by Tiffine Wang, Partner at MS&AD Ventures

In my 15 years of advising and working alongside executives running large multinational corporations across the globe, I've witnessed the undeniable impact of culture on businesses. I have seen many talented executives and directors at large organizations develop excellent strategies—only to have their plans undermined by culture. 

This dynamic notably plays out in the startup realm when startups are acquired by larger corporations; the latter group often struggles to retain key startup executives due to the misalignment of culture and incentives. It’s an understood problem that many corporate executives talk about addressing by transforming their corporate culture, but it is difficult to do well. 

Culture also delivers material outcomes in the finance industry. It significantly impacts key investment decisions, risk tolerances, and communication strategies. In my work with founders and investors from Europe and Southeast Asia, I’ve seen investors tend to set more conservative terms, while in the US and Israel, investors often look for companies going after much larger markets. This cultural difference plays a role—but not a singular one—influencing the decisions and eventual outcomes of a company.

Companies that heavily prioritize quantitative goals, such as financial gain, may achieve significant short-term performance, but if it is the only thing they are focused on, they may find themselves in scandalous waters in the long run. We can see such dire consequences at Enron, where a corporate culture prioritized financial gains over ethics, ultimately leading to its downfall (as highlighted in The Smartest Guys in the Room).

Another example is in banking and venture capital, where excessive focus on individual performance can foster a highly competitive culture that may impede collaboration and ultimately affect the firm's success. 

A firm where partners are primarily incentivized based on the number of deals they individually source and close—with little consideration for teamwork or collective decision-making—may encourage partners to engage in cutthroat competition for deals, hoarding information and sabotaging their colleagues' efforts in pursuit of personal gain. This behavior can erode cooperation and trust within the firm, potentially leading to suboptimal investment decisions driven by individual ambitions rather than the collective interests of the firm and its investors.

Across these cases, a failure to recognize and navigate cultural nuances—whether corporate or geographic—can lead to misunderstandings, miscommunication, and, ultimately, business failure. Meanwhile, when understood and adapted to, cultural nuances can drive growth and profitability. 

The good news is that culture is not static; it can be shaped and transformed. Executives and industry leaders play a key role in defining and reinforcing the desired cultural values, norms, and behaviors within their organization. I’ve seen successful organizations transform their cultures through the following steps.

Admit there is a problem 

The first step is actually admitting that the old culture is not working and a new one needs to be built. A famous example of cultural transformation is Microsoft, where CEO Satya Nadella  successfully changed their culture from a "know-it-all" to a "learn-it-all" mindset. Acknowledging that the previous culture was led by a *know-it-all* culture created the beginning of change. 

Define the desired change and clearly communicate it across the organization  

Defining the desired cultural change is a critical step in the cultural transformation process. This involves creating a clear vision of the organization or a team’s future culture. Identify key cultural attributes that will drive success, and communicate the vision and goals to all stakeholders. Many executives have published books or spoken publicly about their culture including leaders at Starbucks, Netflix, Facebook. Doing so sends a message to internal staff, potential customers, employees, and other key stakeholders—letting a range of constituents inquire about cultural goals and hold leaders accountable.  

Gain trust by leading by example  

It is important to understand that cultural norms and values are a reflection of actions and behaviors, not what is written in a mission statement or handbook. Leaders who value autonomy and ownership tend to attract individuals who value independence and innovation. Conversely, someone who micromanages may discourage those seeking autonomy and empowerment to join a team. Leaders set the tone and are responsible for creating an environment that encourages employees to embody the company's stated values and align them with the company’s ethos. Leaders who set the rules but don’t follow them will encourage employees to disengage—meaning an attempted cultural change has failed. 

At MS&AD Ventures, we have two primary roles: investing in startups, and supporting our parent company with innovation and partnerships. We place great emphasis on open communication, and our core values include Respect, Ownership/Accountability, Teamwork, and Integrity. Part of the team consists of colleagues from Japan; some of them are accustomed to a culture that places a strong emphasis on consensus-driven decision making. To challenge incoming trainees and push them out of their comfort zones, we have established the expectation for them to actively engage in arguments and debates with myself and other senior management. Failure to meet this expectation would result in a “'fail.” This approach provides them with valuable opportunities to practice and refine these essential skills in line with our core values.

This deliberate shift is aimed at providing them with opportunities to practice challenging senior executives and articulating their own perspectives. I sometimes purposefully assign them tasks or present ideas that may not make sense and observe if they would argue back. By actively promoting an environment that encourages debate, we cultivate critical thinking and foster a culture of open communication within our organization. 

Align KPIs, Goals and Incentives

In a recent conversation with a banking professional who works at a bank serving the VC and startup industry, I was intrigued to discover that their performance metrics did not revolve around the number of deals closed. Instead, the bank places greater importance on building and maintaining long-term relationships with their clients. This emphasis on relationship-building fosters a culture that prioritizes understanding and supporting clients' long-term goals, which is consistent across all employees. Learning about this aspect of their organizational culture made me more inclined to work with them, as it showcases their commitment to the success and growth of their clients beyond immediate transactions. Since many banking products are often a commodity, this practice gives them a unique edge. 

A Safe Space for Constructive Feedback

Creating a safe space for constructive feedback is also vital for any organization's success, which fosters a culture of open communication, continuous learning, and improvement. Netflix, led by co-founder Reed Hastings, epitomizes this approach with its "culture of candor," where employees are encouraged to freely share opinions, ideas, and concerns regardless of their position. This environment empowers employees to contribute to innovation and adaptability, building trust and collaboration. A feedback friendly culture cultivates a growth mindset, enabling individuals and the organization to learn. Personally, I have found that establishing a safe space for individuals at all levels to share feedback openly has been instrumental in my leadership development.

Patience and Persistence 

Driving cultural change within the finance and insurance sectors—including in fintech and insurtech—is a complex and challenging endeavor that requires ongoing persistence and dedication. These industries are often steeped in tradition, and transforming their deeply ingrained beliefs, values, and behaviors takes time and sustained effort. Leaders must remain committed to their vision for change, continuously reinforcing the desired behaviors, and providing support to their teams throughout the process.

Fostering open communication, transparency, and trust within these organizations can help cultivate an environment that encourages innovation, collaboration, and ethical decision-making. 

As the industry evolves, organizations that proactively drive cultural change will be best positioned to seize new opportunities, respond to emerging challenges, and maintain a competitive edge in the global marketplace. By embracing cultural change, we set the stage for our businesses to flourish and leave a lasting legacy for future generations.