by Shaun Smith
In Chapter 5 we saw how citizenM has created an innovative brand that is built around purpose. How is it sustaining this through its culture? What is the link between purpose, culture and behaviour? We asked Michael Levie, citizenM’s chief operating officer (COO), to tell us:
‘If I look at the culture and DNA of our organization today we operate under some very simple rules; it’s one team, one vision and we have very clear defined roles so that everybody understands what their job is.
‘This attitude represents itself in the dress code because we’re not very official. It’s basically, be comfortable. You’re supposed to be yourself. At the ambassador level, they may have a little tattoo or a piercing, or whatever, that’s perfectly fine. Through their uniform we want them to show their own character. In the support centre, language is very loose, the word ‘f..k is exercised frequently, it’s a very direct, very open, very cohesive culture and one that people are comfortable with.’
Hospitality is quite a formal industry in many ways. Most of the senior industry figures have been trained in the great hotel schools in Switzerland. Their dress and manners are impeccable. There is usually quite a strict code of conduct. The hierarchy is almost military-like in its formality and a junior housekeeper would feel very uncomfortable speaking openly to a general manager. It is highly unlikely that executives would even dream of addressing the CEO with expletives. If you stay in one of the grand hotels of Europe you will feel this conservative culture wrapped around you like an invisible but cosseting cloak. Ritz-Carlton’s company motto of ‘We are Ladies and Gentlemen serving Ladies and Gentlemen’ epitomizes this old-school approach to hospitality.
CitizenM is quite different. Its business model is different. The guests are different. The customer experience is different. Its people are different. And because of this it needs to have a culture that is aligned to sustain that difference. We are not advocating that other organizations follow the example of citizenM or, indeed, that citizenM’s approach is correct and Ritz-Carlton’s is wrong; quite the opposite in fact. We are suggesting that ‘form follows function’ and that the culture you create must be appropriate for your brand, target customers and desired experience. It must be cult-like in being consistent, intentional, different and valuable to your brand.
Chapter Six
Cult-like culture
One of the brands that we featured in our book Bold: How to be brave in business and win was Zappos, the online retailer. The brand has established an enviable reputation for being purpose-led (delivering happiness) and delivering a distinctive customer experience (to live and deliver WOW), but it also has a very distinctive culture. Tony Hsieh, CEO of Zappos, says:
‘A company’s culture and a company’s brand are really just two sides of the same coin. Brand is just a lagging indicator of culture.’
Hsieh has continued to embrace innovation and adopt new business models; his most recent is to reconceive the organization in order to create natural sustainability. The concept is called Holacracy. The word comes from the Greek meaning ‘one part of a whole’ and it takes a very different approach to organizational culture. Instead of organizing around functions it arrays the business around shared purpose. Hsieh took his inspiration from the way that cities evolve and reinvent themselves quite organically:
‘We want Zappos to function more like a city and less like a top-down bureaucratic organization.’
Creating the purposeful organization
We asked long-term Zappos employee Christa Foley to tell us about this new concept and how it was conceived.
Our purpose is to inspire the world by showing that it is possible to simultaneously deliver happiness to customers, employees, community, vendors and shareholders in a long-term sustainable way.
An example of this is that we moved to Las Vegas from San Francisco. We knew that as the company continued to grow we were going to need kind of a campus environment. Tony Hsieh made the decision to move us into downtown Las Vegas into the former City Hall. It was, frankly, a bit contentious initially, because the downtown Las Vegas area – at least at that time – was not the best place to go. So Tony asked, ‘How do I make this environment the best that it can be for Zappos employees? How do I make it safe? How do I make it convenient in terms of dry cleaning services, great places to eat, and all the things you need to make a neighbourhood great?’ From there the concept really snowballed.
One of the challenges that Zappos has faced as we have got bigger is the slowdown of innovation and entrepreneurship that many companies face as they grow larger. They tend to stagnate and slow down. Yet cities seem to remain agile and vibrant as they grow. So, in addition to wanting to make sure downtown Las Vegas was a good place for Zappos employees, Tony started to see an opportunity. ‘If I can help this community to grow by integrating Zappos into the community it will help us to become more innovative and entrepreneurial too.’
There’s a strong desire to make sure that we continue to embrace and drive change, which is one of our core values, but we’re highlighting that even more now. One of the ways that we’re seeking to embrace and drive change is the move towards Holacracy. This is a new way to structure your organization. It takes away titles and managers, and really, flattens the organization so that people focus on the work that you need to do and what the purpose is. One of the major goals is to allow people to surface what are called tensions, which doesn’t have to be a negative thing. It could be ‘I have a great idea that we can do on the website,’ for example. The structure allows employees to surface these ideas, or tensions, and have them acted on really quickly. It is about the spirit of innovation and agility and entrepreneurship.
