Transcript - The View from the Top – May 19, 2015 - Company Culture
Meredith: We got such great positive feedback from the audience that we wanted to continue our discussion through a series of podcasts. My name is Meredith Haviland. I’m a partner at Foley Hoag, and I do a lot of work with companies from start-up phase through their exits. And I’m joined today by Marina Hatsopoulos, who’s a director, Angel investor, and entrepreneur.
Marina, one of the topics that people keep talking about it corporate culture, why it’s important, what it means, and what we should all be thinking about. In your role as a former CEO, what’s your view on corporate culture?
Marina: I think corporate culture is extremely important. It’s something that can really help a company to be successful and help it to make very good hires. And as a company grows, it becomes increasingly important for the CEO not just to behave in a way that’s consistent with the culture that it wants to pervade, but also to articulate that culture. And that’s important because in the early days, you have direct interaction with all your employees pretty much on a day-to-day basis. But then as the company grows, you may not be directly interfacing with each employee every day or even at all. And so it becomes very important to articulate the culture and the values of the company.
Meredith: So I know that Diane Hessan of the Startup Institute has referenced the CEO as the chief culture officer and, in fact, has made the point that it’s not something that you should or can delegate to the HR department. And obviously when we’re talking about new hires and developing a reputation and bringing more people on board, especially as the company grows, a lot of people think of that as an HR function. How do you think a company should approach that, and how do you make sure that the people who are interfacing with your new hires are, in fact, aware of your corporate culture?
Marina: Yeah. I don’t think it’s something you can delegate. I think this is one of those things that have to come from the top down from the CEO, and it comes down in the CEO’s behavior in every interaction. And so sometimes those are difficult. And so these can be things like, in our organization it was really important to delegate and to give decision-making authority to the lowest possible level because those are the people who have are - - have their feet on the street, who have the most information to make decisions.
But then you have to live by that, and sometimes that’s difficult because if you’re a control freak, as many CEOs are, then you may want to jump in and actually make a decision yourself. And so it means really living by those articulated values. And in terms of how to articulate it, one thing I did is whenever we brought in new employees, I sat with them, and I had some PowerPoints on the company, and included in that were points about our culture. And so we made sure actually before we hire them even to talk about some of the points. Like in our case everyone was in a cubicle. You weren’t going to earn your way up to a fancy corner office. That was just against our culture. Things like that. We were kind of scrappy, so people had a large ownership in equity, but we weren’t paying out huge cash bonuses. That was sort of a financial philosophical decision, but it really pervades the culture in every aspect.
Meredith: So a lot of companies start with maybe not just one founder. They might have cofounders. And obviously as things grow, you might have more than one person at the top so to speak. Have you had any instances or experience either in your role as CEO or maybe as an investor or a director on a board where you’ve seen founders or cofounders that have competing corporate cultures?
Marina: Yeah. And that’s tricky. And at the end of the day, it kind of depends on who has the stronger way to make things happen or also who has more interaction with people. So if you have a sort of absentee CEO or whatever role, where they’re not interacting with people a lot, they’re going to have much less impact on the culture than somebody who might even be at a lower level but who is there all the time and really actively making their belief system part of the ethos of the group. But, yeah, it is - - it’s tricky. And as a director that’s something that I think is really important. And so when I’m working with young CEOs who may not have thought that much about it, or they may think of culture slightly differently, I really work hard to articulate what I think are important values to get them to buy into it.
So, for example, a start-up might say, yeah, we are very supportive, like they view that as being a part of the culture, which is great, very positive, very supportive. But I as a director may come in and say, that’s great and that’s good, but you also want accountability. And so we can’t always be positive rah-rah-rah if somebody’s not delivering results. And so there has to be a way to reconcile. They’re not necessarily diametrically opposing, but a more enriched culture, I would say.
And so to that particular perspective, one thing I’ve talked a lot with start-up CEOs about is this issue of results versus activity because you can get into this loop of like extraordinary activity, but not really delivering results. And you can - - activity makes you feel because you feel like you’re doing something. But then when you stand back, you may realize you’re not actually pushing the ball forward necessarily.
Meredith: Interesting. And it sounds like from your perspective, since it’s something you can’t delegate, that a CEO that has a strong vision of corporate culture, it’s really important that he or she maintain the connection with the employees and others.
Meredith: How about - - how do you make sure that your corporate culture is - - kind of permeates the business including to outside people, maybe your customer base or otherwise?
Marina: Yeah. That’s really, really tough. One thing I did as CEO is I talked to our customers. So every Friday afternoon I would just get the names of ten customers and just call them up randomly and have a direct interaction with them. And that gave me a little bit of insight as to their interactions with the company. Maybe a service tech had just visited there that week or whatever. And so it would give me a little bit of a triangulation as to whether we were living by our culture. But that’s tough. It’s really touch, and yet you see it. It works.
