MINDSETS - Creative Confidence

Why is culture important? 

Corporate culture is important for a company since it drives success, regardless of how effective a plan is. Peter Drucker, a management consultant, educator, and author, quoted, "Culture eats strategy for breakfast." Drucker emphasised the importance of the human aspect in any organisation. No matter how comprehensive and solid a strategy is, if the individuals executing it do not foster the necessary culture, the project will fail. A good corporate culture is more about how people act in important times, how they manage pressure and adapt to diverse obstacles, as well as how they treat partners, customers, and each other. Only when this is accomplished, they will build a stable and healthy culture.  For instance, The provider's culture was defined by fundamental values that prioritised principles, creating an impression for clients and staff and cultivating a caring and collaborative workplace. Their mindset encouraged innovation, teamwork, and a bold approach to failure, with the goal of constantly learning and improving (Engel, 2018). At the end of the day, The people who carry out the plan are ultimately important (Conmy, 2023). The key takeaway from corporate culture is that culture emerges from the behaviours we allow. When we tolerate negative behaviour, it gets ingrained and accepted. It is not about being harsh, but rather developing a culture of mutual "open and honest" feedback (Bill, 2018). 

“Culture eats strategy for breakfast.” is a famous quote from writer Peter Drucker. However, he didn’t mean that business strategy wasn’t important, but rather that having an empowering culture would be a better route for the organization to succeed (Drucker, 2016). The importance of culture shows that it can help the organization attract top talent as a company with a strong culture often creates opportunities for employees from the relevant field when a supportive and fulfilling working environment makes employees feel motivated and valued and provided to contribute their best working effort (Contributor, 2014). Besides, culture can also help to enhance the customer's experience for the company based on how a strong culture company interacts with their customers that prioritizes customer-centricity and excellent service to lead customer satisfaction and loyalty to another level (Bill, 2014).

Do you think Facebook overpaid for WhatsApp? Why?

In my opinion, I think Facebook paying $19 billion for WhatsApp is worthwhile and reasonable because WhatsApp has a large and very active user base. Facebook holds its own in North America, but in Europe and emerging markets, WhatsApp has a huge share of users - the UK and Brazil have about twice as many users, and countries like Germany and Italy have three times as many users (Kerravala, 2014). Facebook has expressed the phenomenal growth of WhatsApp and the fact that it is growing faster than Facebook, Twitter, Gmail, and Skype(Metz, 2014).

And Facebook acknowledges that teens are spending less and less time on its service. Facebook offers its own messaging service for smartphones, but WhatsApp gives it instant access to a new, relatively large group of young people who actively message each other every day. It has to make this move if it wants to attract younger generations. Therefore I think Facebook buying WhatsApp is a smart move.

What are some of the problems bringing in new investors?

Trust and credibility

An investor refers to an individual or an entity who commits capital for a business with the expectation of a financial refund. However, investors can be divided into two types which are passive and active. Passive investors are those investors who are not actively involved in the business operation whereas active investors will not only commit capital but also be involved in business decision-making (Hussain, 2023). 

Everything about cooperation will highly rely on one element, which is trust. Investors commit capital to entrepreneurs who have a high potential to generate a return through profitable investments. Thus, the priority of the investor will be the potential value of the investment instead of considering the familiarity of the investment (Rassolli, 2024).

New investors might have little understanding regarding the investment they invest in which means they can only trust the entrepreneurs related to business operations and future development plans. In this case, investors might mistrust the wrong entrepreneurs which results in financial loss eventually (Rassolli, 2024). 

Not only that, novice active investors might also experience investment failure because of misprediction on business development or operation which leads to making wrong decisions. Taking Balcones Distilling as an example, the investor of Balcones does not trust the founder on the business plan, which causes a personnel split between the company and eventually delays the company’s development (Risen, 2014). 

To sum up, investors need to find the balance point between trustless and overtrust. To overcome this, investors must have sufficient knowledge reserve on the prospect of the investment industry (Rassolli, 2024).

