it takes leadership, example, and execution
building a winning corporate culture
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Ms. DeWitt: Yes, that is a good one. What would we do differently.

Mr. Brosowsky: Would you like to share your name?

Audience Member: Sure. Tasha Tilock, with Cultural Axis Partners. Thanks.

Mr. Brosowsky: Thank you.

Ms. DeWitt: Cultural Axis Partners? They could probably answer that question very well.

          What would we do differently? Well, you have to think in terms of your successes and failures, and the biggest challenge comes once you start to grow rapidly. Some things were happening in our culture, like a grapevine developing. I know it sounds naive, but we didn't want a gossipy grapevine at our company. We saw things like that developing, so what we did -- and what we could have done sooner -- was to get the next couple of tiers of management more involved in the strategy of the company. We started to do these off-site meetings once a quarter for the senior management team, where we spend a few days talking about the business, the problems, moving forward, recalibrating, and whatnot. We started to take the next couple of layers of management and put them in a room. We said, “These are the five issues facing the company.” They had some mentors on the senior management team. We said, “Break up into groups and help us solve these problems.” It did a lot of good things for us, including reminding all the other leaders in the company what the culture was all about and what the business goals and objectives were. It also helped them know that we were listening and that they had a role to fulfill in the company. As the company grew bigger, it wasn't turning into just another job. Third, it helped us identify the next couple of generations of leadership, which is very, very important if you want your company to keep growing and succeeding.

          To summarize, we should have gotten more layers of the company involved in the strategy and problem-solving of the company sooner than we did, but we did it, and it helped turn around some of the problems that we were seeing.

Mr. Hill: For the most part, I wouldn't change anything about the culture. I think I would change a couple of things that I might have done differently early on. I would have acted sooner in a couple of situations. Earlier, I talked about how the wrong people in an organization could be poison, especially with a smaller company. It's harder when you have so many people to see the one person coming through the door who is going to be trouble. There are a couple of times when I sensed trouble that I should have stepped in a lot sooner. As a result of that, I think it made me more aware, it made me concentrate on making sure that I didn't make the same mistakes again. It goes back to making sure that you bring in the right people. Like I said before, culture is just something that happens. You control it at the very beginning, but then it takes on a life of its own, so I don't think I would change anything about the culture, I'd just change some of the things about me.

Mr. Pittinsky: A very similar answer. It sounds harsh, but it was not acting quickly enough about people who didn't share the values, who were political, and who were spreading that within the organization. You can't underestimate how quickly and how decisively you need to act. You build people up in your mind because you recruit them, you're excited, they're perfect, you make a big deal about them, then you can't imagine life without them, so you take the shortfalls. It's so hard to realize that the person just isn't the right fit. It may be nothing about them, just not the right fit, but you have to act quickly when you see it. Inevitably it is the right thing to do if the person isn't a match for the culture.

Mr. Brosowsky: If there is one thing you want everyone in this audience to go away with, what would it be?

Mr. Hill: I think that the one thing to walk away with is that if you focus on customer service and employee satisfaction, it will make you profitable. It's not focusing on the money or the other things that just aren't important. If you are focusing on the things that are really important, which are the people who do the job, and the people who make having a job feasible, a.k.a. the customer, you have your priorities right. And, as you grow, remember how you got there.

Mr. Pittinsky: This may sound a little bit Apple-ish or Steve Jobs-ish, but build a company with an identity -- your brand identity, your logo, your values, your culture, the way in which you describe your company and yourself. Build a company with an identity, because it pervades everything else in terms of recruiting people, retaining people, motivating people, and building a culture. Organizations have identities. Either it's going to evolve organically, or you can try to shape it against your values. Focus on the company's identity, don't take anything for granted, and be creative with it.

Ms. DeWitt: I think that the most important thing -- given that you already have a reasonably good idea, that you want to start a business, and that you know who you are and what you stand for -- the most important thing you can do is to surround yourself with the right people. You are learning and growing at such a rapid rate, you are encountering so many new experiences that you need these folks to touch base with. The people I was talking about before, Jack and Gene, collaborating with them, bouncing ideas off of them, that was so important. Choose those people wisely. You get to choose. Even though you're out there scrambling for money, you get to choose who becomes your core advisors. Selecting those people is the most important thing you do once you have your idea, you have your passion, and you have the self-confidence to go out there and do it. Which, of course, I encourage everybody to do.