The organization is formed of a number of circles that function around a particular purpose. And every circle has an individual purpose that supports the overall Zappos purpose. One of the circles that I’m a part of is Zappos Insights (www.zapposinsights.com); our purpose is to help external groups learn about the Zappos culture and how it is used to run a successful business.
There are two different kinds of meetings that happen in Holacracy. You have what is called a ‘tactical’ meeting on a weekly basis, and then a ‘governance’ meeting every other week. Tactical meetings are where tensions are surfaced. So, every week there is an opportunity for anyone in the group to bring up a tension. It doesn’t mean you have to wait for a meeting, of course, you can do that via e-mail, or you can just walk up to someone, just like you would normally. But this gives everyone an opportunity every week to suggest ideas. Governance meetings are more about the work of the circle and the roles and accountabilities of the circle and the members.
Holacracy allows every single person in the organization to contribute to innovation. What we saw very quickly, within the first month, and we continue to see it every week, is the speed and agility with which we are able to move and shift direction.
I’ll give you an example using the circle that I’m in. We initially were part of what was traditionally the HR group, but pretty quickly realized through these meetings that our work didn’t really align directly with, or support, what HR was doing. And, so, I decided that I wanted to move our circle under a different circle, called ‘Community’. If you think about moving a unit from a larger department into a completely different department at a typical organization, it would probably take four to five months of conversations to reach a consensus and a decision, whereas in Holacracy within 10 minutes of the meeting the move was made.
Leaders and managers no longer exist in Holacracy, because authority gets distributed across the entire organization. Each circle does have what is called a lead link, and they have very specific responsibilities, but they are not traditional manager responsibilities. They do get to decide who fills a role or decide if someone should be removed from a role, and they are responsible for the budget. But outside that, they are not responsible for performance management; they are not responsi
ble for progression; it is really just about enacting the purpose of the circle.
The great thing about these changes is that they are about bettering our business and achieving our purpose.
Only time will tell if Holacracy is successful. It certainly has both advocates and its critics as you can read here:
http://qz.com/317918/holacracy-at-zappos-its-either-the-future-of-management-or-a-social-experiment-gone-awry/
It will be fascinating to see if an organization intentionally and entirely structured around purpose is a viable option for other companies.
Whilst the Zappos approach is unique, its desire to create a strong culture is not. One of the other brands we featured in our book Bold: How to be brave in business and win is the Geek Squad, the technology repair company. They promise to ‘Save your ass’ and this irreverent approach is reflected in their language, their job titles (technicians are called ‘Special Agents’) and their uniforms. Even the 700 or so employees that work at ‘Geek Squad City’, the repair facility located in Louisville, Kentucky, wear the Geek Squad uniform every day although they never see a customer. Robert Stephens, the Geek Squad founder, has this to say:
‘If the DNA is protected properly as the organization grows, it carries a copy of itself in every person. That’s why it is so important to have a strong point of view, to have a clear vision that is unambiguous in its language, so that if competitors copy you, it’s very clear whose DNA they’ve copied.’
So the culture is carefully designed to reinforce what the brand DNA is in the minds of its employees and its customers.
Stephens’s phrase ‘it carries a copy of itself in every person’ is very interesting. This is Holacracy taken down to the level of the individual.
Chapter Seven
Distinctive employee experience
We have said that culture is a vital ingredient to sustaining success, but how do you create and then sustain the culture? The answer is through creating an employee experience that is a mirror for the customer experience. Ronan Dunne, the CEO of O2, sums this up well by saying:
‘If you cannot turn your employees into fans there’s no way that you will turn customers into fans.’
Turn your employees into fans
We have found in our own research that there is about an 85 per cent correlation between the way that your employees think about your brand and the way that your customers do. It follows, then, that you need to make your employees your fans too.
Ronan Dunne’s remark raises another interesting point – and that is the alignment between the kind of people your employees and your customers are. It is extremely difficult for employees to relate to customers from a completely different demographic and vice versa. You cannot always mirror these two groups, of course, particularly when you have lower-paid retail staff selling to high-net-worth customers who are probably considerably older. But if you can seek to hire people who relate to both your customers and the product you sell, it can be very powerful. Patagonia is a wonderful example of this. Its employees are passionate advocates of adventure travel who use the brand’s products. These Patagonia ambassadors test the products and write about them in ‘Notes from the field’.
http://www.patagonia.com/eu/enPL/ambassadors
Ann Pickering, the HR director for O2, uses the same concept when hiring people:
‘Take that cadre of people we call “digital natives”. They have grown up with the internet; they have grown up with smartphones; they don’t know what went before, that’s just the way they’ve grown up, and they’re our future. They are our future for O2 too because that’s what our customer base is looking like now.