The likelihood of disputes increases

The addition of new investors not only implies dilution of ownership but also inevitably means an increase in the number of voices and decision-makers. While many may welcome the fresh ideas brought by new investors, it also becomes a source of disagreements and disputes. Therefore, accepting a new investor depends not only on the funds they bring, even if it is a very enticing offer, but also on careful scrutiny and attention to whether the new investor possesses ample business experience and maintains a good reputation (Tellers,2017). Additionally, every entrepreneur should have the skills of being open to acceptance and willingness to try. Even in the case of bringing in new individuals, the best combination of financing type and amount should still be the standard for selecting suitable investors.

Unclear Goals and Objectives

For new investors, one of the primary problems they usually face is unclear goals and objectives. This is due to investors may no be able to estimate certain things in their investments, such as the main business structure, the capital amount needed, the expected time frame for investment and advanced technology required for products. At the same time, investors also unclear about the differences between goals and methods and define the method as the goal of their business. For example, a good investment method for investors is to have non-dilutive capital for their starting up, however, for those who are not able to raise non-dilutive capital, they will define this method as their goal and waste a lot of time in it (Shimasaki, 2015). Therefore, new investors should always be patient and take time to clarify their goals and objectives through doing research or consulting expert, in order to run their business efficiently and effectively.

References

Rassolli, M. (2024, February 8). 6 Common challenges faced by new investors and how to face them. TrendScout UK. https://www.trendscoutuk.com/blog/6-common-challenges-faced-by-new-investors-and-how-to-face-them/#:~:text=Overload%20of%20information-,Challenge,trust%20in%20the%20wrong%20individuals.&text=When%20you're%20overwhelmed%20with,making%20and%20lower%20your%20efforts.

Risen, C. (2014, December 27). How Dreams and Money Didn’t Mix at a Texas Distillery. The New York Times. https://www.nytimes.com/2014/12/28/business/how-dreams-and-money-didnt-mix-at-a-texas-distillery.html 

Metz, C. (2014, February 20). Here’s why Facebook paid $19bn for WhatsApp. WIRED. https://www.wired.com/story/facebook-whatsapp/

Kerravala, Z. (2014, February 20). Did Facebook overpay for WhatsApp? Network World. https://www.networkworld.com/article/748104/cisco-subnet-did-facebook-overpay-for-whatsapp.html

Conmy, S. (2023, May 8). What does culture eats strategy for breakfast mean?. The Corporate Governance Institute. https://www.thecorporategovernanceinstitute.com/insights/lexicon/what-does-culture-eats-strategy-for-breakfast-mean/#:~:text=The%20quote%20culture%20eats%20strategy,who%20implement%20the%20plan%20matter.

Engel, J. M. (2018, November 20). Council post: Why does culture “eat strategy for breakfast”? Forbes. 

Tellers, C. (2017, March 3). Issues to consider when bringing in new investors to a business. Social Actions. https://www.socialactions.com/issues-consider-bringing-new-investors-business/

Aulet, B. (2014, April 13). Culture Eats Strategy For Breakfast. TechCrunch; TechCrunch. https://techcrunch.com/2014/04/12/culture-eats-strategy-for-breakfast/

Drucker, P. (2016, March 11). Culture eats strategy for breakfast. The Management Centre. https://www.managementcentre.co.uk/management-consultancy/culture-eats-strategy-for-breakfast/#:~:text=%E2%80%9CCulture%20eats%20strategy%20for%20breakfast

Shimasaki, C. (2015, December 28). 1 of 7 Common Entrepreneur Mistakes: Unclear Goals. Biosource Consulting Group. https://biosourceconsulting.com/entrepreneur-mistakes-unclear-goals/

Workload

ERIN CHUNG SHING (TP070387) FOO JING SZE (TP070845)	Why is culture important?
CHUAH XIN YI (TP070340)	Do you think Facebook overpaid for WhatsApp? Why?
CHONG PEY SHAN (TP070414) LEE WAN CHIEN (TP070220) GOO MAY SHYN (TP070055)	What are some of the problems bringing in new investors?