If you want entrepreneurship in the DNA of your firm’s culture, a top-down commitment to innovation and risk is essential.
How important is culture? Since it’s the amorphous, intangible, and mysterious thing that drives your values, perceptions, branding, and more, I’d say it’s critical. On the recruiting side, every prospective employee will say they want to work for someone with a “good culture.” In M&A, a cultural match between two potential partners is one of the most important aspects in ensuring a successful transaction. Culture can also mean success or failure for an organization due to the secondary and tertiary effects, both internal with your team and external to your clients and partners.
I was recently on a strategic planning engagement where, while conducting management interviews, one of the principals couldn’t quite figure out exactly what was wrong or how to improve. He described various pieces that felt like dominoes, or an interconnected web. “Well, if we could just fix this, then that would fall into place, but that is really connected to this piece over here, etc.”
What he was trying to describe, and what was underpinning the whole conversation, was that the firm had lost its sense of direction. The culture had fallen apart. A strong, intentional, and positive culture is, unfortunately, more of the exception than the rule these days. Your culture is your firm’s DNA and provides motivation, inspiration, guidelines, boundaries, and expectations for your team and clients. The way you communicate and entertain drives your culture and your culture drives your firm’s values.
You must be intentional about how you create culture and what is right for your firm. But no matter the size of the organization or its focus in the A/E industry, an entrepreneurial spirit is always attractive. From management on down, an entrepreneurial strategy means your people are more proactive, innovative, and they take more risks. These qualities all fuel growth and increase value. So how do you make that happen?
You’ll need to provide your people with the means, the motive, and the opportunity to be more entrepreneurial. There are obstacles, of course, three of which we hear about all the time.
The number one problem is that people are too busy to worry about innovation or marketing. We all have huge workloads and want to stay billable, but innovation and marketing are just as important.
The second is a lack of support from management for trying new things. Failure is not often celebrated. The fear of failure can be crippling, especially when you lack support, guidance, and cover from above.
Finally, we hear there is a lack of incentives to pursue entrepreneurial ideas. There are obvious risks associated with taking chances, but you can’t shy away from the pursuit of possibilities. You want to nurture meritocracy, not entitlement. So where do we start?
- Get the message out. Constantly communicate that innovation is valued, especially when it directly impacts and improves service to clients.
- Celebrate learning. Give ample room for personal growth. This applies to training and mentoring, but also to learning from failed ideas that didn’t quite pan out. Each experiment leads to valuable knowledge that your firm can use to improve.
- Give employees ownership. This can be stock, profit-sharing, or simply ownership of a project/program. Everyone wants to feel like they have a say in the direction of the firm. Your people will reward you with innovative solutions to drive growth.
- Realign incentives, both financial and nonfinancial to encourage the behavior you’d like to see. This includes the freedom to fail. Every idea will not be a success and you want to encourage a mindset that leads to action without immediately short-circuiting the process.
- That said, you will have to determine a process in which to gather, filter, and execute on ideas. There is a limited amount of capital, time, and energy. You must determine which ideas to prioritize. The faster you can move, the better. If something is not working, learn from it and move on.
- Finally, empower your employees with the expectation of assessing risk. If you expect everyone to innovate, you should also expect everyone to identify risks and determine solutions to mitigate those risks.
Alexis de Tocqueville wrote in his 1836 work, Democracy in America, that “The Americans always display a free, original, and inventive power of mind” while speaking of the entrepreneurial and innovative nature of our young country. Put this power to use for your firm. Intentionally create a culture full of entrepreneurial spirit, “intrapreneurs,” or co-entrepreneurs. It doesn’t matter what you call them, they will invigorate your firm with growth and excitement.
Phil Keil is a consultant with Zweig Group’s M&A services. Contact him at email@example.com.Subscribe to the electronic version of The Zweig Letter for free.