Book Summary — What you do is Who you are.

Create Your Own Business Culture.

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1 paragraph summary:

Excellent book on all things Culture and how culture is not what you write on a wall or tell people, but about what you do on a day to day basis.

When I was CEO of LoudCloud, I figured that our company culture would be just a reflection of my values, behaviours, and personality. So I focused all my energy on “leading by example”. To my bewilderment and horror, that method did not scale as the company grew and diversified. Our culture became a hodgepodge of different cultures fostered under different managers, and most of these cultures were unintentional.

Because your culture is how your company makes decisions when you’re not there.

It’s the set of assumptions your employees use to resolve the problems they face every day. It’s how they behave when no one is looking. If you don’t methodically set your culture, then two-thirds of it will end up being accidental, and the rest will be a mistake.

Culture is not like a mission statement, you can’t just set it up and have it last forever.

There’s a saying in the military that if you see something below standard and do nothing, then you’ve set a new standard. This is true of culture — if you see something off-culture and ignore it, you’ve created a new culture.

Innovative Ideas

Hierarchies are good at weeding out obviously bad ideas. By the time an idea makes it all the way up the chain, it will have been compared to all the other ideas in the system, with the obviously good ideas ranked at the top. This seems like common sense. The problem is that obviously good ideas are not truly innovative, and truly innovative ideas often look like very bad ideas when they’re introduced.

Outsourcing Tech

But if their startups outsource their engineering, they almost always fail. Why? It turns out that it’s easy to build and app or a website that meets the specification of some initial idea, but far more difficult to build something that will scale, evolve, handle edge cases gracefully, etc

Companies — just like gangs, armies, and nations — are large organisations that rise and fall because of the daily micro-behaviours of the human beings that compose them.

If a great culture won’t ensure success, why bother? In the end, the people who work for you won’t remember the press release or the awards. They’ll lose track of the quarterly ups and downs. They may even grow hazy about the products.

But they will never forget how it felt to work there, or the kind of people they became as a result.

The company’s character and ethos will be the one thing that carry with them. It will be the glue that holds them together when things go wrong. It will be their guide to the tiny, daily decisions they make that add up to a sense of genuine purpose.

A culture’s strengths may also be its weaknesses. And sometimes you have to break a core principle of your culture to survive. Culture is crucial, but if a company fails because you insist on cultural purity, you’re doing it wrong.

Who you are is not the values you list on the wall. It’s not what you say at an all-hands. It’s not your marketing campaign. It’s not even what you believe. It’s what you do. What you do is who you are.

1. Culture and Revolution — Toussaint Louverture

In our long history, there has been only one successful slave revolution that led to an independent state.

Slavery chokes the development of culture by dehumanising its subjects, and broken cultures don’t win wars.

Louverture used seven key tactics, which I examine below, to transform slave culture into one respected around the world. You can use them to change any organisation’s culture.

1. Keep What Works

He used preexisting strengths to great effect — ie songs the slaves sang at their celebrations

2. Create Shocking Rules

As a slave, you own nothing, have no way to accumulate wealth. You can have everything taken away without warning.

If I believe there is no tomorrow, then there can be no trust.

This dynamic becomes problematic in an army, because trust is fundamental to running any large organisation. Without trust, communication breaks. Here’s why:

In any human interaction, the required amount of communication is inversely proportional to the level of trust.

As an org grows, communications becomes its biggest challenge. If soldiers fundamentally trust the general, then communication will be vastly more efficient than if they don’t.

To instill trust throughout the army, Louverture established a rule so shocking it begged the question “Why do we have that rule?” The rule forbade married officers from having concubines.

Raping and pillaging was the norm back then, so the rule seemed absurd.

When everyone wants to know “Why?” in an organisation, the answer programs the culture, because an answer everyone will remember. The explanation will be repeated to every new recruit and will embed itself into the cultural fabric.

“Because in this army, nothing is more important than your word. If we can’t trust you to keep your word to your wife, we definitely can’t trust you to keep your word to us.”

a. It must be memorable
b. It must raise the question “Why?”
c. Its cultural impact must be straightforward
d. People must encounter the rule almost daily.

