What You Do Is Who You Are

by Ben Horowitz

  The truth about telling the truth is that it doesn’t come easy. It’s not natural. What’s natural is telling people what they want to hear. That makes everybody feel good . . . at least for the moment. Telling the truth requires courage. Less remarked on—but equally important, for our purposes—is that it requires judgment and skill.

  Why is it hard for CEOs to be as honest as they’d like? Let’s look at a few scenarios:

  Sales are not going well. If you tell your employees the truth, the shrewdest ones will rightly worry about the viability of the company and leave. If they leave, you will continue to miss your numbers, introducing a death spiral of underperformance and attrition.

  Your expense structure is too large and a layoff looms. The company isn’t doomed, but if you do a layoff, the press will write that you are. Employees will read that, panic, and leave. And then you really will be doomed.

  An important executive just defected to your biggest competitor because she thinks they have a better product. If you tell the truth about her departure, people will wonder if they should be looking, too.

  The product has a serious flaw that is making your customers turn to your chief competitor. If your employees learn this, they will wonder why they’re working for the failing number two company.

  Your last valuation was too high and you’re looking at a down round. Your managers sold new hires on the promise of your stock price going even higher.

  In each of these commonplace scenarios, telling the truth seems like committing corporate suicide. Should you just give up and lie? No. Trust derives from candor, and your company will fall apart if your employees don’t trust you. The trick—and it’s tricky—is to tell the truth without thereby destroying the company.

  To do this, you must accept that you can’t change reality, but you can assign it a new meaning. Imagine the reality you have to assign meaning to is a layoff. First, recognize that you won’t be the only person interpreting the layoff. Reporters will say it means the company has failed. Laid-off employees will feel betrayed and convey that. The employees who remain will have a profusion of interpretations. But if you assign meaning to the layoff before anyone else, and you do so candidly and convincingly, your interpretation has a decent chance of being the one that everyone remembers.

  There are three keys to assigning meaning:

  State the facts clearly . “We have to lay off thirty people because we came in four million dollars short of projections”—or whatever the case may be. Don’t pretend that you needed to clean up performance issues or that the company is better off without the people you so painstakingly hired. It is what it is and it’s important that everyone knows that you know that.

  If your leadership caused or contributed to the setbacks that necessitated the layoff, cop to that. What was the thinking that led you to expand the company faster than you should have? What did you learn that will prevent you from making that mistake again?

  Explain why taking the action you’re taking is essential to the larger mission and how important that mission is. A layoff, done properly, is a new lease on life for the company. It’s a hard but necessary step that will enable you to fulfill the prime directive, the mission that everyone signed up for: eventual success. It’s your job to make sure that the company didn’t lay off those people for no ultimate purpose—something good needs to come of it.

  The shining example of assigning meaning was what Abraham Lincoln did in his Gettysburg Address. In explaining to the country why soldiers laid down their lives at Gettysburg, he gave new meaning to the Civil War. And that was a feat. Gettysburg was the bloodiest battle of the bloodiest conflict in American history. The three-day struggle pitted countryman against countryman, brother against brother, and produced some fifty thousand casualties.

  At the time, many people understood the Civil War to be about preserving the union or states’ rights or the economics of slavery. Lincoln gave it fresh import in a speech so compact and powerful that it’s worth reading in its entirety.

  Fourscore and seven years ago our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.

  Now we are engaged in a great civil war, testing whether that nation, or any nation so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.

  But, in a larger sense, we cannot dedicate—we cannot consecrate—we cannot hallow—this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us—that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion—that we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom—and that government of the people, by the people, for the people, shall not perish from the earth.

  Before Lincoln’s speech most people did not think of the United States as a country “dedicated to the proposition that all men are created equal”; after it, it was hard to believe anything less. Lincoln acknowledged the terrible cost in lives of a war he’d conducted, but he assigned that loss significance. He not only gave purpose to the event, he gave meaning to the country itself.

  As you think about bad news and how you might fear your people finding out and freaking out, remember Gettysburg. Be it a deal gone bad, a whiffed quarter, or a layoff, this is your chance to define not only the event, but the character of your company. And no matter how badly you screwed up, you didn’t send thousands of soldiers to their deaths.

  There are companies that don’t care about trust. Some leaders foster internal competition. They pit their employees against each other and let the best person win. This dynamic often prevails in businesses where most of the employees have the same function; realms such as venture capital, banking, and “boiler room” sales sweatshops. Because these environments are never collaborative, and often rely on “rank and yank” competitions, there is no internal trust. Everyone says whatever he needs to say to get ahead. Regrettably, this type of dynamic can result in profitable companies.

