It started innocuously enough.
Small things, really. The Friday afternoon collaborative sessions that used to generate your best ideas became perfunctory hour-long meetings where nobody said anything interesting. The "everyone knows everyone" energy dissipated into siloed teams who viewed other departments with mild suspicion. New hires sat through onboarding presentations about "our culture of innovation and openness" whilst observing behaviour that contradicted every slide.
Your Head of Product—one of your first 10 employees—pulled you aside: "This doesn't feel like the company I joined anymore."
You're 147 people. Three years ago, you were 42. Revenue tripled. Team size more than tripled. And somewhere in the growth trajectory, you lost whatever made this place special.
Welcome to the cultural dilution crisis—the silent killer of mid-market companies scaling past Dunbar's number.
The Dunbar's Number Cliff: Why 150 Changes Everything
Anthropologist Robin Dunbar identified a cognitive limit: humans can maintain stable social relationships with approximately 150 people. Beyond this threshold, the informal mechanisms that naturally maintain culture—tribal identity, social grooming, shared experience—stop working.
Research from March 2025 confirms continued relevance of Dunbar's layered numbers in organisational contexts:- Groups of 5: Close collaboration teams (meeting every 12.6 days)- Groups of 15: Department-level cohesion (meeting every 23.9 days)- Groups of 50: Division-level awareness (meeting every 25.0 days)- Groups of 150: Company-level identity (meeting every 46.3 days)- Groups of 500+: Brand-level association only (meeting every 64-245 days)
The Critical Insight:
At 30-50 people, culture happens organically. Everyone knows everyone. Values transmit through observation and informal interaction. Cultural violations are immediately visible and socially corrected.
At 150+ people, culture fragments into sub-cultures unless you actively engineer cohesion. What was implicit must become explicit. What was emergent must become designed.
The companies that successfully scale culture don't leave it to chance. They systematise it.
The Five Failure Modes of Cultural Dilution
Failure Mode 1: Values as Decoration
Walk into most mid-market firms and you'll find values posters:- "Integrity"- "Innovation"- "Customer Obsession"- "Collaboration"
Ask employees what these mean in practice: blank stares.
These aren't values—they're aspirational corporate word salad. Real values are observable behaviours that get rewarded (explicitly or implicitly) and whose absence gets punished.
A £55M SaaS company had "Customer Obsession" as core value. Yet sales team got compensated purely on revenue, regardless of customer fit. Result: chronic over-promising to close deals, implementation teams left cleaning up mess, customer churn at 34% annually.
The real value (revealed through incentive structures): "Revenue at Any Cost."
The Fix:
Values aren't nouns. They're verbs.
Not: "Integrity"Instead: "We keep commitments even when it costs us short-term; we fire clients who ask us to compromise standards; we admit mistakes before clients discover them"
Not: "Innovation"Instead: "15% of development time allocated to experimental projects; we celebrate thoughtful failures fast; we kill 60% of ideas in prototype phase"
Failure Mode 2: Founder Mythology
At 30 people, the founder's personal charisma and vision drive culture. Everyone's had direct interaction with them. Their work ethic, decision-making style, and values are observed first-hand.
At 150 people, 70% of employees have never worked directly with the founder. Culture becomes a game of telephone—distorted with each retelling.
One £48M professional services firm's founder was known for "radical candour"—direct, challenging feedback delivered with care. As company scaled, managers emulated the directness without the care. Result: culture of brutal criticism masquerading as "honesty," driving 23% annual attrition.
The Fix:
Codify the principles behind founder behaviours, not the behaviours themselves.
Not: "Be like Sarah" (the founder)Instead: "Sarah gives critical feedback because she's invested in your growth—here's the framework she uses: [specific model]. You should adapt this to your style whilst preserving the intent: feedback as development tool, not judgment"
Failure Mode 3: Culture of Nostalgia
The "Old Guard" (first 30-50 employees) constantly reference "how things used to be." New joiners feel excluded from an inside joke they'll never understand. Company bifurcates into those who "get it" (early employees) and those who never will (recent hires).
This is cultural ossification disguised as cultural preservation.
