Creating a Great Culture

Culture isn’t a magical set of rules that makes everyone behave the way you’d like. It’s a system of behaviors that you hope most people will follow, most of the time. Companies—just like gangs, armies, and nations—are large organizations that rise or fall because of the daily microbehaviors of the human beings that compose them. Is that phone call so important I need to return it today or can it wait until tomorrow? Can I ask for a raise before my annual review? Is the quality if this document good enough or should I keep working on it? Do I have to be on time for that meeting? Should I stay at the Four Seasons or the Red Roof Inn? Should I go home at 5 p.m. or 8 p.m.? Should we discuss the color of this new product for five minutes or thirty hours? If I know something is badly broken in the company, should I say something? Whom should I tell? Is winning more important than ethics? Culture can feel abstract and secondary when you pit it against a concrete result that’s right in front of you, but it’s a strategic investment in the company doing things the right way when you are not looking. It’s the set of assumptions your employees use to resolve the problems they face every day. It’s how they behave when no one is looking. If you don’t methodically set your culture, then two-thirds of it will end up being accidental, and the rest will be a mistake.

Culture begins with deciding what you value most. Then you must help everyone in your organization practice behaviors that reflect those virtues. If the virtues prove ambiguous or just plain counterproductive, you have to change them. When your culture turns out to lack crucial elements, you have to add them. Finally, you have to pay close attention to your people’s behavior, but even closer attention to your own. How is it affecting your culture? Are you being the person you want to be? This is what it means to create a great culture. This is what it means to be a leader.

Many people believe that cultural elements are purely systematic, that employees only operate within a given corporate culture while they’re in the office. The truth is that what people do at the office, where they spend most of their waking hours, becomes who they are. Office culture is highly infectious. If the CEO has an affair with an employee, there will be many affairs throughout the company. If profanity is rampant, most employees will take that home, too. So, trying to screen for “good people” or screen out “bad people” doesn’t necessarily get you a high-integrity culture. A person may come in with high integrity but have to compromise it to succeed in your environment. People become the culture they live. In and do what they have to do to survive and thrive.

In the end, the people who work for you won’t remember the press releases or the awards. They’ll lose track of the quarterly ups and downs. They may even grow hazy about the products. But they will never forget how it felt to work there, or the kind of people they became as a result. The company’s character and ethos will be the one thing they carry with them. It will be the glue that holds them together when things go wrong. It will be their guide to the tiny, daily decisions they make that add up to a sense of genuine purpose.

The following are techniques that will help you shape the culture you want but remember that a perfect culture is totally unattainable. Your goal is to have the best possible culture for your company, so it stays aimed at its target.

Cultural Design

Identifying the culture you want is hard: you have to figure out not only where your company is trying to go, but the road it should take to get there. The culture that works for Apple would never work for Amazon. At Apple, generating the most brilliant designs in the world is paramount. To reinforce that message, it spent $5 billion on its sleek new headquarters. At Amazon, Jeff Bezos famously said, “Your fat margins are my opportunity.” To reinforce that message, he made the company be frugal in everything, down to his employees’ ten-dollar desks. Both cultures work. Apple designs dramatically more beautiful products than Amazon, while Amazon’s products are dramatically cheaper than Apple’s.

The first step in getting the culture you want is knowing what you want. It sounds obvious and it is; it sounds easy, but it’s not. With seemingly infinite possibilities to choose from, how do you design a culture that gives your organization the advantages it needs, creates an environment you are proud of, and that—most importantly—can actually be implemented? A few points to keep in mind:

  1. Whether your company is a startup or a hundred years old, designing your culture is always relevant. Cultures, like the organizations that create them, must evolve to meet new challenges.
  2. All cultures are aspirational. No company has ever achieved total cultural compliance or harmony. In a company of any significant size there will always be violations. The point is not to be perfect, just better than you were yesterday.
  3. While you can draw inspiration from other cultures, don’t try to adapt another organization’s ways. For your culture to be vibrant and sustainable, it must come from the blood, from the soul.

One way to think about designing your culture is to conceive it as a way to specify the kinds of employees you want. What virtues do you value most in employees? Making your virtues precisely the qualities you’re looking for in an employee reinforces an important concept: virtues must be based on actions rather than beliefs. It’s really easy to fake beliefs in an interview. If you hire for what people can do, on the other hand, you can find out through reference checks if they’ve done it in the past, and you can even test for it in the interview. Making your hiring profile a big part of how you define your culture makes enormous sense—because who you hire determines your culture more than anything else.

