Why Business Philosophy drives (and can kill) your Culture

What you are about to read is a based on a true story. Names have been changed to protect the innocent and the guilty.

Once upon a time, there was a young man named Kevin. Kevin loved software programming. He started off writing computer games for fun and went on to study Computer Science at University. After he graduated, he went on to work at a small start-up as a junior software engineer. Things went really well the first couple of years. Kevin grew his skills set and even received a personal note from the CEO commending him on such a great first year.

Then, one day, the company was bought out. The old CEO retired, and a new CEO, Veronica Virtue, was appointed by the board of directors. She had an outstanding record and a compelling vision for the employees.

The first thing Veronica did was hand pick a few employees who she believed were a good representation of the employee base. She did this because she said the culture was fantastic and she, in no way, shape or form, wanted to change it. Employees had each others’ backs and the environment was incredibly collaborative. She asked the small committee to capture the essence of the culture in a few corporate values. They came up with the following:

• Honesty
• Energy
• Integrity
• Strength
• Trust

Once these values were created, Veronica held a special company-wide meeting to explain that the committee felt strongly that the employee culture was made up of honest individuals who all had integrity and trusted one another. They approached their jobs with energy and strength, thus generating the five core values.

Things seemed to be okay. But then Virtue hired an old friend, Madeleine Blomquist, to head up a big client-facing division. Rumors were she was not a “people person” and had been asked to leave her previous role, but she was welcomed none-the-less.

Within a single year, the turnover of the business shot up to 30% and every single Project Manager who had been employed when Kevin joined was now gone and replaced. Most of the turnover came from this division headed by Blomquist.

Within the space of a few weeks, Kevin saw his boss forced out of the company by Blomquist. It all happened very quickly and was handled in a hush-hush kind of way. His boss was loved and respected by the other employees and was a long serving employee. Suddenly all of the high-ranking members of the company were leaving and there were many “It is with mixed emotion…” announcements being e-mailed to the employee-base by the CEO. Kevin then made a mistake in his job and was told by his new boss “If this happens one more time there won’t be a second chance.”

His new boss was given a “Golden Handcuffs” deal and carried out Blomquist’s instructions without ever defending his team. He would often hold meetings to tell them all how much they “sucked” and could never back up any of his claims that things “were not working.” Within the space of five months, five of his team members resigned. According to Kev, the guy was a spineless leader who micromanaged his subordinates and at times had them in tears in his office.

A complaint was made, carefully, by long serving members of the company with whom Kevin was friends, and the only thing that came back from the CEO was “How could Madeleine do better? If she had to work on three things what would they be?” It soon became apparent that Virtue was not interested in helping the relationship between Blomquist and her division. True, she was hitting huge numbers (thanks to Sales, essentially) but had left a high body count in the wake of this achievement.

A “Blame Culture” soon became the norm. The only employees not to be fired or leave were the ones who, in the interest of their own survival, threw others under the bus and were jokingly referred to as “Mini Madeleines.”

The final straw for Kevin was when he met with a co-worker after the team’s annual reviews. The co-worker was depressed because he had been marked down on the “Energy” company value. He read out a long, patronizing blurb to Kev about how the manager felt he needed to be more “Go Team.” Kevin could not believe that a person’s personality was being attacked that had nothing to do with their job or job performance.

It soon became apparent, when the team began talking amongst themselves, that everyone was getting bad reviews. One new girl (Who Kevin said was solid as a rock) was told by the new boss, index finger and thumb pinched together, “You were this close to being on an Improvement Plan.” Maybe it would have been easier to just tell the team the raises would be small that year due to the company missing its goals. But that would assume leadership lived by their own culture value of “Honesty.” As we will learn, actions really do speak louder than words when it comes to understanding a leadership’s philosophy.

When I first heard what was going on, a number of things became apparent to me:

• Veronica Virtue did not care about the culture. If she did, she would have made sure that employees could operate in a safe environment without having to turn on one another. The turnover got so bad that at one point the weekly newsletter stopped reporting on who had ‘exited’. Of course, everyone knew what was going on as the employees all talked amongst themselves. This sent out a bad message that essentially nobody was safe and leadership did not want to be honest with the employee-base. And if you are familiar with the work of Simon Sinek, you will know that when nobody feels safe, the feeling spreads like an infection through the employee base. Soon people are focused more on who got fired, who is hiring, and applying for jobs rather than doing their own jobs. You end up with a largely disengaged group of employees who stay for the paycheck and the health insurance — i.e. they are there for the wrong reasons.
• Virtue’s philosophy could be judged by her actions. Her actions were to drive out most of the old guard and anybody who did not agree with her (thus minimizing the chances for innovation — those who think differently are very valuable) and hire, promote and hold on to those who did. Blomquist was hitting her numbers, so she stayed. She also hired many ex colleagues from other firms. The organization soon looked like an episode of Star Trek with the Borg — in the image of Virtue and Blomquist — running rampant. Anyone who thought differently or imaginatively was a red-shirt. Her philosophy was essentially: “Numbers > People”
• Virtue was hurting the client base. A very well known axiom is that if you take care of your employees, they will take care of your clients. However in the numbers driven, blame culture, nobody wanted to be accountable for anything in-case it went awry. Employees started cutting corners to hit their targets and clients suffered.
• Virtue’s business philosophy had destroyed the company culture. Gone were the days of collaboration, teamwork and client satisfaction. In their places — bloated process, positioning, suck-ups and frustrated clients.

If I was not able to personally confirm this story, I would have not believed it either. Sometimes truth is stranger than fiction. Yet somehow what should be an obvious problem-solution became an amorphous tangled web that Virtue soon needed to seek outside help to fix. I am a huge fan of Capitalism. The 99% movement would hate Virtue and Blomquist. I just feel bad for the bozos who paid this woman millions of dollars to run a decent start-up into the ground.

So — this brings me to the point. There are no books on Business Philosophy. But it is real. It is not the same as Strategy or Culture. Strategy is the documented assessment of where you are, where you want to be and how you plan to get there. Culture is an aggregate of the actions and behaviors of an employee-base — each employee brings a bit of it with them when they join an organization; a small part of the ingredients that will go into a large melting pot and anneal. Business Philosophy is what you really think and feel about business, about employees, about customers. And how you really feel is normally evidenced in your actions. Not just in business but in every day life. It is what differentiates (for example) someone who calls themselves a Christian from someone who truly lives as a Christian.

Business Philosophy comes from the leadership team. It does not matter what they tell you the culture is. It does not matter what they tell you the company values are. Leadership can speak all they want. But their actions will be the very indicator of their true business philosophy and that philosophy can build an empire or destroy one. And in the modern world of the Internet and Internet Review Sites like Glassdoor.com, where transparency is no longer a choice— the philosophy will be there for the world to see.

What is your philosophy?