In 1849 Jean-Baptiste Karr said, “the more things change the more they stay the same” and that’s still true today.

On the surface you wouldn’t think Musical.ly’s Alex Zhu Zhu and Intel’s Andy Grove have a lot in common, but you would be wrong.

Both created cultures that incorporate a critical attitude — paranoia —  although they look very different.

Andy Grove: “When I came to Intel, I was scared to death. I left a very secure job where I knew what I was doing and started running R&D for a brand new venture in untried territory. It was terrifying.”

Zhu Zhu: “The day we released this application to the market we realized it was never going to take off. It was doomed to be a failure.”

Musical.ly’s first pivot went from a video education app to a combination music/videos/social network that was catnip to their target early-teen demographic.

That led to growth, but it was slow growth, which the founders knew was leading to a slow death.

The a-ha tweak happened when they moved the logo and growth exploded.

They had realized that when people shared the music videos, the logo was cropped out on Instagram and Twitter. They repositioned it so now it was easy to see that it was a Musical.ly video.

Grove said, “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.” (Grove’s paranoia did not condone bullying or a culture of fear.)

Zhu Zhu is far from complacent and keeps pushing and iterating faster.

“I think we have these scary moments all the time because you’re never safe. Even if you have tens of millions of users, you have to keep them always engaged. I think it’s better for us to be scared all the time rather than feel content that we built a successful product and now we can lay back.”

If you don’t care for paranoia, you can substitute a combination of never-ending mindfulness, objective reality as opposed to comforting assumptions and unremittingly honest feedback.

Image credit: musical.ly

Edicts by Steve Ballmer and tweets by David Sacks do not a culture change.

Changing culture doesn’t happen overnight and takes a lot of damn hard work.

But it can be done.

And for CEOs willing to take the time and do the work, the payoff is ginormous to the 10^th power and goes well beyond money — for the company, the employees, stakeholders and last, but certainly not least, for themselves.

Just ask Satya Nadella or Lou Gerstner, who turned around IBM and said it best.

“I came to see, in my time at IBM, that culture isn’t just one aspect of the game—it is the game.”

On a funny, or should I say ironic, side note.

As I looked through past posts and articles I realized how similar in name Nadella is to his complete cultural and managerial opposite, [Robert] Nardelli.

Separated by two letters and a mental chasm that dwarfs the Grand Canyon.

Flickr image credit: jphilipg

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Do you have values?

Do you clearly articulate them your team?

Do you strive to incorporate them into your company’s culture?

Do those values include building a sustainable business, kind to the environment, gives back to its community and actively contributes to the wellbeing of its workers?

Will you stay true to those values while growing, when both eyes are on the revenue/profitability of your company?

If so, you could apply to be recognized as a Certified B Corp, like Warby Parker, Etsy, and the Honest Company.

B Corp status is a step in the right direction — but…

When push comes to shove it’s not legally binding.

Public Benefit Corporations (PBC) are a step above and beyond.

And Kickstarter just joined their ranks.

There’s a profound distinction between a “public benefit corporation,” or PBC, and a “B Corp,” co-founder Perry Chen told me during a recent visit to Kickstarter’s Brooklyn headquarters. Both are for-profit companies who wear their missions on their sleeves, but B Corps have no legal responsibility to uphold their values. PBCs, on the other hand, have a legally binding duty to provide benefits to society. One is an accreditation, like “Fair Trade,” the other is an entirely rethought corporate structure.

Put another way, if a PBC puts maximization of shareholder value — the true north of Wall Street — ahead of the public benefits it declares in its charter, it can be sued by its shareholders.

“A value is only a value if it’s non-negotiable,” Chen told me. Kickstarter’s values are now codified in a legally binding document. They’re literally non negotiable.

What are those values?

In section one, the company restates its mission — thereby enshrining that mission in its legal foundation. The second sections lays out the company’s values, taking aim at five highly political corporate issues: Selling user data to third parties (it never will, unlike Google, Facebook, and pretty much most of the Internet), clarity in “terms of services” (it won’t seek legal gains just because it can, unlike, well, pretty much the entire Internet), political lobbying (it won’t lobby unless the issues aligns with its values, regardless of potential monetary gain — unlike … you get the picture), taxation (it won’t employ the “esoteric tax management strategies” beloved by giants like Apple, Uber, et al), and environment (the company is committed to reducing its impact across the board).

