by Ben Horowitz
Now the CEO is in a bind. Does he stick to his guns even though he doesn’t really believe in his idea anymore? Or does he risk looking wishy-washy by reversing himself on the spot? This is a no-win—all because he wanted to be Jack Welch. If you aren’t yourself, even you won’t follow you.
A CEO will often hear something like this from a board member: “I don’t think your CFO is as good as the CFOs of other companies whose boards I’m on.” This is an extremely tricky statement to deal with. The CEO doesn’t know those other CFOs, and she can’t interview them and compare. How does she respond? The CEO’s common—and wrong—move is to go tell her CFO to be better in front of the board. She is trying to be what the board member wants, but failing, because she has refused to have a point of view. Her CFO will be confused, because he has no idea what he’s done wrong. He will try to transform into something he’s not and also lose his leadership mojo.
The CEO should tell the board member, “Great. Let me know what you think makes those CFOs better than our guy, and please introduce me to them.” The CEO should spend time with those CFOs, decide for herself whether she comes to the same assessment of a skills gap, then—and this step is critical—decide how important those skills are for her company. If the skills are vital and the difference in skills between her CFO and the external CFOs is real, she can go back to her CFO, tell him where he stands, and let him know that he’s not going to make it. She can be herself. If she disagrees with the board member, she can be herself with him, too. And she’ll have done the work to back up her response.
If you follow the first rule of leadership, not everybody will like you. But trying to get everybody to like you makes things even worse. I know this, because not everybody likes me. In fact, I am sure someone reading this right now is saying, “Who does that old white dude think he is quoting Chance the Rapper?” I am okay with that. I don’t want to be cool. I just want to be me.
But Know Which Parts of You Need Work
There are parts of any CEO’s personality that he doesn’t actually want in the company. Think carefully about what your flaws are, because you don’t want to program them into your culture—or else leading by example will bite you in the ass.
One part of my personality that didn’t work so well in a software company was my willingness to engage in endless, unstructured conversation. (That habit is a better fit at a venture capital firm.) Tip to my future friends: if you don’t end our phone calls we might literally talk forever.
When you need a large organization to work in concert and execute with precision on an enormous number of tasks, you simply don’t have time to explore every nook and cranny of every issue in every conversation. So my discursiveness—which I still like to think of as curiosity—could be extremely disadvantageous. I learned to counterprogram the culture against my inclinations in three ways:
I surrounded myself with people who had the opposite personality trait. They wanted to finish the conversation as soon as possible and move on to the next thing.
I made rules to help manage myself. If a meeting was called without a tightly phrased written agenda and a desired outcome, we’d cancel it.
I announced to the company that we were committed to running meetings efficiently—talking the talk that I did not like walking, and forcing myself to walk it as much as I could.
The company still suffered from my inefficient personal style, but we were mostly able to work around it.
Applying Who You Are
Once you’re comfortable with who you are, you can begin to map that identity onto the culture you want. When Dick Costolo took over as CEO of Twitter, his advisor Bill Campbell joked that if you set off a bomb at 5 p.m., only the cleaning people would get killed. Costolo wanted to change the culture to encourage hard work. Costolo himself is a grinder. After having dinner with his family every night, he’d go back to work and make himself available to anyone who was still there and who wanted to get something done that needed his help. Pretty soon, a lot of people were working longer hours and getting more done. If Costolo wasn’t the type of person who could focus and be effective for very long hours, his plan never would have worked.
It is much easier to walk the talk when the talk is your natural chatter. When I was a young manager, written feedback had a much greater impact on me than verbal feedback (even though I was obviously fond of chatting). I liked writing my own reports. As CEO of Opsware it made sense to me that written feedback would be a vital part of our culture. If I hated writing, that virtue would never have worked.
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.
Culture and Strategy. Did Somebody Say Breakfast?
