Peak Performance Newsletter #16 | On Culture: From Solo to Team and Beyond
Culture is unique because it is emergent. The impact of Founder DNA. The importance of modeling culture as a leader.
Culture is all the rage in business nowadays, and for good reason. Take it from the late great Peter Drucker himself: "Culture eats strategy for breakfast."
The ubiquitous sentiment is that culture is important, nay, culture is KING, and yet we also have no idea how to define and create good culture.
The reason for this is that good culture can't be created with a playbook. It can't be dragged-and-dropped between companies. Good culture is unique to the company. This is because culture is emergent, created by the unique niche of interactions between the company's people, partners, and market. Because of this, culture must be both discovered AND created.
In this post, I explore some thoughts on culture:
What is it? Where do we get stuck in conversations about it?
How is it created and where does it live?
How does it evolve from solopreneur to team and beyond?
This post is for leaders: those people tasked with creating and guiding culture to achieve desired ends. From this perspective, the post is about the process of uncovering, defining, and creating culture. Were I to write this from an employee perspective (beyond employee #10 or so), I would be writing about assessing cultural fit with the assumption that cultural creation is largely unavailable to you.
And with that, onward!
What is Culture?
So what is culture? A few definitions I've found highly useful:
"A pattern of shared basic assumptions that the group invented, discovered, or developed in learning to cope with its problems of external adaptation and internal integration, that have worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems."
Edgar H. Schein, Organizational Culture and Leadership
"How we do things around here."
Peter Drucker
And for a more textbook definition:
"Collective and shared values, beliefs, mindsets, behaviors, and habits."
All in all culture is how the collective feels, thinks, and therefore acts. It shows up most tangibly in relationships that group members have with each other and external partners and clients.
At its deepest level, culture shows up in how people relate to themselves in the context of the group. A person who is terrified of missing a deadline might have a personal problem, but it also has consequences for culture. The more widespread the internal relationship amongst teammates, the bigger the impact. The more people who are terrified of missing a deadline, the more it says about and has consequences for your culture and company at large.
Note that these definitions don't make any claims regarding what a good or bad culture is. At the core, there is no absolute good or bad culture. And there is no absolute regarding what is good or bad for culture. There are only habits, beliefs, mindsets and assumptions that either contribute or detract from the culture that you want to build. Generally speaking, the culture you want to build is dictated by:
The type of experience you want people to be having at and with your company
If that culture positively contributes to achieving performance objectives
To restate the above with this in mind: There are no actions that are good or bad for culture. There are only actions that create the type of experience you want your people to be having at and with your company, drive outcomes, both, or neither.
Tensions & Tradeoffs
One of the more challenging aspects of creating culture is balancing performance demands with the experience you want people to have. Every decision has a negative, positive, or neutral impact on each of these vectors. Many decisions have a tradeoff of varying magnitudes. One huge painpoint around culture is navigating situations that create tradeoffs between experience and performance. This may also appear as tradeoffs between two cultural values.
At the risk of oversimplifying: imagine a company with the values "Work Hard" and "Be Empathetic." Imagine a client has a project that will require the team to work 80 hours this week. Do you do it? Work hard tells us to gear up and get it done. Be empathetic tells us to take it easy on our team and renegotiate with the client. Or does it? Maybe we need to be empathetic with the client in this situation? Much cultural pain comes from situations that create tension between values. More on how to resolve this below.
Note that many of these tradeoffs are also driven by the context which the organization lives in. The team at YouTube has vastly different performance constraints and consequences than the team running a hospital. The level of expectation and demands that the hospital team may need to flex to in order to meet its objective, saving lives, would probably look downright pathological at YouTube. Many companies operate that way anyway.
Founder DNA: Where Culture Comes From
One good question to ask: where the hell does culture originally come from?
In my many years at early stage companies, I've noticed one trend over and over again: The Founding Team's personal psychology is inevitably inherited by the company at large.
I call this Founder DNA. Why does it happen?
Humans are social creatures. We're wired for hierarchy. Millenia of hierarchical evolution tell us that if you want to survive and thrive in a hierarchy, mirror the behavior of the person at the top. Get close to them, do things that make them happy, and avoid doing things that make them unhappy. Inevitably those people lower in the hierarchy start to mirror the tendencies of those at the top.
This can be exacerbated by hiring: if founders view their personal tendencies as superior without understanding their contextual pros and cons, they will inevitably hire people whose personalities mirror their own.
