The Critical Role of Corporate Culture

Last week I showed a graphic that at its center had the words “the critical role of corporate culture.” Entrepreneurs need to grasp those words as the very core of the formation and development of their new business. You have a unique opportunity to build the culture you want, to build your team and the values you want your entire team to share. The company will develop its own culture if you do nothing, so it is better to intentionally form it and nurture it.

Real Power and Influence

One of my Intel colleagues, a Harvard MBA told me a story of HBS students eager to take John Kotter‘s leadership class, at the time called “Power & Influence.” The students thought that Kotter’s course would teach them how to become calculating and ruthless. He amusingly remembered that Kotter’s course taught them the exact opposite: managers must first learn to be humble, connect and gain the respect of their colleagues and subordinates, before attempting to lead, or they would be doomed. Kotter’s book of the same name is filled with case studies of “ruthless” people who failed and those with humility who succeeded.

Tobi has struck a vulnerable nerve with his painfully accurate comment that Canada has a cultural problem, a “go for the bronze” mentality.” He is not the first to point out Canada’s lack of clothing WRT commitment and investment in innovation and entrepreneurship. Canada frankly has never been keen on risk capital. It’s just not Canadian, eh? Tobi joins Richard Florida and other Canadians in making similar awkward observations. The greatest irony is that Tobi’s remark that we need an “Own the Podium” program for Canadian innovation, was first proposed by former UBC President Arvind Gupta in a Vancouver Sun editorial some 10 years ago. Predictably, nothing has happened since then, and nothing will likely happen now.

Since Facebook announced its new Libra currency and mobile payments scheme, the global reaction has been very mixed. Libra is not truly a cryptocurrency though it will use blockchain. It will be pegged to a reserve currency, which cryptocurrencies are not.  Libra will “potentially” be governed by an association independent of Facebook, though that association remains non-binding and sketchy at this point. Potential regulatory issues abound around the World, and Facebook is currently not viewed very favorably by many governments.  But most interesting to me, Libra appears to be modeled after Kenya’s M-Pesa mobile payments system, the world’s leading mobile payments system, invented by mobile carrier Safaricom. Then I asked myself if Facebook, knowing that it needs to move away from selling personal data, has seized on Safaricom’s M-Pesa as its new revenue model. 

A detailed report, prepared by Finite State, a Columbus, Ohio-based cybersecurity firm, concludes that Huawei telecom switching gear is far more vulnerable to hacking than other vendors’ hardware due to firmware flaws and inadvertent “back doors” that were discovered. The report has been circulated widely among cybersecurity experts in the U.S. and UK, and it is considered credible.

Strategic Inflection Points

I want to more fully explain the concept of Strategic Inflection Points. I have referred to this topic in my Week 5 and Week 11 update videos. Former Intel CEO Andy Grove first described a strategic inflection point as a time in the life of a business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end. An inflection point can be the result of an action taken by a company or an action taken by another entity. An excellent recent example may be Facebook’s announced intention to enter the cryptocurrency market. The markets have already reacted sharply to Facebook’s move. Analysts have suggested that it may significantly alter the forecasts for cryptocurrencies. Change is inevitable and change is happening more rapidly than ever. Adaptation to change is imperative for corporate survival.

A Cautionary Tale

A crucial part of running a startup company is developing customers, sometimes much larger customers. This can lead to very lucrative revenue and growth. Also, a common exit option is to be acquired by a larger company. However, I want to offer a cautionary tale from my experience. A large engineering company whose products were lagging began buying large amounts of the newest product technology from our startup in Silicon Valley. Unfortunately, it soon became clear that the large company’s strategy was to not pay their invoices, assuming that our company would become starved for cash, and eventually, the large company might be able to acquire our startup’s technology for a very small price.

Managing The Accelerated Corporate Lifecycle

Anyone starting a new company should understand the concept of the “corporate life cycle”, and use it as a guide for understanding where the company is in that cycle, to understand the risks at each stage, and to recognize the need for action to change course. This graphic shows a typical corporate life cycle and different possible paths as the company matures. Management of the corporate life cycle also dovetails with the concept of a “strategic inflection point,” which I briefly discussed in my Week 5 Report, The Internet of Things. John Chambers, the former CEO of Cisco Systems has pointed out that the rapid acceleration in market changes has also accelerated the corporate life cycle, emphasizing the importance of understanding it. Companies abound that were initially very successful and yet eventually closed their doors, or were acquired because the company did not anticipate market changes and the need to adapt to the new situation.