  But I would never want to work there.

  Openness to Bad News

  If you manage a reasonably large organization, you can be absolutely sure of one thing: at any given moment, something somewhere has gone terribly wrong. Some of your managers know about the brewing disaster, but for reasons we’ll get into they haven’t told you—even though the mess is only going to grow the longer it stays hidden. I call these submerged issues kimchi problems, because the deeper you bury them, the hotter they get.

  How do you build a culture that enables you to discover these problems sooner rather than later? It’s surprisingly difficult. There are several reasons employees don’t naturally tend to volunteer bad news:

  It seems to conflict with an ownership culture. A common management adage is “Don’t bring me a problem without bringing me a solution.” This idea encourages ownership, empowerment, and responsibility among the employees, but it has a dark side. For one thing, what employees are likely to hear is just “Don’t bring me a problem.” At a deeper level, what if you know about a problem but you can’t solve it? What if you’re an engineer who sees a fundamental weakness in your software architecture, but doesn’t have the authority or expertise to fix it? What if you’re a salesperson who believes one of your colleagues is making fraudulent promises? How can you solve that without help? If you encourage bad news, you must be careful not
to disempower people in doing so.

  The company’s long-term goals may not align with an employee’s short-term incentives. Imagine that your new product must ship this quarter. It’s so critical you’ve offered a shipping bonus to the engineers. Now imagine that the product has a dangerous security flaw. If you’re an engineer who discovers the flaw, but you need the bonus to buy holiday presents for your children, what do you do?

  Nobody likes to get yelled at. If you know about a problem, there’s a reasonable chance that you caused it and have no idea how to fix it. Revealing it to your superiors means admitting guilt, and who likes to do that?

  How do you build a culture that airs its problems without diluting the virtues of ownership and empowerment—and without making everyone feel defeated, or encouraging a culture of whining?

  Encourage Bad News

  When I heard about a problem, I tried to seem ecstatic. I’d say, “Isn’t it great we found out about this before it killed us?” Or, “This is going to make the company so much stronger once we solve it.” People take their cues from the leader, so if you’re okay with bad news, they’ll be okay, too. Good CEOs run toward the pain and the darkness; eventually they even learn to enjoy it.

  Many managers want to attend executive staff meetings, as it makes them feel needed and it puts them in the know. I made use of this desire by setting a price of admission to the meeting: you had to fess up to at least one thing that was “on fire.” I’d say, “I know, with great certainty, that there are things that are completely broken in our company and I want to know what they are. If you don’t know what they are, then you are of no use to me in this meeting.” This technique got me deluged in bad news, but it also created a culture where surfacing and discussing problems was not just tolerated, but encouraged. We didn’t solve all the problems that came up, but at least we knew about most of them.

  Sometimes just knowing about a problem we did not solve solved other problems. When I launched Opsware from the ashes of LoudCloud, I wanted to ship Opsware, the software we used to manage our cloud environment, as soon as possible. We would have to scramble to fix the inevitable bugs and issues, but the knowledge and the skills we would gain from competing in the market would be invaluable. That’s what I thought.

  But most of my engineers thought, Ben has lost his mind. He has no idea how far away this product is from being ready for prime time. I did not know they thought that until, during a routine conversation with one of my engineers, I asked, “What do you think we should do differently?” He said, “Nobody thinks we should ship Opsware but you.”

  I still thought shipping was right, but I learned that I was creating a different problem: the product team was losing confidence in the CEO. I immediately called an all-company meeting and explained in detail why I thought we were better off trying to sell something that wasn’t quite ready and adjusting to market conditions on the fly than waiting until we thought the product was perfect, but not learning anything about our customers’ needs in the meantime. I did not convince everyone that I was right, but everyone understood that I was aware of the problems with the strategy and wanted to pursue it nonetheless. That made all the difference.

  Focus on Issues, Not People

  If you find a problem, do a root-cause analysis and figure out what caused it. You will almost always find that the underlying issue was communication or prioritization or some other soluble problem rather than a particularly lazy or idiotic employee. By getting to the root cause and addressing that, rather than playing the blame game with an employee or two, you create a culture that won’t be secretive or defensive—a culture open to bad news.

  Look for Bad News in the Regular Course of Business

  As you meet with people in your organization, either formally or casually, ask them questions that will help uncover bad news. Questions such as, “Is there anything that’s preventing you from getting your job done?” or “If you were me, what would you change in the company?” You may have to ask several times, but people will talk about the problems if you encourage them to. The more you demonstrate genuine eagerness to discover bad news, and genuine supportiveness once it’s discovered, the more open they’ll be to opening up.

