When Peter Drucker said “culture will eat strategy for breakfast” he was pointing out that while a company may prepare a strong plan, it wouldn’t lead to anything substantial without great execution. This is especially true for start-ups. An important challenge for entrepreneurs, more so when they scale up, is to set the right company culture.

Company culture has two parts — the visible one such as office timings, dress code, workplace comforts, transportation, food, benefits, and so on; and the invisible one such as treatment of partners, approach to customer satisfaction, decision-making styles, integrity in financial transactions, treatment of employees, an atmosphere that encourages questioning and failing, and so on.

In large corporations and multinational companies, the board and the management set the culture, which is mostly carried down over the years. A good example of this is that when we say “It’s a Tata company”, we actually mean that the company stands for solidity, fairness and trust, thanks to the group culture that the Tatas have established over decades. On the other hand, culture in start-ups is a challenge because most of them thrive in chaos. Small teams are scrambling and firefighting customer-related, financial, employee-related, transactional and operational issues every day, and there’s just no respite to focus on building culture.

Unfortunately, this is exactly when you need an organisational culture. One of the key responsibilities of the founders is to decide what kind of company they want to build: a start-up that has no processes or one that is system driven; one that thrives on firefighting or one that is calm and disciplined under pressure; a cocky organisation where smart young people constantly show off the chip on their shoulders or a firm where people deal with partners, customers and colleagues respectfully and fairly.

Founders, by nature, are strong, charismatic personalities, and their starry-eyed employees look up to them and follow their lead. Founders must walk the talk — they cannot be arrogant and expect employees down the line to be respectful in their dealings. Enron, whose leaders went to jail for fraud, ironically had the following values displayed in their lobby — Integrity, Communication, Respect, Excellence. I know of a few iconic start-ups with instances of women employees facing harassment at work and, in almost all cases, there were also rumours of employees who chose to move on, unable to handle the aggressive approach of the boss.

A great example of a founder driving culture top-down is Reed Hastings at Netflix, a company that focuses on excellence in everything it does (the Netflix culture deck, available online, makes for fascinating reading). Unfortunately, most founders do not spend much time on this important aspect while they are building the business and postpone it for later.

(The writer is a serial entrepreneur and best-selling author of the book ‘Failing to Succeed’; he posts on X @vaitheek)