The Fix:
Cultures must evolve or die. The question isn't "How do we preserve exactly what existed at 30 people?" It's "What elements of our identity are core (must preserve) vs. contingent (must evolve)?"
Core (Preserve):- Foundational values (how we treat people, make decisions, define quality)- Strategic differentiators (what makes us competitively unique)- Identity anchors (who we are, what we stand for)
Contingent (Evolve):- Communication mechanisms (weekly all-hands works at 30 people, not 150)- Decision-making structures (founder approval for everything doesn't scale)- Spatial dynamics (everyone in one room isn't possible at scale)
Failure Mode 4: Culture by Accident
Most mid-market firms don't deliberately design culture. It emerges from:- Which behaviours get rewarded- Who gets promoted- Which mistakes get punished vs. tolerated- How conflicts get resolved- What leadership actually does (vs. what they say)
Without deliberate design, the emergent culture often contradicts stated values.
Example: Company claims "Work-Life Balance" as value. Yet every promoted employee has reputation for 60-hour weeks. Actual cultural message received: "Work yourself to death if you want advancement."
The Fix:
Audit revealed values (what actually gets rewarded) vs. espoused values (what you claim to believe).
The Culture Audit:
1.Promotion Analysis: Last 10 people promoted—what behaviours/characteristics do they share? Is this what you want to encourage?
2.Firing Analysis: Last 10 departures (fired or pushed out)—what behaviours/characteristics led to their exit? Is this what you want to discourage?
3.Reward System Analysis: What behaviours does your compensation structure incentivise? Are these aligned with stated values?
4.Time Allocation Analysis: Where do leaders actually spend time? (What you pay attention to signals what you value)
5.Meeting Analysis: Which meetings are sacred (never cancelled) vs. dispensable? Reveals true priorities.
Failure Mode 5: Sub-Culture Fragmentation
At 150+ people, departments develop distinct sub-cultures. Sales develops aggressive, revenue-driven culture. Engineering develops perfectionist, slow-deliberation culture. Operations develops efficiency-obsessed culture.
These aren't inherently problematic—until they become tribal identities that view other departments as "them" rather than "us."
One £62M manufacturing firm had:- Sales team: "Engineering over-engineers everything and moves too slow"- Engineering team: "Sales promises impossible timelines and sells vaporware"- Operations team: "Both groups create chaos we have to clean up"
Result: Cross-functional projects failed 68% of the time due to inter-departmental dysfunction.
The Fix:
Cross-Functional Rituals:
-Rotation programmes: Sales spends 1 week in Engineering; Engineering spends 1 week with customers; Operations shadows Sales-Shared goals: 30-40% of departmental bonuses tied to company-wide metrics (not just departmental performance)-Integration roles: People who span boundaries (Technical Account Managers bridge Sales/Engineering, Product Managers bridge Engineering/Commercial)
The Cultural Scaling Framework
Phase 1: Cultural Archaeology (Months 1-3)
Before you can preserve culture, you must understand what it actually is—not what you wish it was.
The Cultural Excavation Process:
Step 1: Story Collection
Interview 20-30 employees across all tenures and levels. Ask:- "Tell me about a time you felt most proud to work here."- "Describe a moment that captured 'who we are at our best.'"- "If you were explaining to a friend what makes this company different, what story would you tell?"
These stories reveal your actual cultural DNA.
Step 2: Pattern Recognition
Across the stories, identify recurring themes:- What behaviours get celebrated?- What trade-offs consistently get made?- What principles guide decisions when there's no obvious "right answer"?
Step 3: Core Values Articulation
Distill patterns into 3-5 core values (no more—more than 5 means you haven't prioritised).
The Specificity Test:
Each value must pass the "Would the opposite be absurd?" test.
"Integrity" fails this test. No company says "We value dishonesty."
"We share WIP (work in progress) before it's polished because early feedback matters more than ego protection" passes the test. You could imagine a company with opposite value: "We only share work when it's polished and perfect."
Phase 2: Cultural Encoding (Months 3-6)
The Culture Document (Not a Poster):
15-20 page document (Netflix culture deck is famous example) that articulates:
1.Company Origin Story: Why were we founded? What problem were we solving? What principles guided early decisions?