Stewart Butterfield, the cofounder and CEO of Slack, has very actionable ideas about what makes a good employee or candidate. He looks for these four values:

  1. Smart. It doesn’t mean high IQ (although that’s great), it means disposed toward learning. If there’s a best practice anywhere, adopt it. The company should turn as much as possible into routine so employees can focus on the few things that require human intelligence and creativity. A good interview question for this is: “Tell me about the last significant thing you learned about how to do your job better.” Or you might ask a candidate: “What’s something that you’ve automated? What’s a process you’ve had to tear down at a company?”
  2. Humble. This doesn’t mean meek or unambitious, it means being humble in the way that Steph Curry is humble. If you’re humble, people want you to succeed. If you’re selfish, they want you to fail. It also gives you the capacity for self-awareness, so you can actually learn and be smart. Humility is foundational like that. It is also essential for collaboration.
  3. Hardworking. It does not mean long hours. You can go home and take care of your family, but when you’re here, you’re disciplined, professional, and focused. You should also be competitive, determined, resourceful, resilient, and gritty. Take this job as an opportunity to do the best work of your life.
  4. Collaborative. It’s not submissive, not deferential—in fact it’s kind of the opposite. Being collaborative means providing leadership from everywhere. I’m taking responsibility for the health of this meeting. If there’s a lack of trust, I’m going to address that. If the goals are unclear, I’m going to deal with that. We’re all interested in getting better and everyone should take responsibility for that. If everyone’s collaborative in that sense, the responsibility for team performance is shared. Collaborative people know that success is limited by the worst performers, so they are either going to elevate them or have a serious conversation. This one is easy to corroborate with references, and in an interview you can ask, “Tell me about a situation in your last company where something was substandard and you helped to fix it.”

In addition to specifying the kinds of employees you want, it’s imperative that these employees feel empowered to make a difference. The most important element of any corporate culture is that people care. They care about the quality of their work, they care about the mission, they care about being good citizens, they care about the company winning. So, a gigantic portion of your cultural success will be determined by what gets rewarded at your company. Is it caring about your work? Or do you do better financially if you actually give zero fucks? Every time an employee works hard to make a change or to propose a new idea only to be met with bureaucracy, indecision, or apathy, the culture suffers. Every time an employee is recognized or rewarded for pushing the company forward, the culture strengthens.

If your organization can’t make decisions, can’t approve initiatives quickly, or has voids where leadership should be, it doesn’t matter how many great people you hire or how much work you spend defining your culture. Your culture will be defined by indifference, because that’s what you’re rewarding. If I work hard and my neighbor does nothing and we both have the same impact at the company, then her behavior is obviously the way to go.

Another major consideration of cultural design is properly choosing and defining virtues. Many potential cultural elements are too abstract to be effective. If you define “integrity” as a virtue, will that clarify exactly how people should behave? If there’s a conflict, does integrity mean meeting your product schedule as promised or delivering the quality that your customers expect? Some ways of thinking about a virtue’s effectiveness:

  1. Is your virtue actionable? A culture is not a set of beliefs, but a set of actions. What actions do your cultural virtues translate to? Can you turn empathy, for instance, into an action? If so, it may work as a virtue. If not, best to design your culture with a different virtue.
  2. Does your virtue distinguish your culture? Not every virtue will be unique to your company, but if every other business in your field does the same thing, there is probably no need to emphasize it. If you’re a Silicon Valley company, there is no need to make casual dress a virtue, because that’s the default behavior. But if you’re a technology company and you want everyone to wear a suit and tie, that will define your culture.
  3. If you are tested on this virtue, will you pass the test?

Make sure that your culture aligns with both your personality and your strategy. Anticipate how it might be weaponized and define it in a way that’s unambiguous. No single virtue makes universal sense. Your company’s culture should be an idiosyncratic expression of your personality, beliefs, and strategy—and it should keep evolving as your company grows and conditions change. However, there are two cultural virtues that nearly every organization would do well to have:

1.) Trust

Trust is fundamental to running any large organization. Without trust, communication breaks. Here’s why: In any human interaction, the required amount of communication is inversely proportional to the level of trust. If I trust you completely, then I require no explanation or communication of your actions at all, because I know that whatever you are doing is in my best interests. On the other hand, if I don’t trust you in the slightest, then no amount of talking, explaining, or reasoning will have any effect on me, because I will never believe you are telling me the truth and acting in my best interests. As an organization grows, communication becomes its biggest challenge.