The management consultant Peter Drucker famously said: “Culture eats strategy for breakfast.” It is a great line and I love it, but I disagree with it. I love it, because it is marvelously anti-elitist: Screw what the executive suite says, what matters is what the people are doing. That’s totally correct. I also love that Drucker’s observation elevates culture to a high-order consideration. But the truth is that culture and strategy do not compete. Neither eats the other. Indeed, for either to be effective, they must cohere.
Genghis Khan’s military strategy called for nearly everyone to play the same role: a self-sufficient cavalry soldier. So his egalitarian culture perfectly fit his strategic needs. When Shaka Senghor’s strategy was to have a smaller but more elite gang than his competitors, he built his culture around a camaraderie that the larger gangs couldn’t match.
When Jeff Bezos created Amazon’s long-term strategy, a key element was a lower cost structure. So a cultural attentiveness to frugality made perfect sense.
For a company like Apple, whose strategy depended on building the most beautiful, perfectly designed products in the world, frugality would have been counterproductive. In fact, John Scully nearly destroyed the company when he fired Steve Jobs for, in part, his lack of cost consciousness. Not every virtue fits every strategy.
If you want to create strategic advantage by being the fastest-innovating company in the world, then Facebook’s original motto, “Move fast and break things,” makes perfect sense. If you are Airbus, making airplanes, it might not be such a good idea.
Pick the virtues that will help your company accomplish its mission.
Subcultures
This book would be much more elegant if I could just assert that all companies have a single, cohesive, nonconflicting culture. Alas, any company of any significant size will have subcultures in addition to its main culture.
Subcultures usually emerge because the divisions of a company are often quite distinct from one another. As different functions require different skill sets, salespeople, marketing people, HR people, and engineers tend to come from different schools, to have majored in different subjects, and to have different personality types. This leads to cultural variation.
In tech, the most pronounced difference is between sales and engineering. As an engineer, you need to know how things work. If you’re asked to build a new function for an existing product, you must understand precisely how that product works. So you often have to talk to the code’s author, who must be able to tell you exactly how she designed it and how all of its components interact. People who are abstract, nonlinear, or imprecise in their communication have difficulty fitting into engineering organizations, because they leave bugs in their wake.
As a salesperson, you must know the truth. Does the customer have the necessary budget? Are you ahead of or behind the competition? Who in the target organization is a supporter and who is a detractor? Experienced salespeople like to say, “Buyers are liars.” That’s because, for a variety of reasons, buyers do not volunteer t
he truth. They may enjoy being wined and dined; they may be using you as a stalking horse to get a better price out of the competition; or they may just have a hard time saying “No.” Like Jack Bauer in 24 interrogating a terrorist, you must extract the truth. In sales, if you take what you’re told at face value, you won’t last.
When you ask an engineer a question, her instinct is to answer it with great precision. When you ask a salesperson a question, she’ll try to figure out the question behind the question. If a customer asks, “Do you have feature X?” a good engineer will answer yes or no. A good salesperson will almost never answer that way. She will ask herself, “Why are they asking about that feature? Which competitor has that feature? Hmm, then they must be in the account trying to take my deal. I need more information.” So she’ll reply with something like, “Why do you think feature X is important?”
Having their questions answered with questions drives engineers insane. They want answers fast, so they can get back to work. But if they hope to see their product succeed—if they want great salespeople to go sell it, so they can keep working for a company that’s still in business—they need to be able to tolerate that cultural difference.
In a well-run organization, engineers get compensated more for how good the product is than for how much money it ends up bringing in, because there are often serious market risks that are outside the engineer’s control. Great engineers love to build things and often code on side projects as a hobby. So creating a comfortable environment that encourages round-the-clock programming is vital. Hallmarks of engineering cultures often include casual dress, late morning arrival times, and late or very late evening departure times.
Great salespeople are more like boxers. They may enjoy what they do, but nobody sells software on the weekends for fun. Like prizefighting, selling is done for the money and the competition—no prize, no fight. So sales organizations focus on commissions, sales contests, president’s clubs, and other prize-oriented forms of compensation. Salespeople represent the company to the outside world, so they need to dress accordingly and show up early, when their customers punch in. Great sales cultures are competitive, aggressive, and highly compensated—but only for results.
