In Real Leaders Don't Follow, author Steve Tobak explains how real entrepreneurs can start, build, and run successful companies in highly competitive global markets. He provides unique insights from an insider perspective to help you make better-informed business and leadership decisions. In this edited excerpt, Tobak explains what business owners need to do to create a company culture that breeds success.
Ask CEOs about company culture -- what it is and why it matters -- and you’ll get 10 different answers. The funny thing is, that’s exactly as it should be. This is one of those rare instances when a vague definition may actually be a good thing.
That said, there are certain principles that seem to work well to create a company culture people want to emulate. Here’s my take on what works, what doesn’t work, and why.
1. Push for empowerment, not engagement.
The good folks at Gallup and other consulting firms have turned employee engagement into an enormous moneymaking fad. But for decades, innovative entrepreneurs and business leaders have been creating company cultures that go far beyond engaging employees by empowering them to make a real difference.
Let’s not mince words. Employee engagement is just employee satisfaction 2.0. Sure, Gallup added the words involvement and commitment to the definition, but that’s nothing new. More important, I don’t believe that what Gallup or anyone else is selling necessarily leads to greater productivity, higher customer engagement, or improved operating results.
The way to do that isn’t by engaging or manipulating employees. What you do is empower them to make a real difference by investing in them, trusting them with responsibility, and truly making them part of the company.
Give employees what they value most:
A chance to have a real impact
As much responsibility as they can handle
An environment that challenges them to reach new heights and mentors to help them do it
Exceptionally competent and driven managers who work as hard as they do, if not harder
A successful, growing company that makes great products that customers love
A piece of the action
Employees want leaders who don’t just say they believe in them but who put their money and their faith where their mouths are. Good leadership fosters meritocracy -- in which employees are promoted and rewarded based on achievement and talent -- so they know that success at the company is based solely on their abilities.
2. Create a cult-like culture.
How do some leaders inspire such fanatical devotion from employees? And how do they manage to retain that loyalty and dedication as the company grows? The answer may surprise you.
These days, every entrepreneur wants to change the world, dress like Steve Jobs or Mark Zuckerberg, and let employees bring their dogs to work or some other such nonsense. None of that has anything to do with company culture. Cult-like culture comes from the beliefs and behaviors of entrepreneurs who are driven by passion, let nothing stand in their way, and follow no one. They do things their own way. If it works, they document and attempt to scale it. And if that works, the result is a highly successful company with a culture they’ve built around their own unique beliefs and behaviors.
Take Trader Joe’s founder Joe Coulombe, for example. You would imagine the guy who came up with those tropical-themed markets with all that great booze would be a Jimmy Buffett party-animal type. In fact, Coulombe was a Stanford MBA who, after running a handful of Los Angeles-based convenience stores, came up with an idea that upwardly mobile college grads might want something better than 7-Eleven. That simple idea led to everything else that made the company successful and its culture unique.
Since 747s were just beginning to make travel to tropical locations a whole lot easier, Coulombe used that for the theme of his first market in Pasadena, which opened in 1967. He stocked it with good wine and booze simply because he’d read that educated people drank more. Then he hired good people, paid them a living wage, and voila, the formula worked. The company has virtually no turnover to this day.
3. Think (and act) different.
The status quo is without a doubt the most insidious source of business bureaucracy. It erodes effectiveness, productivity, and competitiveness and destroys morale in the process. Behind most great company cultures is a CEO who doesn’t just see things differently but has the confidence and courage to fight the status quo and do things differently.
Apple may have the most unusual culture of any large company, but that’s mostly a function of putting the product and the customer experience first. It’s no accident that the Cupertino giant’s culture is as distinct as its products are groundbreaking -- one leads to the other. From the beginning, employees learn to "Think Different." It’s not written anywhere and there are few processes to follow, but they learn it just the same. Think Different isn’t just a tagline from an ad campaign; it’s a mindset that captures and reinforces the company’s unique culture, the way it operates from top to bottom. And it works, big time.
Concepts like conventional wisdom and status quo don’t exist at Apple. It does everything its own way and on its own schedule. In an era when everyone craves information, no company controls the message and content better. Transparency is for everyone else. Apple is famously secretive.
By putting the emphasis on the product and the customer experience, Apple frees its employees from all the usual corporate bullshit so they can actually do their best work. And that’s the benefit for leaders with the vision to see things differently and the courage to challenge the status quo.
4. Hire the best, organize the least.
If human capital is your primary asset and your culture defines what your employees are supposed to believe and how they’re supposed to behave, how do you expect that to work unless you hire the right people? And how do you expect to retain them unless you give them the attention they need and deserve?
I know this is one of the trickiest aspects of running a company. I’ve known dozens of business owners who couldn’t hire the right people or keep them motivated to save their lives. The reason? They simply don’t make it a priority. The one thing that most successful companies have in common is that their founders made hiring and retention a priority. And whatever process they used to do that effectively became part of the company culture.
Think about it. If you take any society and begin diluting it with people who simply don’t fit, in time you’ll lose whatever it is that distinguished that society. That’s why recruiting and retention are so critical to the success of any company. Not only are bad hires and losing good people extremely costly in the short term, but they weaken the culture over the long term as well.
My only caveat: This is one of the few things a CEO should be hands-on with. That doesn’t mean you have to be involved in every single interview and organizational decision, but since these are the people you need to do great work and they have to be organized in the most effective way, you can’t afford to delegate how that takes place or the responsibility for the outcome.
My only specific advice: Implement the flattest and simplest structure and the fewest processes that will facilitate desired behavior and outcomes. Keep in mind that the most valuable corporation on earth, Apple, has just ten senior executives and eight board directors, and that’s counting Cook twice. With the right people in the right roles, you don’t need many.