The intense atmosphere at startups can make conflicts difficult to resolve
Buzzing about which new startups will prosper and which will flop is a favorite pastime in Silicon Valley. But a new company’s prospects aren’t based on just what the company creates, says Stanford professor Lindred Greer. They’re also based on the people creating it and, more important, how they treat one another.
“Startup success is as much about managing the people as it is about creating the product,” says Greer, an organizational behavior professor at Stanford Graduate School of Business.
Based on her research on entrepreneurship and team dynamics, Greer will teach a new course at Stanford GSB this spring focusing on the unique team-dynamic challenges faced by early-stage startups. In a recent interview, she offered tips for managing startup teams.
Be Aware of Culture in Early Stage Startups
The culture of early stage startups forms the backbone of the culture the company will have in later years. Therefore, paying attention early on to the type of culture you want to create is critical.
One aspect of startup culture, Greer notes, is the emphasis the founders put on equality. While egalitarian cultures can motivate workers and encourage a free flow of ideas, they are often hard to maintain when companies scale and managers have to make hard decisions that go against the grain of the egalitarian ethos.
“The first time someone has to be fired, the culture of equality may be shattered,” Greer says.
In order to preserve this culture as they grow, startups must find ways early on to balance the need to motivate workers and give them a voice with competing organizational needs for structure and hierarchy, she says.
To illustrate this point, Greer offers an analogy about the fateful day a child discovers that Santa Claus is not real. There is no changing that reality. But, says Greer, a parent has a choice between saying “Tough luck — Santa doesn’t exist” and “I’m sorry the man in the red suit doesn’t exist, but the holiday spirit does.”
Likewise, a founder can say, “Tough luck. I can fire whomever I want.” Or, she can find a more respectful way to communicate this to the remaining employees and preserve the spirit of equality while maintaining her position at the top of the organizational hierarchy.
This piece originally appeared in Stanford Business Insights from Stanford Graduate School of Business. To receive business ideas and insights from Stanford GSB click here: (To sign up: https://www.gsb.stanford.edu/insights/about/emails)