The truth about telling the truth is that it doesn’t come easy. It’s not natural. What’s natural is telling people what they want to hear. That makes everybody feel good . . . at least for the moment. Telling the truth requires courage. Less remarked on—but equally important—is that it requires judgment and skill.

Trust derives from candor, and your company will fall apart if your employees don’t trust you. To do this, you must accept that you can’t change reality, but you can assign it a new meaning. Imagine the reality you have to assign meaning to is a layoff. First, recognize that you won’t be the only person interpreting the layoff. Reporters will say it means the company has failed. Laid-off employees will feel betrayed and convey that. The employees who remain will have a profusion of interpretations. But if you assign meaning to the layoff before anyone else, and you do so candidly and convincingly, your interpretation has a decent chance of being the one that everyone remembers. There are three keys to assigning meaning:

  1. State the facts clearly. “We have to lay off thirty people because we came in four million dollars short of projections”—or whatever the case may be. Don’t pretend that you needed to clean up performance issues or that the company is better off without the people you so painstakingly hired. It is what it is and it’s important that everyone knows that you know that.
  2. If your leadership caused or contributed to the setbacks that necessitated the layoff, cop to that. What was the thinking that led you to expand the company faster than you should have? What did you learn that will prevent you from making that mistake again?
  3. Explain why taking the action you’re taking is essential to the larger mission and how important that mission is. A layoff, done properly, is a new lease on life for the company. It’s a hard but necessary step that will enable you to fulfill the prime directive, the mission that everyone signed up for: eventual success. It’s your job to make sure that the company didn’t lay off those people for no ultimate purpose—something good needs to come of it.

There are companies that don’t care about trust. Some leaders foster internal competition. They pit their employees against each other and let the best person win. Regrettably, this type of dynamic can result in profitable companies. But I would never want to work there.

Encouraging bad news also helps build trust. If you manage a reasonably large organization, you can be absolutely sure of one thing: at any given moment, something somewhere has gone terribly wrong. Some of your managers know about the brewing disaster, but for a multitude of reasons, they haven’t told you—even though the mess is only going to grow the longer it stays hidden.

How do you build a culture that airs its problems without diluting the virtues of ownership and empowerment—and without making everyone feel defeated or encouraging a culture of whining? Encourage bad news. People take their cues from the leader, so if you’re okay with bad news, they’ll be okay too. Good CEOs run toward the pain and the darkness; eventually they learn to enjoy it.

If you find a problem, do a root-cause analysis and figure out what caused it. You will almost always find that the underlying issue was communication or prioritization. Or some other soluble problem rather than a particularly lazy or idiotic employee. By getting to the root cause and addressing that, rather than playing the blame game with an employee or two, you create a culture that won’t be secretive or defensive—a culture open to bad news.

As you meet with people in your organization, either formally or casually, ask them questions that will help uncover bad news. Questions such as, “Is there anything that’s preventing you from getting your job done?” or “If you were me, what would you change in the company?” You may have to ask several times, but people will talk about the problems if you encourage them to. The more you demonstrate genuine eagerness to discover bad news, and genuine supportiveness once it’s discovered, the more open they’ll be to opening up.

2.) Loyalty

Loyalty is vital to most cultures—but difficult to install. Loyalty emerges from an expectation that the other party feels the same way; that your colleagues, and your company, are there for you. CEOs have different approaches to encouraging it. Here’s how Patrick Collison of Stripe thinks about loyalty:

“We obviously can’t offer lifetime employment. I hope what we can deliver is that in fifteen years, when people look back, they will think that they were able to do the most meaningful work of their careers here. In exchange, I expect two things: first, ethical integrity. Second, that they optimize for the company rather than for themselves. If they satisfy those two expectations, then they have our appreciation, respect, and loyalty.”

In other words, he will support them throughout their careers.

Ali Ghodsi, CEO of Databricks, makes a more specific commitment to his executive staff. “I commit to them that there will be no surprises. The job might not work out, but they will hear from me first and immediately and they will have time to land safely somewhere else. In exchange, they need to let me know early on if they are unhappy in any way.”

Ultimately, loyalty is about the quality of your relationships. People don’t leave companies, they leave managers. If there is no relationship between a manager and an employee or, worse, a bad relationship, you won’t get loyalty regardless of your cultural policy. Being explicit in the way Ghodsi is can enhance the relationship, because he makes a verbal commitment on top of the evident interest that he has already taken in his executives. If he simply stated that commitment without working to establish the relationships that would support it, he would fail.

