I’m not sure whether it’s amusing or ironic (or both) but breakout companies all seem to be focused on culture. And when they are successful, no matter the business, they are immediately in high demand to tell others how they do it—think Tony Hsieh and Zappos.
Last Saturday I told you about Nick Sarillo, whose two pizza restaurants in Chicago do $7 million a year with 20% turnover vs. the casual dining industry average of 200%. As a result of the Inc magazine profile he is keynote speaker at the Pizza Executive Summit this summer. I’m sure he’ll be in demand other places. I love the title—“Culture 2.0: Branding your company’s way of life;” think about it.
Along with being a culture fanatic I also believe that anyone can lead given the opportunity, challenge and a supportive culture in which the messenger is never killed.
An NYT interview with Mark Pincus, founder and chief executive of Zynga offers insight into his approach of making all his people CEOs.
“I’d turn people into C.E.O.’s. One thing I did at my second company was to put white sticky sheets on the wall, and I put everyone’s name on one of the sheets, and I said, “By the end of the week, everybody needs to write what you’re C.E.O. of, and it needs to be something really meaningful.” And that way, everyone knows whose C.E.O. of what and they know whom to ask instead of me. And it was really effective. People liked it. And there was nowhere to hide.”
Stories from CEOs of their most life-changing day in their careers. Sometimes the result was promotion to the upper reaches of business, and sometimes a steep fall from grace.
TED has become a phenomenon and it’s on now. Plan to spend some time listening to an eclectic group of creative thinkers.
TED is a small nonprofit devoted to Ideas Worth Spreading. It started out (in 1984) as a conference bringing together people from three worlds: Technology, Entertainment, Design.
The annual conferences in Long Beach and Oxford bring together the world’s most fascinating thinkers and doers, who are challenged to give the talk of their lives (in 18 minutes).
In a final tip of the hat to Valentine’s Day tomorrow, check out substitutes for Viagra that taste great.
Many of this week’s posts will revolve around culture, so it seemed apropos to start the week with some interesting views on culture.
Louis V. Gerstner, former CEO IBM, says,“The thing I have learned at IBM is that culture is everything.”
Many experts are coming to that realization—decades after the average employee figured it out.
They didn’t use that term 30 years ago when I was a recruiter, but candidates talked about wanting to work where they “felt comfortable” and “fit in;” where they were listened to and were happy.
Edgar Schein, a professor at MIT Sloan School of Management, says, “The only thing of real importance that leaders do is to create and manage culture.” “If you do not manage culture, it manages you, and you may not even be aware of the extent to which this is happening.”
Robert Mintz said, “The crimes alleged at Enron were not the acts of a few greedy senior executives, but truly was an indictment of almost the entire corporate culture.”Of course, it was those same greedy execs who fostered that culture.
Jane Howard said, “We believe it’s our responsibility to create a unique corporate culture. If we do that well, we believe we’ll have enthusiastic employees. If we have enthusiastic employees, we’ll have loyal customers, and if we have loyal customers, we’ll have a sustainable business.”
Shades of Tony Hsieh, who built a culture so powerful that other execs pay him to learn how to implement something similar in their companies; “Our No. 1 priority is the company culture. Our whole belief is that if we get the culture right, then everything else, including the customer service, will fall into place.”
Zappos is a long way from fast food, which is often considered the bottom of the cultural heap, but many execs in that industry are hyper aware of culture’s effect. As David A. Brandon, CEO of Domino’s Pizza said, “You can’t overcome a bad culture by paying people a few bucks more,” something that management ought to remember.
Finally, research from Harvard Business School’s John Kotter & James Heskett found that culture has a major effect of the bottom line, “We found that firms with cultures that emphasized all the key managerial constituencies (customers, stockholders, and employees) and leadership from managers at all levels outperformed firms that did not have those cultural traits by a huge margin.”
I think if I read one more op-ed piece saying the path to improving US education is paved with better teachers I’ll scream.
I’m not saying that good teachers aren’t important, but I don’t believe that teachers are the root of the problems.
Before I start with examples, let me ask you this: how well would you perform if you were
terminated for insisting that projects not only be done, but done on time;
poorly compensated in comparison to most people with similar education and experience, but in other industries;
subject to pressure, tirades, insults and having people constantly go over your head to change your decisions; and
shown little respect by your direct reports, indirect reports and management.
Does that sound like an environment that would encourage you to do your utmost? I actually find it surprising that there are as many good, dedicated teachers as there are.
Staying with the current analogy, direct reports = students, indirect reports = parents and management = administrators.
Teaching is like any other form of work—it thrives in a good culture, sags, wilts and gives up in a bad one.
