The first edition of Culture Insights, the all-new video podcast from Hofstede Insights India addressed a challenge many start-ups are confronted with. Culture Insights will explore evolving trends and the multiple facets of Organizational Culture. The first edition featured Akhilesh Mandal (Managing Director India, Hofstede Insights) in conversation with Manu Parpia (Business Consultant / Former CEO & Founder - Geometric Ltd). Manu is a veteran industry leader who has founded several organisations and handheld them from start-up to growth phase. The ideal person to talk about the significance of organizational culture in start-ups and more importantly how they arrive at an optimal organizational culture as they scale up. Even before we bring you the excerpts from this insightful tete-a-tete, let’s define Organizational culture first.

Are you looking for consultation on the perfect Organizational Culture for your company?

Organizational culture is the way in which people in an organization relate to each other, their work and the outside world, in comparison with other organizations. Your Organizational Culture shows how your organization works: how to things get done, the interactions between people, and employee relationships to their work and the outside world. The best organizations often place equal emphasis on strategy and culture. Such organizations create a culture that motivates their teams. Organizational Culture is what differentiates your business, so it is important to know the various factors that contribute to your company’s culture.

Manu reminisces of a time when start-ups didn’t have the benefit of analytics. It was the good old ‘gut feel’. Organizational Culture sets the tone for decisions to be made and for people to understand what is acceptable and what is not. For example, if you have a performance-based culture – you are promoted when you perform and you’re out if you don’t, that defines the kind of talent you attract. The tone you set is important. It’s not just the tone but it’s also transparency. Does an organization share data down the line or is it restricted only to the top management. Manu believes that culture and values are closely interlinked.

The discussion progressed towards how culture is built especially at a time when many start-ups are more focused on existential challenges and keeping their heads above the water. Akhilesh spoke about the Hofstede view that the best culture is when the team works while the leadership is not around. “Once you’ve set the culture, things just happen; you don’t need to intervene”. Manu concurs – “Culture is an enabler. It frees you to do other things”

The Hofstede view is that Culture is contextual. It is determined by what stage the organization is at, what is the environment your organization is embedded in, and the pole star of your business and the strategic intent. This brings us to a key question: do cultural elements change from a start-up phase to a scale up mode?

Manu believes that at many times they do, albeit subtly. It’s why leaders need to change sometimes. A leader may be good in the start-up phase but may not be an ideal candidate to take over the organization in scale-up mode. The excitement of a start-up is difficult to maintain as you expand. Things that made you successful as a start-up may not make you successful as you expand. Processes become more important as you scale up. You do build processes as you start. Manu remembers a time when he thought titles were not important but gradually learnt that they do matter to employees and their external support systems.

As you expand you have to build structure. This structure affects culture. External stakeholders like shareholders also impact culture. It’s difficult to maintain the speed of decision making. initiative and the desire for initiative as more processes are added. Manu believes that the best solution is to remove irrelevant processes. Simple example, should the boss approve your leave? If you’re surprised by the leave application of your subordinate, it shows you’re not in touch with your staff.

Manu remembers a time when he had to step back and make for a CEO in one of the start-ups he helped establish. That CEO took the company to great heights but it still needed Manu’s entrepreneurial streak in the initial phase before the CEO stepped in. The trick is to step back, most entrepreneurs find it difficult to let go or take a backseat when their usefulness is exhausted. But it has to be done to help the start-up achieve scale.

Reach out to us to discuss the challenges faced by your organization. We can help you build an optimal Organizational culture.

Hofstede Insights doesn’t believe  in a good or bad culture. Culture should serve as an enabling component to the business strategy. Your strategic intent is the anchor, culture should be built to achieve this intent. That brings us to the question - does every organisation need to building their own nuanced culture? Manu reiterates that a “Culture cannot be copied but can be emulated” You can learn from other people.  Make your own blend that is suitable for your organization and your context.

Stay tuned for the next edition of Culture Insights.

