To build a strong business, founders need to ensure culture and strategy reinforce each other
A s an entrepreneur, setting the culture of your organization can be exceptionally hard, and there is a stark shortage of reliable reference material. Most management books suffer from survivorship bias, and tend to focus on companies that succeeded, concluding incorrectly that their culture made them thrive.
Serial entrepreneur and venture capitalist Ben Horowitz, who failed to build a career as a hip-hop artist, addresses this in his new book. Even though he couldn’t do much in music, the training came in handy later in his career. The beauty of What You Do Is Who You Are is that it doesn’t reverse engineer. It draws upon many references from hip-hop to explain how strong cultures are built and how they apply to modern workplaces.
Here are five guiding principles of building a culture that enables great work.
Finding the right fit
First, virtues are far more important than values. The reason efforts to establish corporate values are basically worthless is that they emphasize beliefs instead of actions. There is a huge difference between what companies claim to stand for and how its employees behave. Culture isn’t about colourful walls and sushi lunches. It is composed of daily micro-behaviours. You can claim to champion whatever you want but your actions reveal your true self. It is important to keep in mind that role modelling helps but doesn’t work when companies scale.
When Horowitz was the chief executive of software Loudcloud, he assumed that if he led by example, other employees will follow suit. However, as the company grew and diversified, its culture became a random aggregation of sub-cultures fostered under different managers.
Second, accelerate the contradictions. The hypocrisies and contradictions in companies can turn out to be great learning opportunities if management teams try to understand their origin. Specifically, teams need to identify what actions widen the chasm between espoused values and virtues.
Third, culture doesn’t eat strategy for breakfast. There has been a false dichotomy between culture and strategy for a long time. Today, if entrepreneurs and founders wish to build a business that lasts and accomplishes something meaningful, they need to ensure that both culture and strategy reinforce each other.
That is why it is important to have diversity champions part of the core team, formulating overall strategy. Having a leader of diversity doesn’t work if she doesn’t have a seat at the strategy table.
Fourth, shocking rules reinforce cultural priorities at the time. In the early days of Facebook, “Move fast and break things" was the acceptable operating principle. Obviously, Mark Zuckerberg wasn’t telling his engineers to be reckless without reason. He knew that to succeed in a network-led business and overcome competition from incumbents like MySpace, he had to prioritize speed over everything else. Moving fast was the need of the hour and the shocking byproduct of breaking things was the acceptable side-effect. .
In 2014, Facebook’s shocking rule made way for the much more stable motto: “Move fast with stable infrastructure." It was less shocking but indicated the priority of the organization at the time, risk mitigation. As Horowitz explains, cultures evolve with mission and stage of implementation.
Fifth, make ethics explicit. The most common mistake founders make is that they assume that employees will do the right thing even when it conflicts with other objectives and incentives. If you want to observe ethics in your organization, observe the behaviour of salespeople on the last day of the quarter. Their actions will demonstrate the culture and ethical index of your organization.
Contrary to popular belief, being ethical isn’t a liability. It can strengthen your culture. Toussaint L’Ouverture, the leader of the slave revolt in Haiti, used ethics as a way to elevate culture, and build trust at one of the harshest periods in history. Ultimately, it created an army that was much more principled than its adversaries and overcame the British, French and Spanish forces despite being severely under-resourced.
By presenting examples like Louverture and offering insightful culture design principles from hip-hop art, Horowitz does what most others have failed to do – demystify culture. The single biggest takeaway for me was that culture is not preordained. It is very much a function of our actions.
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Utkarsh Amitabh is founder of Network Capital, a global peer mentoring community and a WEF Global Shaper.