249: Culture that Works. Becoming a Billionaire. Seeing Again
Happy Sunday!
If this is the first time you’re reading strategy, soul & self, I hope you enjoy it. You can subscribe here.
If you work in an organisation where your culture and processes are disconnected, please share today’s letter with your colleagues. You might not be able to fix everything, but small fixes can cascade. You might not be able to change the whole business, but you can shift how your division operates (and high performance is contagious). Read the letter together. Identify an opportunity. Improve it.
/strategy
One of my favourite guides to shaping organisational culture is No Rules Rules by INSEAD professor Erin Meyer and Netflix founder Reed Hastings. It describes how Netflix intentionally designed and implemented practices, habits, and systems to birth a culture dedicated to innovation and experimentation (more about No Rules Rules here).
Meyer and Hastings illustrate, using real-world examples, how culture isn’t defined by what we say but by what we consistently do.
If you have simplicity as a value but employees need to fill out six forms to go on leave, or twelve to get a new laptop, it’s unlikely to be part of your culture (other than on the boardroom wall).
I was excited that HBR selected one of Meyer’s most recent articles, Build a Corporate Culture That Works, one of 2024’s three ‘most impactful’ articles.
Meyer offers six guidelines.
- Build Your Culture Based on Real-World Dilemmas
- Move Your Culture from Abstraction to Action
- Paint Your Culture in Full Color
- Hire the Right People, and They Will Build the Right Culture
- Make Sure that Culture Drives Strategy
- Don’t Be a Purist
She starts, “One of the biggest mistakes companies make when articulating their desired organizational culture is to focus on abstract absolute positives (integrity, respect, trust, and so on). Take integrity. Virtually all leaders want their employees to behave with it. Indeed, there is really no credible alternative to integrity as an articulated value. Never have I come across an organization that said, ‘In this company, we are all about corruption.’”
She advises that a more useful approach is to start with the tough moments, when people face real dilemmas and have to make judgment calls. What do you want them to weigh? What kind of conversations should they be having? Culture becomes meaningful when your values help guide those choices in the messy, high-stakes moments.
Netflix and Shopify are both high performance cultures.
Netflix’s captures it like this “Adequate performance gets a generous severance” and Shopify CEO, Tobias Lütke, wrote, “Shopify is not a family. You are born into a family. They can’t un-family you. The danger of ‘family thinking’ is that it becomes incredibly hard to let poor performers go. Shopify is a team.”
The risk with such all or nothing cultures is they can result in hyper-competitive, arrogant and ultimately organisation destroying behaviour.
Meyer notes, “Of course, some companies prize skill and talent above all other qualities and will take the antagonistic superstar over the kind, average worker every time. But Lütke makes it crystal clear what he wants his managers to remember: ‘Slack trolling, victimhood thinking, us-versus-them divisiveness, and zero-sum thinking must be seen for the threat they are.’ Netflix resolves the dilemma more simply, stating ‘No brilliant jerks; the cost to teamwork is just too high.’”
Powerful cultures are embodied in every aspect of organisational life. Challenge yourself. Take a simple process – something like onboarding a new employee or signing a guest in at reception or ordering a new office chair – and test it against your values. If it doesn’t fit, decide which must go – the value or the process.
//self
Koos Bekker is one of South African most successful businessmen. Forbes estimates that today he is worth $3.5 billion.
In 1997, he became the CEO of Naspers. At that point, it was mostly a newspaper publisher. Not an exciting business in any meaningful way. Under Bekker’s leadership it transformed into one of the continent’s most valuable, thanks in no small part to its investment in China’s Ten Cent.
TJ Strydom’s Koos Bekker’s Billions tells his story.
Part of Bekker’s legend is that he never drew a salary at Naspers. He negotiated a five-year contract that gave him a 3% share of all value created above inflation. In retrospect, it sounds like a simple route to riches. The lived reality was quite different.
Strydom tells us, “On Bekker’s first day as CEO, Naspers shares traded at about R32. In the deepest trough after the dotcom crash, they were languishing at R12… Bekker reported a loss of R1,9 billion to shareholders in 2002, down from a profit of R1 billion in 2001 and a long way off the R3.3 billion netted in 2000. Far from creating value, in the first four years on the job Bekker had actually overseen a two-thirds decline”.
In 2002, at the end of his first contract, Bekker got nothing. He’d worked five years for no pay. He could do so because the first decade of his career had left him with a substantial financial buffer. Five years later the money started to flow and really never stopped.
Behind successes lie an intentional building of buffers. Bekker’s buffer was cash that in turn bought him time. What are yours? We all need them.
(Read more in Build Buffers. Be Better)
///soul
Time is a powerful asset. Sometimes, waiting is the best thing we can do. Judy Brown’s Trough is a beautiful expression of this principle.
There is a trough in waves,
a low spot
where horizon disappears
and only sky
and water
are our company.
And there we lose our way
unless
we rest, knowing the wave will bring us
to its crest again.
There we may drown
if we let fear
hold us in its grip and shake us
side to side,
and leave us flailing, torn, disoriented.
But if we rest there
in the trough,
in silence,
being in the low part of the wave,
keeping our energy and
noticing the shape of things,
the flow,
then time alone
will bring us to another
place
where we can see
horizon, see land again,
regain our sense
of where
we are,
and where we need to swim.
All the best
Karl
If you enjoy reading this letter, please consider recommending it to friends and colleagues. They can subscribe here. You’ll also find me on LinkedIn.
My coaching practice is fully booked until August. If you’d like to work with me in the last part of the year, email me on coaching@karlgostner.com and we can schedule an introductory conversation.