Most businesses incorporate in Delaware where the legal PBC framework was signed into law by Gov. Jack Markell in 2013.

Public Benefit Companies are a relatively new legal entity — Delaware, where many fast-growth startups incorporate, created PBCs just three years ago. Besides defining a public benefit as “a positive effect (or reduction of negative effects) on one or more more categories of persons, entities, communities or interests (other than stockholders in their capacities as stockholders),” Delaware’s code allows new PBCs to make “further commitments” beyond the state’s legal definition.

Method, Plum Organics, Alter Eco, and New Leaf Paper are all PCBs.

Kickstarter could just have easily chosen the road to unicornism, but chose their values instead.

What will you choose?

Image credit: HikingArtist

Great culture is about values, not fancy offices, free food, perks, etc., because, done well, it provides a blueprint for any worker faced with making a decision.

Great cultures don’t happen by accident or benign neglect, nor do they grow organically.

They are the result of focused thought, intentional design and, focused effort.

They are sustained through exceedingly careful hiring and the willingness to walk away from a candidate whose values aren’t compatible.

For great insight into building a values-based company read this interview with John Montgomery, founder of Bridgeway Capital Management.

The investment industry is known more for its greed than its social sensitivity, but Bridgeway has been making waves for more than 20 years by giving 50% of its profits to charity and capping top salaries.

Montgomery’s approach has been profitable, as well as a talent magnet and retention tool.

John, you founded Bridgeway Capital Management 22 years ago and your firm grew to manage billions in assets. Many people are drawn to your firm because you are values-driven, and your website says your core values are: ‘integrity, performance, efficiency, and service’. What does it mean to live these values? (…)  “We’re not trying to create golden handcuffs to keep people in place. We’re trying to create an amazing place to work where people can provide investment advisory services and give back at the same time. On my team — the investment advisory team — we’ve lost one portfolio manager or researcher in 20 years.”

If a culture built around ‘integrity, performance, efficiency, and service’ can propel and sustain a company in an industry like financial services where talk is cheap and talent is supposedly focused only on what’s in it for them, think what strong values can do for your company.

Image credit: Dave Gray

A Friday series exploring startups and the people who make them go. Read all If the Shoe Fits posts here.

If anything has changed in the 21^st Century it’s the recognition that culture is everything — the true “make or break” for any company.

Knowing that, founders, of all people, should know better than to do anything that undermines their culture.

And yet they do it all the time.

One of the worst is also one of the commonest — having two teams

• the one to which they pay lip-service and talk about in public; and
• the one that has their ear, takes priority and stays front and center in all decisions.

Founders constantly refer to their “team” and it’s taken to mean all the company’s employees.

But, for those the shoe fits, it actually refers to their stars, their pets and all (most?) of their direct reports.

This was a common attitude in larger companies, but at least it was honest; bosses were ‘us’, workers were ‘them’ and everybody knew where they stood.

The changes started when Volvo focused the world on the power of teams, research showed that productivity increased when people were more invested and engaged in their work and terminology was introduced that is inclusive and empowering.

Fast forward to now and that language is in common use, but, as with most things, it can be distorted and perverted.

Founders, like other bosses, fall in two categories.

• Those who buy it, own it, use it and mean it;
• and those who use it to keep everyone in line who’s not on the ‘real’ team.

Which are you?

And before you claim the first bullet take a good look at your past actions.

In fact, get some feedback from someone you know will tell you the truth, as opposed to what you already “know” or want to hear.

Image credit: HikingArtist

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

As the importance of culture in startups becomes ever more obvious, founders are faced with this question.

“How do we keep our corporate culture as we grow?”

The answer is “Through a lot of hard work and tough hiring decisions.”

There are no shortcuts; no easy way; no app for that.

Unfortunately, that’s not an answer many founders want to hear—or do.

First, you have to clearly identify absolute company values—those with no wiggle room—which takes time and effort.

Next, it means interviewing far more candidates than when all that matters are skills.

Finally, it takes the toughness to walk away from sometimes dazzling candidates who, no matter how brilliant and skilled they are, just don’t fit.

It’s far easier to teach a skill than instill/change values and/or attitude.

So the next time you find yourself in this situation stop and think—is it worth selling your company’s culture down the river just to avoid more interviewing.

It’s your choice, but everyone will end up sleeping in the bed you choose to make.

Image credit: HikingArtist

Bosses are enamored with culture and rightly so.

