“I came to see, in my time at IBM, that culture isn't just one aspect of the game, it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value.”

—Louis V. Gerstner, Jr., former Chairman and CEO, IBM

Leaders must put character at the center of everything they do.

Today, peak performance requires a dual focus on culture and strategy, especially in this new era of doing business. We are in a unique environment marked by instant gratification, pervasive social media influence, and fast-changing global political and economic forces that require every business to be agile and ready to shift at a moment's notice. In addition, the forces of digital transformation and disruption are exerting tremendous pressure on entire industries—and the executives who lead them.

On top of all that, we've all witnessed the tremendously negative impact the COVID-19 pandemic has had on people, businesses, and the global economy—surpassing the downturn of 2008. While many companies have recovered from the severe and unexpected disruptions to their business operations, many others have gone bankrupt or have closed their doors permanently. Major companies filing for bankruptcy during the COVID-19 pandemic include Neiman Marcus, JCPenney, Virgin Atlantic, Hertz, 24 Hour Fitness, Pier 1 Imports, Brooks Brothers, Stein Mart, Sur La Table, and even the Cirque du Soleil circus arts live entertainment company. The list goes on.

And, as I write these words, mortgage delinquencies are the highest they have been in a decade,¹ American Airlines announced that it is going to cut 19,000 jobs,² and it was reported that 54 percent of San Francisco storefronts—the local lunch spots, neighborhood grocery stores, fitness studios, and other small businesses that we at Anaplan headquarters regularly frequented before the pandemic—are no longer in business.³ Internationally, according to Roberto Azevêdo, Director-General of the World Trade Organization, “The unavoidable declines in trade and output will have painful consequences for households and businesses, on top of the human suffering caused by the disease itself.”⁴

Clearly, the aftereffects of COVID-19 will leave lasting ripples on how businesses are run and how leaders prepare their companies for the future, perhaps for decades to come. These ripples won't be felt just in the United States, but all around the globe. Every CEO I know is considering flexible new ways of working that put less focus on having people on-site in traditional offices, and more focus on outcomes. And so are employees. According to one survey of more than 750,000 employees working in more than 100 global enterprises—representing every major industry—in early April 2020, 33 percent of those surveyed said they wanted to return to the physical workplace full time post-COVID-19. At the end of June 2020, only 4 percent of those surveyed said they wanted to return to the physical workplace full time post-COVID-19.⁵

It seems that change is all around us.

Leaders intuitively know a great culture enables great business results, and a significant amount of research confirms this. However, that same research shows that most organizations are falling short when it comes to culture.

According to Gallup, which has been regularly surveying the state of employee engagement for almost two decades:

Culture is a critical part of an organization's identity. Culture is created through the experiences that employees have with the corporation and, just as importantly, with each other—the everyday interactions with peers, managers and executives.⁶

When employees identify with and are aligned with a company's culture, they feel they belong to an organization that is inspiring, purposeful, and truly values their contributions to the team. They feel connected. And this connection flows right to the bottom line. A 10-year review of more than 111,000 employee surveys conducted by Aon Hewitt and Queen's Centre for Business Venturing (QCBV) revealed that organizations whose employees have the highest levels of engagement achieve:

• 65 percent greater share-price increase;
• 26 percent less employee turnover;
• 100 percent more unsolicited employment applications;
• 20 percent less absenteeism;
• 15 percent greater employee productivity; and
• Up to 30 percent greater customer satisfaction levels.⁷

This is all good news for businesses with great cultures, but there's a hitch. According to a 2018 PwC survey of more than 2,000 people in 50 countries, although company leaders tend to think their companies have great cultures, their employees don't necessarily agree. While 63 percent of C-suite and board members surveyed reported that their organizations have strong cultures, only 41 percent of employees responded that this is the case. In addition, 80 percent of respondents said that in order to succeed, grow, and retain the best people, their organization's culture needs to evolve within the next five years. Compare this to just 51 percent of respondents in 2013 who said that their organization's culture needs to evolve.⁸

As the Aon Hewitt/QCBV study demonstrates, a corporate culture that is lacking correlates to lower levels of employee engagement, productivity, and business results, along with higher levels of turnover and absenteeism. However, it gets even worse. Gallup also found that 51 percent of employees surveyed are actively looking for a new job or watching for openings at any given time—in many cases because they are convinced that “the grass is greener” in a different organization.⁹ Unfortunately, this group of people may very well include your best employees—some of whom may leave before they realize their full potential in your organization.

In 2019, job and recruiting site Glassdoor published the results of its latest Mission and Culture Survey. This survey asked a simple question: What makes employees around the world satisfied at work? According to the results of the survey, the top three drivers of employee satisfaction are:

• Culture and values;
• Quality of senior leadership; and
• Career opportunities.¹⁰

The Glassdoor survey also revealed that:

• Well over half (56 percent) of employees and job seekers say company culture is more important than salary when it comes to job satisfaction.
• Almost 73 percent of adults surveyed would not apply to a company unless its values align with their own personal values.
• Nearly 4 in 5 people would consider a company's mission (79 percent) and culture (77 percent) before applying for a job there.
• Almost 2 in 3 employees (65 percent) say company culture is one of the main reasons for staying at a job.
• 65 percent of U.S. Millennials are likely to place culture above salary, which is higher than any other age demographic surveyed.¹¹

Clearly, culture matters and has a tremendous impact on who joins and stays at your organization—and ultimately, on your ability to execute strategies required to achieve the goals you set for your organization.

When I became CEO of Anaplan in 2017, I could see the culture needed an overhaul. Even though our product was exceptional, and we were on to something that had enormous potential, that was not enough to make the company successful long-term. One thing I noticed early on was the company was lacking in diversity and inclusion—in fact, internally the nickname “Manaplan” was often invoked because upper management of the company was mostly men, and women were not well represented across functions.

We needed to make some changes quickly to transform Anaplan's operations and culture. I will get into the details of that transformation later in this book. But for those of you who are trying to understand your culture, I recommend asking these questions: How does your culture evolve amid ever-changing business, political, social, economic, and customer dynamics? How does your culture remain clear, consistent, and powerful amid hypergrowth? How does your culture persist when people are dispersed globally, expect more from work, and work remotely?

The New Relevance of Character

What we know as someone's character anchors the relationships we build with people around us—our boss, the people who work for and with us, our customers, our vendors, our investors, the communities in which we do business, and the world at large. Positive business reputations rely on leaders and cultures with upstanding character—behavior that demonstrates values people can rely on and build trust in. From what I have learned, character is intrinsic and enduring—like a boulder that weathers a hurricane with no visible stress or damage—and the origins of the word reflect this.

Character found its way into our language from the ancient Greek word charassein, which means “to engrave,” as you would engrave a letter, number, or other character onto a surface such as clay, wood, or metal using a chisel. As the pioneering psychoanalyst Dr. Richard Sterba pointed out, this original meaning has since been broadened to humans. Says Sterba:

Character designates the features of personality which are more or less indelibly engraved upon it, features which of course express themselves in actions and reactions, features that are “characteristic” of the individual, features by which one ego structure can be differentiated from others.¹²

I believe that, just as a great culture creates competitive advantage, so too does defining and nurturing an upstanding company character. Companies with upstanding character embrace and embody the virtues of empathy, courage, authenticity, honesty, integrity, respect, and more. All of those attributes combine to create positive interactions and relationships that are then rewarded with loyalty, engagement, and goodwill. People make decisions on what to buy, where to work, whom to partner with, and whom to affiliate with based on a company's values and on the character (or lack of it) displayed by its people. Do you stand for something? Is your focus on making the world a better place or just on making money?

We all have our personal opinions on which companies stand out when it comes to character and living their values; there are a variety of annual surveys that rate the best places to work based on employee feedback. For example, rankings for the annual Fortune 100 Best Companies to Work For are based on the results of a 60-question survey given to workers at companies with at least 1,000 U.S. employees. According to the Great Place to Work organization, which administers the survey, 85 percent of the evaluation is based on what employees report about their experiences of trust and reaching their full potential as part of their organization, no matter who they are or what they do. The remaining 15 percent includes an assessment of all employees' daily experiences of the company's values, people's ability to contribute new ideas, and the effectiveness of their leaders, to ensure they're consistently experienced.¹³

Here are the top three companies on the 2020 list and a sample of what employees had to say about these organizations. It will be interesting and instructive to see if the organizational stresses brought about by the COVID-19 pandemic have a significant impact on the upcoming versions of this annual list.

• Hilton. “I love how I don't feel like just a number here. I am a strong believer that Hilton cares about their employees just like they care about their family and I am truly blessed to have been given the opportunity to work for such an amazing company.”
• Ultimate Software. “Ultimate Software takes care of its people and genuinely believes that putting people first is the only way to succeed. I have never felt more supported in my role or happier to come to work than I have since I started my journey with Ultimate.”
• Wegmans Food Markets. “When management says they care about their people it actually shows in their actions. I have always been made to feel wanted and valued as a person and employee.”¹⁴

I can almost guarantee that all companies on the Fortune 100 Best Companies to Work For list have strong, positive cultures and that their leaders have character and are fully aligned with their organizations' values. There are, of course, companies that have done well financially—sometimes incredibly well—despite having bad reputations and creating negative environments for their employees. But they are the exception, and the good results don't last.

The kinds of behaviors that were once considered “par for the course” in some organizations—underpaying women, celebrating aggressive “bro” cultures, excusing bad bosses, stigmatizing LGBTQ+ employees, marginalizing people of color—are no longer tolerated. People don't want to work for companies like this; they don't want to buy products or services from companies like this, and they don't want to support companies like this.

Consider the example of Uber, the disruptive ride-sharing pioneer that achieved a valuation of $70 billion by 2016, just seven years after it was founded in 2009.¹⁵ This valuation was truly a remarkable financial milestone, but there was a very dark side to this accomplishment. Uber's problematic culture, endemic in the engineering team, was revealed in 2017 when former software engineer Susan Fowler wrote a blog post about her experience of sexual harassment and discrimination at the company and her unsuccessful efforts to get management to do something about it.

By the time Fowler made her viral blog post, more than 200,000 people had deleted their Uber accounts—many to protest Uber's perceived support of the U.S. government's travel ban of January 28, 2017, and also the company's negative culture and then-CEO Travis Kalanick's alleged role in creating and perpetuating it.¹⁶ According to one Uber executive, employee morale cratered after these incidents. “Until 2017, you could go into Uber on any given day and half the T-shirts were Uber T-shirts. They disappeared overnight. People didn't want to wear Uber stuff.”¹⁷

In June 2017, Kalanick took an indefinite leave of absence, and he was ultimately pressured to step down as CEO by five key investors (he remained on the Uber board of directors until 2020). Uber's next CEO—Dara Khosrowshahi—joined a few months later and immediately got to work on reshaping the company's tarnished corporate culture, creating a more stable work environment, and stemming the exodus of talented employees. Even so, three years after the CEO transition and after publicly acknowledging that its culture was detrimental and in need of change, Uber continues an uphill battle to repair its reputation. This is a textbook example of how an unmanaged culture can cause real reputational and financial damage to an otherwise promising company.

Leading for Character and Culture

I have had the benefit of experiencing different corporate cultures at the companies I worked for and those of customers and partners that I interacted with. There is one consistent feature that distinguishes cultures that personally resonated for me. A strong positive culture guided by upstanding core character has always been highly motivating for me as an individual—an environment in which I wanted to connect, but also to perform. I felt like I belonged. I was part of something bigger than myself, doing good in the world, and I wanted to do well—not just for myself, but for the organization and for our customers.

When good character grounds culture, people are more energized and motivated to do well. The leaders set the pace. There's openness, so people understand what's expected of them. There's collaboration, so everyone works together. Drama, office politics, toxic behavior, and other negatives are discouraged and kept to a minimum. I've personally seen and experienced the impact of a strong culture that's created by people demonstrating a core character that made me feel included and valued, and consistently generated great results.

In my experience, leaders who embody upstanding character trust and respect the people who work for and with them, and this trust is reflected right back to them. Trust is built when we say what we believe and we follow it up with action. Employees say to themselves, “I'm going to do whatever I can for them because I like what they stand for. I believe that they're here on my behalf.” And, so, a lot of the behavior that I saw over the years in the people I respected as strong leaders and mentors, I tried to emulate myself as a leader, and I tried to model in the various roles or responsibilities that I've had.

So, who defines a company's character and culture? It's the employees themselves—everyone who works for the organization. And I believe at the heart of an upstanding character are two simple qualities: trust and respect. It allows for psychological safety so that you feel comfortable to speak up, disagree openly, or offer a completely different suggestion knowing there are no repercussions. When trust and respect are strong, people tend to commit fully, and they are less distracted by the unimportant, petty issues that plague so many organizations—destroying the energy and motivation of employees—while putting their focus on the important things that are positive and really make things happen.

After the big downsizings and layoffs of the 1980s and 1990s, when the markets turned around and companies started to hire again, technology companies started bringing back the kind of perks that we thought people wanted—particularly in the Silicon Valley. We started to offer free food, recreational facilities, dry cleaning, on-site childcare, Ping Pong tables—all sorts of pluses to attract and retain talent by creating a pleasant environment. But at some point, we began to realize that we needed to go much deeper than those superficial niceties. We needed to think hard about creating the kind of environment where people would truly connect and feel a sense of belonging—and where they could grow and realize their highest aspirations.

While people work in an organization to make money and further their own careers, they also get to socialize, communicate, collaborate, and learn new and different things. The environment plays a critical role in that, and a company's environment is tangible. You can sense something about a company's character and culture just by walking through the front door. Part of it has to do with how the environment looks and feels. Is it open and inviting? Or are people divided and closed off? You can see it in how people carry themselves and how they occupy their space. Are they engaged and active—excited to be there—or would they rather be somewhere else?

Here's an example of what I mean. One night, before the first COVID-19 shutdown, I stayed late at the office and decided to get something to eat nearby. I was hungry and didn't want to wait to get home for a very late dinner. There weren't many places open, so I stopped by a popular chain restaurant known for its rotisserie chicken. I hadn't eaten at this chain for a long time, but I fondly remembered it for its great food and great service in a friendly, home-like environment.

Unfortunately, the reality of the restaurant had nothing to do with my memories. To begin with, the restaurant was dirty—really dirty. It looked like the tables hadn't been cleaned off in some time, and there was trash and food scattered around the floor. The service also suffered—the employees acted like they would rather have been anywhere but there. They were sloppy, unfriendly, and just threw the food on the plate. The entire experience was decidedly unpleasant—for me and for the people who worked there. Whose fault was this?

I can tell you that behind the scenes, this company is not being managed well. They don't have respect for the people who work there, and as a result, the employees don't have respect for their managers or customers. Because, if they felt more respected, they would make sure that they presented themselves better. They would take pride in maintaining a clean and cheerful environment, rather than one that's neglected with food all over the floor. I saw a direct correlation between the company culture and the customer experience. And it wasn't a good one.

When employees are valued by the people who lead them, they feel important, appreciated, and connected. And this applies so much to Anaplan. I hear this all the time when I'm out with customers. I was at an event in London with some of our customers—executives from Jaguar Land Rover. Mike Tickle—Planning Director, Commercial at Jaguar Land Rover—said to me:

Frank, I don't know if you know this, but the reason why I started looking into Anaplan is because I went to an event and several of your people were there. They were so energized and so enthusiastic about what they were doing that I felt like I would be missing out if I didn't get to know more about what was going on. It piqued my curiosity because of the people and how they were carrying themselves, and the enthusiasm they had for their company. I wanted to be part of it.

Of course, I was delighted to hear this, and it tells me that we are doing some things right. At the same time, I know we're not perfect. Anaplan is a work in progress, and we still have a ways to go. But, working together, we're accomplishing some truly amazing things for our customers, in a culture based on mutual trust and respect. In fact, we've hired a number of people who used to be our customers. In every one of these cases, the people we hired were impressed with the Anaplan culture, which they experienced as they worked with our employees.

Sara Baxter Orr is our Global Head, CFO Practice. Here's what she told me about experiences she had before and after joining Anaplan:

While I was still with Verizon, you invited me to speak at Anaplan's Women's Interest Network. It was a fantastic event—there was tremendous passion around wanting to help women succeed. And I tell everyone I meet that I've never been around a company where women supported women the way that we do at Anaplan. It's so refreshing and amazing to me because that's not always the case, not every culture is like that. For me, that was very exciting and it's one of the reasons I joined.

And then, after the murder of George Floyd in Minneapolis and the ensuing aftermath, we've really leaned in. We've been honest with ourselves and we've taken a position of wanting to learn, wanting to make a difference, and taking this moment and making it matter. That has been really refreshing and meaningful to me as well. Culturally, this has been just as rewarding as it has been to grow revenue and grow our business.¹⁸

Ray Curbelo, our Global Head of Finance Solutions, had his own very positive experiences with Anaplan and our culture while he was working at a Fortune 500 insurance company. As he explained to me:

The Anaplan team I worked with always made it about more than just “what's in it for Anaplan?” It was about what's in it for the customer, how are they going to benefit, and how can they help them be more successful—and help them drive value for the company? It was always simple things, like the account executive at Anaplan sending me articles. He'd say, “Hey, I remember you mentioned you were struggling with X, Y, and Z. This article made me think of you and that situation you mentioned.” Or “How is so and so doing on your team? Is there anything we can do to support them?”¹⁹

Claire Lord, a Senior Customer Success Business Partner, told me about how the Anaplan people she worked with while at Thomas Cook made her and her coworkers feel valued—even after the company went out of business. She said:

In my role at Thomas Cook, I dealt with a lot of suppliers, and with Anaplan it was never a hard sell—it was always a group effort. You guys weren't selling to us; we were working together. The people that we worked with closely at Anaplan made us feel like we were valued, and they championed us at every opportunity. It wasn't just we were doing our own thing. As a collective, we were working together to make both companies better.

And then, when Thomas Cook went under, we were so overwhelmed by the support that we got from everybody at Anaplan. You know, there was nothing in it for them, but they made us feel like they cared about how we felt. They introduced us to other companies, introduced us to people within the business. And it really felt like they cared about us as individuals, not just as an account. And I see that now from the Anaplan side, which is great.²⁰

Our investors have also noticed the emphasis we put on character, culture, and customer focus. Alex Wolf is Managing Director for the Investment Group of Santa Barbara, one of Anaplan's largest investors. In a discussion at one of our large company and partner events, Wolf explained what he and his investment group look for when they assess an investment opportunity, and what they saw in Anaplan.

We spend a lot of time when we get to know a company, trying to understand what they are doing well. We'll ask their customers questions like: Are you happy with the products? Are you happy with the service that you're getting? Have you looked at competitive solutions? Would you ever switch? What would cause you to switch? What other use cases are you interested in buying? All of that checked out extremely well with Anaplan.²¹

Here's an example of a strong culture from a company that everyone recognizes. Disney is famous for hiring young people to work in its theme parks. What's amazing is that the same teenagers who might routinely stay up late playing video games or hanging out with their friends will eagerly wake up at 6:00 a.m. to come to work for Disney with a smile on their faces, ready for the day. Disney claims it's because of the unique culture that it breeds—the pride it builds within employees (called “Cast Members”) to do the work that they do, whether it's donning a costume to play a cartoon character, operating a ride, or sweeping litter from the walkways. When they have a purpose and feel valued, they transform from sullen teenagers into stellar employees.

