There is a tendency among investors and managers alike to think about the assets of a company in concrete terms – plant & machinery, inventory, real estate, etc. – and even intangible assets like patents or brand identities are often lumped in with other physical assets. But what about the culture of a company? When curated properly, isn’t that just as much of an asset as the building in which that culture thrives?
I think so. In fact, I think our culture is one of the most important drivers of Star Mountain Capital’s continued success. Sure, we can hire extraordinarily smart people and do all the number-crunching required to make informed decisions about investments, but in my view, the real secret sauce of any successful organization is how its people operate, think and collaborate together – “cultural capital,” if you will. Point to a successful company, and more often than not, you will find an abundance of strong cultural capital sustaining it.
This topic was on my mind when I was recently featured in the “tribes” section of innovative digital magazine INDVSTRVS. The feature-length article was different than most I’ve done since founding Star Mountain in 2010; instead of focusing on the monetary elements of success, we dove deeply into the business-with-purpose ethos that infuses everything we do at Star Mountain.
Great cultural capital inside companies is like a fingerprint; no two are the same, and what works for one may not work for another. But in my experience, they do share certain characteristics. They have aligned individual goals with that of the company – an alignment of interests – that in our case is accomplished by including 100% of our employees in the profit sharing from our investments (referred to as carried interest in our industry). Other things are more esoteric – a desired sense of purpose (e.g. creating jobs by investing in and building U.S. small and medium-sized businesses), passionate focus on technology to improve all aspects of the business, thinking outside the box around the best ways to do things, not just how they have been done before, fresh and healthy food, standing desks, lots of windows and sunlight, etc. – that make work a more comfortable and engaging place to be.
Another common element is a focus on putting the right people into the right positions depending on their backgrounds, experiences, education and personalities. It’s not just about talent – the most talented team in the NHL doesn’t necessarily win the Stanley Cup – because success is often about the dynamics of a team and how the players’ skill sets complement one another. We spend a lot of time at Star Mountain making sure our employees are in the roles best suited for them, and it shows.
Another signature trait I see among successful companies is a steadfast commitment to things that don’t necessarily translate immediately into financial gain or reward. People who find ways to improve their communities through volunteering, civic activity, employment of veterans etc. are the ones who will carry a sense of duty and obligation to the firm and persevere through the tough times. Taken at scale, this desire to serve a purpose greater than oneself can generate truly meaningful impact, and it seeps over into the organization’s foundational culture. It’s not something you can teach; it has to be innate, part of one’s DNA – and great corporate cultures are loaded with it. Plus, such cultures tend to attract like-minded people, generating a self-reinforcing loop that helps sustain the culture’s key attributes.
This nexus between business and purpose is where most successful organizations thrive. In fact, a truly great corporate culture is the greatest single asset of a successful business. Yes, some companies that are able to invent and market the next gee-whiz gadget can be wildly successful, if only for a comparatively short time. Conversely, organizations that focus on creating the most cultural capital possible are usually the ones that end up with the most sustainable, scalable and rewarding businesses over time.