Culture Shock: Common mistakes growing companies make with their culture (and how to avoid them)

“Culture is not an initiative. Culture is the enabler of initiatives.” – Larry Senn

As startup companies transition into larger, more established organisations, they face unique challenges that can impede their growth. One of the most critical yet often overlooked areas is organisational culture. The culture that propels a small team to early success may not sustain them as they scale. Recognising and addressing cultural pitfalls is vital for sustained growth and success. Here are four common cultural pitfalls that growing companies often encounter and strategies to overcome them.

1. Overlooking the Need to Evolve Culture Deliberately

In the early stages, a startup’s culture is often organic, driven by the founders’ values and the intimate, collaborative nature of a small team. However, as the company grows, this informal culture can become a liability if it doesn’t evolve. An unmanaged culture can lead to misalignment, reduced engagement, and inefficiencies.

This informal culture can become a liability if it doesn’t evolve. Consider a tech startup that initially thrived on a freewheeling, anything-goes culture. As the team expanded, the lack of defined values and norms led to inconsistencies in decision-making and conflict among employees who had different expectations about work practices.

To address this, leadership must proactively define and communicate the desired culture. This includes articulating core values, setting behavioural expectations, and ensuring that these are integrated into hiring, onboarding, and performance management processes. Regularly revisiting and refining the cultural framework as the company grows ensures it remains relevant and supportive of the organisation’s goals.

2. Neglecting the Balance Between Flexibility and Control

Startups often pride themselves on their agility and lack of bureaucracy. However, as they scale, the absence of structure can hinder operational efficiency and accountability. Conversely, imposing too much control too quickly can stifle the innovation and responsiveness that fuelled early success.

A growing e-commerce company enjoyed rapid growth due to its flexible approach to product development and customer service. However, as the volume of transactions increased, the lack of standardised procedures led to customer complaints and operational bottlenecks.

Companies need to strike a balance by implementing scalable processes that provide structure without sacrificing flexibility. This can be achieved by developing clear but adaptable guidelines, empowering teams with decision-making authority within defined boundaries, and continuously seeking feedback to refine processes. Implementing project management tools and regular reviews can help maintain this balance.

3. Inadequate Leadership Development

The leadership style that works for a small, tight-knit team is often insufficient for a larger, more complex organisation. Founders and early leaders may struggle with the transition from hands-on roles to strategic leadership, and new leaders may lack the necessary skills to manage larger teams.

A healthcare startup’s founder was excellent at driving initial innovation but struggled to delegate effectively as the team grew. This led to burnout and a bottleneck in decision-making, as the founder remained heavily involved in day-to-day operations.

Investing in leadership development is crucial. This includes providing training and mentorship for existing leaders to develop strategic management skills and emotional intelligence. Additionally, establishing a leadership pipeline through talent identification and succession planning ensures that new leaders are prepared to take on greater responsibilities. Regular leadership assessments and development programs can help leaders at all levels adapt to the changing needs of the organisation.

4. Resistance to Structural Changes

Growth often necessitates changes in organisational structure, such as new departments, roles, and reporting lines. However, employees and even leaders can resist these changes due to fear of the unknown, loss of control, or attachment to the “old way” of doing things.

A marketing startup faced resistance when it introduced a new managerial layer to better handle the increasing workload and client base. Long-time employees felt sidelined, and the initial implementation was fraught with confusion and resentment.

To mitigate resistance, it’s essential to communicate the rationale behind structural changes clearly and involve employees in the transition process. Change management strategies, including stakeholder engagement, transparent communication, and phased implementation, can help ease the transition. Providing support and training during the change process also ensures that employees feel equipped and valued during periods of transformation.

Navigating cultural evolution is a complex but critical task for growing companies. By deliberately evolving culture, balancing flexibility and control, investing in leadership development, and managing structural changes thoughtfully, organisations can maintain their core values while scaling effectively. Recognising these common pitfalls and proactively addressing them sets the foundation for sustained growth and long-term success.