How to maintain culture through the tech downturn
Going backwards can sometimes take you forwards and there are two main ways that founders can maintain culture during turbulent times.
In a jobseeker’s market, hustling through the hurricane is about principles, and above all, your purpose.
Tech startups are known for their fast-paced, high-stakes, hustle culture. But with the ‘tech wreck’ and economic downturn resulting in numerous redundancies and declining valuations, how do you continue to maintain a strong company culture?
The Australian start-up scene has been in a purple patch for the past few years. With record levels of investment, tech and start-ups have been able to effectively differentiate themselves from the rest by touting their collaborative and innovative culture — often supported by generous conditions, benefits and accelerated career growth.
However, across the board this trend is reversing. Recent results show that the amount of capital investment flowing into Australia is down by 50% compared to this time last year. While that may sound dramatic, it’s more about normalisation. We are closer to standard investment levels after a year or two of spiking capital.
With market conditions softening and inflation rising, investor sentiment is increasingly nervous. Some investors are looking to conserve cash by setting a higher bar for investment. It’s the perfect storm for Australia’s tech startups.
As a result, many founders are finding themselves reassessing the fundamentals of their business model as they face a fork in the road. Valuations are deteriorating, venture capital is drying up, and headcount reductions are beginning.
These economic headwinds mean that many startups and scale-ups are struggling to maintain their culture through these difficulties. This poses a risk that will increase as the war for talent intensifies.
How do organisations and their leaders maintain culture through periods of decline and the diaspora of key staff? Going backwards can sometimes take you forwards and there are two main ways that founders can preserve culture during turbulent times.
Use purpose and culture as a decision-making tool
Employees are increasingly looking to work for purpose-driven organisations that stand for more than just profit or products.
Examples like Linktree demonstrate how companies can manage redundancies in a more positive way that reinforces their culture, and offers generous support. This behaviour is not only honourable towards the impacted employees, it also acts as a strong cultural symbol for the ‘survivors’ and is evident of the way that the company handles tough decisions.
Purpose is very much about choices — choosing clients, partners, ethical marketing frameworks, human resources, customers relations and corporate responsibility. Being truly purpose-driven is not just for charities, and social enterprises — it’s for everyone. Purpose is a true expression of why your company exists and can function as a touchstone to guide your decision making. This will further your vision and strategy.
Recommit to the roadmap
There is always a tension between growth and discipline when scaling a business. When times are tough it is easy to become reactive. You can focus on cutting costs, or you can start to focus on growth at all costs. In periods like these founders have the opportunity to demonstrate strategic discipline and focus, two behaviours that will build confidence in the culture that they lead.
You don’t need to have a business-first or employee-first model. Businesses and the people within them are not mutually exclusive. On the contrary: one is entirely dependent on the other to thrive. The trick is for your purpose to be inclusive and embedded at every level — modelled and led by leaders and felt by every member of your team.
While businesses are often judged and measured on financial performance, what impacts those are the parts of a company that you cannot see. There is a direct link between culture and a business’ valuation and profitability.
When you are a purpose-driven organisation, your performance is directly linked to people. Businesses that are purpose-led are proven to be more successful because they are aligned with their employee and customer values. This culture has a direct impact on business performance, in good times, and in more challenging ones.
