Culture Is Just As Important To the Diversified Global Enterprise As To the Start-up Businesses require a new discipline of 'federation science' to convey a diversified group's purpose, values and brand promise in a coherent manner.
By Ruzbeh Irani
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I read with interest the article "Why Culture is Crucial to Building a Successful Startup" and feel compelled to contribute—and, even, extend—this debate to the larger corporate world of conglomerates. The article cited research from TINYPulse amongst 25,000 employee respondents across 20 industries, that nearly half (43 per cent) would leave their companies even for a marginal hike because of weak company culture.
Staff attrition is obviously an existential consideration for start-ups; but I want to highlight the role and importance of culture—which is based on a common set of values and a shared purpose—at the opposite end of the business scale, within global enterprises.
The nature of the latter is currently undergoing a profound shift. Traditionally, corporate entities and their subsidiaries were typically managed through a series of "linear' relationships; the holding company lent capital, infrastructure, business expertise and, of course, brand visibility to the subsidiary, in return for a level of control, implemented through a combination of share ownership and direct reporting lines.
This was essentially the trade-off; the subsidiary company could leverage the strength of the larger group, in return for ceding some autonomy and control. The holding company could enter and take advantage of growth industries and terrains, spread its collective risk, further exploit its brand capital and ensure sufficient levels of control and authority to protect the same.
Fluid Relationships
But such "linear' relationships between holding and group companies are evolving into something more fluid. Today, a holding company's legitimacy, influence and control over so-called "subordinate' entities have less to do with majority shareholding or direct reporting lines, than a group's mission, its collective purpose and shared values. Such so-called "soft assets' are increasingly defining business choices such as where/when to invest, sectors in which to diversify, and when to consolidate.
Elon Musk's commitment to making big strategic bets on the future guides not just his firms' recruitment policies, but also its investment strategies; Richard Branson obsession with disrupting incumbent competitors in fields as diverse as music and transport also represents his "business' strategy.
At the Mahindra Group, the core purpose is to enable individuals and communities to rise; and at the heart of our businesses is a willingness to challenge convention and use alternative thinking to drive positive change in the lives of our stakeholders. Whether we make electric mobility accessible and affordable or extend the benefits of financial inclusion in India's heartland, what binds us is our companies' preparedness to experiment with new ideas and unconventional thinking to enable our stakeholders to rise.
Across such structures, a brand's meaning—underpinned by a vision and a set of values—represents a similarly existential rationale for the entire organization. If it is not conveyed, or not maintained, or is mis-interpreted…or simply ignored, the implications can be just as serious as for start-ups.
In fact, start-ups represent the future growth of diversified groups. Within the Mahindra Group, for instance, we nurture start-ups; some incubated, others acquired. Here again, it is this shared purpose, values and mission that binds us together.
In a business environment where the "direct reporting', "linear', "command and control' model is becoming obsolete, a new set of tools and methodologies are required to manage and ensure the integrity of concepts such as purpose and culture. These are not simply marketing slogans; they underpin the organizations' very existence.
In effect, business requires a new discipline of "federation science'; to convey a diversified group's purpose, values and brand promise in a coherent manner; and one that is meaningful to both established subsidiary companies and pure start-ups within the Group.
As these relationships become more complex and nuanced, concepts such as culture are every bit as important within the diversified corporate as to the start-up.
