Lead Through Culture

This is the seventh in a series of dialogs between a new CEO and an experienced mentor in dealing with a tough business issue. Follow @2020outlook on Twitter or enter your email address in the right column to be notified each time a new dialog is available for reading and comment. Thank you for your suggestions.

“Culture differentiates great companies from the merely good ones. Getting culture right creates continual momentum that doesn’t have to be driven from above.”

Brett Hurt
CEO, Bazaarvoice
Former CEO and co-founder, CoreMetrics

“Every day’s a holiday when you love what you’re doing, right?”

Brett laughed at Diana’s comment. “Right, at least if you love to create businesses. We haven’t talked in quite awhile. Making any progress?”

Having succeeded in starting several companies from scratch, Brett was in demand as an advisor. Diana was a driven leader who’d impressed him several years before in his Commercialization and Entrepreneurship courses, and he was considering accepting a place on the board of her two-year-old company.

“What’s your definition of progress?” Diana laughed. “We’re definitely beyond startup and into running an established company. We passed breakeven almost a year ago, and I guess that’s a milestone.”

“Do I hear a ‘but’ in that statement?” Brett asked.

“Definitely. I love being able to focus more on running the company now, instead of chasing after more investment all the time. That said, I seem to be stuck in a rut where every day I solve operational issues and manage cash, then I go home. That’s important, of course, but it’s not enough to grow the business.”

Brett asked, “Do you have the talented managers you need? Are you trying to do it all by yourself?”

“Talent really isn’t the problem. I’ve been careful to hire people as smart or smarter than me, and no jerks. You taught me in grad school how basic that is. No, it’s more that they always look to me for direction. The basic intelligence is there, but something’s missing.”

“Hmm, that’s not a good sign. I thought you said you were careful in hiring.”

“Ouch,” Diana smiled. “Yes, I was careful, and they all exhibited that ‘striver’ mentality I look for – you know, people that aren’t afraid to try something new in order to accomplish big goals. But, somehow that trait isn’t showing up regularly, and I don’t know why.”

“Got an example?”

“Sure. I found out last week that we missed out on a big deal with a client that we work with all the time. We have a customer service rep who heard about it. He helps them build solutions but didn’t hand it off. He explained that he was focused on making the customer happy at the time. I asked his VP about it and she said she was really sorry but her primary department focus is on meeting service metrics.”

“How big a deal was it? Could you get back in the running?”

“No, that’s the problem. The deadline for RFPs came and went. The customer didn’t notify us because they weren’t aware that we have capabilities that match. It was disappointing.”

Brett shook his head. “That’s a real problem, and I wonder if it’s a culture problem.”

Diana sighed. “Gee, I hope not. What kind of culture problem could it be? Everyone here is top-notch technically and they all work hard. We run people through an incredibly involved interview process to make sure they have the right stuff. What am I doing wrong?”

“It may not be anything you’re doing, but it may be something you’re not doing. How do you measure performance across the company?”

“We collect metrics on everything we do. Since social media is a big component of our solutions, it’s important to track users at every step, and it’s not hard to do since everything happens on-line.  I have reports available to track sales, support, QA, development, projects – everything. So I can’t see how measuring is the problem.”

“OK, let’s turn it around. Could measuring actually be the problem?”

“Wait a minute,” said Diana. “I remember one of your famous sayings from class: ‘if you can’t measure it, you can’t manage it’ – isn’t that right?”

“Yes, I did say that, but it’s still possible to pay too much attention to one guideline and lose track of the big picture. Look, you were a star among many in my classes, and I’ll bet you’ve got things buttoned down really well when it comes to management tools. What I’m wondering, though, is what’s the general backdrop to using those tools? I mean, is everyone on the same page about the business?”

“Oh, I’m sure of that. Since the first day I’ve been as transparent as possible about the numbers and how we’re doing financially. We have monthly meetings that let everyone in the company know how we’re doing, and everyone sees each department’s key metrics.”

“Well, yes, that’s good. Getting everyone’s involvement is hard if they don’t trust you and think you’re keeping something from them, but there’s a bigger issue.”

Brett went on. “Here’s the issue that may be causing your frustration. In your zeal to keep everyone focused on individual and department performance, they can lose sight of the bigger picture, and-”

Diana blurted out, “But they do have the bigger picture! I lay out the numbers for them all the time. Uh… sorry for interrupting, but I try really hard to keep them posted so they can see how they’re doing.”

“Yes, you do. Does everyone understand how important their role is to driving revenue? Sales knows that for sure, and Marketing, but what about procurement? QA? admin staff? Look, I can’t know from just this one discussion, but it sounds like the culture is all about technology metrics and financial metrics, but maybe lost in the shuffle is how important it is to work together in order to win customers’ hearts.”

He continued. “OK, here’s a statistic that’s held up for a long, long time. Depending on whose numbers you believe, it costs five to ten times as much to gain a new customer as it does to keep one. That’s not the precise issue for you, but it’s related. If you build deep relationships with customers to the point that they’d rather do business with you first rather than look elsewhere, then being left out of opportunities will be much less likely.”

Diana asked, “Are you suggesting that the customer would have come to us with the deal even if they were unsure whether we could help them?”

“That’s exactly what I’m saying. Much of the technology and services in this new social media world becomes quickly commoditized. In the end, it’s the relationships you build that maximize your chances of success.”

Diana looked straight into his eyes. “I think you’re right, and it’s amazing you could see that without walking around my company. So, how can I fix this?”

Brett smiled and said, “It’s not hard, since you’ve already established some great cultural principles. Start by examining your own relationships with customers and learn how you can improve. Then guide your company toward a higher level of sensitivity about growing and keeping customer relationships. You’ll discover the right ways to do it, like employee circles and perhaps some outside organizational advising. Just remember – it will flow from what you model and what you expect from everyone else.”

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