Mr. Brosowsky: I would like to thank Ben Martin, Mary MacPherson and the rest of the Netpreneur team for putting this event together this morning, and thanks to our panel. Now I'll introduce Mario Morino.

mario morino: wrap-up

First, thanks to everybody for coming this morning. I especially want to thank our panelists, Jeremy, Andrew, Matt, and Caren, for giving their time. It's a symbol of what you have been saying, your care, and your respect for this community. You are each at a different stage of development, and I know what you are doing individually for the region and for many of the people you've been in touch with. For that, I thank you very much.

          The subject of leadership and culture is critically important to your success and to your life. I always try to draw a connection between your business and your life because, in the end, you always have to think through why you are doing all this. Why are you killing yourself? Is it simply to make money, or is it to change something in your life status?

          It was said that culture is organic. While you don't sit down and flow chart your culture, I would argue that you nurture it. If you don't, it will run wild and grow you under. It will become the gossip machine that Caren mentioned.

          Think for a moment. I'm going to give you some names and I want you to picture in your minds the cultures of these companies.

          Enron. What would be one word that you'd use to describe this company? It would not be a good one.

Audience Member: Selfish.

Audience Member: Greedy.

Audience Member: Sharks.

Mr. Morino: You're all being kind. I won't tell you mine because we are on public record. I think the nature of the business has been deceptive to its people and its clients. It goes to the core of the problem of a lack of values. We're seeing tremendous and devastating impact on the business community, and many good businesses are being tainted by association.

          Here’s a company that has done very well. I'm going to take you to the early '80s, and give you the name: Oracle.

Audience Member: Arrogant.

Mr. Morino: Right. Arrogant. And draconian, because there was a time when they dismissed people without a second thought. If you missed your numbers, if you missed your targets, you were canned. It created such a ruthless mentality within the sales divisions, that you can come to your own conclusions about what type of behavior this kind of pressure motivates.

          Andrew mentioned recruiting from Computer Associates. I'm not saying that is good or bad, but when you describe CA, I don't get a good vision. I respect Charles Wang and I respect Sanjay Kumar for what they have achieved, but I also understand the inherent disdain that CA has shown for their clients. That is the one word I always use to describe them. 

          Microsoft. What is your view of Microsoft? At different levels I actually have a lot of respect for the firm, but I have always described them this way: “legally ruthless,” meaning ruthless within the extent of the law. I guess that’s debatable, now, but there was a time when if you ever sold a business or did acquisitions with them, or dealt with them otherwise, you'd have been wise to remember that term, “legally ruthless.”

          Terms like those are stigmas for those businesses. You also hear other terms and get different views of companies like SAS in Raleigh, North Carolina. Jim Goodnight is clearly cultivating a culture that borders on being “benevolent.” He’s a remarkable stanchion of the North Carolina community. The company is still private. They have their own Montessori schools. They built a $30 million school for their employees and community. There is a remarkable conscience in the company, and it emanates through all aspects of the organization.

          Cultures are real, but they are organic, and you nurture them as a leader. Caren said it very well, and all of the panelists epitomize the fact that culture starts with you. When you are starting a business, by definition, you are the culture. The question is, how does that culture grow and change over time? I believe that your challenge is to create a petri dish. You are going to define what goes into the dish, therefore you are going to affect the culture that comes out of it. You can't control the culture, but you can control how it gets seeded and grows.

          How do you do that? First of all, by example and execution, by what you do, day in, day out.

          I was with a gentleman recently who was talking about being on calls with me. He said, “I can't get over how polite and courteous you are to people.” Many people don't agree with that, by the way, but if you went back to look at how we did business, courtesy and politeness and respect were always driving factors. He was describing it like it was something special. I said, “That's what I should do. Don't compliment me for something I should do.” You are just treating the person with respect.

          Who you hire, that’s what ultimately defines your culture. You need people who will both fit with and will help you change your culture at different phases. You do that consciously, and you do it holistically. Caren used the word “holistic.” I think it's a very important point. I can tell you about times I made the mistake of violating it, and I got chewed up. We used to have a veto process in hiring, in the development team, in particular. I'm an ex-developer, too. We thought that chemistry was so vital that if anybody among our core group of 20 people said no to a candidate, they didn't get in. You had to really climb that wall to make it into our team. There was a guy we were recruiting, many of you may even know of him because he became quite famous in his own right. Everybody said no to him, but I hired him anyway. I was right about how good he was, but, boy, he did not fit us. He caused an awful lot of pain for a long time in the company. That was my mistake, and I wore it for a long time.