The result of these two tendencies is that founders strengths and blindspots tend to cascade across the company. A founder with a brutal action bias and little tendency for strategic thinking tends to build an org that does the same. An empathetic and thoughtful founder who shies away from conflict tends to build an empathetic, thoughtful, conflict-avoidant company.
The best way to combat this is for founders to:
Develop an awareness of their psychology tendencies
Develop compensatory mechanisms for their blindspots, these generally being systems and processes or hiring a complementary partner/leader
To use the examples above, a highly action-biased founder can compensate for lack of strategic thought by scheduling regular personal or team strategy sessions or hiring a highly strategic leader. A high EQ but conflict-avoidant founder can add some tenacity and grit to the org by learning to be more tenacious or hiring leaders who model that in appropriate places (sales, for example).
One important note: I didn't say hiring employees who have the countervailing strengths, I said leaders. Employees are too likely to cave into the cultural pressures of the organization and morph to the founders disposition, creating a miserable experience for them while failing to change the culture. A leader is much more likely to push for their strengths to live in the org.
Additionally, integrating compensatory mechanisms in the org inevitably introduces friction. You need someone who is positioned in such a way that they have both the leverage and incentives to move through that friction, creating a more integrated and healthily developed company.
This is much more art than science, but that's okay. Oftentimes awareness of the blindspots and a commitment to reconciling them is enough to get you on the right track. This leads me to one golden rule of creating culture:
As a leader, changing your culture requires changing yourself.
Culture when you're Solo
When you're solo, the seeds of culture lie in your relationship with yourself, as well as your first partners and clients.
It's hard to conceptualize culture when it's just you. But it's still there! Culture at an organization is how the group perceives, thinks, feels, and therefore acts. When you're alone, culture is how you do those things.
This combined with Founder DNA is why it's important to have self-awareness or a coach/therapist when you're solo (ideally both). If you're oblivious to your blindspots when you're alone, it's not only more painful for you, but you're blindly habituating blindspots that will cause loads of pain as you start to bring on partners and a team:
Beat yourself up every time you miss a goal? You'll do that with your partners and your team, and they'll start to do it to each other.
Have a total disdain for process? Plan aggressively but never followthrough? You bet that will be exacerbated and amplified as you bring more people in.
Have a total action bias and never plan? Always plan and slow to act? Shy away from big, scary challenges? Always attack big scary challenges without giving yourself adequate time to rest? Your team will absorb any and all of these behaviors like a sponge.
Work on culture early, primarily by working on your relationship with yourself and your first partners and clients. This paves the way for a great culture as your team grows.
Culture on a Team
Where Culture Lives and How to Influence it
For small teams, the place where culture is most evident is in the company's interactions, either within the team or between the team and its external stakeholders.
As a leader, one of your most powerful tools for changing culture is modeling behavior. Given the inheritance that is driven by Founder DNA, simply modeling the culture you want by treating team members, partners, goals, meetings, and processes in a particular way will go a long way.
For team members who don't adopt the desired cultural norms, you'll need to address it with those people directly. Introducing your second most powerful tool: as a leader, most cultural change lies in the second-order effects of your actions. Cultural change happens not in how folks change on the acute issue that you are addressing, but in how the way you address the issues influences them when they aren't working on that issue or directly interacting with you.
The culture lies in the meta. You need to be observing the effects of your effect. If someone struggles to perform and you berate them for it, they may get the project done faster, but you may have terrified them. Increased productivity now would have come at the cost of their future productivity via a lack of psychological safety.
Similarly, if you are aggressive with an employee regarding not treating partners well, you are signaling that you care about partners but also that you don't care about employees.
This is the central challenge of culture as an early-stage leader: You must consider the 1st-order, 2nd-order, and 3rd-order effects of every action and communication, as well as the intent and implicit assumptions it signals.
Getting culture right requires alignment between all of them.
Addressing Issues with Culture: When Cultural Pain is Cultural Opportunity
One issue I've seen at companies is the tendency to point to "cultural problems" while having no nuance for what that means. Generally, cultural issues can be root caused to one of four issues:
Culture is not defined
The definition of culture requires improvement
Developmental opportunity for the team
Wrong Fit
1) Culture is not defined. There's a question as to when culture needs to be defined at a company. One sure sign that it does: if you are talking about cultural issues. This is a sign that you have a sense of the culture that you do or don't want, and want to start to use this in the company's decision-making processes. As this point, it's imperative that you define culture. If not, you'll likely find yourself in circular conversations around culture, attempting to benchmark against something that you don't have defined.
At the center of culture definition are mission, vision, and value statements. The teams I've seen do this best choose leadership principles over values, as principles allow for more nuance regarding what is valued and how to live that value. I think Drift is an incredible example of this. Amazon too.
2) Defined culture requires improvement. So your culture is defined, but you're still having issues. And you can't quite point to your definition for why the issues are at odds with your cultural objectives. Perhaps you find that one or more of your cultural principles are in conflict.
This is a surefire sign that you need to level up your culture as defined. Generally the definition needs to be leveled up if:
Aspects are explicitly misaligned: ie experiential values don't align with performance needs, or two values explicitly conflict
Ill-defined: the definition just isn't sufficient. It doesn't tell us enough about how we actually do things around here. This is a huge issue, especially for larger companies that rush culture definition because they want to be able to talk about it, rather than live it.
Implicit misalignment or insufficient nuance: Defining culture is hard. If cultural principles are well-defined but there are still issues, it's likely because people are unclear on how to bring all of the principles into alignment. What is their priority rank? What gets precedent if you suspect there is misalignment and how do you address that? Cultural difficulties are huge opportunities to ask yourself what exactly you mean by the culture that you have defined.
3) Developmental opportunities. Even the perfectly defined culture can be a challenge to live. As a leader, it's important to understand that issues attributed to culture can be developmental opportunities for everyone involved. It's one thing to define a culture. It's another to embody it.
One key to addressing cultural issues as a founder: you must model cultural values as you address issues. If you have an issue with an employee being perceived as aggressive at a company that values empathy and you proceed to address that aggressively, you are signaling a huge contradiction to the employee "we are empathetic here, except to you and your aggression." If an employee is being too action-biased at a company that values thoughtfulness, you mustn't be action-biased in addressing the bias. You must model strategic thoughtfulness.
A leader must live values in full alignment. They must model the principles the company strives for at all times, especially when those principles are challenged and the leader is personally triggered or activated.
4) Bad fit. If a culture is well-defined and the team has taken many attempts to develop and integrate an issues, it might signal that it isn't a right fit. This makes no normative judgments of the person, it's equally as likely that the company is insufficiently equipped to develop or understand and integrate them. Either way, there is a point in time where it makes sense to part ways.
Resource on Culture
Below are some of my favorite resources on culture. Much of this comes from my experience at early stage companies. Scaling culture beyond 25-50 employees is something else entirely. These resources can helps:
Extreme Ownership (for leaders)
In Summary
Culture is unique to the company
Culture is an emergent property of the unique ecosystem of the company (employees, partners, market)
Culture is continuously discovered, created, and developed
Culture is most evident in the relationships individuals have with themselves and others
There are no good or bad cultures, only cultures which are better or worse fits for the objectives of the company and the experience you want people to have in relationship to your organization
The basic requirements of your culture are partially inherited from the mission, context, and therefore performance demands of your organization
Cultural pain normally arises from the contextual tradeoffs between the experience you want people to have and the performance requirements of the company
Early-stage culture tend to correlate directly with the Founding Team's personal strengths and blindspots. I call this Founder DNA.
This can be reconciled with a healthy awareness and ongoing compensatory mechanisms. Mechanisms include systems and processes that address the blindspots or by hiring leaders for whom the blindspot is a strength.
Addressing blindspots will create friction. It takes work for an organization to integrate people with countervailing tendencies into the org in a way that is additive or, if done well, multiplicative.
When you're solo, culture is in your relationship with yourself and your earliest partners and clients. It's important to address dysfunction then, both for your own sake and the sake of your eventual partners and team.
As a Leader, the best way to influence culture is model it
When modeling culture, you must seek to be aligned in the 1st, 2nd, 3rd, and nth order effects of your action
To remediate cultural pain, move through these four steps:
Ensure culture is rigorously defined
Improve the definition as edge cases emerge
Develop team members who struggle to meet cultural benchmarks
Know when to call it quits and part ways
No newsletter last week. A few projects ramped up and I've been feeling the wintry desire to hibernate. I was disappointed in myself, but quickly realized I needed to accept reality and get back on the horse for this weeks. In the moments when I fall off the proverbial horse, I return to a quote from Atomic Habits by James Clear:
"Never Miss Twice. The first mistake is never the one that ruins you. When successful people fail, they rebound quickly."