Culture can kill your startup – fast

The original blog was written in Finnish as this problem is among large number of Finnish companies – Both startups as well as corporations. . During the recent years I have met hundreds of Finnish startups and company culture is one of the lowest at their agenda – and with given example , it is same with numerous Finnish corporations, as well as with international companies.

Poor corporate culture kills the company

Recently, there has been lot of discussions on Nokia and many other Finnish company’s future. As a rule, the Nokia discussion has sought to blame outside – outside culprits are good because they do not force us to self-examination.
At the same time Nokia’s insiders have told us and pointed to Nokia’s corporate culture change in the 2000s. In fact, I had business with Nokia in 2003-2005 , and then saw Nokia’s corporate culture challenges – in particular, listening to other people and challenging own ideas was bad.
Corporate culture is a major driving force in the company. Its impact on the company’s success – and dying – compared to efficiency improvement programs or innovations – is huge.
In fact, I experienced the power of the corporate culture twice this summer. Perhaps these examples shed light on the impact of corporate culture and why some companies are growing fast and others die off.

Case: Mercedes-Benz/Veho
I took my car for service according to given instructions. My car was stolen from Mercedes-BenzVeho maintenance.
When I did not hear anything from Mercedes-Benz after the theft , I contacted the local CEO. This resulted in the following:

Call 1 Mercedes-Benz representative announced that they have no responsibility for the matter.
Call 2 Representative announced to cover insurance excess of € 150. I asked myself whether they would be interested in selling me a new car.
Call 3 Sales representative informed that they have demo vehicle available at cost of € 92,000 and if the other demo vehicles are interesting, ”look at them yourself online .”
The incident happened more than four weeks ago, and these are the only communications I have received from Mercedes-Benz.
LOST Customer Lifetime Value to Mercedes-Benz is about € 500,000.

Case: Jawbone
I bought the Jawbone Up (). After two weeks of usage it started loosening up . On my return trips on a plane, it came off my wrist and was lost.
I sent Jawbone customer support a complaint Up’s loosening.

1. Reply: Came immediately after my communication. They asked to return the Up. I replied that the bracelet was lost ( lost due to my own stupidity )
2. Reply: Jawbone apologized , wished that I had been satisfied with Up and asked my device info (serial number, color, size ) . Promised to take the matter to the attention of the production .
3. Reply: Jawbone responded to my information by regretting that they do not have in stock any blue Up’s – only black ones.
4. Reply: About a week after the last my e-mail, I have in my hand a new Up
WON Customer Lifetime Value to Jawbone for about 600 €

The external corporate culture is reflection of internal corporate culture

What kind of corporate culture the companies in question want to to maintain and how it is reflected in daily work: Mercedes-Benz = > follow the instructions provided and you are still a ”problem” – the Jawbone = > I am stupid and still a valued customer .
The externally seen and experienced corporate culture is a reflection of the internal corporate culture. It directly affects the company’s ability to make a profit (which is reflected back to the corporate culture , and the treadmill is ready to start ) .
Companies with good internal corporate culture project it to their customers and partners. A good example is the example . Zappos , which is valued as the world’s best e-commerce company. Corporate culture effect to employees and to the customers is their biggest asset to profitability – not the company operative effectiveness.
Construction of a culture is much more difficult than implementing efficiency improvement implementation – anything with high value is typically extremely difficult. Therefore, often mediocre leadership chooses the easier way, and only use the ” fire-extinguisher” strategies.

Good corporate culture increases Customer Lifetime Value with multiplier

Good corporate culture is often reflected as a high customer lifetime value. But to maintain good corporate culture hard work and sacrifices are required, as the culture will erode with time like any technology or building.
Case Mercedes-Benz customer lifetime value was worth about € 500,000 , but with low quality work, it eroded in value to zero. In Case Jawbone customer value was originally about 130 € , but with good quality work, pro-active behavior – the lifetime value was multiplied. The next I speak or see jawbone products, it gives me positive feelings, which I reflect also to other people (like this blog).

Good corporate culture reflect in both internal operations and external actions has a significant impact on customer value and customer acquisition cost

Many young entrepreneurs, among them SuperCells Ilkka Paananen and Trulia’s Sami Inkinen – have realized the importance of corporate culture and its significant impact the company’s earning possibilities – when the “old” business leaders understand this ?

The success of the future requires a good corporate culture – both internal and external !