What the Hell is Company Culture?

David Foster Wallace, one of my favorite authors, gave a graduation speech called, “This is Water.” Cleaned up and shortened for youtube (worth the 9 minutes), Wallace starts by telling about an older fish greeting two young fish, “Good morning boys, how’s the water?” After he swims off, one young fish says to the other, “What the hell is water?”

I get lots of agreement and nods when I quote Drucker, “Culture eats strategy for breakfast.”  Culture is what every profiled CEO in the NYT’s “Corner Office” talks about.  Culture is what the Admiral I met on the USS Harry Truman waxed on about as the key to his success.  But often, people don’t know what it really means, or how to work on it, even though it is everywhere.

And I didn't either.  Jack Daly once challenged me, “Do you have a culture by default or a culture by design?”  “Um,” I thought, in 2003.

Culture is hard to work with because it is like water to fish.  “Artifacts” of culture can be found at office parties, in performance reviews, in the way meetings are run, in dress codes, in customer interactions, in software designs.  One investor I know claims he can read culture from the state of the office bathrooms. Of course, every one of these things is a topic to explore.  Arguably this is a topic for a book, not a blog.  But there is a way to “see” and therefore work with culture that cuts through the clutter:

CORE VALUES

A mission is a company’s definition of winning. Core Values are the answer to the question “how do we win?”  They broadly state what’s important to do, and the behaviors that define what’s uniquely important to do at one company vs. another.  You can map the most distinguishing features of life in a company to its values.    

Core values really hum when they are also brand pillars.  The reasons someone buys from you are the same reasons why someone works for you.  Fedex’s top core value is safety.  Running the biggest airline in the world, Fedex boasted of only one fatality in 35 years of operations, when I visited them about five years ago. Reliability screams from every aspect of their operation.  And the story of how they revolutionized delivery with “Absolutely, Positively Next Day” has become business legend. The "absolutely positively" part is what really mattered, and grew naturally out of their values.

So how do you work with culture? Come up with ways to invest in and amplify what you value.  It is not having lots of fun parties or unusual things to do at work.  That probably doesn’t hang together well, doesn’t scale, and may actually waste time.  If everyone believes that the values are the way to win, by definition they are worthwhile. M5’s Battle of the Bands events were awesome and legendary because they tapped into the energy of "learn" - one of our four core values. 

Another of M5’s values was “Be Honest.” We built technology, a highly transparent website showing the world our service foibles in real-time, to help us be honest with our customers and the market.  We rewarded someone with a trip to Space Camp in Alabama for telling a customer bad news.  We fired. Three $500 bottle of wine ordered at staff dinner wasn’t the problem, not "fessing up" after sobering up sent someone off the island.  We created stories about “Be honest,” and deepened it.  We designed our culture with intent.

One problem is that the stated core values aren’t always the real ones.  As with mission, you have to discover core values — if they are “aspirationial” posing as “core,” the leaders appear hypocritical, and the values can become irrelevant.  Pat Lencioni has a great riff on core vs. other types of values in,“The Advantage."  We shifted the words a few times as we tried to better describe our values, but the truth underneath didn’t move much.  Phillip Kim, a co-founder and always the skeptical engineer, had his own way of describing M5’s strengths, “Techies who do customer service well.” This was consistent and complementary to our other descriptions, so it helped. 

Another problem is that company values may not be your staff’s own values.  Stan Slap’s book, “Bury My Heart In Conference Room B,” has a particular take on this.  I saw him speak at Microsoft, and I read his book after Lanham Napier of Rackspace said he had hired him.  Slap’s approach makes building culture possible for big companies.  Relax, says Slap. Back-off.  It is ok for different values to be defined by different leaders in different parts of the company.  The idea is to liberate staff to be true to real values, and energized to follow authentically value-driven bosses.  It's better than a sharp stick in the eye, and hopefully the values are consistent with how leadership is directing the company.

It is hard to “see” culture - it is the water you and your staff swim in.  But values are the lens that reveal what it is. Are the values truly core?  Authentic? Shared? Then, what decisions, processes, programs, activities and stories map to them?  We did a pretty good job at M5 building a culture by design.  But, we could have done a lot more.  Most companies don’t seem to make it a priority, certainly our competitors didn’t.  I want to bet even bigger on this next time.

Top VC Sequoia (investments include Zappos and Rackspace) have made culture a focus.  To close, here’s a great conversation with Alfred Lin and AirBnB founder about how core values are Air BnB’s rocket fuel: