What is the difference between organizations that achieve their goals, and those that fall short or even fail?
One surprising factor explains much of this difference: Organizational health.
Companies with a more engaged workforce see higher profits, sales and productivity, and lower turnover. Those with performance-enhancing cultures and better overall indices of organizational health see higher growth in terms of revenue, jobs, and net income than those without, and deliver higher returns to shareholders.
Think of organizational health as you would the health of a living being. Health is much more than the absence of illness. Like the health of living organisms, organizational health thrives with proactive measures, improves when attended to, and worsens if neglected. Healthy organizations foster working environments that enable these desired outcomes to be achieved by creating systems that allow individuals inside the organization to thrive and work at their best. An organization can only be as healthy as its constitutive members; the health and habits of the individuals compose the organizational health of the team.
We created Masawa with an ambitious plan: to invest in teams who are revolutionizing the mental health space and increasing the mental wellness of billions of people. In order for organizations to affect such transformative change, the founders and organizations we support need to be well themselves. Yet there are many barriers to building a healthy organization, particularly for early teams. As a result, we place people and health at the center of our investing strategy, focusing not only on what work is done, but also on how work is done.
Organizational health enables positive business results and external impact. It is a crucial component of organizational success, but one that is too often treated as a “nice to have” rather than a “must have.” At Masawa, we partner with entrepreneurs early in their founding journeys to encode their organizational DNA in the healthiest possible way. As investors, we are committed to bringing attention and focus to this area not just at Masawa, but also in the VC world writ large.
Our conversations with founders show strong pressure to manufacture a veneer of wellness and perfection when fundraising and building their organization; but studies show that 50% of entrepreneurs experience mental health issues, and a full 94% of founders report symptoms of burnout, anxiety, and panic attacks. Early startup teams, especially those in the impact space, often live in a state of tension. They are deeply driven by their purpose and vision for change, but confront very real constraints and challenges. Many fear that any sign of perceived weakness – to say nothing of openly discussing mental health struggles – could make the difference in whether their company survives. However, the more destructive issue may well be the very fear of this vulnerability itself. The statistics demonstrate that if a founder or other team member isn’t well, their organization isn’t well, and neither individuals nor the organization they work in are able to operate at their best.
People problems, such as co-founder conflict, cause almost two-thirds of startup failures. Perfect business fundamentals or impact frameworks cannot save organizations that do not create an environment for the individuals within them to thrive. Clearly, it is a real risk to delay or ignore organizational health, but one that investors and entrepreneurial teams rarely talk about. By the time it feels like the right moment to dedicate effort in this area, it is often already too late.
Healthy organizations perform better across a host of metrics as compared to those that are less healthy. Doing everything possible to invest in and help build healthy organizations doesn’t just make sense for Masawa as a mental health impact fund. All investors could improve – financially and otherwise – by taking a more structured and proactive approach in this area.
Masawa has defined a model for organizational health that focuses on six core dimensions: Belonging, purpose and coherence, physical and mental wellbeing, learning and growth, and recognition. Culture, people, and policies are key enablers that allow teams to grow in these dimensions. These dimensions are mainstreamed throughout our interactions with founders in our pipeline from the very first meeting, through our due diligence processes, and all the way through the support we offer via our Nurture Capital approach.
Masawa uses our six-dimension model to assess and co-develop plans to address the organizational health concerns of companies in our portfolio. Challenges take a different shape according to the size, context, and maturity level of the organization. Take the coherence dimension, for example. An early-stage venture struggling to balance prioritization of profit versus purpose might benefit from a series of facilitated workshops focused on alignment and cohesion. However, for a larger organization seeing a large influx of new employees, creating formally-defined job descriptions for the first time could be an important step in this area.
On the individual agency dimension, people within the organization seek to shape their work approach to a reasonable extent. In a new organization, this might mean that the small founding team has flexible working hours and locations. In a more mature organization, we might see this lived out as a capacity for individuals to pursue ideas, and a stipend for home office set-up that goes beyond mere permission to work remotely.
As with living organisms, there is no one-size-fits-all approach to creating a healthy organization. The basic components may be the same: light, water, and nutrients for plants, but the shape that these fundamentals take will vary based on a number of factors. Organizations must craft an approach that is appropriate to their particular environment and find ways to balance immediate priorities with longer-run health considerations.
We place people – founders, teams, and their well-being – at the center of our approach. We design our nurture capital offerings with founders and teams, not for them. We know that founder strength and organizational resilience are the most critical elements enabling impact and organizational success. We also know from experience that there is no one-size-fits-all approach to this endeavor. In future posts, we’ll lay out our unique approach to nurture capital and provide case studies to illustrate the model in action.
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