6

CULTURE

In addition to strategy, culture is the other major lever you have for leading organizations, arguably the more vocal one. Whatever strategy has not made clear to your extended team, culture will unapologetically fill the void. Culture establishes the rules of engagement after leadership leaves the room; it explains how things are really done around here.

Culture tells us how to behave in a meeting. It tells us who gets to take up space automatically and who has to work for it. It tells us whether we should follow the rules or cut corners, whether we should share or hoard information, whether we should stick our necks out and try to make things better or simply adapt to the status quo. What’s more important, growth or excellence? Action or analysis? Being direct or saving face? Strategy drops hints, but it’s culture that has the definitive answers.

Culture carries its guidance to the farthest corners of the organization to places you may never go and people you may never meet. There’s a story about the salvation of FedEx that Michael Basch, one of the company’s founding officers, likes to tell.1 In 1973, FedEx was on the ropes, bankruptcy looming, nothing going right fast enough. The company’s iconic founder and CEO, Fred Smith, had done everything he could think of to save the organization, including gambling the only capital he had left in a desperate trip to Las Vegas (astonishingly, this bought him some time). Smith was out of next moves.

As this existential crisis unfolded, a customer called FedEx in tears because her wedding dress hadn’t arrived yet, with less than twenty-four hours until the ceremony. A frontline service employee named Diane jumped into action, tracked down the dress, and chartered a small Cessna to deliver it—all without wasting precious time by asking anyone for permission. (We’ve tried and failed to find her full name.) The gesture created so much buzz at the wedding that it got the attention of some executive guests. The following week, those same guests decided to take a bet on using a young, wobbly FedEx for shipping some of their products, driving up demand from three packages a day to thirty. It was enough to save the company.

FedEx’s strategy in these early years was simple: deliver time-sensitive packages with speed and certainty. But Smith and his team had also built a strong, “bleeding purple” (the company’s primary logo color) culture marked by a get-it-done ethos and disregard for external signifiers, including race, gender, and company status. Everyone mattered. Everyone had the agency and obligation to contribute in meaningful ways. Diane’s bold decision making created a lifeline for FedEx, and it wasn’t a charismatic CEO or a well-defined strategy that made the difference. Those things may have pointed out the finish line—deliver packages quickly—but it was culture that unleashed her to go all out.

What is culture?

Culture usually becomes “a thing” when people realize that something about their culture needs to change. This awareness often comes later in an organization’s life cycle than it should, and part of our mission here is to shorten that timeline. For pedagogical reasons, we’re going to simply assume that there’s something about the culture of your own organization that you already know you want to change.

Let’s start there: If you could change anything about your culture, what would it be? Is there more than one thing on the list? Take a few minutes to think about it and then write down your answers. We ask these questions right up front because the reflection itself can be empowering. Most people—even the most senior leaders—can feel, at times, as if culture is something they have to endure, not something that’s within their power to change. They couldn’t be more wrong.

As a starting place for discovering how possible it is to change culture, we like former MIT professor Edgar H. Schein’s iconic framework, which loosely divides organizational culture into artifacts, behaviors, and shared basic assumptions.2 As Schein argues persuasively, to get people to reliably behave the way you want—even in your absence—you have to get them to reliably think the way you want.

David Neeleman famously flew as a crew member once a month when he started JetBlue.3 He would put on an apron, serve coffee, and introduce himself up and down the aisle with a friendly, “Hi, I’m Dave.” Neeleman electrified the organization every time he did this and reinforced the company’s shared basic assumptions, including the belief that everyone, at every level, was in service to JetBlue passengers. The most important assumption he surfaced—a somewhat radical idea at the time—was that customers are people. JetBlue’s mission was to “bring humanity back to air travel.” Seeing the CEO treat a passenger like a human being was a warning shot to everyone that no one flies steerage on this airline. That’s how things are really done around JetBlue.

