When It Comes to Culture, You Can Be Right, or You Can Be Successful

Apply the lessons of product design to your company culture

Originally published on NewCo Shift

Every founder understands the importance of culture in the long-term success of their company. Yet rather than valuing and supporting all employees, organizations like Uber still manage to build a toxic, poisonous one. How does this happen, and what can you as a founder do to prevent it?

We’re still in the early days of understanding how to build great culture. However, the barriers to doing so are surprisingly similar to another area where we’ve come leaps and bounds in the last decade: Creating great products. The similarities in their problems mean the tactics for solving them should be portable, too. In both cases, the barrier is essentially:

You’re creating for someone else, and they get to decide whether you succeeded.

Your opinion matters, but only as part of the feedback loop between your work and the outside world. Eric Reis and Steve Blank have done a great job of teaching us that facts live outside the building, and the real test is to go find them. You can’t rely on your own perspective, because you’re not the ones deciding whether to buy.

A product solves a specific problem for a specific customer, whose perfect solution might fail the very same problem on another person. When it comes to testing your product, the only experience that matters is that of your target customer. Failing them is failing full stop.

Your culture has the same need to dial into your audience. As the founder, it doesn’t matter what you think of the company’s culture. It’s not for you. But for better or worse, you do get to decide who your culture is for. A lot of these failures of culture are actually the CEO making bad decisions about who the culture is for.

For example, we all know stories of toxic employees driving other people out of the company. The excuse we hear is that this person is “too important to fire.” It’s presented as a choice between firing this person or making some people uncomfortable, in which case it’s easy to keep this high performer around. But that’s not actually the choice you’re making.

When you choose not to fire someone who harasses women, what you’re really saying is, “This person is more important to my company than women are.”

You’d rather your organization and leadership discriminate against women, have them leave your company, and have your people and teams suffer all the psychological damage that results from choosing to protect one person over a whole class of people.

It’s the same for an employee who discriminates against minorities, veterans, disabled people, or any other group. You can keep that one person, or keep the ability to hire from that entire labor pool.

Of course, that toxic person won’t actually prevent you from hiring from a whole group. That would actually be better in the long run. Instead, you’ll hire a few, but they’ll only stick around long enough to be almost valuable to you. People who stick around for one to two years are incredibly expensive - but your toxic employee will cause them to leave. You get to pay to recruit and replace them, to train them up, to watch teams form, and then to watch them fall apart again. And again. All because you couldn’t make a hard call on one person.

Conveniently, you’ll then be able to look back after a couple of years and say that these people who left just didn’t fit in, as though it’s somehow their fault that you’ve designed an organization that excludes them as target users.

I think there’s a strong moral case to made for inclusion, but you don’t need it. All you need is basic economics. Great people are scarce, and every group you exclude reduces that pool even further. Your investors want you to have the biggest possible user base to increase your addressable market; don’t you also want the largest possible employee base? Women are 51% of the population, and in the US, whites make up 72% of the population. If you only hire white men, with maybe trifling exceptions, then your target market is only 36% of the country. Reduce to just the working age population, and you’re at 22% of the pool. And that’s before you slice for experience, location, etc., much less silly requirements like a degree from an elite school and experience working at Google or Facebook. Every demographic you exclude reduces your possible employee base, and with it your chance for building a great business.

Let’s say I’ve convinced you. You have to design your organization to include other groups. Now what do you do to ensure it’s working for them?

Again, the facts live outside the building. Even worse, as the founder you don’t get the truth. Most people do not speak truth to power because they either feel unsafe, or actually are. Even worse, most powerful people don’t want to hear it. This attitude helps explain why a lot of cultures are so broken. You have to fight your instincts, your comfort, and often, your happiness to get the truth from those who own it.

In the fall of 2014, I had dinner with eight women who worked at my company. This was my most difficult experience as CEO. They were pissed off. Their experience was very different from what I thought was happening, and hearing it directly from them hurt.

I realized in hindsight that I’d made the tactical mistake of collecting the most upset women in the company - getting together with everyone who was having the worst experience- but that didn’t make their experiences any less valid or their feedback any less important.

Thankfully, I was aware of some aspects of what they were struggling with, and I was able to point to three separate projects I was working on, all with defined goals, owners, and deadlines, that would target what I thought were the biggest issues. But I had not realized how bad it was for them, and I was far from achieving my own goals in this area.

My behavior as a result of that dinner would make an explicit statement about who my company was for. I could have taken that deep pain, that searing discomfort, and run from it. I mean, I didn’t experience any of that, and all I had was these whiny women who had this problem. Right?

Would you accept that with your product? Would you dismiss the feedback of eight customers who were on the verge of dumping your product? Would you look at their feedback and say, well, it’s just eight whiny users, I can ignore them?

Many founders choose this path in culture. They keep around the bad managers, the toxic star player, or the oppressive HR policy. But like with your modern software, you have the opportunity - and I say the obligation - to do better.

So go, build your best culture, set high standards for your team. But be very clear about whose feedback you rely on to test whether you’re meeting those standards. If your goal is inclusion and diversity, which it absolutely should be, then you need to listen, really listen to diverse voices, and to those who are systematically excluded from most organizations.

If you can do this, you can emulate the Dodgers hiring Jackie Robinson and the Sorbonne University promoting Marie Curie as the first woman professor of general physics. If not, you will find yourself competing with them instead.