Investment managers and business leaders often cite “culture” as a critical element while evaluating investments, M&As, or potential business partnerships. While culture is often considered, it is rarely closely examined, and more often than not, simply serves as another item on the due diligence checklist. Yet culture is much more than a buzzword. The right cultural fit can make two companies ideal partners and amplify the joint value that they can create, just as a poor cultural fit can render a seemingly great business arrangement ineffective.
As a strategic investor, one of our biggest goals is to add value to our portfolio companies by providing them with access to our enterprise customers amongst others. This requires our business units to work seamlessly with the startups as partners in pursuit of joint deals. Given that Wipro is a massive organization, spanning multiple continents and over 50 countries, cultural fit is all the more important to ensure this value is realized.
What does culture mean to us?
Broadly speaking, culture is the way we conduct ourselves in our day-to-day business interactions. Just with any relationship, honesty and communication are critical to ensure long lasting success. In addition to highlighting the opportunities that we see in working together, we feel it’s important to map out possible challenges down the road so we can proactively identify solutions and minimize unexpected hurdles.
Another essential element of our culture is an emphasis on continuous learning, and an open attitude toward things we don’t yet understand. This goes hand-in-hand with the importance we place on respect for others – respect for their time, respect for their work, respect for their goals and values. Basic things like showing up on time, coming prepared to meetings, responding in a timely fashion, etc., can make a huge difference in how others perceive both individuals and the companies they represent.
What does culture mean to our portfolio companies?
We spoke with the CEOs of some of our portfolio companies to get their take on what culture means for them and what it means when considering potential partners. While the answers differed, a common perspective defined culture as the way employees behave, interact and make decisions. Furthermore, a shared sense of purpose is critical, as it drives greater accountability, trust, and teamwork. A well-defined company culture enables employees to take pride in their work and increase everyone’s desire to contribute positively without worrying about individual silos. Taken together, all of these elements enable young companies to achieve the agility and productivity needed to succeed in a fast moving environment. This same sentiment is echoed in this research report by data portal CB Insights. Many of the common pitfalls by startups leading to their failures can be mitigated by having a properly articulated vision, a team focused on executing to the same and flexibility to adapt to market needs – all elements of “culture” that needs to be established upfront by the founding team.
When describing what he looked for in a corporate partner, one of the CEO’s top concerns was working with an organization that understood his company – what it stood for, what their goals were, and how they planned to achieve these goals. As most startups do, his company valued innovation and placed an emphasis on the willingness to be wrong. Having an open attitude towards failure allow employees to experiment which in turn fuels innovation. Choosing the right partner, one who understood this viewpoint, ensured this element of their culture remained a source of strength.
Here’s how we can achieve cultural synergy
From our position as a large corporate entity working with nimble startups, continuous improvement through learning and self-examination is essential. We actively work to understand the cultural differences that exist between us and a potential partner, and make the effort to fill gaps whenever possible. As an example, while a workforce spread across continents and time zones might make communication slower at times, it also gives us access to large customers and global markets. On the other hand, a young startup might have the best technical product available, but limited reach selling into industries and geographies outside of their initial focus. The best partnerships allow participants to complement each other, leveraging the strengths of the other and minimize individual shortcomings.
Understanding these tradeoffs in value – when, where, and why they occur – allows us to better identify the right partners. The best possible partners are those that can fill gaps or augment weaknesses, benefit greatly from our strengths, and share a vision for our combined potential.
Our 3 biggest takeaways
Here’s what we’ve learned about culture when considering investments:
1. Understand AND articulate the value that both sides are bringing.
2. This is not a transactional relationship, it’s a long-term partnership – so it’s critical to set a strong foundation of trust, respect, and communication. Furthermore, partnerships are not build around lofty discussions of potential and synergy, they are built around spirit and action. How we execute at the ground level on a daily, weekly, and monthly basis.
3. Seek to proactively enable our portfolio companies, but be careful not to overly tap their limited resources, as this can lead to accidentally stifling what makes them great – their productivity, creativity, and agility.