Outward-Facing Corporate Culture

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Corporate Culture Caused the Techlash, and now Culture is Changing to Work with the World

Until recently, competitive advantage was gained from a strong inward-focused corporate culture. In the war of us vs. them — circled wagons, campfire rituals and the lore of slogans drove performance with unique forms of belonging. But if a corporation is a person, it’s an antisocial teenager bereft of parenting and devoid of societal values. It’s time to grow out of narcissistic tendencies and become a citizen of the world.

Business Grows Up

My grandfather once told me that an entrepreneur is in it for the fast-buck, but a businessman makes a lasting contribution to his community. Those words stuck with me, in what an entrepreneur should be. And the world is catching up.

In an impactful statement, The Business Roundtable modernized its principles on the role of a corporation beyond shareholder profit. By carrying a duty to create value for stakeholders (customers, employees, suppliers and communities), a corporation can not only be a responsible citizen, but grow sustainably.

The statement became a charge for change for every public corporate board, and undoubtably many a private corporation. In the Tech Industry, the conversation already started due to perhaps its most important stakeholder — with the rise of employee activism.

The Techlash is a Byproduct of Corporate Culture

“Just as CEOs can’t look away when social issues clash with their values, employees can’t pretend that whatever its leadership decides to do is above their pay grade. If leadership won’t act on a company’s values, employees at every level need to hold them accountable.” — Marc Benioff

With the Tech Backlash, the industry is in a moral crisis of its own making. Technology is the most powerful force in society after institutions. When technology becomes an institution, or when technology companies grow to become institutions, the sheer power of unchecked natural monopolies will force a response from society and institutions. Especially when the technology shapes culture and politics.

The single underlying factor that gave rise to the Techlash is inward-facing corporate cultures. Cultures designed to self-serve towards pursuit of growing shareholder value. Even in consideration of an external stakeholder like customers, the intent of good service is largely shareholder profit.

Big Tech Culture Failure

Culture guides decisions, in and beyond the executive suite to produce outcomes, good or bad. Values are beliefs that frame culture, and looking back at outcomes they can be very telling.

Facebook’s “Move Fast and Break Things” helped achieve speed and agility at scale. Other companies adopted similar values in it’s wake, like WeWork’s “Tenacious…Be persistent and knock down walls–literally if you have to. You have our permission.”

In the growth at all societal costs phase of Tech culture, Google even edited out one of its core values.:“Don’t be evil. We believe strongly that in the long term, we will be better served — as shareholders and in all other ways — by a company that does good things for the world even if we forgo some short term gains.”

“I just think he [Travis] didn’t make it clear that legal and ethical [considerations] were more important than competitiveness. As a result, when left to their own devices, in a distributed organization where there was a lot of distributed power, that combination had people doing things that were out of bounds.” Ben Horowitz

CEO Dara Khosrowshahi noted as he acknowledged the failing Uber’s values “As we move from an era of growth at all costs to one of responsible growth, our culture needs to evolve.”

In pursuit of exponential growth, many tech companies failed to incorporate societal values, both internally (from sexual harassment to diversity and inclusion) and externally for the effect on external stakeholders. In Silicon Valley they say we learn from failure, and we have a lot to learn from.

Talent Strikes Back

In Tech, the most scarce and valuable input is talented people. Attracting and retaining these talented people is harder than any other industry except perhaps Finance, but in Tech compensation is driven by the long term incentive alignment of stock options. Ownership. As software is eating the world, and software is made of people, the effective norms for talent will extend from and beyond Tech.

The Google Walkout and other visible Tech employee activism are a cultural revolution against inward-facing corporate cultures that failed them. The employees-as-stakeholder had bought into Google’s Don’t Be Evil values that were part of it’s founding. But this value was astonishingly repealed. In Google’s case employees revolted against creating products that were being sold for evil.

Values for Big Tech

Tech corporate boards now have a third-eye above them, and a growing consciousness for how they impact their employee, customer, supplier and community stakeholders.

The pace of policy development, and especially consensus in the current climate, increasingly lags behind the innovative growth of Tech. Unfortunately, Political Risk will likely result in small measures with unintended effectiveness, that won’t keep societal transgressions in check and largely reinforce natural monopolies.

I would still take the values in your average Tech company over all most any other industry, but because the effect is greater the bar is higher. And now the pressure will force a change, that if not made will be a competitive disadvantage in for those that don’t reform.

Values for Startups

I used to find it funny how very early stage startups focused on culture. I saw startups kowtowing with free snacks to try and compete for talent with big companies that were effectively creating campus atmospheres complete with an onsite social life reminiscent of college. To me, a startup was a simple thing: make stuff, sell stuff, satisfy customers. Inspire and align on a mission and have people be adults and work at it. At the beginning, what mattered was products and markets. Corporate culture was the differentiator later, for the largest of companies like Southwest Airlines, at the top of organizational development pyramid:

With experience, like most S-curves of learning, when I got good at it, I realized how little I knew about practically putting culture to work. You can design an organization. It’s processes, knowledge flows and decision-making. And motivate people towards clear goals.

But the map you create isn’t the territory — both the true environment of work, and how decisions that add up get made.

The environment within your organization and how it intersects in the world is shaped by small interactions that can make people feel anything — respected, empowered, belonging, safe, or not. People can put aside their personal or shared feelings for the task at hand. But creative work is not just in the mind.

The best example of a corporate value in-action I’ve been a part of was at LinkedIn. The first value for making decisions is https://careers.linkedin.com/culture-and-values. LinkedIn’s customers are both individual members and the businesses hiring, marketing and selling to them. Down in the bowels of the organization there would be a product meeting where a proposed innovation, say for using data to market to members in an aggressive way, and someone at the table would point out that doing so would go against the Members First value.

The mistake I see startups making from the onset is to establish their Values and Virtues before they learn anything. By analogy fostering a community its better to let issues emerge before setting rules. Before product-market fit, you know very little about the organization you want to develop. My advice is to start with a very small list of values, 3 at most. Every year, review them, consider adopting a new one based on what you’ve learned. At some point stop revising and replacing them, and ratify them.

Further Reading

The thrust of this post is that corporate culture needs to be redefined with outward facing values to be responsible and sustainable. I focus on values, the beliefs of a culture, but putting this into practice is hard. Putting buzzwords from on-high on a poster in the lunchroom won’t get it done. I highly recommend Ben Horowitz’s new book “You Are What You Do” to help explore making culture change effective.

Next Play

I’m optimistic that Tech will learn from failure. I would still take the values in your average Tech company over all most any other industry, but because the effect is greater the bar is higher. And now the pressure will force a change, that if not made will be a competitive disadvantage in for those that don’t reform.

Photo by Oleg Laptev on Unsplash

(Cross-posted @ Medium | Ross Mayfield)