Another way to describe culture is that it’s our collective agreement about what is true. What is important. What is a crisis. What is cause for celebration or pride or shame. Culture even determines something as fundamental as what is funny. Humor is not a universal truth; it’s a cultural one. For example, a culture challenge at Riot Games was that behaviors that were coded as funny and harmless at an early stage in the company’s history, when it was a relatively homogenous group of young, primarily male gamers—things like physical gags—were no longer funny or harmless once more and varied people joined the team. (See the sidebar “Ten Signs You Shouldn’t Make That Next Joke.”)

Schein once went so far as to say, “The only thing of real importance that leaders do is to create and manage culture.”4 We have a hard time disagreeing with this statement, except maybe quibbling with the “only” part (see chapters 1–5). We’d argue that culture is in the running for most important because—among other things—it stays behind long after you’ve left the building. You may move on from the company, but a strong culture can endure for generations.

Culture also has incredible reach, spilling out beyond the boundaries of your organization. Culture changes the people it touches, who, in turn, change the people they touch, and so on. Anyone who has felt more optimistic after walking into Starbucks—or felt cooler when they chose that indie coffee shop instead—knows that culture can influence anyone who interacts with it. If your ambition as a leader is maximum impact, then learn to become a culture warrior.

Among the most effective culture warriors walking the planet is Patty McCord, former chief talent officer at Netflix. You won’t find empty values statements on the walls of a Netflix conference room, not on McCord’s watch. As she helped to build Netflix into a media giant, McCord articulated the behaviors the company prized most—there are nine—and then used them to drive all hiring, compensation, and exit decisions. She socialized new recruits on these behaviors in a famous hundred-slide presentation on Netflix’s unique culture, and then reinforced them constantly, for example, invoking “honesty” (number eight) if colleagues withheld feedback from each other. (Sheryl Sandberg described McCord’s presentation, known as the Netflix Culture Deck, as “the most important document ever to come out of [Silicon] Valley.”5) McCord also challenged employees to question each other’s actions if they were inconsistent with Netflix culture, an act she explicitly labeled an expression of “courage” (number six). By the time McCord left the company after more than a decade in her role, Netflix was behaving exactly as she and CEO Reed Hastings had designed it to behave: curious (number four), innovative (number five), and passionate (number seven). Not long after McCord made her culture deck public, Netflix dropped a complete season of House of Cards and forever changed the way the world consumed content.6

McCord designed Netflix’s culture to attract high-performing creative leaders who thrive in work environments where they have a high degree of freedom and, in McCord’s worldview, are so self-motivated, self-aware, and self-disciplined that they’re also worthy of that freedom. These “innovator-mavericks” (her preferred term) hate almost everything about being trapped in a typical role or organization. They don’t want to be told what to do with their discretionary behavior, and they’re certainly not wasting time reading the company handbook. They even resist restrictions such as vacation or expense policies, which Netflix has essentially abolished. The company’s expense policy is, “Act in Netflix’s best interest.”

McCord did everything in her power to lure these autonomous creatures into the building and then set them free with a culture that told them everything they needed to know. She and Hastings stayed out of their way and made sure everyone else did, too. In other words, the most senior executives at Netflix were often intentionally absent, leading from the sidelines, where their most valuable, freedom-loving employees preferred them to be. It’s a model that reveals another foundational truth about leadership: some of your best people don’t always want you in the room. Culture gives you the confidence to exit.

Do you have a culture problem?

By June of 2017, the mandate to change the culture at Uber could not have been stronger. This was not lost on then-CEO Travis Kalanick. As reported by Mike Isaac in Super Pumped: The Battle for Uber, while Kalanick was on leave, he drafted an email to the company that he never ended up sending.a The email was humbled and reflective, mirroring the version of Kalanick we had gotten to know earlier that spring. He opened with a sober take on Uber’s culture challenges: “Over the last seven years, our company has grown a lot—but it hasn’t grown up.”7

Kalanick took responsibility for the company’s cultural missteps, including its emphasis on growth at all costs and its transactional approach to stakeholder relationships. He acknowledged that the values that had driven Uber to its surreal, historic positioning—to becoming the most valuable startup in the world—also had an unanticipated downside. “There’s a lot of good intent behind our values,” he wrote, but he conceded that they had also been misused and misinterpreted. And then he used a descriptor for this distortion that would have gotten everyone’s attention: “weaponized.”

This word is sometimes used too casually, but it wasn’t in Uber’s case. Here’s our definition of a weaponized value: it’s the manipulation of an espoused value to disempower, or in extreme cases, harm someone. It’s the opposite of leadership in that it’s all about the weaponizer and their own interests. A weaponized value dresses up a new belief in the guise of an old one. It changes the meaning of what is true without the rest of the organization’s consent. For example, we worked with one company that listed “default to trust” among its core values. This phrase was meant to remind everyone to give each other the benefit of the doubt, a noble idea, but it began to be used to shut down healthy dissent. “Default to trust,” a manager might say to a direct report who questioned the plan or offered an alternative viewpoint.

It was clear that there were parts of Uber’s culture that had indeed been weaponized, which was one of the reasons Kalanick invited Frances to join the team. We still fantasize about what might have been if we had gotten the call earlier, whether we could have helped to head off some of the pain the company went through. In our experience, a pattern of weaponization is a lagging indicator of an unhealthy culture. Our goal is to give you the tools to diagnose and change culture before this critical phase, at the point when your culture simply needs to be repaired (rather than stripped to the studs for a gut renovation).

How do you know when you’re at a cultural moment of truth? The trite answer is that people will often tell you. When Susan Fowler endured her very, very strange year at Uber, she reported her experiences internally well before she chose to share them publicly.8 The facts of her case never made it all the way to Kalanick, from what we understand, but because of the courage of Fowler and other culture whistleblowers, we now live in a world where feedback on culture is finally making its way to all the people who need to hear it.

It helps that culture has become a relatively well-understood concept, thanks in part to workplace norms that have placed it at the center of the talent wars. Great employees want to work in environments where their values are aligned with their employer’s, and they’re increasingly vocal about demanding it. If you suspect your culture needs a refresh, we advise being super-direct with your colleagues. Ask them what about your existing culture is and is not working. Chase down the answer with the conviction that Schein might be right and it’s the most important thing you do as a leader.

The goal in these discussions is to develop a reasonable hypothesis that you can then test more systematically (see the “Culture Change Playbook” section later in the chapter). We suggest gathering this informal data in intimate, interactive formats such as small groups or one-on-one discussions. Start with the empathy anchors on your team, the people who are naturally wired into the experiences of others. Include the truth tellers and people with nothing to lose. Add a culture discussion to all exit interviews. (A question we’ve found particularly useful in exit interviews is, “As someone who cares deeply about the culture here, is there anything you think I should know about your experience or the experiences of other people?”) Control for status, function, and anything else that might be a variable in how people experience what is true. If you have reason to believe you won’t get an honest answer—if psychological safety isn’t a cultural given—then do what it takes to protect the messengers.

As you develop your intuition, here are some conversational entry points that we’ve seen work:

• How well do you think our culture sets people up for success? Are there ways that it also undermines their effectiveness?
• Have any of our values or commitments to each other become “empty” or even “weaponized”?
• How aligned is our culture with our current challenges and opportunities?
• What do we need to change culturally to achieve our most ambitious goals?

A more difficult part of this intuition-building process can be to listen—really listen—to what you hear in these discussions, with the curiosity of an anthropologist and the radical accountability of a leader. Listen as someone responsible for the experiences of others, both in your presence and in your absence. Listen without your ego or internal defenses getting in the way. The objective is to convince yourself you need a culture shift before you prepare to convince others.

Kalanick’s infamous “toe-stepping” maxim was one of the first values to be publicly retired when Dara Khosrowshahi took the helm as CEO.b As Khosrowshahi explained in a widely read LinkedIn post, “ ‘Toe-stepping’ was meant to encourage employees to share their ideas regardless of their seniority or position in the company, but too often it was used as an excuse for being an asshole.”9 He went on to acknowledge an inconvenient truth: that the shared assumptions and behaviors that got Uber here were not going to carry the company all the way there, to a sustainable, thriving company.

This is incredibly common tension that’s not limited to the world of technology startups. Indeed, we believe that some variation on this challenge is at play inside almost every organization. Practically every company we know is relying in some way on assumptions and behaviors that need to be updated to reflect their current reality. Which elements of your culture might be doing more harm than good at this point? Is there anything that got you here that’s now standing in the way of your ability to go there? (See the sidebar “The Case for Examining Your Own Sh*t.”)

Soul searching at Riot

In the summer of 2018, the Riot Games leadership team members experienced every modern CEO’s nightmare: they woke up to a breaking news story alleging that a broken, sexist culture had emerged on their watch.11 A few days later, the company issued a public apology and vowed to address the roots of the problem.12 Riot was known for its loyalty to players of its blockbuster game League of Legends, and the company pledged to bring the same level of devotion and empathy to its relationship with employees. It was a sincere, full-throated commitment to change and the reason we agreed to work with the team. Riot’s leaders were clear that the assumptions and behaviors that got them here needed real reform.

The team’s first step was to actively listen. In the days following the article’s release, company leadership met with hundreds of “Rioters” in small, interactive sessions to discuss what had gone wrong. A theme that emerged during these emotional conversations was frustration with a high-octane “bro culture” that hadn’t evolved along with the company. Riot began as a scrappy, disruptive startup. Its handful of employees identified as underdogs in the gaming industry, channeling passion and ambition into better serving their fellow gamers. The language of an early “Riot Manifesto” focused on animating behaviors like “Challenge Convention.” As the company scaled to a workforce of thousands, however, the context surrounding these behaviors was lost. “Challenge Convention” turned into “Challenge Everything.” “Take Play Seriously” became license to marginalize colleagues who weren’t considered true gamers, a subjective category that too often excluded women.

In addition to listening, Riot leadership commissioned a companywide survey—drafted by a newly formed cultural transformation team—that asked about the culture that would enable Riot to deliver resonant game experiences over the long term. The survey was simple and direct, just three questions:

• Describe the core values you believe would foster the ideal company culture for Riot. Be as specific and descriptive as you like!
• Which elements of Riot’s current culture are preventing you from experiencing the culture you just described?
• Which elements of Riot’s current culture do you observe are preventing others from experiencing the culture you just described?

Survey responses were raw and real, revealing widespread discomfort with the status quo and a hunger for a more collaborative work environment. Many respondents expressed a desire to scale the company’s original vision in more inclusive ways, to adapt its founding values to the diverse workforce Riot needed to achieve its ambitions. One respondent summarized the aspirations of the larger team: “The best version of Riot is a place where Rioters come together with the shared goal of delivering unforgettable experiences for players … Our shared passion for games unites us toward a common goal, but our diversity is our strength. Each Rioter has their own wealth of experience and perspective, and an equal seat at the table.”13

Finally, all employees were invited to optional cultural “visioning” sessions, where they were encouraged to revisit the original Riot Manifesto, an exercise rich with symbolism. The manifesto was the company’s most important cultural artifact, and employees were given the mandate to change it, to even blow it up if necessary. Armed with pens and paper, they were asked to design a better culture for themselves and their teammates, one where everyone had an equal opportunity to thrive.

To our surprise, Rioters overwhelmingly wanted to retain the core of the company’s original vision. There was broad agreement that many of Riot’s founding values were still relevant if truly actualized—if the company truly walked the talk—and if these values were reconciled with what Riot had become, a company now positioned not only to disrupt but also to lead. Today’s Riot needed to innovate and execute with excellence, to embrace creativity and collaborate broadly, to take exquisite care of players and each other. These had been trade-offs in the past, but that tension had become untenable.

In December, a few months after the original article was published, Riot leaders shared their new cultural values with the company. Gone was the term “manifesto,” with its suggestion of revolutionary zeal, but many other words were familiar. Player experience was still paramount, but language that had been used to undermine trust or justify exclusion had been struck. A new commitment to “thrive together” felt particularly important to people.

The updated values informed the rest of the company’s culture change priorities, including the addition of a new chief people officer and chief diversity officer. This new leadership team (two women, one of them a woman of color) proceeded to assess all hiring practices and performance management systems. They invested in an educational foundation for all employees on how to build inclusive, high-performing teams. Their mission was to help create a reality that matched the height of the company’s new ideals.