While every company needs core common cultural elements, trying to make all aspects of your culture identical across functions means weakening some functions in favor of others. For example, virtues like “We are obsessed with customers,” “The best idea wins regardless of rank,” and “We outwork the competition” all apply at the company level. But “We dress casually” or “We only care about results” are usually more apt for a subculture.
A Specification for Employees
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 from bushido: virtues must be based on actions rather than beliefs. Because, trust me, 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. Patrick Collison, cofounder and CEO of Stripe, told me:
Honestly, most of what ultimately defined us happened in the hiring of the first twenty people. So the question of what do you want the culture to be and who do you want to hire are in some sense the same question.
Stewart Butterfield, the cofounder and CEO of Slack, said that orienting his culture around the kind of employees he wanted has started to dramatically improve things at the company:
Our values were really original—they included playfulness and solidarity, for instance—but they weren’t an effective guide to action. We were trying to find something that would help people make a decision.
Then I remembered a conversation I had with Suresh Khanna, who led sales at AdRoll. One thing he said really stuck with me. He said that when he was recruiting he looked for people who were smart, humble, hardworking, and collaborative.
That’s what we needed. Those four are especially valuable in combination, because if you have just two of the four it can be a disaster. If I tell you someone is smart and hardworking, but neither humble nor collaborative, that’s going to bring an archetype to mind and it’s not a good one. Same with someone who is humble and collaborative but isn’t smart or hardworking. You know that person and you don’t want them.
His ideas about what makes a good employee or candidate were much more actionable than ours—it’s hard to measure someone’s playfulness or solidarity in an interview. I began looking for these four:
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. We want to turn as much as possible into a routine so we 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?”
Humble. I don’t mean meek or unambitious, I mean 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 the kind of collaboration we want at Slack.
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.
Collaborative. It’s not submissive, not deferential—in fact it’s kind of the opposite. In our culture, 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.”
Someone with strength in all four attributes is the perfect Slack employee.
Once you have your specification for employees clearly established, how do you apply it? Amazon selected people to serve as the Bar Raiser. Their function in interviews is to test candidates on their ability to understand Amazon’s leadership principles and fit into its culture. Crucially, the person who is the Bar Raiser is not on the hiring team and has no vested interest in the candidate—his or her mission is purely cultural. Prioritizing this role does two things. First, it establishes a strong test of cultural fit. Second, and perhaps more important, it sends a message to every candidate that Amazon’s culture is vitally important.
A well-designed cultural interview need not be long. Parametric Technology Corporation (PTC) is a computer-aided-design software company with a legendary sales culture. My head of sales at Opsware, culture-changer Mark Cranney, came from PTC and was always bragging about how good they were at selling. I got annoyed and asked why they were so great. He said, “Well, it started with the interview. I walked into the interview with the senior vice president of sales, John McMahon. He said nothing for what seemed like five minutes, then asked me, ‘What would you do if
I punched you in the face right now?’”
At this point in Mark’s story, I cried, “What!? He wanted to know what you would do if he punched you in the face? That’s crazy. What did you say?”
Mark said, “I asked him, ‘Are you testing my intelligence or my courage?’ And McMahon said, ‘Both.’ So I said, ‘Well, you’d better knock me out.’ He said, ‘You’re hired.’ Right then I knew that I’d found a home.”
How did McMahon make a hiring decision so quickly? That brief exchange enabled him to suss out whether Mark was a fit with his key cultural elements: the ability to keep your poise under fire, the ability to listen carefully, the courage to discover why a question is being asked—and, most of all, competitiveness.
A Universal Element of Strong Cultures—What You Do Must Matter
While you should design your culture to meet the unique needs of your organization, there is one element every company needs. Almost no one ever makes it part of their stated set of values, but it’s impossible to build a winning company without it.
The questions employees everywhere ask themselves all the time are “Will what I do make a difference? Will it matter? Will it move the company forward? Will anybody notice?” A huge part of management’s job is to make sure the answer to all those questions is “Yes!”
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.