I’m sure you’ve had this experience that I’ve had where certain organizations, they can be profits or nonprofits or small or large, but it does pervade an organization to every level. And it’s not even like the companies that pay the most get the best. It’s not like that. It’s something - - something that you can feel in every interaction you have with the company.
Meredith: It’s interesting that you bring up the point about it not being necessarily - - the places that someone might want to work may not be the place where they will receive the highest pay. I know that there’s been a lot of talk recently about millennials and how they’re facing corporate culture, whether it’s from a branding perspective and potentially you want to brand to them and bring them in as a customer of your business, but maybe it’s even somebody that you want to hire in, and you want to attract millennials into your workplace.
And I know that Maia Heymann of CommonAngels has said that corporate culture and values that resonate with millennials are considered a competitive advantage in attracting and hiring talent. Have you had any experience again in one of your multiple roles with companies that are struggling with that, with trying to be able to attract millennials, recognizing that they may not be looking for the biggest paycheck, but they’re really looking for the best place to work?
Marina: No, I’ve definitely experienced that. And it’s actually so refreshing. I really appreciate that, that the millennials are looking for something more. And generally there’s - - you can - - depending on what the business is, there’s an angle there to be pushed ideally to make that argument to make something look attractive. And generally, and I found this even with an older generation, the start-up culture in and of itself involves risk taking. It involves being a little bit of a pioneer. It involves being a little bit of a rebel. And there are people for whom that resonates, and there are people for whom it doesn’t.
And I’ve had it where even millennials - - there was a millennial I worked with who was at a very high level of a start-up. And she was just really struggling because she said, well, I just don’t know if this is going to be successful. And if it’s not successful, I’m getting paid below market. And she had a huge equity stake in the company. And she was just really uncomfortable grappling with it because she was very marketable. She could make a lot more cash salary somewhere else. And I said to her, you have to buy into this. It’s not for everyone. And if it’s not for you, that’s fine. There’s nothing wrong with that, and you should definitely go and get your cash salary. And she did. She left.
Meredith: How do you find - - thinking of a start-up and sort of the life cycle of a start-up, there’s a lot of changes. Sometimes there may be founders who leave, maybe a new CEO. I think one common change is frequently through various stages of financing, you do bring on different directors. And again just curious what your view is or what your experience has been with those changing personnel. Have you seen corporate cultures change? Have you seen them try and maintain what the initial founder set out to do? And have you seen good experiences with changing corporate cultures?
Marina: Yeah, I have. And it’s kind of ugly in the transition when two people are butting heads. But ultimately I think that can often be a great growth experience for an organization and can lead to a much richer culture. And so ultimately, ideally, you’re kind of getting the best of both worlds. So I’ve seen it on a board level where you’ll have a new director come on board who might want to take control or be very authoritarian or try to be more visionary. But there may be - - and that may rub everyone the wrong way, but then at the end of the day there’s a piece of that that stays on that was needed. And so ultimately after you get through the difficult transition, I think that can often be a very positive factor.
Meredith: And I hear a lot today about this notion of being real and how important it is to be real both for your employees and for your customer base and how if you’re not real, people will see right through it, and in today’s’ market that just doesn’t cut it. I’m curious your experiences with that. Have you - - do you feel the same way? Have you seen companies who are trying to do something that just doesn’t fit their corporate culture and, therefore, that real factor just isn’t there, and it’s the negative to their business?
Marina: Yeah. So here’s the tricky part is being real is incredibly important to a brand, and the question becomes how you translate that. It’s all in the details, right. And so I have worked with a company where for one of the individuals being real meant never paying for advertising. You either got it for free or you didn’t get it at all. But you can’t grow a business that way. And so that involved some transition to kind of say, yes, we want to be real. However, we also want to build the business. And so how can we reconcile what this initial individual saw as two opposing concepts and reconcile them into one? We can be real and advertise. And so it’s tricky. It does all get to the details and into kind of changing people’s perspective over things.
Meredith: And what would you view - - obviously companies have different corporate cultures. It doesn’t make one better than the other necessarily. There may be different reasons for those different cultures and attract different customer bases, different employees. What - - do you think there are common traits to a healthy corporate culture?
Marina: I do. I have - - I think there are a few. So one is - - and this is a really tough one, but it’s this sense of excellence and quality, but not perfection. And that’s a tough line to not cross over. So it means not being sloppy. It means not sort of doing things without adequate effort and that sort of thing. But it also means knowing when it’s time to move on and go to the next step because ultimately perfection can really hamper a company’s ability to grow. So it’s - - it’s very tough to articulate, and again it’s all in the details, and it’s all in the behavior on those day-to-day decisions. But the sense of excellence is something that you see in an organization. And you’ll see it in every interaction you have with them, whether it’s on their software, whether it’s having a problem, a customer service issue. At every level of the organization when you’re dealing with them, you’ll be treated respectfully. They won’t let things fall through the cracks, and - - but that doesn’t mean it’s perfection, meaning like the whole company comes to a standstill to solve your one problem. It may mean that they say, we’re on it, and we’ll get back to you in 48 hours to solve it. That kind of thing. It’s this balance.
