Musings #11: On Startups and Culture

I'm listening to this song as I start this Musing. It is the song to which one of the greatest legends of Indian cricket decided to announce his retirement last Saturday through a moving video where he highlights his teammates during triumphs and himself during failures. Mahendra Singh Dhoni, just the name brings awe, inspiration, and deep adulation in the heart of every Indian who follows cricket anywhere in the globe. We will all miss seeing him in Indian blues, but the culture he has created in the Indian dressing room will continue. We can summarize Dhoni's ethos as a leader in three words - trust, composure, and confidence.

Today, as we wrap up the 4-part series on building teams, let us see how everything about leading a high-performance team converges on culture.

"Culture is not what you write on powerpoints or word documents, it is what you do day in and day out as a leader and motivate your team to follow."

Intel Case Study

Going back to my first job, I still remember the Intel Cultural Values. It was drilled into new hires and was even at the back of every Intel badge to quickly refer to (I do have my Intel badge still, but it is stuck in our office and so got a photo off the web). We even had a mnemonic for Intel's values "Roger Rabbit Gets Quality CDs," corresponding to the values "Risk-taking, Results Orientation, Great Place to Work, Quality, Customer Orientation, and Discipline." I joined Intel in 1998, and it is more than 15 years since I left, but I still remember it. But, more importantly, most of these values I try and practice to date. Some parts of a company's culture travel with people well beyond their time with the company and so let us design, define, and practice these conscientiously.

Strategy vs. Culture

Before we dive deeper into culture, we need to understand that a company's strategy and culture are two sides of the same coin. For an Amazon, which works on meager margins in its e-commerce business and wants to pass on every cent to the customer, "Frugality" is a core principle. Jeff Bezos drove this point home to employees by using door desks to save costs. The same culture would not have applied to an Apple under Steve Jobs that wanted to "Build products we believe in." Accordingly, Apple was comfortable spending $5B on its new campus, a work of art on its own. It is essential to be very clear in your company strategy and use culture to achieve that strategy. The strategy is more where you want to go, and culture is what will get you there.

Starting up on Culture in Startups

As soon as we have 5-10 people in a company, whether we like it or not, there is a culture already. I still remember the very early days of Swiggy. During the first six months, Harsha (the CEO) had delivered food close to 200 times, especially in cases of service failure - "Consumer Comes First" was always a culture at Swiggy well before they put down their values on paper. The actions that founders and senior leaders demonstrate personifies the culture a lot more than any words. But it is worthwhile sitting together as leadership and figuring out the few basic tenets that we want to cultivate as an organization. It is ok to keep things simple in the early days and pick a few fundamental values that are core to us as leaders and easy to follow naturally. One or two aspirational ones are ok - but even those should be ones we are willing to change to achieve. The core thing is to deliberate on this, chalk it down, and commit as a team to live the values every day.

Implementing the Culture

The actual company values, as opposed to the nice-sounding values, are shown by who gets rewarded, promoted, or let go. — Netflix Culture: Freedom & Responsibility

The real work begins after we have articulated the culture. We discussed hiring in our earlier Musing. It is essential to incorporate "culture fit" into our hiring process - both through interviews and reference checks. Reference checks are more effective here and important to do enough number of these to get various angles on the candidate (colleagues, bosses, direct reports, across jobs, etc.). Here are some great tips on doing this well from Fred Wilson - one key takeaway, if we haven't found any negatives on the candidate from reference checks, something is amiss.

Post hiring, and training the new hire, it is crucial to set clear goals for them and coach them through regular 1:1 meetings using an approach of radical candor. When it comes to performance reviews, this is a critical time to reinforce how important the organization's cultural values are. Ideally, 50% of the weightage can be placed on values fit and the other 50% on business performance metrics - this is clearly explained here. And if someone is not a culture fit, even if they are outstanding in performance, it is essential to work with them to rectify the behavior or ask them to move on. Who we promote or who we let go, mainly based on demonstrated behavior, significantly influences how the rest of the organization will behave - shaping the company culture.

Application

One resource that can help you measure and improve your company culture is Employee Net Promoter Score (eNPS). eNPS is a great way to measure how our employees feel about the company. And specifically, what aspects of your culture is working very well and what is detrimental that is making people leave.

Highlights

FreshWorks is one of the most beloved companies by employees. One of the key reasons for that is their values captured by the acronym - CHAT - learn about it in this 5-minute video (Tip: Make an Acronym for your values and use a Mnemonic if needed like Intel). It is their third version of values since formalizing it in 2014 - it is ok to refine the cultural values over time as a startup.

And here is a chat I had with Harsh from Dream11 last year, we talked about how he worked on the fantastic culture at Dream11. He has an acronym - DOPUT for the culture there - listen to find out what it means and how relevant it is for Dream11's strategy. He also talks about how they get feedback from peers on cultural compliance for performance review. (Go to 22:07 and listen for 15 mins)

One of the best books on culture in action, especially with great examples from outside the technology world and applying back to tech, is Ben Horowitz's "What you do is who you are." Here is a podcast with him on the Tim Ferriss Show.

Spotlight

What if the culture is not working and people are rushing out the door? Many startups face this situation. Here is Naveen Tewari (CEO of InMobi), in a candid conversation with Saikiran Krishnamurthy (co-founder and CEO of xto10x), recalling a phase in InMobi's evolution when this happened, and how Naveen managed to fix the culture.

Quote

When we think of Cultural Values and Acting on it, we cannot think of a better example than Mahatma Gandhi.

That brings us to the close of this mini-series on building high-performance teams. I would really appreciate it if you can share some feedback by taking this 1-minute survey. Also, I hope we get to work on understanding and developing the culture in our organizations. And become role-models for the culture we want to see in our respective ecosystems.