  Loyalty

  Loyalty is vital to most cultures—but difficult to install. In today’s dynamic business environment, in which the average person can expect to have eleven or twelve different jobs in her career, how loyal are companies going to be to their employees? And how loyal should employees be in return? What are the rewards for each party?

  Loyalty emerges from an expectation that the other party feels the same way; that your colleagues, and your company, are there for you. CEOs have different approaches to encouraging it. Here’s how Patrick Collison of Stripe thinks about loyalty:

  We obviously can’t offer lifetime employment. I hope what we can deliver is that in fifteen years, when people look back, they will think that they were able to do the most meaningful work of their careers here. In exchange, I expect two things: first, ethical integrity. Second, that they optimize for the company rather than for themselves. If they satisfy those two expectations, then they have our appreciation, respect, and loyalty.

  In other words, he will support them throughout their careers.

  Ali Ghodsi, CEO of Databricks, makes a more specific commitment to his executive staff. “I commit to them that there will be no surprises. The job might not work out, but they will hear that from me first and immediately and they will have time to land safely somewhere else. In exchange, they need to let me know early on if they are unhappy in any way.”

  Ultimately, loyalty is about the quality of your relationships. People don’t leave companies, they leave managers. If there is no relationship between a manager and an employee or, worse, a bad relationship, you won’t get loyalty regardless of your cultural policy. Being explicit in the way Ghodsi is can enhance the relationship, because he makes a verbal commitment on top of the evident interest that he has already taken in his executives. If he simply stated that commitment without working to establish the relationships that would support it, he would fail.

  The leader of an organization can have meaningful relationships in the company that extend far beyond the people who report to her. If she takes a genuine interest in the people she meets, stays true to her word, and is known throughout the organization as someone you want to get behind, she can create deep bonds and loyalties even in the most dynamic industries.

  Your Cultural Checklist

  With these thoughts on virtues that belong in almost any culture, we’ve reached the point where you’re ready to go make your own. Here’s a checklist of points to keep in mind:

  Cultural design. Make sure your culture aligns with both your personality and your strategy. Anticipate how it might be weaponized and define it in a way that’s unambiguous.

  Cultural orientation. An employee’s first day at work may not be as indelible as Shaka Senghor’s first day out of quarantine, but it always makes a lasting impression. People learn more about what it takes to succeed in your organization on that day than on any other. Don’t let that first impression be wrong or accidental.

  Shocking rules. Any rule so surprising it makes people ask “Why do we have this rule?” will reinforce key cultural elements. Think about how you can shock your organization into cultural compliance.

  Incorporate outside leadership. Sometimes the culture you need is so far away from the culture you have that you need to get outside help. Rather than trying to move your company to a culture that you don’t know well, bring in an old pro from the culture you aspire to have.

  Object lessons. What you say means far less than what you do. If you really want to cement a lesson, use an object lesson. It need not be a Sun Tzu–style beheading, but it must be dramatic.

  Make ethics explicit. One of the most common and devastating mistakes leaders make is to assume people will “Do the right thing” even when it conflicts with other objectives.
Don’t leave ethical principles unsaid.

  Give cultural tenets deep meaning. Make them stand out from the norm, from the expected. If the ancient samurai had defined politeness the way we define it today, it would have had zero impact on the culture. Because they defined it as the best way to express love and respect, it still shapes Japanese culture today. What do your virtues really mean?

  Walk the talk. “Do as I say, not as I do” never works. So refrain from choosing cultural virtues that you don’t practice yourself.

  Make decisions that demonstrate priorities. It was not enough for Louverture to say his culture was not about revenge. He had to demonstrate it by forgiving the slave owners.

  These techniques will help you shape the culture you want, but remember that a perfect culture is totally unattainable. Your goal is to have the best possible culture for your company, so it stays aimed at its target. If you want people to treat every corporate nickel like it’s their own, then having them stay at the Red Roof Inn sends a better cultural signal than having them stay at the Four Seasons—but if you want them to have the confidence to ask for a $5 million order, the opposite might be true. If you don’t know what you want, there is no chance that you will get it.

  Culture begins with deciding what you value most. Then you must help everyone in your organization practice behaviors that reflect those virtues. If the virtues prove ambiguous or just plain counterproductive, you have to change them. When your culture turns out to lack crucial elements, you have to add them. Finally, you have to pay close attention to your people’s behavior, but even closer attention to your own. How is it affecting your culture? Are you being the person you want to be?