Corporate culture is often hard to precisely define. Yet it’s always cited as being one of the key drivers of company outperformance, especially for startups. Recently I was asked to define what culture means by a young entrepreneur: beyond the fun social stuff, and beyond the cool company schwag, what really is startup corporate culture all about?
Everyone has their own definitions, but to me corporate culture is simply the collective product of how people behave and interact in a company.
There are plenty of far more knowledgeable sources on the generic elements of corporate culture, so I won’t elaborate them much here. But it’s worth exploring the role of corporate culture in early stage biotech and how specific behaviors contribute as a powerful differentiators in favor of the best companies.
Opining on the subject nearly twenty years ago, Christopher Henney, biotech pioneer and co-founder of Immunex, Icos, and
wrote that young biotechs are “very fragile organisms” whose maturation came from “the nurturing of their internal identity” through a system of workplace behaviors designed to reduce organizational friction – and those behaviors became their culture. I like that way of conceptualizing culture; in short, positive corporate cultures reduce the frictional entropy of human interactions so that teams can channel more of their energies into productive pursuits. The right C-level behaviors are critical for this to happen (which didn’t include wearing ties, apparently, in Henney’s perspective).
He also highlighted the preeminence of science within successful biotech corporate cultures, which I fully agree with. Making drugs is hard, but its far more compelling than just making apps and gadgets. We are making innovative medicines aimed at dramatically improving patients’ lives by bringing discoveries from the bench to the bedside. This science-based mission is a bold and important one for the company, and for society. As Henney articulated, and repeated later, early stage biotechs run purely by non-scientist business-types often struggle to set a positive corporate culture, especially if creativity and passion are forced to “fit” a conventional corporate mold and science isn’t respected. Early stage biotech CEOs certainly don’t always have to be scientists, of course, but nearly all biotechs need to have strong scientific leadership and be comfortable embracing it as central to the culture. Reproducible, high quality science and the objectivity of the scientific method are cornerstones of long-term success. As Agios CEO David Schenkein has said, R&D is truly the beating heart of biotech.
With science at its foundation, corporate culture often begins with articulating the vision and values of a company.
An aspirational vision provides a clear sense of purpose and a set of values define the normative behaviors desired to achieve that vision. While important as a unifying principle, a typical biotech’s vision isn’t all that unique from other firms, with minor nuances in language: patient-centric visions are frankly ubiquitous in our industry, as should be expected. We all aspire to transform or improve patients’ lives through new medicines.
As for the values, again, not meaning to be cynical, but nearly every biotech says they value the same things: committed to great science; open, connected, and collaborative; innovative and pioneering; striving for excellence in all things; bold, energetic, and passionate; accountable to the highest standard; yada yada yada. Those are all great and important values, for sure. But they are by and large also ubiquitous in our industry, bordering on banal in many cases. And nearly every company has its values on a nice plaque or poster on the wall extolling those values. Undoubtedly, many are very well done, and boldly grab your attention as you enter the company. We’ve all seen many of them, and perhaps participated in their creation.
But it’s not the vision or values written on the wall or website that creates company culture.
Fundamentally, what differentiates corporate cultures are the people, their actual behaviors, and how they become the company’s common practices: what gets celebrated vs discouraged, who gets hired and fired, and how the team vs the individual performs. These practices are what make a culture distinctive (or not), and can be what creates a competitive advantage. In many cases, culture beats capitalization. Well-funded, more experienced biotechs often lose to nimble entrepreneurial ones that embrace cultures which encourage the better success-oriented behaviors (like taking initiative).
It starts with living the values that are on the wall. I’m reminded of the phrase ‘talking about exercise won’t make you physically fit’. It’s very true about culture. Walk the talk.
Here’s a set of principles or practices often found in high-performing biotech corporate cultures.
- Culture is built from the start, not born. And it continues to be built (or torn down) every day through the actions of the team. The key is to set the right cultural DNA of the company at inception, because fixing it is hard. The challenge of changing a bad corporate culture is why large Pharma R&D organizations are in such a difficult place today (here); Emma Walmsley’s quest to inject “courage” into GSK’s culture is recent example. The right early hires are therefore critical as they set the tone. Early in the life of a company, and repeated at regular intervals over time, teams should find the time to coalesce around a shared view of what’s important: develop a collective vision for a compelling and important future; adopt a common language; affirm a set of shared operating principles. This can be done with or without formal facilitators, but it needs to be done well. And it’s worth repeating as organizations grow. In many ways, this is about first-things-first: stepping back from all the life-or-death urgent things every startup needs to do (raising money, generating data, recruiting the team, etc), and focusing on the important but non-urgent quadrant of the Eisenhower/Covey matrix. This is time spent on building shared ownership of the company’s culture, and is critical for the achievement of the long-term vision and goals. And it goes beyond just the startup team – including the Board as part of this process can be valuable. Lastly, culture is fluid and evolves, so it’s important to frequently do a health check of how things are going: e.g., anonymous surveys, focus groups, and “culture clubs” tasked with identifying what can we do better as a company. Unum Therapeutics, one of our portfolio companies, does a “culture boost” every six months where they talk about what the culture means to individuals on the team; talking about “culture in practice” helps reinforce the expectations.
