What You Do Is Who You Are

by Ben Horowitz

  If I violate basic trust with my most highly valued employees, I will break our culture of trust and jeopardize the entire operation. I realize that protecting shareholders is also extremely important, so I propose the following. Either a) I issue the stock increase and reduce the amount of stock available to our other executives by the corresponding amount, or, if you do not trust me to do that, b) The board approves a transfer of my personal stock in the amount of the promised increase to the executive. This issue is that important to me.

  Best,

  Ben

  Fred did as I suggested. But the new board member dug in, the board refused to make the accommodation, and eventually the executive quit.

  A disappointing outcome, but for Fred it was instructive. He learned that he needed the right culture on his board as well as in his company. The fact that the new investor cared nothing about the culture of the company—the culture that would to a huge extent determine the fate of his own investment—and cared only about looking like a tough guy would continue to be problematic. Fred ejected the investor. His company continues to grow, bruised but stronger.

  Telltale Signs That Your Culture Is Messed Up

  Determining that your culture is broken is hard. It would be great if you could trust your employees to tell you. But a) they’d need the courage to do that, and b) the person complaining would have to be a good cultural fit themselves or the complaint might actually be a compliment (your culture is working and therefore the complainer, who can’t get with the program, doesn’t like it), and c) most complaints about culture are too abstract to be useful. 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:

  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.

  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 naive 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.

  An employee does something that truly shocks you. Remember Thorston, the lying middle manager? It horrified me to discover that lying was seen, at our company, as acceptable.

  To correct that misimpression, I had to fire him. Even so, the object lesson of him getting promoted for lying—which is how people saw it—lingered for years. If you’re not careful, the truth can become open to interpretation. Once lines were crossed, our interpretations became loose—as when some of our employees suggested that unguaranteed contracts be counted as bookings—and it was difficult to tighten them back up. If I knew then what I know now, I would have made an all-out effort to reprogram my culture immediately. In addition to firing Thorston, I would have introduced a shocking rule or created an unforgettable piece of lore. I needed an everyday lesson that said, “If you lie to your coworkers, you are fired.”

  If somebody behaves in a way you can’t believe, remember that your culture somehow made that acceptable.

  Object Lessons

  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.

  The Chinese general Sun Tzu, author of the oldest military treatise in the world, The Art of War, understood object lessons perfectly. The great ancient historian Ssu-ma Ch’ien gives this account of how Sun Tzu employed them:

  Sun Tzu Wu was a native of the Ch’i State. Art of War brought him to the notice of Ho Lu, King of Wu. Ho Lu said to him: “I have carefully perused your 13 chapters. May I submit your theory of managing your soldiers to a slight test?”

  Sun Tzu replied: “You may.”

  Ho Lu asked: “May the test be applied to women?”

  The answer was again in the affirmative, so arrangements were made to bring 180 ladies to the Palace. Sun Tzu divided them into two companies and placed one of the King’s favorite concubines at the head of each. He then bade them all take spears in their hands, and addressed them thus: “I presume you know the difference between front and back, right hand and left hand?”

  The girls replied: “Yes.”

  Sun Tzu went on: “When I say ‘Eyes front,’ you must look straight ahead. When I say ‘Left turn,’ you must face towards your left hand. When I say ‘Right turn,’ you must face your right hand. When I say ‘About turn,’ you must face right round towards the back.”

  Again the girls assented. The words of command having been thus explained, he set up the halberds and battle-axes in order to begin the drill. Then, to the sound of drums, he gave the order “Right turn.” But the girls only burst out laughing. Sun Tzu said: “If words of command are not clear and distinct, if orders are not thoroughly understood, then the general is to blame.”

  So he started drilling them again, and this time gave the order “Left turn,” whereupon the girls once more burst into fits of laughter. Sun Tzu said: “If words of command are not clear and distinct, if orders are not thoroughly understood, then the general is to blame. But if his orders are clear, and the soldiers nevertheless disobey, then it is the fault of their officers.”

