An investor once assured me that culture didn’t matter, that only winning mattered.
He was wrong. Winning is not an alternative to culture. Winning is what a strong, healthy culture enables you to keep doing. Most experienced leaders intuitively understand this relationship and correspondingly pay close attention to defining and nurturing the cultures of their own businesses.
After Uber’s recent challenges, it would be tempting to accuse the company of neglecting its own cultural health, as many commentators have, and attribute the source of its woes to just such a myopic pursuit of first place. But is it really that simple?
Who doesn’t experience a twinge of unease at the recent impact of Uber’s cultural difficulties on the company and the disorientation felt by its confident, forceful CEO, suddenly re-cast as humble and uncertain; a role that, just weeks ago, would have seemed more unlikely than Arnold Schwarzenegger’s mis-casting in End of Days.
If we find ourselves hesitating to rush to judgement, perhaps it’s because we have a nagging concern that whatever happened to Uber could also somehow happen to our own business, if not in the specifics then by the same mechanism. After all, when it comes to defining a comprehensive, multi-faceted culture, Uber seems to have proceeded just as most other companies do.
For example, Uber internally defined and promoted seven cultural values. Many of them sound much like those used elsewhere (Quality Obsession, Vision, Innovation etc.). And like other businesses, Uber regularly reinforced those values by similar management training, induction workshops, away-days, wall-posters and so on.
And therefore lingers the fear that our own company’s culture could one day also suddenly give way, revealing a rot of its own making beneath, despite our regular prior efforts to reinforce that culture.
If you find it hard to identify the underlying reason for that fear, it’s because at its root lies the paradox that the greatest cultural strengths of a business tend to later inspire its greatest cultural weaknesses.
I suspect that this is what has afflicted Uber just as it has many other businesses in the past. In fact the culture paradox is a universal affliction, at work in every current business to one extent or another. Though not always fatal, it is often the originating cause of apparently-sudden problems in previously successful companies. And, once the effects of the culture paradox manifest, they are very difficult to treat because the business finds it impossible to reorientate itself to the idea that prior strengths are now undermining the company.
We can learn a lot about the culture paradox from how businesses express and manage (or mismanage) their cultural values. Although by no means the only way that our cultural strengths can unexpectedly work against us, it's an excellent case-study for the various pathologies that can arise.
Company Values: Handle with Caution
To more easily communicate our beliefs and aspirations to busy employees, we typically promote a concise subset of them as our Company Values. But unless we actively manage these values from this point onward, it is here that the seeds of the culture paradox are sown; the values often later undermine rather than strengthen our culture. How does this happen?
Company values are a model of the organisation’s culture and all models are incomplete, applicable only to a limited range of circumstances and devoid of many of the nuances and subtleties of real life. Our expressed values therefore should be regarded only as useful points of emphasis within a wider spectrum of necessary behaviours and used accordingly.
But our human desire to perceive the world as simpler than it actually is ensures that these model limitations are often quickly forgotten. We accelerate this over-simplification when we connect performance review scores directly to values score-cards and similar acts of values fundamentalism.
Values must be regularly and actively discussed across the business. They should be held up for regular scrutiny against our behaviours and we should test our behaviours against them.
However, having committed our values to text, we often congratulate ourselves on having them at all and move on. Their existence creates a certain form of complacency about culture; the box has been ticked. And, with the passing of time, the original impetus for writing our values is lost to those who join the company later but who still must work by them.
The stage is now set for our stated cultural strengths and aspirations to bring us down. Our values can start to actively drive the wrong behaviours and passively inhibit the right ones. Here are some of the most common ways that this happens:
1. One ring to bind them all
Sometimes a set of values is imbalanced such that one dominates the rest to such an extent that it takes over the consciousness of the company. If there is no active counterbalancing value to mitigate the dominant's extremes then the company's behaviour becomes imbalanced too. This often happens where one value speaks directly to our emotions while its peers appeal to our less responsive rationality. It's likely that Uber's Fierceness value eventually dominated Quality Obsession or Innovation in the consciousness of its employees in just this way. Being Fierce is much easier than Obsessing About Quality.
In these circumstances, a value is gradually stripped of context and starts to justify behaviours that were not intended when it was created. For example, a value such as Fierceness, which promotes aggression in the market-place, eventually provides implicit sanction for organisational violence inside the company too.
In Uber's case, without its aggressive, rule-flouting behaviour in the marketplace, it’s debatable whether it could have disrupted taxi-hire regimes all over the world in the way that it has. But a culture dominated by the imperatives to destroy competitors and disrupt protectionist markets can be toxic when transferred to how colleagues work together. This is particularly the case when we tie exponential reward to over-achieving in the dominant value. In the case of Susan Fowler’s treatment and related allegations, internal rule-flouting and fierceness became acceptable too as long as you were a high-impact performer.
