What You Do Is Who You Are

by Ben Horowitz

  There are three keys to managing PORs:

  Don’t give feedback on their behaviors, give feedback on their behaviors’ counterproductive effect. If you say, “It is totally unacceptable to scream at people in meetings,” the POR will hear, “It’s totally unacceptable for you to scream at people in meetings, but others can do it all they want, because I am out to get you.” Focus instead on how his behaviors were interpreted: “You have a very important mission, but when you screamed at Andy that his team was blocking you, his response wasn’t to work harder to unblock you. His reaction was to get you back for embarrassing him in public. Your method was totally ineffective.” The POR will initially bristle at the criticism, then realize that you were right, then work extremely hard to fix the problem—because he is, after all, a perfectionist.

  Recognize that you can’t fix a POR. No matter how effectively you coach a prophet, you won’t completely transform him. So it’s better to try to moderate your prophet while letting the rest of the team know that you expect them to accept him due to his incredibly high productivity.

  Focus your coaching on what the POR can do. As your prophet is paranoid, giving entirely negative feedback will only reinforce his life narrative of discrimination. So spend your time working with him on what he can do. This will catalyze his superpowers and take your company’s production into the stratosphere. For example, if your prophet is a great salesperson who is constantly fighting his peers, challenge him to sell them on his ideas instead of overpowering them.

  In the end, the POR must more or less conform to your culture. Be aware that if you try to work with a POR, you will enrage some employees who will bemoan this special treatment: why wasn’t the POR fired immediately for his cultural transgressions?

  Sometimes this cultural deviance proves to be diversity in disguise. But sometimes cultural cohesion is more important than individual performance and it might be best to let the POR go. Keep in mind that this, too, is a cultural statement: you are saying that regardless of performance, you will not tolerate much deviance.

  This raises the deeper-level question of what kind of culture you want. Are you a zero-exception place, or one that tolerates diversity and idiosyncrasy? If you’re uncomfortable telling a complaining employee something like “Floyd is a special talent, so we are going to give him a little more time to fit in,” then you are a zero-exception culture, and you should not even attempt to deal with PORs.

  Even with the best coaching, you may find that your prophet has too much rage to function in your organization as it grows. But it’s worth trying hard to harness their energies: a great Prophet of Rage can be the most powerful force your company has.

  The Culture of Decisions

  The decisions you make influence your culture as much as anything. But 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:

  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.

  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.

  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. They have just been demoted from the bottom of the totem pole to the ground beneath it. 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. As CEO, I wasn’t zero-tolerance about much, but I was definitely zero-tolerance on managers who undermined decisions, because that led to cultural chaos.

  The final vital component of the decision-making process is “Do you favor speed or accuracy and by how much?” The answer depends on the nature and size of your business. At a large company like Amazon or General Motors, with tens or hundreds of thousands of employees and thousands of decisions that must be made each day, speed is far more important than accuracy. In many cases, it will often be faster to make the wrong decision, discover that it’s wrong, and pivot to the right decision, than to spend the time a priori figuring out the right decision.

  Imagine a large company taking six months to decide whether to include a particular feature on the product. That would mean that for six months, one hundred employees might be blocked from making progress on everything related to the product. Was the decision really that critical? Did they really need to debate it for six months? Probably not.

  On the other hand, consider a business like Andreessen Horowitz, where I work. We make about twenty important investment decisions a year. Getting those right is generally a much higher priority than making them quickly. If you only have twenty shots on goal in a year, you want to make sure each one counts. So we’ll spend hours and hours debating, visiting and revisiting aspects of our decision—then work through the entire process again the next day. Accuracy is much more important to us than speed.

  Even if you generally favor speed, it is often important culturally to favor accuracy in certain situations. If “great design” or “great taste” is a key part of your value proposition and your culture, then it might be useful to spend dozens of hours debating the exact shade of black of your product’s packaging. Taking such pains might not materially improve your sales, but it w
ill absolutely reinforce the cultural message that you don’t take shortcuts about design.