  So saying, he ordered the leaders of the two companies to be beheaded. Now the King of Wu was watching the scene from the top of a raised pavilion; and when he saw that his favorite concubines were about to be executed, he was greatly alarmed and hurriedly sent down the following message: “We are now quite satisfied as to our general’s ability to handle troops. If we are bereft of these two concubines, our meat and drink will lose their savour. It is our wish that they shall not be beheaded.”

  Sun Tzu replied: “Having once received His Majesty’s commission to be general of his forces, there are certain commands of His Majesty which, acting in that capacity, I am unable to accept.”

  Accordingly, he had the two leaders beheaded, and straightway installed the pair next in order as leaders in their place. When this had been done, the drum was sounded for the drill once more; and the girls went through all the evolutions, turning to the right or to the left, marching ahead or wheeling back, kneeling or standing, with perfect accuracy and precision, not venturing to utter a sound. Then Sun Tzu sent a messenger to the King saying: “Your soldiers, Sire, are now properly drilled and disciplined, and ready for your Majesty’s inspection. They can be put to any use that their sovereign may desire; bid them go through fire and water, and they will not disobey.”

  But the King replied: “Let our general cease drilling and return to camp. As for us, We have no wish to come down and inspect the troops.”

  Thereupon Sun Tzu said: �
�The King is only fond of words, and cannot translate them into deeds.”

  After that, Ho Lu saw that Sun Tzu was one who knew how to handle an army, and finally appointed him general. In the West, he defeated the Ch’u State and forced his way into Ying, the capital; to the north, he put fear into the States of Ch’i and Chin, and spread his fame abroad amongst the feudal princes. And Sun Tzu shared in the might of the King.

  The story sounds superharsh: why kill the concubines? They weren’t even soldiers. It seems so unfair. Yet this unfairness was the key to setting the culture Sun Tzu wanted. Because it was so ruthless, he knew the story of the beheadings would travel throughout the kingdom. Nobody would ever be confused about whether it was okay to giggle at an order. This was critical, because Sun Tzu knew that in a battle one soldier losing discipline could cost him everything. He needed the culture to be rock solid from the king to the concubines, and he made it so with a searing object lesson.

  If your company faces an existential threat, you may need to employ a similarly unfair object lesson. 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 take Sun Tzu’s approach: you should 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.

  If a salesperson merely tells a customer that a feature is coming when it isn’t, but he doesn’t bind the company to the feature’s arrival, then you should reprimand or perhaps fire him, but it won’t be necessary to remove the entire hierarchy above him.

  Dealing with Culture Breakers

  In The Hard Thing About Hard Things I wrote a section called “When Smart People Are Bad Employees.” These are employees who you think will be incredible, but who turn out to be break the culture. I described the three types of bad employees, all of whom you should probably fire. Below is a digest of what I said—and one additional edge-case type of employee that’s more problematic.

  The Heretic

  Every company needs lots of smart, super-engaged employees who can identify its particular weaknesses and help it improve them. But some employees look for faults not so they can fix them, but so they can build a case. Specifically, a case that the company is hopeless and run by a bunch of morons. The smarter the employee, the more destructive this type of behavior can be—because people are that much more likely to listen to him. He will convince engaged, productive employees to become disengaged and to rally others to do the same. They will question every management decision, break trust, and cause your culture to disintegrate.

  Why would a smart person try to destroy the company he works for?

  He is disempowered. He feels he can’t access the people in charge, so complaining is his only way to get the truth out.

  He is fundamentally a rebel. Sometimes these people actually make better CEOs than employees.

  He is immature and naive. He cannot comprehend that the people running the company do not know every minute detail of its operations. He therefore believes they are complicit in everything that’s broken.

  It’s very difficult to turn heretics around. Once a heretic takes a public stance, the social pressure to be consistent is enormous. If he tells fifty friends that the CEO is the stupidest person on the planet, reversing that position will cost him enormous credibility. Most people aren’t willing to take the credibility hit.

  The Flake

  Some brilliant people can be totally unreliable. At Opsware, we once hired an undeniable genius—I’ll call him Roger. Roger was an engineer in an area where a typical new hire would take three months to become fully productive. Roger came up to speed in two days. On his third day, we gave him a project that was scheduled to take one month. Roger completed the project in three days with nearly flawless quality. More specifically, he completed the project in seventy-two hours. Seventy-two nonstop hours: no breaks, no sleep, no nothing but coding. In his first quarter on the job, he was the best employee that we had and we immediately promoted him.