A few years ago, we got a taste of Disney's unique culture when a group of Anaplan leaders participated in a one-week professional leadership and development course at the Disney Institute in Anaheim, California. The leaders were steeped in Disney's approach to building employee engagement and satisfaction while delivering the highest levels of customer service, and they put those lessons to work in their own teams.

A big part of Disney and other companies that leverage culture is that they don't just take it for granted. They put extra effort into it—they make sure that it provides the right business outcomes, just as they make sure their company is delivering the right product and financial results. They'll ask, for example, “Is our employee morale in a good place? If it's not, then we need to focus on that as much as we need to focus on our customers.”

In Chapter 6, I devote an entire section to the specific learnings that our people brought back with them to Anaplan, and how we integrated them into our own unique culture.

The Nexus of Culture and Strategy

Culture and strategy are interdependent—they feed and have the potential to elevate each other. When a company's culture ignites passion and loyalty in their employees, their efforts to ensure the success of that strategy are multiplied. The results aren't visible just internally, but externally as well.

In the past, leaders were mostly judged on their ability to execute the technical aspects of their jobs and to deliver results. And while these will always be important qualities for leaders to have, motivating and energizing the people on their team are just as essential. In 2019, Fortune published its list of the World's 50 Greatest Leaders. The list represented a big shift in how we view leadership effectiveness today. Instead of being focused solely on financial results, the Fortune ranking rewarded leaders in business, government, philanthropy, and the arts who “are transforming the world and inspired others to do the same.” And, in the case of the business leaders on the Fortune list, they do this by creating great corporate cultures.

On the flip side, some companies do a poor job of creating a positive and sustaining corporate culture, but I would say most are in the middle—they believe they have a good culture but don't actively nurture or invest in it. It is an untapped resource.

What I've seen over and over again are leaders who take their culture for granted. They'll schedule an event that is meant to improve morale, or they'll take on a couple of short-term culture-boosting initiatives, check the box, and then move on. They don't realize that culture is an ongoing, evolving thing that has to be constantly developed and nurtured. Actively demonstrating character and culture starts at the top—it can't be delegated, and it must be intentional.

The second development I've seen is when the singular pursuit of business results comes at the expense of culture, which ends up jeopardizing enduring performance. It's all about how many widgets the company is going to make, and how they're going to make them. They overemphasize efficiency and results—giving culture and people a back seat. Over-indexing on quantitative success will not drive hypergrowth, agility, and loyalty. I know it sounds contrary coming from a former CFO, but you can't sustain your business by managing only to financials.

The third development that often causes culture and strategy to go wrong is office politics and ego. If you don't keep politics and egos in check, bad behaviors emerge, and strategies invariably go awry. Bad behaviors can undermine a culture immediately because they turn people off and shut them down. Instead of being engaged and productive, people take a big step back as they realize they have to play the game. And if an organization rewards politics and ego, these bad behaviors will persist and spread, and have a detrimental effect on culture.

Now more than ever, it's time for leaders in every organization and every industry to put character at the center of everything they do. This character must be based on upstanding values that guide behavior while embracing what has always been good for business—the pursuit of excellence, respect for individuals, and respect for the communities where we do business. The character we exhibit as leaders has a profound influence on the culture of our organizations. And, for hypergrowth, adaptive, customer-centric companies in our era of digital transformation, character-led culture is strategy.

In the chapters that follow, we take a look at exactly how leaders in any organization can define an upstanding character and culture that separate them from the rest of the pack—leading to levels of performance far beyond what you might have ever imagined possible. Now, let's get started.