Most exciting to us, Riot’s ambition on inclusion has moved beyond its own organizational boundaries. As the company continues to promote belonging inside Riot, Riot leaders have doubled down on fostering inclusion more broadly. The company is leading an initiative to build a working group for diversity and inclusion (D&I) professionals in gaming, and representation in its own games—played by over 80 million people a month—is taken as seriously as other creative priorities. As a result, female characters and characters of color have been given more prominence in the company’s games. Queer love stories have begun to show up in games’ elaborate backstories. A full-time role focused on inclusion in products has been added to Riot’s dedicated D&I team, a role unique to the company, as far as we know. Although Riot is proud of its history of representation, these efforts have new resonance. They also reinforce what we love most about culture change: you can’t contain it. Culture changes the people it touches, and culture change transforms them. The people touched by Riot’s extraordinary culture journey are becoming culture warriors themselves.

The Culture Change Playbook

We’ve done a fair amount of pedagogical “sanding” at this point, hopefully prepping your minds for a fresh, new coat of insight. (Curiously, this remains Frances’s favorite education metaphor.) Let’s now take a moment to revisit the question we asked at the beginning of the chapter: If you could change anything about your culture, what would it be?

Before you take the actions we outline next, we suggest repeating the intuition-building steps—the conversations and focus groups we proposed earlier in the chapter—until you’re convinced you indeed have a culture problem. Keep in mind that not every organizational problem has a culture solution, but every culture problem has an organizational solution. Said differently, every culture problem can be broken down into its component parts and solved, even the ones that feel the most daunting or sensitive. The process will be no more complex than some of the other initiatives you’re leading, so bring your most optimistic, can-do self to the experience.

Once you’re ready to proceed, “The Playbook” will help you move from informed conviction to organizational impact, a sequence we’ve developed and tested over more than a decade of doing this work.

Step 1: Collect the devastating data

Start by describing the problem that culture change will solve. Has safety taken a back seat to other priorities? Are there demographic tendencies in who gets to thrive? Has the company become too cautious? Too transactional? Too complacent? The “devastating” data are simply the observable parts of the problem, the hard evidence that all is not well in the kingdom. Capture it in a format that will allow you to remeasure and demonstrate progress later on.

Step 2: Keep it to yourself (for now)

Resist the temptation to immediately broadcast your findings. This step can be counterintuitive in an age of increasing transparency, but when organizations share tough culture data without a productive path forward, they can quickly lose momentum while well-meaning people debate the accuracy and sufficiency of the data (and everyone else gets crazy frustrated). Indeed, we’ve seen well-meaning organizations lose momentum for years when data are shared and debated before there are viable correctives. Share the evidence with enough people to execute step 3, which is to pilot potential solutions. Limit information access to this need-to-know group, just for now.

Step 3: Pilot a rigorous and optimistic way forward

Running a good culture-change pilot program has three core elements: intention, design, and execution.

Your intention is to demonstrate that success is possible—to show the organization that the problem can be solved (relatively) quickly without good people being harmed. It’s often important to reassure your colleagues at this stage that your objective is not to condemn anyone, but to unleash the organization’s full potential. Your starting assumption is that experienced, well-intentioned employees made reasonable choices. If the pilot succeeds, then those same employees will be making choices that are even more reasonable. That’s the optimistic part.

For the design phase, recruit a pilot leadership team with a bias for action and deep intuition about the problem. Decide as a team which organizational behaviors you want to change and the most effective levers for changing them. Channeling Schein again, try to isolate the assumptions that are driving those behaviors. How might you change the way good people think? In our experience, the most enduring change campaigns ultimately impact mindset. That said, it’s also fair game at this stage to push directly on behaviors and even on artifacts.