2.Core Values with Behavioural Indicators:- Value statement- What it looks like in practice (specific examples)- What it doesn't look like (counter-examples)- How it influences decision-making
3.Operating Principles:- How we make decisions- How we handle conflict- How we prioritise- What we optimise for
4.The Unacceptable:- Behaviours that lead to termination regardless of performance- Lines we won't cross- Trade-offs we won't make
Example: Value Definition with Behavioral Anchors
VALUE: "Ship Learning Over Ship Perfection"
What this means:We value rapid iteration and learning from real-world feedback over extended internal perfectionism. Speed to learning beats speed to perfection.
What this looks like:- Releasing beta features to subset of customers for feedback rather than internally debating theoretical concerns- Conducting 5-day prototypes to test assumptions rather than 3-month builds based on speculation- Accepting that 15% of shipped features will be killed after we learn they don't deliver expected value- Post-mortems that celebrate "smart failures fast" (good hypothesis, rigorous test, definitive learnings)
What this doesn't look like:- Shipping broken features that damage customer trust- Skipping code review or security protocols in name of "speed"- Ignoring known issues because "we can fix it later"
How this influences decisions:When choosing between:- 8-week build with all features → 3-week build with core feature + 5 weeks iteration based on usage data ✓
When we DON'T apply this:- Security features (perfection required)- Data integrity (no tolerance for bugs)- Financial accuracy (get it right first time)
The Onboarding Integration:
Culture document becomes foundation of onboarding. Every new hire:- Reads culture document before first day- Day 1: 90-minute culture session with founder or senior leader discussing origin story and values- Week 1: Discusses each value with their manager using real examples from their team- Week 2: Observes values in practice through shadowing across departments- Month 1: Presents "culture observation" to their team—examples of values in action they've witnessed- Month 3: Culture check-in—how well does lived experience match described culture?
Phase 3: Cultural Reinforcement (Months 6-12)
Encoding culture in document is necessary but insufficient. Culture lives in reinforcement mechanisms.
Reinforcement Mechanism 1: Decision Alignment
Every significant decision references values explicitly.
Example Decision Framework:
When evaluating whether to take on a complex project with questionable timeline:
Value: "Ship Learning Over Ship Perfection"→ Suggests we should start with limited scope MVP
Value: "Customer Trust is Sacred"→ Suggests we shouldn't commit to timeline we're not confident hitting
Decision: Take the project with phased delivery approach—MVP in realistic timeline (Value 1), with clear communication about evolving scope (Value 2)
Reinforcement Mechanism 2: Recognition Rituals
Weekly "Values in Action" Recognition:- Each team nominates one person who exemplified a specific value that week- Recognition includes specific story (not "Sarah showed integrity" but "Sarah disclosed implementation risk that could have delayed project, even though it reflected poorly on her initial estimate—this prevented customer surprise and aligned with 'Customer Trust' value")- Company-wide Slack channel shares these stories
Quarterly Values Awards:- One person per value receives recognition and £500-£1,000 bonus- Selected by peer nomination (not management decree)- Winner shares story at all-hands meeting
Reinforcement Mechanism 3: Performance Integration
Traditional performance review: 70% "what you accomplished," 30% "how you work with others"
Cultural performance review: 50% results, 50% values demonstration
The Values Assessment:
For each core value, rate employee on 1-5 scale:- 1: Actively contradicts this value- 2: Inconsistent demonstration- 3: Reliably demonstrates- 4: Role models for others- 5: Defines what this value means in practice
The Hard Rule:
A "1" or "2" on any core value triggers performance improvement plan regardless of results performance. You cannot high-perform your way out of cultural misalignment.
One £57M fintech scaled this approach. Result: Terminated 3 high-performing salespeople over 18 months for cultural misalignment (aggressive customer manipulation contradicted "Transparency" value).
Short-term pain: £180,000 in lost deals.Long-term gain: Sales team rebuilt on sustainable practices, customer lifetime value increased 41%, team voluntary attrition dropped from 31% to 12%.