The leader of an organization can have meaningful relationships in the company that extend far beyond the people who report to her. If she takes a genuine interest in the people she meets, stays true to her word, and is known throughout the organization as someone you want to get behind, she can create deep bonds and loyalties even in the most dynamic industries.

Cultural Orientation

Culture is an abstract set of principles that lives—or dies—by the concrete decisions the people in your organization make. As a leader, this gap between theory and practice poses huge challenges. How do you get an organization to behave when you’re not around to supervise? How do you make sure the behaviors that you prescribe result in the culture that you want? How can you tell what’s actually going on? How can you know if you’ve succeeded? Your own perspective on the culture is not that relevant. Your view of your executive team’s view of your culture is rarely what your employees experience. The relevant question is, What must employees do to survive and succeed in your organization? What behaviors get them included in, or excluded from the power base? What gets them ahead?

The best way to understand your culture is through how new employees behave. What behaviors do they perceive will help them fit in, survive, and succeed? That’s your company’s culture. Go around your managers to ask new employees these questions directly after their first week. And make sure you ask them for the bad stuff, the practices or assumptions that made them wary and uncomfortable. Ask them what’s different than other places they’ve worked—not just what’s better, but what’s worse. And task them for advice: “If you were me, how would you improve the culture based on your first week here? What would you try to enhance?”

Your first week in an organization is when you’re observing each detail, figuring out where you stand. That’s when your sense of the culture gets seared in. That’s when you diagnose the power structure: Who can get things done, and why? What did they do to get in that position? Can you replicate it? At the same time, how you behave on arrival—how other people see you—affects your standing and potential in the company and determines your personal brand.

First impressions of a culture are difficult to reverse. This is why new-employee orientation is better thought of as new-employee cultural orientation. Cultural orientation is your chance to make clear the culture you want and how you intend to get it. What behaviors will be rewarded? Which ones will be discouraged or severely punished? People’s receptivity when they join, and the lasting impact of first impressions, is why the new-employee process is the most important one to get right. If your company’s process for recruiting, interviewing, orienting, training, and integrating new employees is intentional and systematic, great. If any part of it is accidental, then so is your culture.

An employee’s first day at work always makes a lasting impression. People learn more about what it takes to succeed in your organization on that day than on any other. Don’t let that first impression be wrong or accidental.

Shocking Rules

One of the most distinctive large-company cultures is Amazon’s. It promulgates its fourteen cultural values in a number of ways, but perhaps most effectively through a few shocking rules. One value, frugality, is defined as: “Accomplish more with less. Constraints breed resourcefulness, self-sufficiency, and invention. There are no extra points for growing headcount, budget size, or fixed-expenses.”

That’s a nice definition, but how do you drive home that you mean it? Here’s how: desks at Amazon were built by buying cheap doors from Home Depot and nailing legs to them. These door desks weren’t great ergonomically, but when a shocked new employee asked why she had to work at a makeshift desk, the answer pinged back with illuminating consistency: “We look for every opportunity to save money so we can deliver the best products for the lowest cost.”

Any rule so surprising it makes people ask, “Why do we have this rule?” will reinforce key cultural elements. Think about how you can shock your organization into cultural compliance.

Here are the rules for writing a rule so powerful it sets the culture for many years:

  1. It must be memorable. If people forget the rule, they forget the culture.
  2. It must raise the question “Why?” Your rule should be so bizarre and shocking that everybody who hears it is compelled to ask, “Are you serious?”
  3. Its cultural impact must be straightforward. The answer to the “Why?” must clearly explain the cultural concept.
  4. People must encounter the rule almost daily. If your incredibly memorable rule applies only to situations people face once a year, it’s irrelevant.

Incorporate Outside Leadership

Company cultures organize around a simple goal: build a product that people want. But when those companies progress beyond their initial battles they must evolve to take on new challenges. Building a great culture means adapting it to circumstances. And that often means bringing in outside leadership from the culture you need to penetrate or master. Sometimes the culture you need is so far away from the culture you have that you need to get outside help. Rather than trying to move your company to a culture that you don’t know well, bring in an old pro from the culture you aspire to have.

