Why most "culture work" actually hurts your company
Welcome, Entrepreneurs. I’m so glad you’re here.
For the dads: I appeared on my friend Mike Sudyk’s podcast 2-Cent-Dads this past week to talk about startup burnout, and the transition to founder-dad from simply-founder. If you are a founder-dad, or are putting off having kids until you exit, thinking that there will be a “right time” (raises hand), I think the conversation is a worthwhile dive into startup-dad-life.
Now then, let’s dive in to a conversation about culture.
The Importance of Corporate Culture
A quick story to set the stage: About six years ago I scaled my company from 15-employees to 75-employees in about nine months, which was one of the most painful experiences of my business life. Our corporate culture, previously a strong suit of the business, was completely unprepared for the stresses of that type of rapid scale-up, and the growth almost killed my company.
Then we did the incredibly challenging work of transforming our culture from the inside out, while still hitting milestones of a venture backed, high growth company. With the support of a ton of dedicated people, we did it, and the company is now back on track to (fingers crossed) win the market.
All this to say that, having nearly ruined my company due to underinvesting in culture at a critical time, and having done the hard work of fixing and rebuilding our culture to become a strength once again, I have a unique appreciation for the importance, and delicacy, of corporate culture.
Below is the first thing I discuss with entrepreneurs as they start to work consciously on their culture.
Why most “culture work” actually hurts your company, and what to do about it
“Culture eats strategy for lunch” — Peter Drucker
This is one of the most popular quotes on corporate culture. And it’s true. The best company cultures are the foundation on which successful strategy after successful strategy are built.
So everyone should hire people to focus on culture, point them in the right direction, and get out of their way. Right?
Wrong.
The Downside of Misguided Culture Work
According to Fred Kofman, author of Conscious Business and culture consultant to hundreds of organizations, the vast majority of culture work does more harm than good. As in, not only doesn’t it improve the culture, most culture work actually harms the culture it’s trying to help. America spends billions on corporate culture each year, and the sad reality is that, on average, companies would be better off simply crossing their fingers.
But why? Why does most of the effort put toward the most powerful lever in business backfire? Perhaps even more importantly, how can you ensure that the work you put into building your culture intentionally is among the small percentage that eats strategy for lunch?
Starting with Discovery, Not Generation
Ask ten CEOs what makes a good company culture, and they’ll all say something similar: Trust, freedom, autonomy, mastery, purpose, ping pong tables... For many leaders, when they set to work thinking about company culture their first instinct is to simply brainstorm (generate) the culture they want, usually some version of the above, and then figure out the quickest way to communicate those values to their team.
This is the single most common way to disillusion your team and hurt your culture with the best of intentions. Because culture work must start with discovery, not generation.
There’s no way to open the future without closing the past. Unless the company’s leadership does a serious examination of their previous disengaging behaviors, and convinces the workforce that they are committed to change that behavior in a serious way, any engagement program is dead on arrival. — Fred Kofman
The reality is that even if you’ve never thought about it, your company already has a well-engrained culture with very specific characteristics, all of which your employees know well even if you do not (and if you think you do, but you haven’t asked employees to confirm, don’t be so sure). As a result, any values or mission you put on the wall, if they don’t match the actual, existing culture already present, they will communicate to your team you are clueless and, slowly or quickly, they’ll begin to check out. It’s as if your parents, after consistently missing your soccer games for partner calls (hi Peter Banning), call a family meeting to say their core family value is “togetherness.”
Effective culture change work, the kind that changes an entire company rather than simply making an executive team feel progressive, begins with a deep discovery process. It asks the question: what is our existing culture now? What are our current values, whether or not we actually took the time to create them intentionally?
Your parents first have to admit to their demonstrated value of “work>family” and convince you they’re going to change, before you’ll hear the word “togetherness” without dripping cynicism. Similarly, you have to first discover, cop to, and clean up any messes resulting from your existing culture before you have the ability to change it.
So how do we do this? Where do we look?
I know of two places to look. One is hard for one reason, and one is hard for another.
1. Looking Inside Your Company
Anonymous surveys are a great tool to understand how your culture is viewed by your employees. Anonymity is key, lest you get a bunch of sunshine blown up your butt. We built our own survey based on specific questions we had at my previous company, but a quick google search will give you many more options to choose from.