Example:

• VMware — “Partnerships should be 49/51, with VMware getting the 49.” — be a good partner
• Amazong — Frugality — desks made from doors
• Facebook — “Move fast and break things”
• Yahoo — “Nobody is allowed to work from home.”

That’s the nature of culture — it helps you do what you are doing better, but it can’t fix your strategy or thwart a dominant competitor.

3. Dress for Success

4. Incorporate Outside Leadership

Bring leaders in from a culture you want to adapt.

I often see companies that plan to go into new areas, but don’t want to shift their culture accordingly. Many consumer companies want to penetrate the enterprise market — that is, selling to big companies — but resist having employees who walk around in fancy suits.

Building a great culture means adapting it to circumstances. And that often means bringing in outside leadership from the culture you need to penetrate or master.

If you bring in outside leadership, it will make everyone highly uncomfortable. that’s what cultural change feels like.

5. Make Decisions that Demonstrate Cultural Priorities

The more counterintuitive the leader’s decision, the stronger the impact on the culture.

6. Walk the Talk

No culture can flourish without the enthusiastic participation of its leader. No matter how well designed, carefully programmed, and insistently enforced your cultural elements are, inconsistent or hypocritical behaviour by the person in charge will blow the whole thing up.

For a culture to stick, it must reflect the leader’s actual values, not just those he thinks sound inspiring. Because a leader creates culture chiefly by his actions — by example.

Example:

• Hilary Clinton having confidential emails on her personal email — her team did the same.

7. Make Ethics Explicit

Every company likes to believe it has integrity, but if you asked its employees you’d hear a different story.

One difficulty in implementing integrity is that it’s a concept without boundaries. You can’t pat yourself on the back for treating your employees ethically if you’re simultaneously lying to your customers, because your employees will pick up on the discrepancy and start lying to each other. The behaviours must be universal, you have to live up to them in every context.

What you measure is what you value.

If you remember one thing, remember that this care about hard choices.

2. The Way of the Warrior — Samurai / Bushido

The samurai, the warrior class of ancient Japan, had a powerful code we call “bushido” or “the way of the warrior.”

Bushido looks like a set of principles, but it’s a set of practices. The samurai defined culture as a code of action, a system not of values but virtues. A value is merely a belief, but a virtue is a belief that you actively pursue or embody.

Culturally, what you believe means nearly nothing. What you do is who you are.

The biggest threat to your company’s culture is a time of crisis. Meditating on your company’s downfall will enable you to build your culture the right way.

The samurai endured because of two techniques:

1. Detailed every permutation of potential cultural or ethical dilemmas to prevent the code form being misinterpreted or deliberately misunderstood.
2. Stamped their code deep with vivid stories.

Why you do right is not important. Doing right is all that counts. But the people who created the code understood that doing right is harder in some circumstances than others, so they provided case studies.

Story Example — Netscape

• We have three rules at Netscape.

1. The first rule is if you see a snake, don’t call committees, don’t call your buddies, don’t form a team, don’t get a meeting together, just kill the snake.
2. The second rule is don’t go back and play with dead snakes. Too many people waste too much time on decisions that have already been made.
3. And the third rule of snakes is: all opportunities start out looking like snakes.

3. The Warrior of a Different Way — Prison — Shaka Senghor

1. Your Own Perspective on the Culture is not that Relevant

Your view of culture is rarely what your employees experience. What you experience on your first day is. What must employees do to survive and succeed in your org? What behaviours get them included in, or excluded from, the power base? What gets them ahead?

2. You must start from First Principles

Don’t just blindly adopt culture.

The best way to understand your culture is not through what managers tell you, but through how new employees behave. What behaviours do they perceive will help them fit in, survive and succeed? That’s your company culture.

Ask them about the bad stuff, the practices or assumptions that made them wary and uncomfortable. Ask them what’s different than other place’s they’ve worked — not just what’s better, but what’s worse. And ask them for advice: “If you were me, how would you improve the culture based on your first week here? What would you try to enhance?”

A leader must believe in his own code. Embedding cultural elements you don’t subscribe to will eventually cause a cultural collapse.

4. Ghenghis Khan — Master of Inclusion

Ghenghis created a remarkably stable culture by founding it on three principles: meritocracy, loyalty and inclusion.