Phase 4: Cultural Preservation at Scale (Month 12+)
The 150-Person Threshold Strategies:
Strategy 1: Layered Cohesion
You can't maintain 150-person tribal identity. But you can maintain:- 5-person team cohesion (daily interaction)- 15-person department cohesion (weekly interaction)- 50-person division cohesion (monthly interaction)- 150-person company cohesion (quarterly interaction + structural reinforcement)
Practical Implementation:
Team Level (5-7 people):- Daily standups or async check-ins- Weekly retros- Shared team goals and celebration of wins
Department Level (12-18 people):- Weekly department meetings- Monthly social events- Department-specific culture rituals
Division Level (40-60 people):- Monthly all-hands- Quarterly off-sites- Cross-team project showcases
Company Level (150+ people):- Quarterly all-hands (in-person if possible, full-day)- Annual company retreat (2-day, mandatory attendance)- Digital culture reinforcement (Slack channels, internal content)
Strategy 2: Culture Carriers
Designate 10-15% of company as "Culture Carriers"—not because they're better people, but because they actively reinforce culture through:
-Onboarding Buddies: Paired with every new hire for first 90 days-Values Champions: Each value has 2-3 champions who share stories and examples-Culture Committee: Meets monthly to assess cultural health and propose rituals
The Selection Criteria:
- High tenure (2+ years, understands cultural evolution)- Demonstrated cultural alignment (rated 4-5 on all values)- Cross-section of departments (not just senior leadership)- Voluntary (mandatory participation destroys authenticity)
Strategy 3: The Cultural Audit
Quarterly Cultural Health Assessment:
Survey all employees (anonymous, 15 minutes):
Section 1: Values Clarity- "I can explain our core values to a candidate" (1-5 scale)- "I see our values demonstrated in daily decisions" (1-5 scale)
Section 2: Values Alignment- For each value: "I personally agree with this value" (1-5 scale)- "People who violate this value face consequences" (1-5 scale)
Section 3: Sub-Culture Assessment- "I feel more loyalty to my department than to the company overall" (1-5 scale)- "There's an 'us vs. them' dynamic between departments" (1-5 scale)
Section 4: Open Feedback- "One behaviour I've observed that contradicts our stated values:"- "One way we could better reinforce our culture:"
The Action Trigger:
- Any value with <3.5 average rating → Immediate leadership team discussion- Any department with <3.0 on company loyalty → Cross-functional initiative required- Any repeated behavioural concern → Addressed in all-hands or policy change
Strategy 4: The Fire-Fast Rule
The fastest way to destroy culture: tolerating cultural violations from high performers.
The Uncomfortable Principle:
Fire for values misalignment as readily as you'd fire for performance failure.
One £65M technology firm had brilliant engineer who:- Shipped more features than anyone else- Solved impossible technical problems- Generated £400,000+ in value annually
But also:- Publicly belittled colleagues' code- Refused to mentor junior developers- Created environment of fear on their team
This contradicted "Collaborative Excellence" value.
Leadership deliberated for 6 months. Too valuable to lose. Maybe coaching would help. Perhaps his value outweighs culture damage.
Finally terminated him. Team immediately:- Became more productive (psychological safety increased)- Junior developers contributed more (fear of judgment removed)- Cross-team collaboration improved (toxic person removed)
Within 6 months, the team's output exceeded what brilliant-but-toxic engineer had delivered alone. And cultural credibility restored.
The Rule:
If you're unwilling to fire someone for violating a stated value, it's not actually a value—it's a suggestion.
The Acquisition Integration Challenge
Acquiring companies accelerates growth but often destroys culture.
The Standard Approach (That Fails):
"Welcome to [Acquirer Name]! Here's our culture document. You'll adopt our values. Integration complete in 90 days."
Result: Acquired talent views acquisition as hostile takeover, culture clash ensues, key people depart.
The Strategic Approach:
Pre-Acquisition Cultural Due Diligence:
Evaluate cultural compatibility before deal closes:- What are their values (actual, not stated)?- How do they make decisions?- What's their pace/rhythm?- How do they handle conflict?