The Dallas Independent School System is a good example of what is happening. DISD is where the teacher was fired at the instigation of parents for being too tough and giving homework—the fact that the kids scored well on tests didn’t count.
It’s DISD that hired new teachers in 2007 with no way to pay them leading to a $64,000,000 budget shortfall that grew to about $84,000,000 in 2008. Their solution was to layoff the teachers—no damage to the administration idiots—maybe they all took math from teachers who passed them rather than lose their jobs.
Her rise in DISD in a span of three years has been frowned upon by some observers. She was making $87,000 as a division manager in 2006 and ended her career grossing around $140,000.
Some DISD trustees had questioned an organizational chart change that left her husband overseeing the department that she worked in. Her boss was reporting to her husband.
Ya think?
And then there is the saga of Taylor Pugh, AKA Tater Tot, who was growing his hair so he could donate it to a charity that makes wigs for cancer patients—but his suburban Dallas school saw it as reason for in-school suspension for violating the district dress code.
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Back to our analogy. How engaged, productive and innovative would you be working for a company where management performed similarly?
Dallas isn’t alone; it has plenty of company across the country.
So before ranting and blaming the dismal state of US education on teachers, check out your district and state administrations—and then look in the mirror.
Three weeks ago I told you about Jim’s quandary in supporting his CEO’s approach to layoffs, asked what you would suggest he do and in a follow-up post shared more about the culture, the CEO and ideas I’d given Jim. I also promised to tell you the outcome, it’s just taken longer than we expected.
Jim called yesterday and told me that he started by sending links to both posts to his CEO, “Sue;” when she reacted positively he asked permission to send them to the rest of the executive team.
Sue refused, saying that she wanted to send them herself, thanking Jim publicly for taking the initiative to start an alternative ball rolling and ask her executive team to bring still more ideas to a brainstorming session two days later.
Sue also said that she had been horrified by reader reactions; she had really thought that her approach was a fair one until she saw it through outside eyes.
Jim said that the entire exec team was super excited; all of them had been struggling; trying to decide who to lay off, when and how to maintain morale during and after the process.
Here is an overview of what happened at the meeting;
Sue had already discussed a pay cut with the board, but decided that increasing it to 50% would not just be a good gesture, but would help preserve jobs.
She also asked the executive team to accept a 25% cut, which they all did.
The savings from these two moves would prevent immediate layoffs and give them time to take more creative actions.
They agreed that it was important to level with all the employees simultaneously in order to squelch the rumors that had started flying.
The information would include the size of the cuts that Sue and the executives were taking.
The announcement would be by live webcast instead of email to avoid anyone forwarding it outside the company without thinking.
Each vp would schedule a Town Hall meeting immediately after the webcast for his department, including everybody.
After an open discussion and answering questions as transparently and honestly as possible they would ask their people to come up with every possible idea to increase revenue, save money and avoid layoffs.
They decided to set up a suggestion box on the company intranet to make contributing ideas simpler; they chose to use a wiki so that people could comment and add to other’s ideas, stressing that there were no dumb ideas and people should post anything they thought of.
They started implementing as soon as the meeting was over.
Most of the staff were blown away with the salary cuts they had taken. The meetings went over really well and suggestions are pouring in.
The really great thing is a number of the ideas related to increasing revenue, including new market opportunities. Jim says that the sales team really caught fire and is pushing ahead with these and several others that had been shelved for lack of faith.
Almost everyone agreed that they would rather take salary cuts or rotating furloughs to avoid layoffs.
To date, trust levels have skyrocketed, morale is sky-high and, best of all, the sales pipeline is up 4% and growing.
Sometimes bad stuff is the best stuff that can happen—if it is handled well.
What do you do with a slightly-below-mediocre company that keeps its business going by staying in small markets where its dominance is assured by an almost total lack of competition; a company with little regard for its employees and less for the communities in which it operates?
You bring in a CEO who has a passionate belief that the interaction between customers and frontline associates has the greatest influence on success and that the greatest impact on that is the way their leaders/managers treat them.
In other words, employees at every level do unto customers as their bosses do unto them.
Jack Rooney is as far from a rock star CEO as you can get, but he understands that real leadership must permeate the entire company and knows that while true cultural change is neither fast nor cheap it works and therefore is worth the effort.
Rooney calls his approach the Dynamic Organization; he developed it under challenging conditions at Ameritech and brought it to full fruition at US Cellular, which he joined in 1999.
The Pursuit of Something Better tells both stories, Rooney’s and US Cellular’s; they are told by Dave Esler and Myra Kruger, the culture consultants who worked with him at USC and his previous company.
