A company's culture is usually determined from the initial brush strokes of its design. And, when talking about culture, we are talking about the "softer" aspects of business. This includes the types of people that are getting hired, management styles, communication styles, work-life balance, incentive structures, etc. Although there is no one right answer here, I will do my best to summarize a few preferred methods, based on my past experiences.
You cannot have culture without people, and that is where it all starts, right from your initial hiring decisions. To me, this comes down to an individual's smarts, internal startup DNA and personality fit. It is critical you find the smartest people you can find, to help you build your business. I would rather have a smart person that is a quick study and no industry experience, than a marginal industry veteran. If you don't have the fire power in the brain to think creatively out of the box, which is always required with a startup, then your business will never succeed. And, don't be afraid to hire people that are smarter than yourself. Sometimes managers are worried about being made to look stupid by their subordinates. But, I say the smarter the better, to help raise everyone's skills around the table.
But, it is more than just having smart people around you. They must also have the right startup DNA. Someone that is passionate about the product that is getting built and is excited to come into work each day, and put in the long hours required. Someone that is going to motivate the rest of the team to do the same. Someone that is an extrovert A-type personality that is going to cheerlead when necessary and lead by example. Someone that has a great personality fit with their peers, managers and subordinates. Someone that is not easily rejected, or bring a bad mood to the office. I always say, "we are all paddling together in a whitewater raft navigating the rushing rapids, and need all paddlers rowing in unison and as fast as humanly possible to survive."
As for management styles, the less heirarchical the better. Sure there needs to be a clear chain of command, but it is critical an employee's voice is always heard and that they feel their smart ideas are being listened to. There is no faster way to lose an employee than to constantly shoot down their ideas, or by making them feel stupid. And, when doing employee reviews, always do 360 degree reviews: manager reviews employee, employee reviews manager, peers review eachother and employee reviews themself. This way everybody participates in the process and both manager and staff problems can get addressed.
In terms of communication style, I always prefer open communications with the team. That means make sure the entire staff, from top to bottom, is always clear on the company's goals, and has regular communications from management, on both the good news and the bad news. We are all in this together, so don't try to hide anything. Employees are smart enough to know when things are going wrong, and would rather hear what the problems are, so they can help try to fix them. And, have the confidence in knowing management "has their back" and isn't trying to hide anything from them.
Work-life balance can sometimes be hard to acheive in a startup environment, when everyone is putting in the required long hours. But, it is critical you take time every now and then to recharge the batteries. It is hard to do good work, when you can't even stay awake, or if you are always upset you are not spending more time with your family. It is not all about working hard. It is about working smart, prioritizing your efforts and making time for yourself to maintain the proper work-life balance. This could also include things like flex time or working from home, letting staff members set their own schedules that work for them to meet their personal needs.
When Google was getting started, they even went as far as letting staff members take 20% of their time (one day a week) to work on any personal pet projects they wanted, many of which lead to amazing innovations and the next growth vehicles for the company. And, don't get mad if staff wants to blow of steam with a mid day video game or trip to the gym. As long as they are doing the work, hitting their goals and putting in the effort, there is no need to micro manage their hourly schedules.
As for incentives, every employee beats to the tempo of a different drum. So, properly set incentives on a person by person basis, for what personally drives them. Some people are motivated by cash, others by equity or others by perks. Figure out what the magic incentive is for each, and put acheivable performance thresholds in place to acheive such. It should not be a "one size fits all" discussion. And, targets reasonable need to be acheiveable. There is nothing more demotivating than working your ass off and not seeing any fruits from your labor. So, there needs to be both "company targets" and "individual targets", so employees feel they have control over their own incentive destiny.
This is a high level snapshot of a complicated topic. But, hopefully it gives you a better sense on how to best set up your business culture right from the start. As, it is very difficult to change down the road.
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