- Shit happens, it’s the response that counts. A critical experiment might not work as planned. Clinical data could come back negative. A financing or partnership may fall apart at the last minute. These all happen, all the time, in the biotech industry. In the marathon of making drugs, every biotech experiences its own “heartbreak hill” moment at some point (for non-runners, that’s a really tough moment). Dig deep, focus on the living the values. An honest and open appraisal of the data, for instance, is often warranted: bad experimental or clinical outcomes should never be hidden from view. Defensive, close-the-bunker behaviors are seldom healthy. Understand the possible root causes of failure, and put a plan in place to solve it by working it through with the team in a transparent fashion. In the end, high integrity science means that if the data aren’t supportive of moving forward, a startup needs to focus on something else. Great cultures create the resiliency required when bad things happen.
- The No-Asshole-Rule (NAR) should be an unyielding standard for recruitment and retention. Brilliance can’t overcome asshole behavior. A culture that tolerates anti-social behavior is poisoning itself, and makes the rest of the team wonder if the values on the wall are real. While not exhaustive, there are at least three broad types of “socially aversive personalities” (aka assholes), representing what psychiatry professor Cameron Sepah recently called the Dark Triad in a fantastic blog series (here): psychopathy, narcissism, and Machiavellianism. All suffer from an empathy deficit of some form, and can be toxic in any company, but particularly so for a startup. If one sneaks in, fix it by removing the NAR violator right away. Don’t try to compromise the NAR under fear of losing a “star” scientist, as an example, because in the end it’s almost always a bad outcome; these types are like cancers on a company’s culture. Even hints of Dark Triad behavior are bad news. To prevent violations of the NAR, successful companies interview extensively and across the organization for “fit” with the company’s values and culture – even if it slows down the hiring process in a high growth company. Reference checks are done extensively, including “off the sheet” with her former colleagues – peers, direct reports, and bosses. Another suggestion is to have EA’s participate in the evaluation process, because how a candidate treats an admin is very indicative of their deeper value set. Anyone can fake it in one or two interviews, but it’s hard to sneak past the NAR across many interviews and deep referencing.
- Authentic, transparent, and inclusive communication sets the corporate tone. Communicate as much as is both possible and practical; teams are mobilized and engaged by CEOs and other executives who emphasize open, real communications about company progress or external news. Startups can be nerve-wracking places when survival anxiety or uncertainty lurks at every corner, and authentic communication of situational ambiguity and “we don’t have all the answers” reduces this internal friction. Communication can be through many venues. Town hall style company meetings are a staple. Regular internal blogs can be high impact (as expected, I’ll extol the virtues of blogging). Guest bloggers across the company can also share their thoughts. Jason Gardner, CEO of Magenta Therapeutics, another Atlas company, has used internal blogs routinely since inception to capture and share the enthusiasm of Magenta’s purpose, often integrating the patient voice in an inspiring way. Further, communications aren’t a one-way street from C-level to the broader team. It goes both ways, and is also about listening. Open office layouts can be hugely helpful in driving communications across the group, as can distributed seating (having all the functions mixed across the office). If you don’t have open office layout, having a true “open-door policy” where anyone can come in and engage is critical. Lastly, active communication is a tool for inclusion and connectedness. For example, it’s often just management that engages with the Board, but most of the staff want to be able to connect and engage, too. To this end, Magenta has instituted regular, informal “team-on-one” sessions with each member of the Board, without management, for Q&A and other topics; in fact, it was “Breakfast with Bruce” where I was asked about corporate culture.
- Small things matter, both the good and the bad. Cathedrals are built from small bricks, and so goes culture. Celebrating the small victories is important, e.g., some great new data, disciplined decision-making (like killing a project), or simply people living the values. As another portfolio example, MiRagen Therapeutics came up with their “miRewards” incentive program in 2013 to give small awards for recognizing employee contributions on a real-time basis throughout the year. Everyone loves to get the recognition from their peers, and programs like this are typically very successful at focusing positive attention on the good stuff happening day-to-day in a startup. The inverse is also true of “small things matter” – small bad behaviors can’t be allowed to fester. Team tensions arising from inappropriate actions shouldn’t be pushed under the rug. Like the broken windows concept, if small bad behaviors are tolerated, big bad behaviors can emerge. This principle gets at the essence of what activities are celebrated vs discouraged.