Object Lessons

Culture is not like a mission statement; you can’t just set it up and have it last forever. There’s a saying in the military that if you see something below standard and do nothing, then you’ve set a new standard. This is also true of culture—if you see something off-culture and ignore it, you’ve created a new culture. Meanwhile, as business condition shifts and your strategy evolves, you have to keep changing your culture accordingly. The target is always moving. The object lesson is an extremely effective way of fixing or changing culture.

Determining that your culture is broken is hard. The most common complaints that roll up from the ranks (often anonymously) are “Our culture is broken” or “We’re not living up to our culture.” That may well be true, but it doesn’t tell you anything. So how do you know when you’re off track? Here are a few signs:

  1. The wrong people are quitting too often. People quit all the time, but when the wrong people quit for the wrong reasons, it’s likely time to make a change. If your business is going well, yet people are leaving at a higher-than-industry-expected rate, you have a culture problem. If they’re precisely the people you want to keep, that’s an even worse sign. When people selected for their cultural fit don’t feel at home it’s a particularly bad omen—you picked them for a culture you don’t have.
  2. You’re failing at your top priorities. Say you’re getting deluged with complaints about your customer service, so you make improving it the company’s number one priority. After six months, customer satisfaction has improved a little, but basically still sucks. The naïve diagnosis is that customer support is broken, and you should fire the leader. But customer satisfaction starts with the product, runs through the expectations set by sales and marketing, and finally lands in customer support. So, your problem is very likely cultural: your culture does not reward people for delighting customers. Why? Most likely, because it rewards people for making product schedules, hitting the sales number, or producing acclaimed marketing campaigns. You will not be able to fix your customer happiness problem without fixing your culture.
  3. An employee does something that truly shocks you. If somebody behaves in a way you can’t believe, remember that your culture somehow made that acceptable.

If your culture is broken, you need to make an all-out effort to reprogram it. No technique more strongly shapes and changes culture than the object lesson. It can seem similar to a shocking rule, but a shocking rule is something you put in place to beg the question of why it’s there. No actual situation that invokes the shocking rule has to arise for the rule to have an impact. An object lesson, by contrast, is a dramatic warning you put into effect after something bad has happened and you need to correct it in a way that will reset the culture and make sure the bad thing never happens again.

Imagine you have a rogue salesperson who cuts a side deal with a customer. While the contract states the sale is final, the side letter lets the customer return your product any time during the first three months of the deal. The salesperson never tells finance or legal about the side agreement. The finance department then incorrectly accounts for the sale as revenue, thereby committing accounting fraud (for a sale to be booked as revenue, it cannot be reversible).

What should you do? You certainly have to fire the salesperson and report the accounting error, but will that change the culture? If you don’t change the culture, this type of behavior might kill your company, as few companies survive multiple bouts of fraud. The cultural best practice is to fire not only the salesperson, but the entire chain of command he reports to. Though managers in sales understand that they’re legally responsible for their subordinates’ actions, the mass firing will still be wildly unfair to at least some of them. Yet in this situation a CEO must take a Confucian approach, as the needs of the many outweigh the needs of the few. The object lesson will be universally understood: at this company, we never do anything illegal.

What you say means far less than what you do. If you really want to cement a lesson, use an object lesson. It need not be a Sun Tzu-style beheading, but it must be dramatic.

Make Ethics Explicit

Every company likes to believe it has integrity, but if you asked its employees, you’d hear a different story. The trouble with implementing integrity is that it is an abstract, long-term concept. Will integrity get you an extra deal this quarter? Unlikely. In fact, it may do the opposite. Will it make your product ship a week early? No chance. So why do we care about it?

Integrity, honesty, and decency are long-term cultural investments. Their purpose is not to make the quarter, beat a competitor, or attract a new employee. Their purpose is to create a better place to work and to make the company a better one to do business with in the long run. This value does not come for free. In the short run it may cost you deals, people, and investors, which is why most companies cannot bring themselves to actually, really, enforce it. But the failure to enforce good conduct often brings modern companies to their knees.

One difficulty in implementing integrity is that it’s a concept without boundaries. You can’t pat yourself on the back for treating your employees ethically if you’re simultaneously lying to your customers, because your employees will pick up on the discrepancy and start lying to each other. The behaviors must be universal; you have to live up to them in every context.

Often CEOs will be exceptionally explicit about goals such as shipping products, but silent on matters such as obeying the law. This can be fatal. It’s because integrity is often at odds with other goals that it must be clearly and specifically inserted into the culture. If a company expects its people to behave ethically without giving them detailed instructions on what that behavior looks like and how to pursue it, the company will fall far short no matter whom it hires.