Meritocracy

In later life, he would judge others primarily by their actions toward him and not according to their kinship bonds, a revolutionary concept in steppe society.

Ghenghis Khan’s sweeping meritocracy made his army fundamentally different from — and more powerful than — any that came before it.

Mongo women were already treated unusually well for that time, but Ghenghis went on to abolish inherited aristocratic titles, and eliminate the case hierarchy, all men were equal.

Loyalty

Ghenghis demanded that his army’s ethics apply to outsiders as well. When he declared that you must never betray your khan, he intended it as a global rule.

After he defeated Jamuka some of the men turned their leader over to him, hoping to gain favours. Rather than rewarding these turncoats, he executed them.

By elevating loyalty to a higher principle. Ghenghis created a massive military advantage. Precisely because he wasn’t asking his troops to die for him, they eagerly would.

Inclusion

Anyone could have added enemy soldiers into his army — but Ghenghis stroke of brilliance was treating those soldiers so well they became more loyal to him than to their original leaders.

Be Yourself, Design Your Culture

The first step is getting the culture you want is knowing what you want. It sounds obvious and it is, it sounds easy, but it’s not. Create an environment you’re proud of.

Step 1 — in designing a culture is to be yourself.

Other people will always have ideas of what you should be, but if you try to integrate all those ideas in a way that’s inconsistent with your own beliefs and personality, you will lose your mojo.

If you follow the first rule of leadership, not everybody will like you. But trying to get everybody to like you makes things even worse.

I don’t want to be cool, I just want to be me.

But know your flaws, because you don’t want to program them in the culture.

Culture and Strategy

Culture eats Strategy for breakfast.

I love it because it’s anti-elitist but I disagree with it.

The truth is that culture and strategy do not compete. Neither eats the other. indeed, for either to be effective, they must be coherent.

Examples:

• Ghenghis — for his military strategy Meritocracy made sense to have self-sufficient cavalary
• Amazon — frugality makes sense as want to be the cheapest
• Apple — beautiful design makes sense

Mix culture and strategy and it won’t work.

For example, Facebook’s “move fast and break things” culture would be catastrophic at an Airbus.

Effective Culture

1. Is your virtue actionable?
2. Does the virtue distinguish your culture?
3. If you are tested in a virtue, will you pass the test?

Culture of Decisions

The decisions you make influence your culture as much as anything. But the process you use to make those decisions also becomes a core part of your culture.

Final Thoughts

Your company culture should be an idiosyncratic expression of your personality, beliefs, and strategy — and it should keep evolving as your company grows and conditions change.

Trust

Telling the truth requires courage, but also judgement and skill.

You can’t always disclose everything.

Should you just give up and lie? No.

Trust derives from candor, and your company will fall apart if your employees don’t trust you. The trick — and it’s tricky — is to tell the truth without thereby destroying the company.

To do this you must accept that you can’t change reality, but you can assign it a new meaning.

If you assign meaning to the ie layoff before anyone else, and you do so candidly and convincingly, your interpretation has a decent chance of being the one that everyone remembers.

1. State the facts clearly.
2. If your leadership caused it, cop to that.
3. Explain why taking the action, you’re taking is essential to the larger mission and how important the mission is.

Openness to Bad News

You can be absolutely sure of one thing: at any given moment, something somewhere is going horribly wrong.

Encourage Bad News

1. Be happy about hearing bad news

Good CEOs run toward the pain and the darkness, eventually they even learn to enjoy it.

2. Focus on Issues, not people >> get to the root cause

3. Look for Bad News in Regular Business >> what’s preventing you from doing business? What would you change?

Loyalty

Loyalty is about the quality of your relationships. People don’t leave companies, they leave managers. If there is no relationship between a manager and an employee, or, worse, a bad relationship, you won’t bet loyalty regardless of your cultural policy.

Culture Checklist

1. Cultural design — make sure you culture aligns with both your personality and your strategy.
2. Cultural orientation — people learn more about what it takes to succeed on Day 1 than any other day.
3. Shocking rules
4. Incorporate outside leadership
5. Object lessons —if you want to cement a lesson, use an object lesson, be dramatic.
6. Make ethics explicit
7. Give cultural tenets deep meaning — make them stand out from the norm
8. Walk the talk
9. Make decisions that demonstrate priorities

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