  Some decisions are so “make or break” that they require a different process. Amazon generally has a “two-pizza teams” process: there should be no more people making most product decisions than can be fed by two pizzas. However, when Amazon is deciding whether to launch a new cloud service requiring a multibillion-dollar investment, it runs a much longer process with many more people involved.

  In the speed-versus-accuracy calibration, the cultural question of empowerment plays an important role. How far down the org chart can a decision get made? Do you trust lower-level employees to decide important matters, and do they have enough information to do so with accuracy?

  If employees have a real say in the business, they will be far more engaged and productive. It’s also often the case that sending the question up the hierarchy not only slows things down but results in a less accurate decision.

  On the other hand, pushing decision making too far down the organization can cause several problems:

  It can break communication across product groups. This results in a frustrating customer experience. For years, nearly every Google product had its own customer profile: I might be BenH on gmail, but I couldn’t seamlessly log in as BenH on YouTube. This led to a fractured experience for customers and prevented Google from understanding user behavior across its product lines. (Larry Page finally forced his groups to prioritize a common customer profile.)

  It can break communication between divisions. Which can lead to a company making great products that it has no capability to market or sell. Xerox’s Palo Alto Research Center (PARC) famously spawned a dizzying array of technological breakthroughs, including the Graphical User Interface, but it could never bring them to market effectively, because the rest of the company didn’t understand what they were up to. Eventually, Xerox realized this and spun PARC off as a wholly owned subsidiary.

  You can lose input from your very best minds. If you’re at Netflix, what decision wouldn’t benefit from Reed Hastings’s knowledge and experience?

  The complexities of all these conflicting imperatives was the subject of a conversation I had with Larry Page in 2012. Page came by my office one day because he was trying to figure out how to organize Google for the future, and he wanted to bounce some ideas off me.

  He said he’d just had a conversation with Steve Jobs, who had yelled at him for “doing too many things.” Jobs thought Page should focus the company and do a few things really well—just like Apple. Jobs was legendary for being deeply involved in product decisions, and the results were spectacular. Apple’s products were beautifully designed, almost magically well integrated, and marketed and sold in a way that felt entirely consistent with the products themselves, right down to how the design of the Apple Store was in harmony with Apple’s overall look and feel. In Steve Jobs’s world, “doing too many things” was the enemy. How could he apply his best-in-the-world taste or keep his products stunningly well integrated if Apple began experimenting willy-nilly?

  I asked Page if he wanted to do a few things really well. He said, “No. If I can’t pursue breakthrough ideas, then what’s the point of being me?” I said, “Then you need an organizational design and a culture that lets you do that, which is definitely not the Apple way.”

  We discussed companies that generated a ton of new product directions, such as Thomas Edison’s GE, Warren Buffett’s Berkshire Hathaway, and Bill Hewlett and Dave Packard’s Hewlett-Packard. Page eventually concluded that building out Alphabet, a parent company that contains numerous autonomous companies, including Google, was the right way for him to pursue his goals. Now he is able to pursue everything from human longevity to self-driving cars. But don’t expect his ventures to be well integrated with a single design style.

  The final consideration in the empowerment-versus-control question is whether you are in peacetime or wartime. Is your business working well and are you focused on creative ways to expand it, or do you face severe existential threats? As I noted in The Hard Thing About Hard Things, peacetime and wartime put a CEO in very different modes:

  Peacetime CEO knows that proper protocol leads to winning. Wartime CEO violates protocol in order to win.

  Peacetime CEO focuses on the big picture and empowers her people to make detailed decisions. Wartime CEO cares about a speck of dust on a gnat’s ass if it interferes with the prime directive.

  Peacetime CEO builds scalable, high-volume recruiting machines. Wartime CEO does that, but also builds HR organizations that can execute layoffs.

  Peacetime CEO spends time defining the culture. Wartime CEO lets the war define the culture.

  Peacetime CEO always has a contingency plan. Wartime CEO knows that sometimes you gotta roll a hard six.

  Peacetime CEO knows what to do with a big advantage. Wartime CEO is paranoid.

  Peacetime CEO strives not to use profanity. Wartime CEO sometimes uses profanity purposefully.