A pre-pandemic report by McKinsey predicted that AI has the potential to deliver additional global economic activity of around $13 trillion by 2030, or about 16 percent higher cumulative GDP compared with 2018. This amounts to 1.2 percent additional GDP growth per year. This McKinsey survey was published around the same time as Pernod Ricard, one of the world’s biggest wine and spirits companies, identified digital transformation as a priority. It prepared for resistance from its salesforce but the company was surprised with the results. In its case technology added to its experience and knowledge.

The relationship between Artificial Intelligence and Organizational Culture

 AI doesn’t just impact business processes or bottom lines but also has a significant impact on Organizational Culture. A 2021 MIT SMR-BCG report found that the benefits of artificial intelligence go well beyond improved efficiency and decision-making. AI can also improve organizational effectiveness and strengthen teams and enterprise cultures. This report was based on a global survey of 2,197 managers and interviews with 18 executives. It identifies a wide range of AI-related cultural benefits at both the team and organizational levels. Among survey respondents with AI implementations that improved efficiency and decision-making, more than 75% also saw improvements in team morale, collaboration, and collective learning.

That brings us to the question can AI actually impact your organizational culture? We’ll start by defining Organizational Culture first.

Are you looking for consultation on the optimal Organizational Culture for your company?

Organizational culture is the way in which people in an organization relate to each other, their work and the outside world, in comparison with other organizations. Your Organizational Culture shows how your organization works: how to things get done, the interactions between people, and employee relationships to their work and the outside world. The best organizations often place equal emphasis on strategy and culture. Such organizations create a culture that motivates their teams. Organizational Culture is what differentiates your business, so it is important to know the various factors that contribute to your company’s culture.

Find out how Hofstede Insights can help you implement a more active approach to your organizational culture.

A study by BCG GAMMA, the BCG Henderson Institute, and the MIT Sloan Management Review found that only 10% of businesses see significant financial returns on their AI investments. The survey points out that companies that succeed recognise that effective use of AI requires a “carefully orchestrated symbiosis between human and machine” leading to greater organizational learning and bottom-line growth. AI’s beneficial effects on culture don’t end at the team level. They can extend across the entire organization, impacting the foundation of business operations, improving assumptions that drive organizational behaviours, and ensuring the pursuit of new KPIs and smarter strategic goals.

For instance, Pernod Ricard fostered trust in its algorithms by using business experts to design them, and by gathering extensive feedback from the first users. The company ensured that the reasoning behind the A.I.’s decisions was communicated clearly to employees, and that its recommendations reinforced salespeople’s pitches.

A column in Fortune authored by François Candelon,  Michael Chu  and Su Min Ha from BCG believes that the success of AI in realising organization-wide progress is a major undertaking. It  involves reimagining business fundamentals and weaving AI into the fabric of everyday processes. They believe that organizations have to find that balance, assign the right collaboration mode between humans and machines and deploy AI innovatively beyond automation to improve existing processes and explore new ways of creating value.

Writing for the California Management Review on the Geometry of AI Culture,  J. Mark Munoz and Oliver Degnan believe that an organization's approach to artificial intelligence is largely dictated by its culture. They believe that organizations may either be Symmetrical or Asymmetrical in their AI culture. Symmetrical AI cultures refer to organizations that have found a sense of harmony and balance in assimilating AI in their organizations. In Symmetrical AI cultures, despite technological disruptions and changes, the firm stays true to its core values and continues to operate in a rational and effective manner. In contrast Asymmetrical AI Cultures refer to organizations that have failed to find a well synchronized platform for the absorption of AI in their firms. When these organizations experience changes, they evolve into a new entity and lose their founding core values, culture and character and consequently their competitive advantage.

We’ve seen multiple companies flounder when integrating technology into their operations and failing to cash in on the benefits that new technologies like AI can bring. The cultural and the financial benefits from A.I. build on each other.

Reach out to us to discuss the challenges faced by your organization.

Hofstede Insights India can help you build an effective Organizational Culture that will enable you to leverage future-proof technologies like AI.