2. Too many strengths equals weakness
It's easy to criticise the Fierceness value for inevitably leading to domination of the other Uber values, but in attempting to avoid this scenario, we can just as easily end up at the other extreme. Values dilution is what happens when we attempt to stimulate too many cultural strengths simultaneously. Arguably this is what afflicted Cisco prior to its business difficulties leading up to 2011.
During the 1990s and 2000s, as Cisco grew, so did its list of values. By 2000, the company had as many as nine. By 2010, it had twenty. The company's culture had by then lost its character through this process of on-going dilution, reflecting a more general loss of focus by the business. Employees no longer understood what was culturally important to the company. Cisco wished to have so many cultural strengths that it risked ending up with none.
3. Warning: Wearing this garment does not enable you to fly
Our company values sometimes inhibit the very strength that we wish to emphasise or develop. A common case is where employees mistake a cultural aspiration for current reality and therefore cease aspiring to achieve the desired cultural strength. This occurs because aspirational values are listed alongside those that genuinely already are current strengths, so we naturally interpret all of the values as current strengths. As a result, the expression of those aspirations actually limits our pursuit of them.
For example, one small company had “world-class” as an aspirational value. The intent of the value was to focus employees on striving to be world-class. But employees instead inferred that the company was in fact already world class because it said so on the walls of every meeting room. Unfortunate.
4. Celebrating a strength stimulates complacency about it
A related situation is where the continuous celebration of an existing cultural strength induces complacency about it. Over time, we become conditioned to believe in our capability without being clear as to why the business is strong in that area. The value thus acts to shield us from our deterioration in the cultural strength.
A striking recent example is United Airlines’ violent removal of a ticket-holding 69-year-old passenger from one of its flights to make space for United employees to transfer. That the CEO’s first reaction was to blame the passenger provides an insight into the years of cultural decay behind the “Fly the Friendly Skies” shield, a cultural tag that has not reflected United's operating reality since Charles Lindbergh was still flying.
5. Straining credibility too far
Aspirational values can have a repellant effect if they are set at too great a distance from the current reality within the business. Culture must be nurtured, not coerced, and the declaration of a value does not by itself bring about its realisation - there must already be some semblance of that value present in the organisation for an aspirational value to be credible.
Cisco (an excellent cultural case study due to its relative longevity) again serves in illustration of this point. In the year 2000, the organisation laid off 8000 employees when the dot-com bubble burst. After many prior years of extraordinary growth, the sudden layoffs left employees in a state of shocked disorientation, in common with the rest of the Silicon Valley.
Shortly afterwards, the word “Fun” was added to Cisco's company values. Nobody was having much fun right at that point and the insertion of the Fun Value on its own, with no discernible supporting efforts, served only to remind people that they were pretty miserable.
The company also learned that great values can eventually go stale, inducing cynicism in employees if not revised or discarded. During its high-growth years, executives referred often to the company as a family and eventually Cisco Family was enshrined as an explicit value. But, when layoffs became a regular annual event, employees would angrily point out to each other that real families don't make their family members redundant.
6. Values that are really a Cry for Help
By the time of Enron's collapse, the organisation was chronically and systematically corrupt. Beneath its market misdirections, the real business model was to immediately book profits (and executive bonuses) for fictional future earnings, hiding the inevitable eventual losses from such deals in off-book accounting vehicles. Its genuine strength in business model innovation during Enron's early years had become a toxic weakness as that strength was transferred to the problem of how to enrich executives.
Little wonder then that most people take Enron's values of respect, integrity, communication and excellence as a cynical cover-story for the outside world as, by the time of its collapse, the company practiced none of these values.
But, this is not the whole story. Here's the wording that accompanies the respect value in Enron's values material for employees:
''We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness and arrogance don't belong here."
This is extraordinary language to use in a corporate values expansion. It conveys the impression that whoever wrote the values (probably some poor soul in HR) was desperately trying to impose a culture opposite to that which he or she saw all around, using the Company Values as the lever.
Needless to say, this didn't work and it never does. Values can't be used by HR Leaders as a Cry for Help. If the senior leaders in your company don't operate by the values on the company wall, no amount of values promotion from your HR team or anyone else will make any difference.
Remember: Values are For Life, not just for Tick-Lists
Of course it's highly beneficial for a business to be clear about its beliefs, aspirations and assumptions. We should never be casual about culture. But, as the pitfalls above demonstrate, being explicit about our strengths is only the first step. From then on, we must continuously analyse the relationship of our values and aspirations to our people, our markets and each other if we are to reduce the chances of our greatest strengths later bringing us down.