          We talked about execution and example, but the other way you drive home culture is by reinforcing behavior that supports the culture. For example, that means not only rewarding the sales team that brought in their numbers, you also reward the sales team that created good will or exceptionally positive reaction or respect in the marketplace by how they dealt with the client. By recognizing them, you're demonstrating your convictions and how important the culture is to you.

          Andrew said something very important. You are going to spend enormous amounts of time with people, so you want to be able to go to dinner with them or have a drink with them. You don't make it an iron-clad rule, but the reality is that you are going to be spending long hours every day with these people. If they don't fit the model, this marriage is going to break up. You’d better be able to get along with folks, and it’s absolutely critical in the early stage.

          Matt made a very insightful comment, that there are multiple cultures in an organization. You want to make sure that you have a core culture that you nurture and advance and hire around that reflects the central values of who and what you are, but you will get different cultures around that core. Respect those different cultures. The technology group and sales group will have remarkably different cultures. There is no question about it. I remember, it took me a long time to understand that. I was doing a mind trip on our development group to understand and respect the sales culture, but, for a long time, my stubbornness as a technical person limited our growth. I couldn't understand the nature of the salespeople, the respect they needed, or how they were motivated. Once we got over that hump, we became a different organization. It was a different culture.

          I don't think that there is an internal/external culture difference. If there is, you have a big problem. It means you are a “suit.” If you are not the same on the inside as the outside, there is something wrong and you have violated a basic value structure. Respect and honesty are as imperative with somebody inside the business as with clients.

          Jeremy asked the question: What happens when things go bad? I might as well be blunt: Everything hits the fan. You really see culture when you endure hardships together. It is easy to get along when everything is running smoothly. You don't even know what you have, then. It's only when it gets hard that you realize how deep and how real your people and your culture are. Or how you are, for that matter. Your stock price goes from $52 to $17 in 48 hours and everybody is in panic mode, everybody wants to take your head off. Or you're still private and you don't know if you can make payroll. Or a contract you were expecting that was going to change the nature of the business did not come through. Or there has been a major sexual harassment crisis and people are looking to see what you are going to do about it. Crises are opportunities. You demonstrate the true culture and value of your organization when you respond to the hardships and crises you face.

          You have to back up what you believe. If it's discrimination, if it's dishonesty, if it’s an issue of integrity, you've got to act quickly. When I say quickly, you've got to think it through, of course, to make sure that you do it right, but you have to act with determination because everybody is going to watch you. They're going to judge your value system right then and there. It’s the same as when you release an individual from the company. People are going to judge you. Your values get judged all of the time, so how you execute against them and how you reinforce them is essential.

          Take responsiveness, for example. I believe that any inquiry coming into the organization should be responded to within 24 hours. No exceptions. Whether it’s a call from customer support or a call from an executive, it doesn't matter, within 24 hours there should be a response to that call. It’s just common politeness. How do you enforce it? You do it yourself. It's that simple. When you make a sales call or you call on anybody, you send a follow-up note. “Thank you for the time.” You do it all of the time, no exceptions. You are demonstrating courtesy. Regardless of who is hiring whom, you always thank the other person. You try to go on their turf to respect their organization. All of these are symbols, but by executing on them you demonstrate your cultural makeup and the values you're trying to build in the organization.

          You've got to support symbolism with execution. You want to have the identity Matt spoke of, and you want to live that identity and walk with it every step of the way. People see right through phoniness. They always do. We kid ourselves with our posters about “quality” and “integrity.” Forget the signs. People are looking at you, how you act, and what you do.

          I want to mention a few other points that were covered, including one that Matt mentioned, the importance of an orientation. You all do it your own way, but when people come into the organization, you have a tremendous opportunity to set their expectations at that moment. You probably should have done it in the recruiting process, but, nonetheless, you have to do it again. It is important to give people the chance to understand the business, its values, and how you do things. Two or three days or a week spent up front will have an enormous payback over time.

          As Caren said, what is important is that you understand who you are. When you are talking about defining culture, it starts with you and your management team. Who are you? What is your makeup? If you can't define that, you'll never get to your core value structure. People need to know why they're there. It’s clarity of mission and clarity of identity. People want to work for an organization that is good. They want to walk away feeling good about themselves and that there is integrity. They want to feel that they are involved, and they want to have passion. You have to create the environment where the individual has an affinity with the organization and what it represents.

          Here are some cultural issues we went through at my company. They are not right or wrong, just things that we did. For example, there was a comment about executive row. I always disliked executive rows because they are a cultural and style definition in themselves. It doesn't mean that it’s right or wrong, it's a style. For years, our executives were with their troops, not in an executive row. That was a message we were sending because we wanted to instill teamwork and camaraderie at the deepest level of the organization. It changed, by the way, when we had others with different styles come into the organization.