What you measure is what you value. Once you remove the requirement to follow certain rules or obey certain laws, you basically remove ethics from the culture. Culture is not a single decision—it’s a code that manifests itself as a vast set of actions taken over time. No one person makes or takes all these actions. Cultural design is a way to program the actions of an organization, but, like computer programs, every culture has bugs. And cultures are significantly more difficult to debug than programs.

It’s impossible to design a bug-free culture. But it’s vital to understand that the most dangerous bugs are the ones that cause ethical breaches. Spelling out what your organization must never do is the best way to inoculate yourself against bugs that cause ethical breaches. Ethics are about hard choices. Do you tell a little white lie to investors or do you lay off a third of the company? Do you get publicly embarrassed by a competitor or do you deceive a customer? Do you deny someone a raise that they need or do you make your company a little less fair?

One of the most common and devastating mistakes leaders make is to assume people will “Do the right thing” even when it conflicts with other objectives. Don’t leave ethical principles unsaid.

Give Cultural Tenets Deep Meaning

The samurai, the warrior class of ancient Japan, had a powerful code we call “bushido,” or “the way of the warrior.” This code enabled the samurai to rule Japan from 1186 until 1868—nearly seven hundred years—and their beliefs endured long after their reign. The samurai are the taproot of Japanese culture to this day.

Bushido looks like a set of principles, but it’s a set of practices. The samurai defined culture as a code of action, a system not of values but of virtues. A value is merely a belief, but a virtue is a belief that you actively pursue or embody. The reason so many efforts to establish “corporate values” are basically worthless is that they emphasize beliefs instead of actions. Culturally, what you believe means nearly nothing. What you do is who you are.

Hagakure, the most famous collection of samurai wisdom, instructs: “The extent of one’s courage or cowardice cannot be measured in ordinary times. All is revealed when something happens.” The biggest threat to your company’s culture is a time of crisis, a period when you’re getting crushed by the competition or are nearing bankruptcy. How do you focus on the task at hand if you might be killed at any moment? The answer: they can’t kill you if you’re already dead. If you’ve already accepted the worst possible outcome, you have nothing to lose.

Meditating on your company’s downfall will enable you to build your culture the right way. Imagine you’ve gone bankrupt. Were you a great place to work? What was it like to do business with you? Did your encounters with people leave them better or worse off? Did the quality of your products make you proud?

Modern companies tend to focus on metrics like goals, missions, and quarterly numbers. They rarely ask why all their employees come to work every day. Is it for the money? What’s more valuable, the money or the time? We’re doing it for each other. How much do you care about the people you’re working with? Do you want to let them down?

Whether your aim is to keep death in mind, to do it for each other, or some analogous formulation, the glue that binds a company culture is that the work must be meaningful for its own sake. It’s also critical that leaders emphasize the “why” behind their values every chance they get, because the “why” is what gets remembered. The “what” is just another item in a giant stack of things you are supposed to do.

The samurai code rested on eight virtues: Rectitude or justice, courage, honor, loyalty, benevolence, politeness, self-control, and veracity or sincerity. Each virtue was carefully defined and then reinforced through a set of principles, practices, and stories. They all worked together as a system, balancing one another in a way that made it very difficult for any individual virtue to be misunderstood or misused. Let’s zoom in on the politeness virtue to see how this works.

The politeness virtue consisted of a complex set of rules that determined how the samurai should behave in all situations—how he must bow, how he must walk and sit, even how he must drink tea. Though the specific rules may seem arbitrary, they were rooted in the belief that politeness is the most profound way to express love and respect for others. It wasn’t just rule-following, but a gateway to deeper intimacy. Bushido, Soul of Japan gives us an idea of how this concept still works in Japan:

You are out in the hot, glaring sun with no shade over you; a Japanese acquaintance passes you by; you accost him, and instantly his hat is off—well, that is perfectly natural, but the “awfully funny” performance is, that all the while he talks with you his parasol is down and he stands in the glaring sun also. How foolish!—Yes, exactly so, provided the motive were less than this: “You are in the sun; I sympathize with you; I would willingly take you under my parasol if it were large enough, or if we were familiarly acquainted; as I cannot shade you, I will share in your discomforts.”