Both stories are the culmination of a man who believed in doing the right thing and a company that was changed accordingly.
“Jack Rooney and his slowly-expanding team of believers challenged the long-prevailing assumptions that business is a blood sport, that the advantage inevitably goes to the ruthless and the greed, that the only way to win is to hold your nose and leave your values at the door. He has proved beyond question, once and for all, regardless of what happens from her on, that a values-based model works, that it can raids both a company and the individuals who are part of it to undreamed-of-heights, to peak experiences that will last a lifetime and change the way those lives are lived.”
And while the authors do a great job of telling the story, the real leadership that Rooney provided, along with his concept of the Dynamic Organization, aren’t broken down or spelled out as a set of lessons and how-to’s separated for you to memorize.
It’s your responsibility to learn from what was done, drawing out those lessons that are most in synch with your MAP, because if they aren’t in synch there’s no way you’ll be able to implement them.
And in case you’re tempted to shrug it off as a fluke, I suggest that you give some long hard thought to Zappos and its ilk.
I highly recommend The Pursuit of Something Better. It’s fun, it’s fascinating. You might even start to believe that you don’t have to leave your ethics at the door; at the very least you’ll know what to look for in your next interview.
I have a question for you today and I’ll post my thoughts on the subject Monday.
I had a phone call from an executive today, “Jim.”
In short, Jim said that he understood why his boss was instituting pay cuts across the board, but had found out that the cuts were scaled with those who were young and single taking the biggest hit, older or married less and those with children the smallest.
This isn’t public information and when he asked his boss about the rationale, she said that the company had limited resources and that those with fewer responsibilities should be willing to make a greater sacrifice for the sake of those with greater ones.
Jim believes that this action isn’t legal and will open the company up to a lawsuit and even if it is legal it won’t remain unknown, will destroy employee trust and decimate the company’s culture.
The CEO sees it as the fairest way to deal with the problem.
Jim called looking for ideas on how to convince her that this is a bad idea; further, he would like to offer a better approach.
“Customer loyalty is harder to measure. As we are in this recession, one way to measure this is that I believe when the recession ends, Men’s Wearhouse will have a higher market share than when the recession began. That will be because of our corporate culture, which will be the glue that holds the customer and the employee and the organization, the shareholder, holds it all together.”
Zimmer has infused the culture with trust and authenticity based on 3 principles
Listen carefully and wait at least one second after the other person’s last syllable before responding.
Elevate the other person’s respect – by focusing on the positive before something that needs to improve.
Always ask the subordinate how a problem might be solved.
The willingness to listen proved its value when a lower-level employee presented Zimmer with the idea that the company rent formal wear, now a significant revenue producer.
Beyond these three principles, the culture provides an environment in which employees aren’t afraid to mention problems or own up to a mistake and Zimmer constantly reinforces his desire for feedback and responds to each email.
“I tell people I like primary information, as opposed to information sifted by various levels of management, but I only get five a day on average.” (Many employees have little confidence in their writing skills.)
You hear a lot about trust and authenticity these days, but I’m willing to bet that George Zimmer didn’t think in those terms 30 years ago when he founded Men’s Wearhouse; no matter the words, he built something that followed his own moral compass.
“I consider anything to do with employees or the stores to be my priority. That’s one of the other things, I guess, when it comes back to trust and authenticity. That is my priority. I don’t say that, I don’t pay lip service to that. That is how I run this business and how I live my life. So, I think the people that work in our stores, know that.”
That’s what founders do.
Sadly, when their compass changes so does the culture—think Angelo Mozilo.
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Be sure to check out the great links at the June 7th, 2009 edition of the Leadership Development Carnival, including lots of great management expertise—in case you think that ‘leader’ doesn’t apply to you.
(I’ve finally gotten my act together to participate, which means I’ll know when they’re happening and that means I’ll have the link to share with you:)
The last few days have been about the importance of culture, so why change now?
If you’re a long-time reader you know that I’m a culture fanatic. I believe that culture is the root, driver and cure for 99% of business and, as is said today, that culture eats strategy for lunch.
Culture also makes companies a lot of money, think Berkshire Hathaway, Apple, Google, Southwest, and Costco. And if that doesn’t convince you look at the dark side and think about what happened when Robert Nardelli trashed Home Depot’s culture.
Next, a Rambus alumni talks about how culture influences innovation in a company that makes its money by inventing and licensing its IP.
I’m a firm believe in using your company’s culture as a screening tool and I’m not the only one. Steve Balzac has some thoughts on the subject, too, including the price you pay for not remembering that people don’t magically change after they’re hired.
I’ve written multiple times about Zappos and I’m not the only one. Any time the conversation turns to productivity, customer service, branding, leadership, staffing, etc., and chances are someone will point to Zappos.
I seriously doubt that Tony Hsieh can even spell imperial CEO, let alone act like one—his office is a cube in the middle of a lot of other cubes.
He has built Zappos around extreme customer service—only to him it’s not extreme, because he knows no other way to do business. And Zappos employees are as passionate about Zappos as Hsieh is.
During his keynote address at the CEO Summit he said that “Creating a happy workplace is crucial to building a successful company. … After looking at research on human behavior he found that happiness is about four things: perceived control, perceived progress, connectedness and vision, or in other words “being part of something bigger.””
Hsieh constantly presents Zappos anywhere possible to build his brand, not talking about shoes, but about Zappos’ culture, the customers’ experience and how happy employees mean happy customers.
Companies constantly talk about the need for a ‘great customer experience’, whereas Zappos provides one.
He’s writing Delivering Happiness due out March 2010. If I was rich I’d send it to every CEO whose company can be found by searching ‘XYZ sucks’ (for example, ‘Comcast sucks’ shows 22,300 results).
In Richard’s interview with Pat Lynch regarding the EFCA, she said that employers have a choice, either take care of their people or the unions will. Lynch identified four primary issues on which employees rate their job satisfaction:
Employee satisfaction with immediate supervisor
Employee voice – do employees feel safe in challenging the status quo, do employees believe their ideas will be considered
Employee perceptions of procedural fairness
Rewards and recognition – these go far beyond compensation, which is not a significant element of satisfaction. Recognition is extremely important.
Richard suggested to start with an online satisfaction survey to learn how employees perceive management and the company and then to act on the results.
He also said, “come back Thursday to hear Miki’s take on keeping employees happy,” which isn’t really fair since everything I write is about keeping them happy and I even have a post called that.
But I’m committed, so let’s do this again.
In today’s language, ‘happy’ means ‘engaged’, which isn’t a new topic—think buy-in, ownership, commitment, involvement, etc.
Although the terms keep changing the behavior has been consistently on management’s radar for decades. The funny part is that the way to achieve it is as old as humanity and ties directly to the Lynch’s four issues.
The big four of engagement are
respect;
encouragement;
support; and
rewards.
Although descriptions and phrasing may vary, when all is said and done it always comes down to these four basics.
It’s not as if this is secret management knowledge. There are thousands of books, hundreds of classes, dozens of blogs and forums all teaching variations on this theme. I read a good article on it last year, but it was the comments that had the real value.
The real question then is if it’s that simple, why isn’t it put into practice more often?
If you don’t really believe in the value or numbers 1 or 2, you can talk all day and your people will hear what you say as hollow, i.e., no authenticity.
Number 3, support, includes skills training and career development. Ingenuity. Not just yours, but your group’s. Your people aren’t dumb, they know when the company can’t/won’t fund training, but there are tons of ways work around that, such as sharing their own expertise with each other during organized brown bag lunch sessions.
Number 4 usually involves money, but public recognition often ranks higher on the scale. And when there’s an authentic, provable lack of funds to provide significant rewards, every company can find other ways to prove that they value their people’s contributions.
There’s a final component that needs to permeate all ranks of management, it’s what I call the believability factor, BF for short.
Believability is a two-edged sword. A strong BF draws people to you; it helps them hear what you have to say; see the vision that you present; and underscores their willingness to follow your lead. Without it, even the straightest shooters may be casually dismissed.
The flip side is definitely worse, because con people, crooks and even murderers often have BF in abundance.
Entrepreneurs face difficulties that are hard for most people to imagine, let alone understand. You can find anonymous help and connections that do understand at 7 cups of tea.
Crises never end.
$10 really does make a difference and you’ll never miss it,
Many of this week’s posts will revolve around culture, so it seemed apropos to start the week with some interesting views on culture.
Jim called yesterday and told me that he started by sending links to both posts to his CEO, “Sue;” when she reacted positively he asked permission to send them to the rest of the executive team.
What do you do with a slightly-below-mediocre company that keeps its business going by staying in small markets where its dominance is assured by an almost total lack of competition; a company with little regard for its employees and less for the communities in which it operates?
In short, Jim said that he understood why his boss was instituting pay cuts across the board, but had found out that the cuts were scaled with those who were young and single taking the biggest hit, older or married less and those with children the smallest.
Culture also 
He also said, “come back Thursday to hear Miki’s take on keeping employees happy,” which isn’t really fair since everything I write is about keeping them happy and I even have a 
