Briefing | Fitness to Scale is an accurate predictor of commercial outperformance! We catch up with Ed Lascelles, Head of Technology Investment, AlbionVC

A positive workplace culture is a vitally important feature of early stage businesses, conferring competitive advantage on those that prioritise its development and nourish it over time.Workplace culture starts to form when founders make their first hires and the dynamics within the executive team start to form. It is made up of a number of attributes: some tangible, others less so.

Certain characteristics are obviously positive, such as teamwork, just as some are clearly undesirable, like bullying. Many others, for example learning, purpose, authority, stability, results, risk, safety, fall somewhere in-between.

Cultural foundations

Founders must be conscious and strategic in identifying and developing the right conditions for their business to thrive. Early on, they need to discuss the values and guiding principles that underpin the desired culture with staff, then codify them.

The sooner they do this, as they bring new people into the business, the better. By the time they are scaling, it is often too late to shape the desired culture. Often, in the interests of filling key roles as quickly as possible, new hires are made with little or no regard to the impact their behaviours will have on company values. In these instances, the culture of the business can take on a life of its own.

Fitness to Scale

A company’s fitness to scale can be measured in the answers to the following five questions:

  1. How well does the business attract, manage and retain talent?
  2. To what extent is the top team and the entire business aligned around a clear and compelling purpose and direction?
  3. Does the organisation enable people to work well together?
  4. Is there potential and capability in the business to execute flawlessly?
  5. Does the business respond and pivot quickly and effectively?

Our research* among the companies we invest in, has revealed a very strong correlation between excelling in all five of the above fitness to scale categories and commercial performance. Put simply, companies scoring highly in all categories perform significantly better in terms of financial growth, customer acquisition and retention, and fundraising than those scoring lower in one or more of the categories.

Outperforming companies also enjoy higher levels of employee engagement and retention compared to low-performing companies. When thinking about preparing a business to scale, founders and their teams should therefore devote sufficient time and attention to how they facilitate these cultural attributes.

Outstanding outperformance

The founders of outperforming companies are highly conscious of the importance of workplace culture and are generally proud of the cultures that exist in their organisations. They recognise the need to improve leadership and the way in which they communicate company direction. They also prioritise the design of talent management processes, such as development and career progression.

Conversely, leaders of underperforming businesses are less satisfied with their workplace cultures. Many recognise their companies show lower levels of employee engagement, motivation, care and pride, but either don’t make the connection with workplace culture or don’t know how to shift it in a more positive direction. There is less understanding, belief and investment in talent processes and maintaining leadership quality in these businesses.

Good founders believe workplace culture matters, and not just for company success. It helps attract and retain talent, and increases staff morale and engagement. It increases collaboration and quality of work and facilitates innovation. It enhances the brand and promotes the smooth delivery of strategy. It allows for meaningful reflection and the ability to course-correct when necessary.

Many of the best founders go further, and feel a duty to create enriching environments in which their staff can learn and grow on top of pursuing a commercially successful business. These businesses are destined to scale and outperform.


Ed Lascelles | Head of Technology Investment, AlbionVC

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