work building a team consistent in their shared values, that deeply believe in the organization’s vision and mission. In all our interactions with our investors, partners, business associates and colleagues, we seek to partner them as we would have them treat us.

Leadership has to be earned every time, all the time. When you have earned the trust and respect of your team, they are likely to go beyond whatever they thought was possible. They will try to live up to that trust and expectation. This is what makes a leader, this ability to influence not from a position of power but from a position of admiration and respect.

Culture can also be shaped by various other factors including Character, Capability, and Connection.

Character is key. It all comes down to people.

Leaders decide. They also serve. Outstanding leaders establish high ethical and performance standards. Their behaviour at work, communication and management styles play a significant role in shaping a company’s culture.

As venture capitalists, our portfolio companies reflect their founders’ values. They can have a significant influence on our decision to invest (or otherwise). We look for technopreneurs that are humbly confident, visionaries with an open mind to new ideas. Above all, they are “people-first” leaders.

In 2013, Vertex Ventures SEA & India invested in a little-known Malaysian ride-hailing startup after meeting the founder and observing how he interacted with others.

“It is important to see how people behave when they disagree. The way he talked to his mum [at a dinner with us] and the way he handled her…I said then that this guy is decent and coachable,” said Chua Kee Lock, CEO of Vertex Holdings in a Straits Times interview. “Ultimately, it all comes down to people. Character is important.”

That co-founder is Grab’s CEO - Anthony Tan. Today, Grab is Southeast Asia’s first decacorn and a leading regional superapp. A key strength is its workplace culture built around the 4Hs of Heart, Honour, Humility and Hunger. These reflect the values of both Grab co-founders - Anthony and Tan Hooi Ling, values they continue to exemplify to this day.

Capability | Continuous Learning & Development

All employees have something that they can learn from each other. True leaders care deeply about the professional growth and longer term success of their team - individually and collectively. People who are passionate about their work just want the opportunity to demonstrate their capabilities. My role in that is to create an environment that elevates and inspires people to rise to a higher, better expression of themselves.

Connection | Building Bridges & Alignment

Culture has always been important to Jeffrey Tiong, CEO of PatSnap, an enterprise SaaS unicorn and a leading provider of innovation intelligence for IP and R&D. He had his ideal company culture in mind since the company’s founding. He has always strived to make PatSnap a place where he and others are happy to work.

“Culture is what connects companies, especially global ones. I wanted to create a company where culture was more than just a word, it was a feeling. I’m extremely proud of the culture we’ve created. You can feel people’s commitment, excitement and resilience in every meeting, product release, email and office,” he says.

Jeffrey shared his story on how he ensured that his fast-growing global team could stay connected and focused.

“When I realised that my team had over 1,000 people and was spread across the world, I began to worry about how I could make sure that everyone was still aligned with the same values and purpose, especially as the company was still growing very quickly,” he said.

“So, me and my management team sat down and spent a few days to create our six values – integrity, leadership, openness, growth, innovation and customer. Then, we made sure that everyone knew them and we incorporated them in all aspects of our business,” he said.

Culture as a Competitive Advantage in a Rapidly Changing World

The world is constantly changing. Nurturing a company culture that remains flexible, resilient and relevant requires understanding and trust between leaders and employees. Good communication is crucial to achieving that objective. Leaders have a very important role in deciding how open communication can be within an organization. By encouraging employees to speak up and tell them what they need, as well as being open to feedback – good and bad – on current policies, management can ensure that work policies are meeting their needs. But not all employees communicate the same way, so leaders may need to be perceptive when gleaning a more nuanced view of employee satisfaction.

“Many people feel more comfortable asking questions anonymously. When I used to open the floor for questions during meetings, I’d get none, but when I made it anonymous, suddenly they came flooding in and they’d ask about everything from direction to strategy,” said Prajit Nanu, Co-Founder, and CEO of fintech unicorn Nium.

“I would try to make myself as accessible as possible and reach out regularly to them, especially top talent. I would call them up and try to understand what was happening for them at work. These are the guys who will drive the truck with you, so they should know what you’re building and feel connected to you. Keep them as close as possible – there is no more important thing for you to do.”

Creating a good organizational culture is a perennial and non-trivial undertaking. If done well, it can be a competitive advantage and north star that will guide the business, in good and challenging times, positioning it for enduring success.

For some companies, this could well be their leap from good to great.

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