          We had a remarkable sense of egalitarianism, although I don’t know if it came through as much as I'd have liked it to. All of the offices were the same. My office had a couch. If anybody else wanted one, they could buy it, just like I did, out of their own pocket. It didn't come out of company money. That was the rule. We did that on purpose, because, right or wrong, we wanted to have it egalitarian. I’ll always remember one company. The CEO and I were walking out of his massive corner office that was probably the size of this hall we’re in now, with a spectacular oriental rug and all of these other wonderful things he was describing to me while explaining how his people -- his people, mind you -- wanted him to have this environment. What he didn't know was that they had to browbeat everybody to buy his birthday gift that day. They couldn't get enough money to buy him a little decanter. They actually had to force people to give the money. But his people really loved him.

          Caren mentioned the work of the webMethods Foundation, and I want to come back to that. There is a lot of new money jumping up around the country, and a lot of new money people who are making total asses out of themselves. They are coming across too fast, with too many answers, thinking that they know all of society's problems. The reality is that they  know little of the new world they’re entering. I take my hat off to what the webMethods Foundation has done under Caren's leadership and that of Diane Tollefson. They have come in quietly, they have assimilated well into the community with traditional philanthropy (actually, a better job than we did), and they delivered on meaningful programs. They’ve got the real issues: homes, education, children, families. They deserve a tremendous compliment and a thank you from the many people who respect what is going on. They are living their value structure. They are walking the walk.

          If I think about everything that the panelists said, the word that jumps out to me is respect. Not that they said it, but did you notice that whenever they talked about the people in the company or the clients, it was always with a sense of respect about the relationship. I think that is the basis of everything. Respect gets established by how much of a focus there is on people.

          Everyone talked about it, but Caren said the word: you want to instill passion. People do want to get up in the morning and come to work. You want an environment in which they get charged. You don't want the environment in which people are coming in because they’ve got to be there. You want people busting 70, 80 hours a week because they want to, not because you are trying to force them to. You want that individual with drive, who cares about the work, and you have to create the environment that makes it happen.

          Two points of caution. First, Caren mentioned the issue of stock price. I was involved in a business two years ago where I was the “old man” on the board. I said, “You are looking at stock price too much.” They looked at me and said, “You are too old-fashioned, Morino.” Guess what? That's right, the crash. You don't look at stock price, you look at the performance of your business. You look at your people. You can't control the stock price. Somebody else decides that number, you worry about the factors you can control and influence.

          I respect Andrew's point about family, but I would say to come off that. I learned a hard lesson: Companies are not families. Don't ever kid yourself about that. You don't fire your son or daughter; you don't lay off your nephew. You will be forced to do that, and, when it happens, the company is no longer a family. Be honest about it. You can be trusting, you can have a great relationship, you can be supportive, but you're not family. It's a growth issue you go through. I don't mean it to be critical, I just think it's a fact.

          One element that I would encourage you to think about is the term “employee.” When we formed our company, Morino Associates, we wanted it to be small, and we wanted everybody to be an “associate.” We didn't know the wisdom of our way, actually, until later when Tom Peters wrote a piece that caught my attention. He talked about the origin of the term “employee.” Turns out that it comes out of a chattel agreement. It's chattel. That stuck with me. I said, “I don't want to call people chattel.” Anybody who’s been around me knows that we never use the word “employee.” It's a small point, but it's also about how you respect people, both as symbolism and the way you live it. These are small things, but they are the kind of things, when pulled together, that also pull your culture together.

          The question everybody here is living through, Caren especially, is: What does growth do to you? The real challenge is to maintain and redevelop your culture, or to allow it to grow in positive ways as you grow. When you have 14 offices around the country, some that came through acquisition, let me tell you, you have spaghetti. Your challenge is to go in and instill a sense of core common values over time. Those are the companies that will succeed. The ones that can't do it are the ones that fail. Core values are about how you perform, what you do, how you execute, how you treat your clients, how you treat the people in the company. Growth gives you an enormous challenge. It is what separates the true success stories from the others.

          Culture is remarkably important, and leaders have a tremendous influence on the culture. Over time that wanes, and your job becomes making sure that you have created the petri dish that allows the culture to grow productively, constructively, that rewards people in the organization and respects them.

          I want to thank everybody again for being here, the Netpreneur team for putting on another great program, and, especially, our panel.

[End]

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