The true purpose of culture
Warning: what I'm going to say will seem counter to much of what you've read on culture. But I ask you to keep an open mind.
Not because I've built amazing cultures. But because I've built bad ones, and great ones, and I've seen the difference that makes the difference.
I'm so glad you're here. Let's get to it.
Hint: it's not to make people happy
It’s wartime now for many startups. After years of cheap money, leaders have to tighten their belts, buckle down, and execute.
For scaled companies, this means a hyper focus on people – the reason any business succeeds or fails – which really means a hyper focus on culture. The problem is, while CEOs across all industries invest in off-sites, values exercises, strategic planning, and all kinds of cultural activities, most CEOs doing this work have the wrong goal in mind. It’s great to clarify objectives and get everyone aligned. But that is not the primary goal of a company’s culture.
The primary goal of company culture is to create conditions in which the best people thrive, and everyone else leaves.
It’s not enough to do (insert surface-y, safe, roundly applauded culture change initiative here). Instead you have to get so fucking clear on the culture you want, on “how we do things around here” as Seth Godin describes it, that those people who don’t naturally jive with those standards stand out like a sore thumb and have no choice but to move on.
Let that sink in.
How to scale a company the hard way
I’ve written before about my experience growing a company from 15 to 75 people in nine months and how the entire culture blew up in the process.
Among all the other reasons things went south, the primary one was that I had the wrong idea of a “successful culture” in my head: I assumed culture’s job was to make everyone happy, thinking that employee happiness was the key to their doing good work.
Unfortunately, if the pursuit of employee happiness is your only goal, sooner or later you find out that people can always be happier. There is no end to that work.
In my defense, the stakes were high, and I needed everyone working at top form (sound familiar?). We only had 10 engineers, and I couldn’t imagine where we’d be if any of them left, so I went to work trying to keep them happy and aligned. But because of how I understood culture at the time, in situations in which alignment and employee happiness conflicted, I leaned toward making them happy. When the engineering team said they needed not to be distracted by bug reports coming in from the support team, or when a few members started working from the bar down the street, my instinct was to draw a hard line. But because it seemed really important to the employee, and I was scared of what would happen if they left, I let it go and moved on.
It wasn’t until, working with a great coach, I mustered up the courage to start drawing clear boundaries (no working at the bar; figure out how to fix bugs AND release features; you know, the basics) — in the process risking making some people UNhappy — that things began to change.
The first thing that happened was that people left. Over half the engineering team, in fact. And they left scathing reviews on the company Glassdoor profile on their way out.
The fear that had been driving all my cultural backbending came true, and I thought it would sink us.
But the best three engineers stayed.
“If you have the right people on the bus, they will do everything within their power to build a great company…because they simply cannot imagine settling for anything less. Their moral code requires building excellence for its own sake, and you’re no more likely to change that with a motivational strategy than you’re likely to affect whether they breathe.”
Jim Collins, Good to Great
Within three months, those three engineers (plus one more we brought in) were outperforming the 10.
Significantly.
We were hitting product milestones, and literally everyone involved in the picture was happier (including those who left, I presume).
My story is not unique.
Now that I’m supporting second stage founders doing their own cultural work, I’ve lost count of the stories that parallel my own. You’ve probably heard similar ones. In fact, I’m sure you have — Elon Musk’s approach with Twitter.
People thought he was crazy making things so “extremely hardcore” that most of his remaining workforce left after massive layoffs. Nope. That was his goal. He set the standards by which everyone would be expected to perform, “how we do things around here.” He gave the wrong people the chance to leave. And they did.
And while I don’t know Elon and my feelings about him are complex to say the least, I completely understand what he was trying to do, and the next time I’m in that situation I hope I do the same thing.
Talent density
I think I heard the term “talent density” first from Matt Mochary, but I can’t find the source, so if someone knows where it comes from, please send me a link. Either way, it’s the most useful way I’ve found to orient well to the people side of a company.
Talent density is not the # of A-players you have. It’s the % of your people who are A-players.
There are two ways to raise that number. You can add more A-players, or you can remove non-A-players.
You should use both tactics.
But these are HUMANS we’re talking about, Ryan.
I get it. This whole — have such rigorous standards that it causes people to leave — sounds bad for people. It sounds like it’ll create a nasty culture, not a great one.
But doubleclick on those emotions. You might be surprised what you find.
Consider who you’re helping by compromising to make your culture comfortable for everyone.
You’re pissing off the right people who are already there who have to carry the load for the wrong people. They’re not happy. Eventually they will leave.
You’re keeping the wrong people stuck in a situation in which they are floundering, sometimes for months or years. This prevents them from finding a place where they can succeed. They’re not happy.
You feel less pain by avoiding dealing with the issue. You feel happy. At least for a little while.
So I ask you: who are you really serving with your ping pong tables and friendly, unassuming vibes?
The big nasty catch
As I’ve written about before, culture work is not about generation. It’s about discovery. You can’t just pick high standards. You must pick high standards that your best people naturally reach.
Those that don’t meet the standards will leave, increasing your talent density. But that’s not the hardest part.
The hardest part is, brace yourself: whatever standards you pick, you have to live up to, too.
Always.
Leadership isn’t complicated. But sometimes, particularly around people, it’s hard as hell.
Things I read this week
One: How Management Teams Can Have A Good Fight (HBR)
I've been supporting a few clients in creating productive conflict in their organizations. I may write my own how-to, but in the meantime, here's a valuable take from HBR for those struggling with this issue:
Two: Fast-Grabby-Thing and Evil-Vibrating-Blob (Nick Cammarata)
A primary challenge of making meditation accessible is explaining nuanced experiences using words that don't turn off your average Westerner. I know none better than Nick Cammarata. This thread is a great entry point.
Want to dive deeper?
If you liked this, check out this list of my top posts, read and shared by thousands of entrepreneurs.
Here are a few of my favorites:
Executive Coaching for Entrepreneurs
There’s a reason every elite athlete in the world works with a coach. You need more than one perspective to see your best work.
I’m an executive coach and the founder of Inside-Out Leadership, a boutique leadership development agency supporting founders to rapidly scale themselves as leaders, so they can thrive professionally and personally as their company changes the world. Leveraging 15-years as a founder/CEO, along with deep training in mindfulness, psychology, Neurolinguistic Programming, psychedelic integration and more, I have helped leaders from some of the fastest growing companies and VC funds in the world design a more conscious life and make key changes to improve their performance and satisfaction.
I coach leaders how I want to be coached:
Focused on the person, not the role.
Focused on results, without the fluff.
To learn more about working with me, click here.