‘So we brought in these people who have changed our demographics. Our age profile now across the company is around about 40 per cent under 30. The average age used to be about 43. They learn differently, they crowdsource, they use websites and get their information in a very different way. So bringing them in and asking them to challenge the way we do things has really made a big difference, because they just think completely differently.’
Many organizations participate in surveys like ‘Great Place to Work’ and benchmark themselves very seriously against the other brands in the database.
http://www.greatplacetowork.net/home
We are strong advocates of this because we believe that engaged employees make for strong companies. However, having said this, as we have already stated, strong brands have unique cultures and whilst there are many generic attributes that describe a great employee experience – trust, pride, enjoyable work, among others – the mix will vary from brand to brand. Similarly, what employees value can vary from organization to organization depending on their generation, the nature of the industry and the brand. For example, Patagonia employees value the time and opportunity for adventure, Topshop sales advisors value their ability to buy great fashion at a discount, and Apple employees probably enjoy getting hands-on with the latest technology. For this reason, our Employee Experience Survey is built around our ‘Organizational Alignment Model’ (see the On Purpose toolkit). This measures both importance and performance of a number of attributes and compares the employee experience against what they value and what the organization is striving to achieve, allowing the context to inform the findings.
As we said earlier, Ritz-Carlton is a very different place to work than citizenM. It attracts different people, yet both provide great experiences. So let’s hear from Michael Levie, citizenM’s COO, as to how they create and sustain the culture through aligning the employee experience.
Having a strong purpose or being innovative is not enough; it’s also about the people around you. So we have a very strict casting and immersion programme. You can build a hotel but no matter how pretty or nice it is, if it hasn’t got a pumping heart it isn’t going to live. We have found through our initial casting and immersion programme how to make the hotel come alive, and then, by having the right manager, make sure we sustain it.
Find the right people
Casting starts with social media; we usually gather a couple of hundred CVs, but it can be up to 800 sometimes. We filter this to the people who have done fun things or the people who look fun; down to 150 to 200 say and we invite those people for a casting day, which is a four-and-a-half-hour interview. We schedule this on a Saturday or a Sunday, which is a real shocker to people, and so out of those 150 to 200 that we invite we end up with 75 to 85 people on the casting day itself. As they come in, we take a photograph of them and then offer them great coffee and pastries. For the first 30 to 45 minutes we do nothing other than observe them. If we have chosen the right people then that first session becomes like a big club with people chatting to each other.
Then I welcome them. I explain who we are as a company and what it is that they are being interviewed for, and then we divide them up into four teams. The first team do one-on-one blind tasting. Imagine you and I have never met. You are blindfolded and I’m your partner and my job is to shove food into your mouth to taste. We’ve got to figure out real fast how we will work together! We observe that to see how fast they adapt, who is taking the lead, who is going first; you observe a lot of subliminal signals. The second test is making a collage with five people. It’s an odd number to make a collage and so we look at teamwork; who uses their ‘elbow’ to make a point, who pulls in the quieter people, that type of thing.
Then they are put into groups of 15 for the third exercise, which is an ‘elevator pitch’. In 30 seconds, using the metaphor of an animal or an object, they have to say ‘who they are’. And the last exercise, once again in groups of 15, is to share with the group who their hero is, and why. So we observe the different social settings and in-between we have had coffee breaks and at the end we have a big sushi lunch; really an over-the-top lunch that they are probably not used to. Then I wrap up, I tell them: ‘We’re not making a judgement on who you are, or what you stand for, or how
good you are, it’s basically more of an alignment puzzle. We are looking for certain people, and the reason for these workshops is to align, as best as possible, the people who we feel will do well in our environment, and that we, as an environment, will do well for them.’ Usually we have to push them out of the door by this stage!
The moment that they leave we lay out all the photographs we took to remind ourselves of the individuals and then there is a discussion about what they did well, what they did not do so well and then we come to a consensus. The team that we have selected are called that same afternoon and they are set up within the next three days for final interviews and then we hire them; the others are called and thanked for their interest. I think it is important that those who are rejected know it that same afternoon. As cruel as it sounds it is better to cut it short than to drag it out.
In-between the casting day and their hiring we get them on our premises with us. For example, we invite the new cast member, or the team, for a fun evening, and the purpose is just to meet each other. We go to a nice restaurant, usually a little aspirational that they perhaps couldn’t afford themselves, and we have drinks and food. There’s no speech; there’s no formal welcome; there’s just a high-five and a chance to spend time with them.
Start people in the right way
When we start the immersion programme it is a very serious intense first week where we get the culture across. That’s when we introduce citizenM itself. Rattan talks about the brand and who we are and then I go into guest service and guest satisfaction. So the most important things are immediately nailed. We then get into the fact that, as ambassadors, they represent the company. We tell them we hired them because they are positive, spirited people, and what they need to do with that. The one thing that I don’t care about is how ‘good’ they are technically; if they do not gel in our organization then it’s wasted energy.