  Peacetime CEO thinks of the competition as other ships in a big ocean that may never engage. Wartime CEO thinks the competition is sneaking into her house and trying to kidnap her children.

  Peacetime CEO aims to expand the market. Wartime CEO aims to win the market.

  Peacetime CEO strives to tolerate deviations from the plan when coupled with effort and creativity. Wartime CEO is completely intolerant.

  Peacetime CEO does not raise her voice. Wartime CEO rarely speaks in a normal tone.

  Peacetime CEO works to minimize conflict. Wartime CEO heightens the contradictions.

  Peacetime CEO strives for broad-based buy-in. Wartime CEO neither indulges consensus-building nor tolerates disagreements.

  Peacetime CEO sets big, hairy audacious goals. Wartime CEO is too busy fighting the enemy to read management books written by consultants who have never managed a fruit stand.

  Peacetime CEO trains her employees to ensure satisfaction and career development. Wartime CEO trains her employees so they don’t get their ass shot off in the battle.

  Peacetime CEO has rules like “We’re going to exit all businesses where we’re not number 1 or 2.” Wartime CEO often has no businesses that are number 1 or 2 and therefore does not have the luxury of following that rule.

  Switching to wartime mode is easier. As soon as the CEO becomes intensely interested in certain details—beginning to hold daily meetings on production delays, for instance—the company will react quickly and everyone will pick up the wartime mentality.

  Going the other way is far more complex. A wartime CEO necessarily becomes a major factor in the overall decision-making process. Even when she doesn’t make a given decision, the people who do will use her observations or inferred intentions as a guide. During wartime, the culture of individual empowerment gets diminished.

  The transition from wartime CEO Steve Jobs to peacetime CEO Tim Cook dramatically changed Apple’s culture around product decisions. Because Cook wasn’t nearly as involved as Jobs had been, many of Apple’s veterans believed that the company was no longer pursuing excellence with the same intensity. The new culture may prove to have advantages, but it definitely feels like a different place.

  Likewise, when Uber switched from Travis Kalanick, a wartime-all-the-time CEO, to Dara Khosrowshahi, a peacetime CEO who simply didn’t have the institutional knowledge to make every decision, the company’s decision process stalled out until Khosrowshahi could rebuild it. It probably didn’t help that he was simultaneously trying to fix the bugs in the old cultural code.

  Most CEOs never switch their culture from peacetime to wartime or vice versa. Most CEOs have personalities that are suited for one or the other. Peacetime CEOs tend to be diplomatic, patient, exceptionally sensitive to the needs of their teams, and comfortable giving them lots of autonomy. Wartime CEOs tend to be far more comfortable with conflict, obsessed with their own ideas about the direction of the organization, and almost unbearably impatient and intolerant of anything other than perfectio
n.

  So usually, if a change must occur, the board fires the old CEO and brings in someone with the requisite mind-set for the new conditions. Google’s unintegrated profiles occurred in Eric Schmidt’s peacetime regime and weren’t fixed until Larry Page took over and restored the company to wartime footing, because he was concerned that it wasn’t taking Facebook seriously enough as a competitor. A corollary point is that executives who like working for peacetime CEOs often don’t like working for wartime CEOs, and vice versa. Only one executive from Schmidt’s staff remains on Page’s staff: the inimitable genius David Drummond, who heads up legal and corporate development—and is a self-described chameleon.

  10

  Final Thoughts

  Got crack all in my drawers, I’m just honest

  —Future

  As we have looked at vital cultures from the samurai and Genghis Khan to a prison gang and Amazon, it should be clear that no one culture is right for everyone. Indeed, 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.

  In this final chapter, I’ll dive into three cultural virtues that nearly every organization would do well to have—and examine why they’re tricky to implement. Then I’ll recap some of the book’s most important techniques: your checklist as you launch or reboot your own enterprise.

  Trust

  Are you an honest person? I’ll bet you thought for a moment, then answered “Yes.” Now, who else do you know who’s honest? I’ll bet that was much harder to answer. How can everyone believe that he or she is honest yet have such difficulty identifying other straight shooters?