And then another, I think, very important part of culture, but - - at least this was very important to us at Z Corporation, and I think it’s somewhat personality driven, so I don’t think this is necessarily for everyone. But as CEO I really objected to people kissing up and just agreeing with whatever I said because to me if you’re just going to agree with what I say, you’re not adding any value, and I don’t need you. And so we had a tremendous amount of healthy debate, and that didn’t mean it was dysfunctional. It didn’t mean we were angry at each other.
But it meant if someone had a position on something, they would fight for it, and we would argue and argue and argue our points, and so that we would try to convince the other one why we were right. And it’s that argument that ultimately, I believe, led to much better decision-making than any one of us could have done on our own. And it’s tough with - - depending on the personalities, that is not always easy to make it work. You need people with a little bit of a thick skin who are going to let it fall off when the meeting’s over, and you also need very clear decision-making authority.
So you need to know at the end of the day, I’m going to fight, fight, fight this point, but this is a sales issue, not a strategic issue, so the VP of sales is going to make it. I’m not going to make it as CEO. I’m going to fight with him about it. I’m going to argue with him, but at the end of the day we’re going to walk out of this meeting, and we’re going to be arm in arm agreed with whatever he decides to do.
Meredith: So it sounds like it’s really important, especially in the leadership ranks of a company, that everyone in the room understands and appreciates the way that the others work and approach these types of issues.
Marina: Exactly. Another one that a CEO will have many opportunities to display is admitting mistakes. And that’s extremely important, and I think all good organizations know how to do that well. And that’s everything from the smallest mistake to the largest mistake, and we all know. We’ve all experienced this in the real world where a company does something wrong, and it could be something pretty bad. But if they are forthcoming about it, and they admit it, and they take responsibility, people will cut them slack. They just want to be dealt with respectfully and honestly.
Meredith: And in this day and age of social media, you had sort of mentioned before sort of immediately or semi-immediately making sure you respond to customers or others. How do you view social media as playing into that and kind of the way that things can blow up before someone even has a chance to respond?
Marina: Yeah. Well, first of all, with social media it just blows my mind how willing people are to behave so poorly in this day and age when everybody has a camera on their phone. So just a little bit of awareness, and this is something that we also made a big deal about at Z Corp., which is any email you write, it’s - - imagine it plastered on a billboard on the Mass Pike. So anything you write, imagine it plastered on a billboard. And so just having some awareness ahead of time that anything you do can and will be held against you.
But then also social media is a great opportunity, though, to admit your mistakes, to get right on it immediately, and address the audience directly. And so I think being on top of it is really important and not letting time go by, not being silent. I think this notion that, well, I’m just playing into it if I engage. No, no. If you did something wrong, you need to get right in there and settle it and be done with it. And so I think too often people hope that if they’re silent, it’ll go away, and generally I don’t think that’s a winning strategy.
Meredith: We talked a lot about start-ups, and I think it’s safe to say that any company that’s forming in this day and age would be on top of social media and understand its implications. I think we’ve also seen situations of well-established companies that have been in existence for a long time try and enter the social media market and maybe not pay as much attention to what’s actually happening there. How do you think kind of a half-entry into social media can impact a corporate culture?
Marina: Yeah. It depends - - I guess it depends on how much the senior management is really plugged into that, and that’s tough. It depends also on whether their customers are really plugged into social media as to whether that’s worth that investment because it is - - it’s a big investment in time and resources to really stay on it, and it can become a little bit of a time sink. That can become something that feeds this frenzy of activity, but isn’t necessarily delivering results. And so it - - that’s very business specific.
Meredith: And what would be - - if you had to kind of boil down everything we’ve been talking about into one or two tidbits for a new CEO, someone who’s coming into a company, maybe they didn’t found it, but they’re about to start as CEO, do you have any tips that you would pass along as far as ways to both understand the corporate culture, maybe suggest changes to the corporate culture, or how to really get that assimilation?
Marina: Well, I think one important thing to do very early on entering an organization at any level is to talk to everybody within the organization at all levels and just listen, listening in to what they think about the organization, what they think could be done better, what they think is already being done well, so really understanding the lay of the land before going in with any preconceived notions, because a lot of times things can be working really well, and it may be very different than what you might think or expect. And then getting advice from mentors, I’m a huge believer in talking to people who have already done it before and getting their thoughts and ideas. But I think you can only bring in your own new ideas and new ways of thinking about it after you understand what’s already there.
Meredith: Well, great. Well, thank you very much, Marina. This has been extremely useful, and I think we’ve talked about a lot of impact on corporate culture that one could have in a leadership position and a lot of other things to think about.
Marina: Well, it’s my pleasure. It’s a great topic.