There is risk to this approach, however. A survey like this communicates to your employees that you understand the importance of culture, and that you will presumably listen to what they say and attempt to address it. If you take this route and do nothing to address the feedback afterward, it can cause the kind of harm we discussed above. This is a genie that is difficult to put back into the bottle.
2. Looking Inside Yourself
At some point in every entrepreneur’s journey they realize that their company is simply a manifestation of their personality. The good and the bad. No matter what’s on the walls, the behavior of the leader dictates the culture. This presents a shortcut, in that you can understand your corporate culture by understanding yourself.
Are you late to meetings? That’s your culture. Others are late, too. Do you hold yourself to the grindstone, sacrificing holidays to make more progress? That’s your culture. Others do that, too. Do you pass the buck and blame others when things go wrong? You get the picture.
While most entrepreneurs resist the hell out of this (it’s scary considering your foundational role in creating the problem you see in everyone else), in my experience looking internally is the most reliable route to determine your culture. For those brave few, it’s best done with either a 360-degree survey, allowing you to get feedback from all your colleagues, or a dedicated coach to help you see your blindspots.
Steps to Culture Transformation
I’ve reconciled with my current culture. Now what?
No matter which discovery route you take, how you get to an understanding of your current state of affairs, the process of changing a corporate culture without hurting the business is always the same:
Step 1: Change yourself such that you live the values by which you want the company to live.
Step 2: Write the values by which you live on the wall.
And if you’re wondering, yes that’s what we did to transform our culture at speed.
We looked in the mirror as a leadership team (me especially)
We talked openly about the pimples we saw there
We made commitments to act differently
We acted differently
Our culture changed
Nobody said it was easy.
Understanding People Debt: why it hurts more than technical debt
Speaking of culture, The People Collective put together an interesting take on what they call People Debt: The hardest business debt to pay back.
Like other kinds of business debt like technical debt, people debt is incurred when a company decides to prioritize speed over doing things “the right way.” For those of you who have managed a development team, you know that there is intense dogma on either side of this spectrum, but I’ve often found that the best route is somewhere in the middle. Somewhere between “move fast and break things” and “haste makes waste.”
This is such a common discussion in the product side of tech companies because it matters. Deciding when to incur technical debt to get a feature out the door to learn versus taking the time to architect the right solution that will scale can quite literally be a matter of life or death for companies, so it’s important and helpful that companies make that decision consciously.
Which is why it’s so surprising that the same discussion is not more common with regard to the human side of organizations. People debt is harder to pay back, and more costly, than technical debt. But most organizations incur people debt with their eyes closed.
When to Consider Leadership Coaching
When determining mutual fit with a potential coaching partner, I find myself curating based on experience and momentum as much as anything else.
For entrepreneurs looking to get from an eight to a ten, leadership coaching through radical self awareness (what I do) is the exact right tool for the job. The entrepreneur has already built a successful business, and works with me to grow his or her capacity for leadership, and identify the ways that her unconscious beliefs and biases are limiting her results, to ensure she can stay always out in front of the business as it grows. Self awareness is the foundation of this level of growth.
But for entrepreneurs looking to get from a three to a five — fixing a fundamental problem with the business, pivoting, or in the first phase of business which we all go through and I lovingly call “try not to die” — leadership coaching is usually like bringing a howitzer to a knife fight. Wrong tool for the job.
It took me three paragraphs to explain that concept. The author of Atomic Habits, James Clear, did a better job in 15 words:
Where to focus:
For the beginner, execution.
For the intermediate, strategy.
For the expert, mindset.
I’m going to steal his elegant framing (like an artist) moving forward when explaining when is the appropriate time to engage what type of support.
For those moving from an eight to a ten, a quote to consider:
“I, too, am a log, and I am already burning. Every cell in my body is using oxygen to produce energy, just like this fire in front of me. And when my fuel runs out, I will die, just like this fire will die out. I am being consumed by the sacred fire of life. I have no choice about that. But I do have a choice about the altar on which I place myself. To what will I offer myself? I have put myself on the altar of such unimportant material and egocentric things. It is time to make a deliberate choice and start burning on the altar of meaning, love, and freedom.”
— Fred Kofman, The Meaning Revolution
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Executive Coaching for Entrepreneurs
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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 and a decade of meditation & mindfulness training, I have helped leaders from companies across the world, funded by some of the world’s top venture funds, to design a more conscious life and make key changes to improve their performance and satisfaction. I coach entrepreneurs how I want to be coached:
Focused on the person, not the role.
Focused on results, without the fluff.