- There is no ‘I’ in team, but know who has the “D”. Drug R&D is undoubtedly a team sport, requiring lots of different disciplines to contribute over long time horizons. In line with this, democratic team-based models are key: they promote openness to ideas, sharing perspectives, challenging conclusions or experimental designs. Diverse opinions and debate are central to getting to the right answer. No single person is responsible for drugs today; credit should be shared broadly across the team. But the criticality of team doesn’t mean decisions revert to group-think. It’s also important to know who has the D (“decision”) in any meeting; while consensus is a wonderful thing, it can drive out productive risk-taking and lead to organizational inertia. As long as accountability is in place, and there’s a sense of shared responsibility from the team, knowing who has the ultimate D on a particular topic is important. This doesn’t give the team the right to abdicate engaging or challenging (“its his problem”), but it does make for clear decision-making. In small biotech startups, that may be the CSO or CEO for certain key program decisions. But simply because they are the final decision-maker doesn’t undermine the importance of team, however.
- Developing talent reinforces a positive, growth mindset. Great cultures develop their people. This could include conventional career development opportunities (e.g., taking external courses and such), but also more generally reflect a focus on sharing and learning. For example, Unum Therapeutics created a learning and development program for its staff, called “Unumversity” where team members can learn about areas outside their expertise, both on business and science issues. Magenta just started a similar program that it’s calling its “MBA” (Magenta Biotech Academy) to teach interested team members about other areas in the startup arena. Committing to the broader development of the team is a clear hallmark of successful growing startups.
- Keep score vs your goals, with healthy balance. Corporate and personal goals are obviously important, as are the annual performance reviews associated with their appraisal. This isn’t practice, so high performing companies do hold people accountable for delivering on both corporate and personal goals. But metrics are a means, not an end. They are a means to help measure performance, identify areas for improvement, and create a framework for coaching and development. Keep score on goal achievement should be less about bonus payouts and more about improving the operational excellence of a company. Along those lines, understanding individual performance is very important. Poor performers need to be actively and aggressively coached, but failing improvement, they should be respectfully transitioned out of the company. This is not to say that companies should adopt the potentially destructive “rank and yank” Jack Welch model of firing the bottom 10%. But the practical reality is that over time every company will likely have a few chronic underperformers, and removing them is important for excellence-focused corporate cultures so that other employees don’t wonder why continued substandard performance is being tolerated. On the flip side, celebrating the top performers is also critical. These are, as Sarah Travel of Benchmark describes, the mitochondria of startups – the powerhouse of energy, enthusiasm, and performance. These are the folks that add value way beyond their roles in a non-linear way. Performance management systems need to be able to reward (and retain) these over-achievers. Celebrating these mitochondria is key to high performing cultures.
- Have fun. Make the workplace an enjoyable place to be. Great teams feel a sense of comradery with each other. Creative schwag is a part of this – like jerseys for a sports “team”. More importantly, spend time together outside of the “day job” to get to know colleagues. Establish regular social functions like mixers after work at the local pub, cakes for birthday parties, toasts for employment anniversaries, etc… Embrace the patient-centric mission as a team by volunteering for a charity together. These are the small things that bring groups together. Play sports together or participate in races that require teamwork. As an example, Unum’s Pan Mass Challenge team of riders toured the White Mountains this past weekend. Atlas sponsors a Reach The Beach relay team. Life’s too short not to have fun with your colleagues.
Most of the themes above are directed at biotech platform companies – those with aspirations of growing into larger biotechs over time. Henney’s description of organizational friction obviously happens more when the company is growing its staff rapidly. In contrast, lean virtual biotechs, by design, often only have a handful of team members for their entire existence. While many of the themes above don’t translate precisely into the virtual setting, variants of most of these principles do. Even small teams need to work hard at building high performing corporate cultures.
While directed at startups, many of these cultural principles could easily apply to larger Pharma R&D organizations, too. There’s lots of talk about values and courage inside of Pharma, but little walking-the-talk. I suspect most big organizations would struggle on any number of the aforementioned characteristics.
Over the long run, better corporate cultures win. They recruit and retain the best people. They get more committed, excited, and engaged employees. They overcome challenges more effectively. And they inspire their teams to deliver great things.
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