As you move to execute the pilot, be as creative and audacious as possible, running smart experiments in a range of conditions. Head off the criticism that you made it too easy on yourselves by choosing a team or location with low barriers to progress. We often advise people to choose the most difficult conditions for the pilot, to drive the steepest learning curve and start winning over the skeptics. Finally, document everything you do and learn. Collect pilot data in a form that supports a persuasive story. How did success show up in the data? How did you know that you built a culture of safety? Of trust? Of inclusion? By the end of the execution phase, you should be able to answer these questions definitively.

Step 4: Involve everyone in the solution

Now you can tell everyone the good news: yes, we have a culture problem, but we also have rigorous, evidence-based insights into the solution. Share the before-and-after pilot data, as well as the detailed story of what you did and learned. Focus the organization on the optimistic way forward, where there are no condemned parties or cynical motives. Invite broad participation in scaling solutions and making them even better. Note that something magical often happens at this stage, with much higher levels of creativity and accelerated action than the pilot team could generate on its own. This is your company unleashed. Embrace it. (See the sidebar “Playbook in Action at Harvard Business School.”)

Add “culture” to your title

Culture change is often viewed as important but not urgent, a lofty side hustle you get to pursue only after you’ve done your day job. But the most successful organizational leaders we know are the ones who put culture at the very center of what they do. They’re the CEOs who implicitly replace the “e” with a “c” and interpret their roles as chief culture officers first. They’re the VPs of product or sales or operations who mentally tack on “and culture” to whatever operating title they’ve earned. They’re the leaders who quietly add culture to their job descriptions, wherever they happen to be in the hierarchy.

That’s exactly the mentality that’s made CEO Satya Nadella and his leadership team so effective at Microsoft. If you want to change an organization the size of Microsoft—filled with people you will rarely see, working in offices you will rarely enter—then you have no choice but to lead from a distance and, in particular, to lead through culture. When he became CEO in 2013, Nadella declared culture change his most important responsibility and dove headfirst into finding ways to get 130,000 employees to work differently in his absence.16

He started by changing their shared assumptions. Partnering closely with his chief people officer, Kathleen Hogan (remember her from chapter 4?), Nadella bet Microsoft’s future on his ability to shift the company’s beliefs about its most sensitive subjects: winning, losing, competition, diversity, even what it means to be part of a unified company. Together with the rest of the leadership team, they championed adoption of Carol Dweck’s “growth mindset,” focusing on behaviors this new mindset would unlock, including delighting customers, collaborating effectively, and fully embracing inclusion. They started by piloting new approaches across their own teams, and then found rigorous and optimistic ways to bring the rest of the company along.17

The short version of the story is that it worked. When Nadella started as CEO, the company’s performance was stagnating. Five years later, in what has become one of the most exciting culture change stories of our lifetime, Microsoft’s stock is at a record high, making it the most valuable company in the world as we write this. The entire organization is competing and innovating in unprecedented ways, and there’s not a “wedge” in the company’s strategy that hasn’t grown. If you ask anyone, anywhere, what changed, their answer always begins with culture. In record time, the company’s leadership team changed the way things are really done around Microsoft.

From the beginning, Nadella decided that creating and managing culture was the most important thing he would do as a leader. What would happen if you were to make the same decision? What kind of leader would you become? At the risk of overstepping our boundary as authors (why stop now?), we believe that the leader you would become is beyond anything you dreamed was possible. It’s a leader who knows how to unleash not only individuals, but also whole organizations and beyond, a leader with the ability to change lives and institutions and even nations. We want to live in that world. We want our sons to grow up in that world. And our greatest hope in writing this book is that we’ve given you permission—and a few key guideposts—to continue your journey toward becoming that leader and empowering everyone around you.

GUT CHECK

Questions for Reflection

• Where does culture currently rank on your list of leadership priorities?
• If you could change anything about your firm’s culture, what would it be? Which behaviors or underlying attitudes are getting in the way of your organization’s success?
• Have any of your values or commitments to each other become empty or even “weaponized”? Are there values missing from your culture that are critical to your success?
• Which beliefs and behaviors have driven your own past successes as a leader? As you think about your future impact, do you need to evolve or let go of any of them?
• If you were to make organizational culture your most important priority as a leader, what would you do differently? Who or what would get more of your attention?