Leaders Own the Job of
Creating the Company Culture
After I left Netflix and began consulting, I visited a
hot start-up in San Francisco. It had 60 employees
in an open loft-style office with a foosball table, two
pool tables, and a kitchen, where a chef cooked
lunch for the entire staff. As the CEO showed me
around, he talked about creating a fun atmosphere.
At one point I asked him what the most important
value for his company was. He replied, “Efficiency.”
“OK,” I said. “Imagine that I work here, and it’s
2:58 pm. I’m playing an intense game of pool, and I’m
winning. I estimate that I can finish the game in five
minutes. We have a meeting at 3:00. Should I stay
and win the game or cut it short for the meeting?”
“You should finish the game,” he insisted. I wasn’t
surprised; like many tech start-ups, this was a casual
place, where employees wore hoodies and brought
pets to work, and that kind of casualness often extends
to punctuality. “Wait a second,” I said. “You
told me that efficiency is your most important cultural
value. It’s not efficient to delay a meeting and keep coworkers waiting because of a pool game.
Isn’t there a mismatch between the values you’re
talking up and the behaviors you’re modeling and
encouraging?”
When I advise leaders about molding a corporate
culture, I tend to see three issues that need attention.
This type of mismatch is one. It’s a particular problem
at start-ups, where there’s a premium on casualness
that can run counter to the high-performance
ethos leaders want to create. I often sit in on company
meetings to get a sense of how people operate.
I frequently see CEOs who are clearly winging it.
They lack a real agenda. They’re working from slides
that were obviously put together an hour before or
were recycled from the previous round of VC meetings.
Workers notice these things, and if they see a
leader who’s not fully prepared and who relies on
charm, IQ, and improvisation, it affects how they
perform, too. It’s a waste of time to articulate ideas
about values and culture if you don’t model and reward
behavior that aligns with those goals.
The second issue has to do with making sure
employees understand the levers that drive the
business. I recently visited a Texas start-up whose
employees were mostly engineers in their twenties.
“I bet half the people in this room have never
read a P&L,” I said to the CFO. He replied, “It’s true—
they’re not financially savvy or business savvy, and
our biggest challenge is teaching them how the
business works.” Even if you’ve hired people who
want to perform well, you need to clearly communicate
how the company makes money and what
behaviors will drive its success. At Netflix, for instance,
employees used to focus too heavily on subscriber
growth, without much awareness that our
expenses often ran ahead of it: We were spending
huge amounts buying DVDs, setting up distribution
centers, and ordering original programming, all before
we’d collected a cent from our new subscribers.
Our employees needed to learn that even though
revenue was growing, managing expenses really
mattered.
The third issue is something I call the split personality
start-up. At tech companies this usually
manifests itself as a schism between the engineers
and the sales team, but it can take other forms. At
Netflix, for instance, I sometimes had to remind
people that there were big differences between the
salaried professional staff at headquarters and the
hourly workers in the call centers. At one point our
finance team wanted to shift the whole company to direct-deposit paychecks, and I had to point out
that some of our hourly workers didn’t have bank
accounts. That’s a small example, but it speaks to
a larger point: As leaders build a company culture,
they need to be aware of subcultures that might require
different management.