How did the entire country of Japan embrace politeness for more than ten centuries? It helped that the samurai required everyone to study the code, commit it to memory, and live it every day—but other cultures have required that kind of study, and they didn’t last nearly as long. The samurai endured because of two additional techniques. First, they detailed very permutation of potential cultural or ethical dilemmas to prevent the code from being misinterpreted or deliberately misused. Second, they stamped their code with vivid stories. Stories and sayings define cultures. The samurai developed and refined their culture continuously over a very long period of time, using a variety of psychologically sophisticated techniques to make it feel indelible, inescapable, and completely natural.

The way the samurai took the action-oriented nature of politeness and used it to express the abstract concepts of love and respect is exceptionally instructive. Make your cultural tenets stand out from the norm, from the expected. If the ancient samurai had defined politeness the way we define it today, it would have had zero impact on the culture. Because they defined it as the best way to express love and respect, it still shapes Japanese culture today. What do your virtues really mean?

Walk the Talk

No culture can flourish without the enthusiastic participation of its leader. No matter how well designed, carefully programmed, and insistently enforced your cultural elements are, inconsistent or hypocritical behavior by the person in charge will blow the whole thing up. For a culture to stick, it must reflect the leader’s actual values, not just those he thinks sound inspiring. A leader creates culture chiefly by his actions—by example.

Walking the walk may be the most difficult skill to get right. Every leader will make decisions she later regrets. Nobody has ever been close to perfect. However, when you inevitably take an action that’s inconsistent with your culture, the best fix is to admit it, then move to overcorrect the error. The admission and the self-correction have to be public enough and vehement enough to erase the earlier decision and become the new lesson.

“Do as I say, not as I do” never works. So, refrain from choosing cultural virtues that you don’t practice yourself. A leader must believe in his own code. Embedding cultural elements you don’t subscribe to will eventually cause a cultural collapse. For example, almost every CEO believes in the value of giving feedback. Everybody wants a transparent culture where people know where they stand. However, too many CEOs require managers to write performance reviews, but won’t take the time to do it themselves.

A company’s culture needs to reflect the leader’s sensibilities. No matter how much you want a learning environment or a frugal company or a place where everyone works late, you will not get one unless that is what you instinctively do yourself. If the expressed culture goes one way but you walk in the opposite direction, the company will follow you, not your so-called culture.

A key to leaderships is that you must be yourself. Other people will always have ideas of what you should be, but if you try to integrate all those ideas in a way that’s inconsistent with your own beliefs and personality, you will lose your mojo. If you try to be someone else, not only will you be unable to lead, but you’ll be ashamed to have people emulate you.

Make Decisions that Demonstrate Priorities

The decisions you make influence your culture as much as anything. And the more counterintuitive the leader’s decision, the stronger the impact on culture. However, the process you use to make those decisions also becomes a core part of your culture. There are essentially three high-level decision-making styles:

  1. My way or the highway. This leader says, “I don’t care what you all think, we’re doing it my way. If you don’t like it, the door is right behind you.” This is maximally efficient as the decision-making process requires no discussion at all.
  2. Everyone has a say. This leader favors a democratic process. If he could call for a formal vote on every decision, he would. Decisions take a long time to get made, but everybody is guaranteed a say.
  3. Everyone has input, then I decide. This leader seeks a balance between getting the right information and using all the brain power available and keeping the process efficient. Her process is not as empowering as “Everyone has a say” or as efficient as “My way or the highway.”

In business, the third style tends to work best. “My way or the highway” disempowers everyone beneath the CEO and creates severe bottlenecks at the top. “Everyone has a say,” ironically, drives everyone completely nuts—employees dislike it even more than “My way or the highway.”

CEOs are judged on the efficiency of their process and the acuity of their decisions, and “Everyone has input, then I decide” tends to balance informed decision making with speed. It also acknowledges that not everyone in the organization has enough information to make a given decision, so someone has to be in charge of becoming knowledgeable and then deciding how to proceed.

The most common cultural breakdown occurs after the decision has been made. Suppose you decide to cancel a software project. Suppose further that it was primarily a financial decision and the project’s manager disagreed. Now the manager has to inform the team. The team, frustrated that all their hard work is being thrown away, will be generally pissed. The natural thing for the manager to say is, “I hear you and, quite frankly, I agree with you, but I was overruled by the powers that be.”

This is absolutely toxic to the culture. Everyone on the team will feel marginalized because they work for someone who’s powerless. This makes them one level less than powerless. The strong-willed among them will make their displeasure known throughout the company, causing other employees to question the leadership team and to wonder if their own work will ultimately matter. The end result will be apathy or attrition or both.

