What define a startup?

1. Introduction
The term “startup” is becoming more and more popular, mostly in the IT industry. Most of the IT news are now writing about startups: people found it, analyze it, work for it and invest into it. You can find IT companies that call themselves “startup” everywhere, from such developed countries as the US to developing ones such as Vietnam. I myself have worked for two companies that call themselves startups, however, I still don’t have a clear definition of a startup. So what criteria define a startup? Is it the age of the company? Or the size? Or something else? I saw companies that have more than 100 employees and still call themselves startup. I saw companies that are more than 3 years old and still call themselves startup. So it seems to me that there is no “unified” definition for a startup.

Startup

The purpose of this post is to present a list of all possible criteria that may define a startup. My personal opinions will also be give in the conclusion.

2. Criteria that define a startup
A quick literature review shows that different people have different criteria for startup.    This list suggests all possible criteria that people may use to define a startup:
  • Age: Is less than 1 year old
  • Size:  Have less than 100 employees
  • Revenue: Generate a revenue less than X amount of money
  • Office: Do not have actual satellite office (office that have more than just a representative)
  • Focus: Focus on learning, discovery and crazy growth instead of profit
  • Growth: Is designed to grow fast
  • Output: Expected output is a new product, a new technology or a solution for existing challenges in the market
  • Members: Majority of the members (more than 50%) are entrepreneurs
  • Culture: Have a “startup culture”
  • Business model: Is designed to search for a repeatable and scalable business model

3. Conclusion
According to my literature review, the criteria about “business model” is the most widely accepted one, followed by the “growth” criteria. I myself totally agree to this definition: A startup is an organization formed to search for a repeatable and scalable business model. So as long as you are still figuring out how to make money, you are still a startup, despite of the age and size of your company. I also strongly disagree to the “culture” criteria: A company is a startup because it has “startup culture”. In my opinion, it should be the other way around: Because you are a startup company, you must have a startup organizational culture so that your culture is aligned with your strategic plan.

Advertisements

Interview questions to uncover organizational culture

A few weeks ago, I received a newsletter email from Navigos Search, one of the leading recruitment firms in Vietnam. Such newsletter emails usually provide tips for job candidates and that time, it was about “7 interview questions to uncover corporate culture” (the original article is from Scott Ginsberg, which can be found here). However, I myself don’t think that those questions are detailed enough to be actually helpful. As a result, I come up with a set of questions myself, and the number of questions is more than just seven.

Organizational culture

The approach that I have while defining this list of questions is based on the seven key dimensions of organizational culture. Details about the seven key dimensions can be found in session 3 of my first post. Each question in the list will help the candidates to uncover one key dimension of the corporate culture:

Individual Autonomy:
  • Is empowerment strongly encouraged? Does it happen regularly?
  • Is it compulsory for all employees to be self-managed and self-organized?
  • Is decision making centralized or decentralized?
Structure:
  • Does the company have a lot of rules and policies?
  • Does the company have a flat or a hierarchical organizational structure?
  • How many levels of hierarchy does the organizational structure have?
Support:
  • How willing are managers to support their subordinates?
  • Will managers be upset if their staffs seek for assistance from them?
  • Are managers encouraged to assist their subordinates?
Identification:
  • Are employees proud of being part of the company?
  • Are employees eager to join public events on behalf of the company?
  • Do the employees usually wear company T-shirt to work? Outside the office?
  • Does the company have any CSR (Corporate Social Responsibility) program?
Performance Reward:
  • How does the reward system or the evaluation system work?
  • Which factors are rewards (salary raise, bonus, promotion) based on? Performance? Seniority? Loyalty? Relationship?
  • Does the evaluation system compare employees to absolute standards or to each other?
Conflict Tolerance:
  • Does work-related conflict acceptable?
  • Does personal conflict acceptable?
  • Is it acceptable to have work-related conflict with your manager?
  • Is it normal to have a work-related argument with your manager in public?
  • Is aggressiveness acceptable?
  • Are people aggressive when discussing and arguing?
Risk Tolerance:
  • Is it acceptable to take risk?
  • Is the terms “high risk, high value” usually applied?

As you can see, there are a lot of questions and you may not have enough time to ask all of them in the interview. One suggestion is to find the answers for some of the questions by doing some researches or to ask only about the dimensions that are important to you. Usually you will have a chance to ask questions about the company at the end of the interview and by asking questions about organizational culture, you can impress the interviewers. The key point here is to be able to gain more understandings about the organizational culture to make sure that you can fit into it. This is extreme important because you can not perform well in a culture that you do not fit in.

An appropriate organizational culture for a start-up software company

Acting as a follow-up on the previous post, in this post I will discuss about how to use the seven key dimensions model to define an “appropriate” organizational culture for a particular company. A typical start-up software company will be discussed in this case due to the fact that this type of company is quite popular nowadays as well as I am very familiar with it.

Seven key dimensions of organizational culture

The first rule of thumb to remember when defining an organizational culture is that it must be aligned with the company objectives and strategic plan. This acts as the main principle when defining the seven key dimensions of the organizational culture:
  • Individual Autonomy: High. In a start-up company, each individual should have a high degree of responsibility and independence to get as much job done as possible. Empowerment should be encouraged and decision-making should be decentralized. To adapt quickly to the rapid changes of the market, more and more software companies apply agile methodologies such as Extreme Programming or Scrum. Those methodologies required self-managed and self-organized staffs and this can only be achieved with a high level go individual autonomy.
  • Structure: Low. A flat organizational structure is strongly encouraged for a start-up software company. In addition, it should not have a lot of rules and policies, which may have bad impacts on the inspiration and creativity of its employees. In the software industry, creativity and ideas are the key factors to success.
  • Support: High. In my opinion, high degree of assistance and warmth provided by managers to their subordinates is always a good thing in all company, not just a start-up software one.
  • Identification: High. Similarly to the Support dimension, it is always good for an organization when its employees are proud of being part of it. A high level of Identification is also good for company branding.
  • Performance Reward: High. In a start-up company, performance should be the main factor that affect such rewards as salary increase, bonus and promotion, not seniority or loyalty.
  • Conflict Tolerance: High. Conflicts should be encouraged in a start-up software company, as long as they are related to work and they are not personal conflicts. High level of work-related conflicts can increase creativity and help to find the optimal solutions, which are vert important in the software industry.
  • Risk Tolerance: High. Similar to the Conflict Tolerance dimension, a high level of Risk Tolerance provides more advantages than disadvantages to a software company. When taking risk is encouraged, it is more likely to find creative and optimal solutions in the software industry.
Once the key dimensions of the organizational culture have been defined, they can be “implemented” within the following artifacts:
  • Mission statement, logo and  slogan
  • Policies and rules
  • Reward system
  • Organizational structure
  • Physical layout of the office
  • Recruitment process
  • Orientation program for new employees
  • Management and leadership style