The Compatibility Assessment:
-High compatibility: Integrate fully, adopt best practices from both sides-Moderate compatibility: Maintain separate brands/cultures, integrate operations only-Low compatibility: Acquire for IP/customers, expect talent attrition, plan accordingly
Post-Acquisition Cultural Integration:
First 90 days:- Don't force culture change- Learn their culture (send your people to observe)- Identify cultural overlaps and differences- Collaboratively design integrated culture
Months 4-12:- Implement hybrid culture that preserves best of both- Transition leadership to people who embody integrated culture- Retire contradictory practices from both legacy cultures
Example:
£45M software company acquired £18M competitor. Cultural differences:
Acquirer: Move fast, accept some bugs, iterate based on customer feedbackAcquired: Perfectionist, slow releases, extensive QA
Rather than forcing acquirer culture, they identified contexts:
-Customer-facing features: Adopt acquirer's rapid iteration approach-Infrastructure/security: Adopt acquired company's rigorous QA approach
Result: Best of both, minimal attrition, integrated within 8 months.
The Remote/Hybrid Culture Challenge
2025 reality: Most mid-market firms operate hybrid or remote-first models.
Cultural cohesion is harder when you're not physically together. Dunbar's number compounds—harder to maintain 150-person cohesion when you see colleagues quarterly instead of daily.
The Remote Culture Framework:
Synchronous Rituals (Build Connection):- Weekly team video standups (cameras on, 15 minutes)- Monthly department all-hands (60-90 minutes)- Quarterly company gatherings (in-person if possible, full-day)
Asynchronous Reinforcement (Scale Culture):- Daily #wins channel (celebrating progress, demonstrating values)- Weekly leadership updates (video messages from founders/execs)- Monthly culture newsletter (stories demonstrating values)
In-Person Intensives (Deepen Bonds):- Quarterly team off-sites (department-level, 1-2 days)- Annual company retreat (entire company, 2-3 days, mandatory)- Project kickoffs/retrospectives (key milestones gathered in-person)
The Investment:
For 150-person remote-first company:
Quarterly team off-sites:- 10 departments × 4 off-sites/year × £3,000/off-site = £120,000
Annual company retreat:- 150 people × £800/person (venue, transport, F&B) = £120,000
Total annual investment: £240,000
This seems expensive until compared to cost of cultural dysfunction:- Attrition from poor culture: 10% higher turnover = 15 additional departures = £183,750 in replacement costs- Lost productivity from silos/misalignment: Conservatively £200,000+- Failed projects due to poor collaboration: Difficult to quantify but substantial
ROI: £240,000 investment prevents £383,750+ in costs
The Realistic Cultural Scaling Timeline
Months 1-6: Foundation- Cultural excavation (stories, patterns, values)- Culture document creation- Initial onboarding integration- Values-based performance framework design
Months 7-12: Reinforcement- Recognition rituals implemented- Quarterly cultural health surveys- First values-based termination (if needed—sends cultural signal)- Culture carriers programme launched
Months 13-24: Maturation- Culture becomes self-reinforcing (employees police themselves)- Sub-culture fragmentation addressed proactively- Acquisition integration tested (if applicable)- Refinement based on cultural health data
Steady State:- Quarterly cultural audits- Annual culture document refresh- Continuous reinforcement through rituals- Zero tolerance for cultural violations
Making the Culture Commitment
The philosophical question: Is culture a nice-to-have or a strategic imperative?
If it's nice-to-have:- You'll delegate it to HR- You'll create values posters- You'll tolerate violations from high performers- You'll wonder why culture deteriorated
If it's strategic imperative:- You'll invest 15-20% of leadership time in cultural reinforcement- You'll fire high performers who contradict values- You'll measure cultural health as rigorously as financial performance- You'll maintain identity whilst scaling
The companies that scale past 150 people without cultural dilution don't do so accidentally. They engineer it.
They recognise that culture is the operating system on which everything else runs. Brilliant strategy, robust processes, and talented people all fail if the cultural foundation is broken.
Your competitors are scaling through acquisition, aggressive hiring, and operational intensity. Most will lose their cultural identity in the process. Their "what makes us special" will become corporate platitudes by employee 200.
The opportunity belongs to those who realise: Culture doesn't scale by accident. It scales by design.
The design work is hard. It's continuous. It requires uncomfortable decisions. But it's the difference between building a company people want to work for versus a company people tolerate until something better comes along.
Which are you building?