So, it’s critical to a healthy culture that whatever your decision-making process, you insist on a strict rule of disagree and commit. If you are a manager, at any level, you have a fundamental responsibility to support every decision that gets made. You can disagree in the meeting, but afterward you must not only support the final decision, you must be able to compellingly articulate the reasons the decision was made.

The manager should have said, “This was a really tough decision. While we have done great work and our project shows real promise, when you consider the overall priorities of the business and where we are with cash, it just does not make sense to continue. We have to focus on our core areas. So, to make sure that everyone on this team is deployed to their highest and best use right now, we have decided to cancel the project.” After a major decision like this, it’s a good practice to ask employees what they thought of the decision—that way you can find out if the rationale behind the move cascaded down the organization with fidelity. Managers who undermine decisions lead to cultural chaos.

Inclusion

Inclusion is a huge and complex issue. However, it can give your company a competitive advantage—the advantage of acquiring the best talent available. Inclusion is more than just national or racial or gender diversity. It is cognitive and cultural diversity—people’s disparate and unique ways of processing information, thinking, and interacting with others. The key to inclusion is actually seeing people for who they are. By seeing people for who they are, you can see what they truly have to offer. But how do you see people for who they are?

People understand their own strengths, value them highly, and know how to test for them in an interview. When a manager wants to make a new hire, she should have people from talent pools different from her own (i.e. U.S. military veterans, African-Americans, etc.) review the hiring criteria and make suggestions about what they would hire for and how they would test for those qualities. For example, one criterion men often overlook when hiring a manager—but women rarely do—is the ability to give feedback. Women are more willing to confront a coworker and have a difficult conversation; men often avoid the issue until it gets superhot. You should also make sure that interview teams come from a range of backgrounds, so that you can better see the complete candidate. It’s easy to value the things that you test for in an interview and nearly impossible to value the things that you don’t.

If the key to inclusion means seeing someone for who they are even if they come in a color or gender that you’re not used to, then it follows that hiring people on the basis of color or gender will actually defeat your inclusion program. You won’t see the person, you will just see the package. Good intentions, pursued without meticulous forethought and follow-through, often lead to catastrophe.

When a company hires an African-American employee because he or she is African-American, then race becomes a reason for making decisions in that culture and the culture often becomes racist. What you do is who you are. If someone enters a company through the Urban HR division, everyone will remember that fact, and the employee will be suspect and have to prove herself over and over. Whereas if everyone is hired on the same criteria, then the culture will see people for who they are and what they uniquely bring to the table.

People who come from different backgrounds and cultures bring different skills, different communication styles, and different mores to the organization. If you’re having trouble seeing the value in a particular talent pool, the answer is not to set up a parallel talent process for those groups; the answer is to fix the talent process you have so you can cure your blindness.

Constant Feedback

You have to be explicit in attaching bad outcomes to culture. That’s where learning happens. It’s not waiting until the year-end performance review and telling them that they’re not a culture fit. It’s a weekly event where you’re connecting confusion, mistakes, and bad outcomes back to your culture and your beliefs about the behaviors and outcomes that will be rewarded, punished, and accepted.

Most organizations either give no feedback or only negative feedback. And when they give negative feedback, they do it poorly. A manager’s job is to help a person find what they’re great at and unleash it in the purpose of achieving the goals that we all share. Yet it has become a blind spot in management where we think that if somebody’s doing something well, they a) know what good looks like, and b) know that they’re good at it. This is not true.

Most people don’t actually know what they’re good at. If you view your job as a manager as finding and unleashing a person’s potential, then you want to spend a lot of time figuring out what people are good at and calling that out. The way you do this is exactly the same as the way you give negative feedback. All you’re trying to do is take confusion and turn it into clarity.

For example, let’s say somebody does something really great. Most managers will ignore it. That’s terrible. Some managers will say “hey, that’s a really great job.” That’s better than ignoring it, but that’s still not great. What great looks like is sitting down with a person and saying: “Here’s what my expectations were. And here’s what I thought. Does that make sense? Here’s what I experienced. I just experienced you doing something far better than that. I thought the report would be here on Tuesday and you got it to us on Monday which gave us an entire extra day. That 24-hour early delivery made a big difference to us.” In this scenario, you’re explaining your experience to them, being explicit about the standard, and helping them make sense not just of what they did that was great but why it was great and why it matters. Feedback like this helps people get clear on what they’re really good at, and in that you’re doing one of the most valuable things a manager can do: unleash their potential.

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