  Then Roger changed. He would miss days of work without calling in. Then weeks of work. When he finally showed up, he apologized profusely, but the behavior didn’t stop. His work product also degraded. He became sloppy and unfocused. I could not understand how such a stellar employee could go so haywire. His manager wanted to fire him, because the team could no longer count on Roger for anything. I resisted. I knew that the genius was still in him and I wanted us to find it. We never did. It turns out that Roger was bipolar and had two significant drug problems: 1) he did not like taking his medication and 2) he was addicted to cocaine. Ultimately, we had to fire Roger, but even now, it pains me to think of what might have been.

  Flaky behavior often has a seriously problematic cause, from self-destructive streaks to drug habits to moonlighting for other employers. The cultural problem is that if a team is counting on the flake, and she’s allowed to flake without explanation, then everyone else on the team believes that he should be able to flake, too.

  The Jerk

  This smart-bad-employee type can crop up anywhere in the organization, but is particularly destructive at the executive level. At times, most executives can be pricks, dicks, a-holes, or a variety of equally profane nouns. I’d argue that being dramatically impolite can improve clarity or emphasize an important lesson—and anyway, that’s not the behavior I’m talking about. I’m talking about someone who looks for an opportunity to attack—the more personal the attack, the better.

  Consistently asinine behavior from an executive can cripple a company. As a company grows, its biggest challenge becomes communication. If a member of your staff is a raging jerk, communication can become nearly impossible, because people just stop talking in his vicinity. If whenever anyone brings up a marketing issue the VP of marketing jumps down her throat, guess what topic will never come up?

  Soon nobody brings up any topic of any kind when the jerk is in the room—and the entire company slowly degenerates. Note that this dynamic only occurs if the jerk in question is brilliant. Otherwise, nobody will care when he attacks them. The bite only has impact if it comes from a big dog. If one of your big dogs destroys communication on your staff, you need to send him to the pound.

  The Prophet of Rage

  Sometimes you run into an edge case among your employees whom you may want to consider trying to reform. One special category of the Jerk is a type I call the Prophet of Rage, in honor of the song by Public Enemy. Prophets are incredibly productive and they have indomitable will. No obstacle is too great, no problem too hard, and they do not care whom they piss off to get the job done. People refer to them as glass breakers, cowboys, toe stompers, and assholes. Really they’re just jerks. But often you don’t want to get rid of them, because who else is going to do so much high-quality work? You just wish they were easier to work with.

  They are so self-righteous it’s difficult to even have a conversation with them about the right way to do things, because they believe that if they are doing it, it must perforce be right. Everyone else is always wrong.

  Their backgrounds almost never match the
typical hiring profile. Often they grew up poor and went to the “wrong” schools. Or they were the “wrong” religion, sexual orientation, or skin color. In one way or another they grew up on the wrong side of the tracks and they believe everybody is judging them on that. They will walk through fire to prove their worth. (This is not to say that everyone with this background is a Prophet of Rage, just that PORs tend to have this background.)

  These employees are the corporate version of WMDs. They are the ultimate weapon—but their deployment can be highly destabilizing. How can you prevent them from destroying your culture and possibly your company?

  When you manage a POR, you have to keep in mind that they often dish it out much better than they take it. While a POR won’t hesitate to viciously attack his peers, the slightest criticism causes him to go into a deep funk. Most managers find such behavior ridiculous and give up when they see it. Most managers therefore forfeit the opportunity for greatness.

  PORs are perfectionists. They expect total perfection from themselves and everyone around them. When they see others deliver subpar work or subpar thinking, the prophets become enraged. The same dynamic that enrages them and causes them to stomp on other people’s toes makes them recoil at any criticism. As they have dedicated their entire life force to doing great work, any rejection of that work is a personal rejection of them. Keep in mind, too, that a prophet’s background will often make him suspect you don’t want him there in the first place.