Corporate culture: Like a family?
In our December Editorial, we presented a list of book recommendations. We thought this would be a great opportunity to review the first two books on that list, as they consider corporate culture from two completely different angles.
The highly regarded Culture Code by Daniel Coyle is about building a successful team around a few simple but powerful themes. It heavily promotes growing the organisation like a family unit.
On the other hand, the first book we will review is almost the complete opposite….
If you have the opportunity to read these two books together, it becomes clear that there isn’t necessarily one right way for every organisation to shape their culture, but there is no end of ideas to grow it in a direction that works for you.
Powerful: Building a Culture of Freedom and Responsibility - Patty McCord
'Powerful' was written by Netflix's former Chief Talent Officer who also who helped design the company's now famous culture deck. Here is one of the first slides from that deck:
Okay, point made. Patty McCord’s book tells us why the Netflix culture is different, and in contrast to Enron, is lived on the ground every day.
The Netflix culture was borne out of necessity as the start-up went through some rough times in its early years. Like many companies it had to lay off a significant number of people. What happened was the resultant company was staffed only by the high performers and the culture changed overnight.
But this is not a culture for everyone.
"Our Netflix executive team was fierce. We were combative in that beautiful, intellectual way where you argue to tease out someone’s viewpoint, because although you don’t agree, you think the other person is really smart so you want to understand why they think what they think" – Patty McCord (Former Netflix Chief Talent Officer)
And counter to Coyle’s Culture Code book, the Netflix ideal has nothing to do with family:
The Netflix experience highlights one that is common to companies as they move through the growth cycle. In the early years when there are only a few employees, usually handpicked by the founder, the company can nimbly navigate its way through change. However at some point growth becomes too large to allow employees the same freedoms and responsibility they had in the beginning.
Netflix puts this down to increased levels of complexity having to be dealt with by an expanding workforce.
So a typical company responds by imposing procedures to help ensure that the average employee will take appropriate actions. But as we know, this is at the cost of less flexibility available to trusted and thoughtful employees. In turn, the ever-increasing mountain of procedures discourages the high-performers, so they move on.
Instead the Netflix solution involves making hard decisions to limit the increase in business complexity and ensure that the number of high-performing employees grows at an even faster rate.
To achieve these things, the Netflix culture works something like this:
- The customer comes first. Doing the right thing by the customer is the most important objective
- Completely frank and open discussions between all directors, management and employees. No worrying about stepping on toes
- Go to great lengths to understand what’s driving the other person’s point of view
- Go to great lengths to avoid increasing business complexity and rule creep
- Pay top-of market for talent that is most suited for the job at hand
- Pay generous termination payments to those that no longer represent the talent needed
“Great teams are made when every single member knows where they’re going and will do anything to get there. Great teams are not created with incentives, procedures, and perks. They are created by hiring talented people who are adults and want nothing more than to tackle a challenge, and then communicating to them, clearly and continuously, about what the challenge is” – Patty McCord
The Netflix culture was deliberately designed to solve the problem of established organisations being slow to change. If implemented properly, this culture would be highly desirable to many organisations that are no longer start-ups. However, organisations with deeply ingrained cultures of process and compliance will struggle to make the requisite changes. Companies with responsible for managing other people's money have issues beyond customer satisfaction (such as fraud mitigation) which would make a departure from a compliance culture challenging, even if it were desirable.
The next book we review discusses building a high-performance culture with a family model.
The Culture Code: The Secrets of Highly Successful Groups – Daniel Coyle
Building safety and belonging
Safety and belonging are all about building the organisation into a loving family.
The author, Daniel Coyle, is an American who lives in Ohio. We shouldn’t be surprised then that at least one of his stories relates to the world of US sports. The most instructive of these I found, was of Gregg Popovich, the coach of the Spurs basketball team. According to Coyle, the Spurs rank as the most successful team across any sport in the US for decades, directly as a result of the family unit that Popovich has moulded the team into.
Commentators note how easy it is to see Popovich’s magic at work. On court the players perform by being unselfish as individuals. Rather than operating as individuals and acting to improve their own stats, if they see a better positioned teammate they pass the ball.
But what’s not visible is how Popovich grows previously selfish players and moulds them into a selfless team
The secret, Coyle shares, involves food and wine.
Spurs players from 2013 point to a debilitating loss during the finals as the most powerful team building moment they ever shared. Other teams in similar situations could have easily descended into a torrent of blame and recriminations. Instead Popovich brought his team together for a ‘family’ dinner after the loss. The players said that Popovich behaved like the father of a bride at a wedding and made sure everyone was appreciated with a light touch or a joke. They talked about the game and connected with each other. The wine flowed. Popovich filled their cups.
But it would be a misconception to think that highly successful teams have cultures that are all about being happy and light-hearted.
Popovich’s secret also includes some other behaviours from high-functioning families. The purpose: to ensure team members know that this is a safe place to give effort. He does this by letting his players know:
- You are part of this group,
- This group is special, we have high standards here,
- I believe you can reach those standards
Together these elements can be brought together to signal to each member of the group that they belong.
Vulnerability (leads to cooperation)
Most of us instinctively view vulnerability as a negative, something to be hidden from our peers. But according to Coyle the opposite is true. In order to create cooperation, vulnerability is a requirement.
“We feel like trust is stable, but every single moment your brain is tracking your environment, and running a calculation whether you can trust the people around you and bond with them. Trust comes down to context. And what drives it is the sense that you’re vulnerable, that you need others and can’t do it on your own”- David DeSteno of Northeastern University.
The important interaction is known as a Vulnerability Loop. When seen in action, they may seem very quick, but there is a regular pattern that shows both parties have some vulnerabilities and going forward become more trusting and therefore cooperative with each other.
Actually, Coyle makes the point that an organisation can help create the right conditions for selfless cooperation, and the more it does this the better it gets.
If you google “Tylenol crisis” you will find that this iconic brand was responsible for the deaths of seven customers after the pills were laced with cyanide in 1982. The way Johnson & Johnson handled the crisis ensured the brand not just survived but thrived.
Both Enron and Johnson & Johnson had their values chiselled into the walls, but only Johnson & Johnson had taken the effort to regularly check whether it meant anything or should be changed. The credo they signed up to was that their first responsibility is to doctors, nurses, and patients; to mothers and fathers and all others who use our products and services…
A culture that was genuinely shared by everyone in the company allowed Johnson & Johnson employees to coordinate a cohesive response during the crisis across different divisions and locations. Because they all knew what their first responsibility was, there were no really tough decisions or trade-offs to make.
No external culture template or book will create the perfect culture within your organisation. But 2018 demonstrated the importance of getting culture right, and these two books are a pretty good place to start.