However, for culture to work its wonders it must sink deeply into the organization in the same way that stain is absorbed by wood.

Cultural stain is the direct result of walking the talk and making sure that everybody else walks it, too.

It’s intentional action and it requires paying attention.

It must be applied carefully or every imperfection and flaw in the organization will be on display.  

Stain is never the output of an underling; when ideas do bubble up from other parts of the organization they won’t take root without the support of the boss, whether publicly or not.

The problem is that many bosses find it faster to treat culture like paint.

Cultural paint is easier to apply and, like real paint, it can hide everything from minor blemishes to dry rot.

It’s paid lip-service, with effects that are grounded in convenience and often included only to make the employees feel good.

What paint-loving bosses forget is that the more coats of paint are applied the more likely is it to peel.

People aren’t stupid and will vote their displeasure with their feet.

Flickr image credit: maurice.heuts

Startup founders to Fortune 50 bosses constantly complain about the time-eating effort it takes to build a great team.

It’s as if they want the fun of fishing without all the bother of poles, bait and hanging out where the fish are.

When a founder is ready to build a team, there is one critical action that is too often ignored—consciously create the culture first.

The order is crucial because a good cultural match is far more important than knowing the programming language du jour or other “hot” skills. (This is true in any size company.)

The majority of the my 3400+ posts deal on one way or another with the importance of cultural fit, as do thousands of articles such as this recent one from Entrepreneur.com.

But it is the lessons from entrepreneurs like Moz’s Rand Fishkin that sink in best.

When you think about great entrepreneurs who comes to mind?

Not Steve Jobs if you limit entrepreneurs to those who invent something brand new; he didn’t invent technology; he took what was there, infused it with brilliant design and then convinced us we couldn’t live without it.

Bill Gates? Larry Page and Sergey Brin? Larry Ellison? Mark Zukerberg?

But could you build a powerful company culture off just their quotes 100 years from now?

Actually, will entrepreneurs even remember them in the Twenty-second Century?

But a century later you can do it off of Henry Ford quotes and it would be not only sustainable, but socially responsible.

Consider this small sample

• There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible. Ford practiced what he preached, too.
• Whether you think that you can, or that you can’t, you are usually right. This may be true for all of us, but it is especially true for entrepreneurs.
• Coming together is a beginning; keeping together is progress; working together is success. Overseeing each of these stages is a perfect description of a founder’s primary responsibility.
• Obstacles are those frightful things you see when you take your eyes off your goal. This isn’t to say that you should be blind to them, but keeping your focus on the goal allows you to overcome them by not losing track of what’s really important.
• A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large. Tony Hsieh has proved this in spades, as has Jeff Bezos. The difference is that Hsieh also practices the first principle above; while Bezos has ignored it.
• Failure is simply the opportunity to begin again, this time more intelligently. The first half of the sentence has been proven over and over, but it is the second half that determines whether the effort is successful.

Parts of Ford make a great role model, while other parts should be treated as poison, which, in the long-run, merely proves Ford mortal.

(Find more Ford quotes here.)

Image credit: Wikipedia

Yesterday we focused on the importance of, and managers’ responsibility for, continually building their people, so they are ready for the challenges their company will face in the future, as opposed to firing them for having the wrong skill-set.

Later on I was discussing the whole terminate vs. develop thing with EMANIO CEO KG Charles-Harris and he made an interesting comment.

There is no question that creating a good culture is essential and underinvested in.  However, there are cultural biases in the US that are different from some other countries.  And while there is something to be said for the extreme success of American business, my background is in Sweden, which has the highest number of multinationals per capita. Clearly there is something that a country of 9 million is doing right.  

While there are plenty of companies that do it right and studies to prove that doing it right is good for the bottom line, US companies are infamous for short-term thinking driven by Wall Street’s quarterly mentality.

Even when the right culture and supporting policies are in place managers at all levels need to monitor and make sure that the managers under them are encouraging their people to take advantage of them and often that doesn’t happen.
Further, great culture isn’t self-sustaining; it needs thought and TLC so it can grow and change as the company grows and changes, without losing the traits that make it great.

But if a culture that supports building people pays off, why doesn’t it happen more often?

The simple, but sad, answer is that building and sustaining a great culture that develops its people, as opposed to considering them expendable, is work—and people are lazy.

Flickr image credit: Yarik. OK