The Culture Multiplier

Daniel YergerAbout the Firm, Financial Planning Leave a Comment

Culture is an interesting area of interest, both public, private, personal, and professional. While every individual brings a genetic heritage and traditions in tandem, each business develops its culture from the top down in a positive light or the bottom up in a negative one. From small businesses to enormous institutions, culture is the force multiplier. An institution with the largest budget, best in class technology, and every competitive advantage can fail to execute where a scrappy start-up with a mission and a dream can conquer all. The culture of a business is best defined from the outset and then is a living thing; in spite of founders intentions, their business can evolve into something that they never foresaw (for good or bad). But that doesn’t mean that a leader is powerless to affect culture. Let’s look at two case studies for culture; one is a name you’ve almost certainly heard of: IBM, and the other, a smaller but growing firm named Stickergiant.

Bad Culture Multiplier

Let’s look at two case studies for culture; one is a name you’ve almost certainly heard of: IBM. IBM fundamentally has a bankruptcy in its culture. After years of semi-directionless “tech innovation”, IBM has failed to be the cutting edge of any particular area of development or science. Rather, it has for the most part, been the “second wave” in many areas of modern technology, such as cloud computing, data storage, IT services, and others. Combined with a pathological obsession with reforming its employee evaluation system, tying promotions, raises, and bonuses to a 90’s GE “Rank and Yank” style of evaluation, it puts otherwise hard working employees against each other. Then, by consequence of ever-declining profits, it constantly looks to make up the difference in its failure of operational leadership by cutting costs in human capital; firing dedicated and loyal employees with decades of experience in favor of warm bodies in seats located in cheaper latitudes and longitudes. And finally, it fails to attempt to innovate in areas that aren’t “attractive” from a brand perspective; while divisions such as AI and Cloud Computing receive the bulk of funding, career capital, and market spend, other areas such as technical services are the proverbial “red headed step child” that begrudgingly is kept on for the fact that it opens the door to up-selling those more attractive services. All this to say that the bulk of its employees work under the shadow of the gallows; forever in fear that IBM will “resource action” them (as business-speak a phrase for “layoff” as you can imagine), or that they’ll be ranked 2 instead of 1 and receive no annual raise or bonus, or that the politics of nepotistic middle managers will mean that their contract will not be renewed or that they won’t be promoted from “contractor” to “reg” and that they’ll be sent back to look for new work once their time is up. Meanwhile IBM had a CEO for the past decade who presided over more revenue declines and layoffs than any CEO in the history of the company, who received record compensation for her dubious talents. Over and over IBM demonstrates with every action it takes that it doesn’t care about it’s people, and in turn, it’s people can only care so much for it. Those flaws, more than anything that IBM dreams of accomplishing in a larger business context, doom it to failure so long as it holds an enormous part of its business hostage to dread.

Good Culture Multiplier

Stickergiant might be my favorite company. That’s not to say that I’m a slavish consumer of its products (stickers and labels) or that I “identify” with the company (I’m just not that cool). Rather, it’s the absurdly robust culture it has developed over the past two decades. As a company that fundamentally makes varieties of paper and vinyl that stick to things, you’d think that culture would be a fragment of what a company like IBM brings to the table (futuristic nanotechnologies and sci-fi-esque artificial intelligence), but it’s culture speaks volumes about its mission and its people. Like many businesses, Stickergiant started as a one-man show before steadily growing its team into multiple departments and divisions. The company makes a point of developing every employee into a ownership mindset; not by enticing employees with promises of equity, but by educating them on the fundamentals of the business they work for. Company-wide huddles review key performance indicators that individual members of the company own responsibility for. The company unambiguously states its support and endorsement for the humanity of every person that works there, not just with words but constant actions both in the hiring and selection of diverse talent but in its regular support of community organizations supporting a variety of interests. The company allows every “giant” to participate in the profits of the company when it meets targets, with everyone splitting a company-wide bonus equally from the excess profit above the aggressive targets it sets for itself. Stickergiant believes so thoroughly in its culture that it offers tours on a regular basis so that other community members and businesses can learn how it has created such a thriving organization. And to compare to IBM’s culture of treating employees as disposable and floundering financials, Stickergiant has grown its headcount, revenue, and profits by several hundred percent just over the past few years.

So how do you make the Culture Multiplier Happen?

              Sadly you can’t buy culture in a box. Culture is developed minute by minute, day by day, in the aggregations of decisions a business’s leaders make and how the employees in the organization view the activities of the company. But there are some fundamental actions you can control as a leader, and ones that will help set the culture you want to encourage:

  1. Leaders Are First In and Last Out: This is a military leadership principle that has withstood the test of time. While business books and thought leaders might opine constantly about the importance of leaders focusing on their “highest and best use of time”, there is no person on earth that can disrespect a leader who digs in and gets the front line work done with their team when it’s needed. This also shows up by being first into the office and last to leave; this isn’t something a leader has to do literally every day, but it should be obvious that the leader puts in more work than the average team member.
  2. Actions are louder than words, but words are louder than silence: Organizations have to live by the values that they espouse, but to do so they have to espouse their values. Organizations that fail to establish a mission, vision, and values are leaving their employees to fill in the blanks. But it’s not enough to paint words like “integrity” or “inclusion” on your walls; you have to walk the walk and talk the talk. Further, values that are in conflict with the activities of the organization (for example, promoting your son-in-law to manager as his entry level position when your values state belief in “hard work and earning results”) will poison the cultural response to those values. They must not only be visible, they must be true.
  3. Understand that careers are dream-makers: One of the best questions you can ask in earnest of an applicant is “what do you hope to gain by working here?” Not in the “Where do you see yourself in five years” throwaway question, but actually trying to learn what your future employee or team member wants from the position. Being clear about their future when they join and keeping your commitments where the development of your team is concerned is part of living the truth of your values. If a position really is intended to be a career track, then it should be crystal clear how to follow that track. If the position really is a terminal position, then don’t confuse applicants by dangling the possibility of future growth in front of them. There are candidates who are looking for one or the other, and your culture will flourish when people have their expectations rewarded.

Some Footnotes

In defense of my critiques of IBM, I worked there for three years. In that time I worked with some amazing people. Almost all of them have been laid off despite stellar performance and dedication to the culture. One of those laid off made one point in IBM’s defense: “Certain things I didn’t hate. Global Technical Services I hate. Resource Action Culture I hate. Their commitment to diversity and inclusion I actually applaud.” Never let it be said that there can’t be a few diamonds in the cultural rough. In the interests of full disclosure, Stickergiant is a client company, but their culture and business accomplishments were well known local lore before I began to work with them. None of what I’ve discussed about them in this piece is confidential, and I hope you have an opportunity to learn from their incredible example.

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