What You Do Is Who You Are: How to Create Your Business Culture

What You Do Is Who You Are: How to Create Your Business Culture Ben Horowitz Ben Horowitz, a leading venture capitalist, modern management expert, and New York Times bestselling author combines lessons both from history and modern organisational practice with practical and often surprising advice to help us build cultures that can weather both good and bad times. The times and circumstances in which people were raised often shape them – yet a few leaders have managed to shape their times. In this follow-up to the bestselling business classic The Hard Thing About Hard Things, Ben Horowitz turns his attention to a question crucial to every organisation: How do you create and sustain the culture you want? This book is a journey through cultures ancient to modern, spotlighting models of leadership and culture-building from the samurai to prison gangs. Along the way, it answers fundamental questions: Who are we? How do people talk about us when we’re not around? How do we treat our customers? Can we be trusted?  Because who you are is not the values you list on the wall. It’s not what you say in a company-wide meeting. It’s not your marketing campaign. It’s not even what you believe. Who you are is what you do. This book will help you do the things needed to become the kind of leader you want to be – and others want to follow. WHAT YOU DO IS WHO YOU ARE HOW TO CREATE YOUR BUSINESS CULTURE Ben Horowitz Copyright (#u90ada14f-717f-5c57-ba46-68a0f789ed63) William Collins An imprint of HarperCollinsPublishers 1 London Bridge Street London SE1 9GF www.WilliamCollinsBooks.co.uk (http://www.WilliamCollinsBooks.co.uk) This eBook first published in Great Britain by William Collins in 2019 Copyright © Ben Horowitz 2019 Cover design by Andrew Guinn Jacket photograph © Beowulf Sheehan Ben Horowitz asserts the moral right to be identified as the author of this work A catalogue record for this book is available from the British Library Information on previously published material appears here (#litres_trial_promo). All rights reserved under International and Pan-American Copyright Conventions. By payment of the required fees, you have been granted the non-exclusive, non-transferable right to access and read the text of this e-book on-screen. No part of this text may be reproduced, transmitted, down-loaded, decompiled, reverse engineered, or stored in or introduced into any information storage and retrieval system, in any form or by any means, whether electronic or mechanical, now known or hereinafter invented, without the express written permission of HarperCollins Source ISBN: 9780008356118 Ebook Edition © October 2019 ISBN: 9780008356132 Version: 2019-09-24 Dedication (#u90ada14f-717f-5c57-ba46-68a0f789ed63) This is for all the people serving time who did what they did, but are now doing something positive. I see what you are doing. I know who you are. One hundred percent of my portion of the proceeds of this book will go to help people coming out of prison change their culture and remain free, and to the people in Haiti trying to rebuild their society and return to the glory of their past. CONTENTS Cover (#u6af08dbe-645d-55a6-bf7e-808c53381bd4) Title Page (#uc1c5687a-2538-55b6-b794-2cbf6daf67b8) Copyright Dedication Foreword by Henry Louis Gates Jr. Introduction: What You Do Is Who You Are 1 Culture and Revolution: The Story of Toussaint Louverture (#u065848a5-d694-511a-979d-6f5d3557b913) 2 Toussaint Louverture Applied 3 The Way of the Warrior 4 The Warrior of a Different Way: The Story of Shaka Senghor (#litres_trial_promo) 5 Shaka Senghor Applied 6 Genghis Khan, Master of Inclusion 7 Inclusion in the Modern World 8 Be Yourself, Design Your Culture 9 Edge Cases and Object Lessons 10 Final Thoughts Author’s Note Index Acknowledgments About the Author Also by Ben Horowitz About the Publisher FOREWORD (#u90ada14f-717f-5c57-ba46-68a0f789ed63) Henry Louis Gates Jr. In the secular bible that launched the Harlem Renaissance, The New Negro: An Interpretation, the indefatigable black bibliophile Arturo Schomburg argued in his essay “The Negro Digs Up His Past” that for too long “the Negro has been a man without a history because he has been considered a man without a worthy culture.” The Puerto Rican–born Schomburg didn’t just write about recovering this subsumed culture in white America; he recentered it by amassing one of history’s greatest collections of manuscripts, art, and rare artifacts, which eventually provided the foundation for one of the crown jewels of the New York Public Library system: Harlem’s Schomburg Center for Research in Black Culture, a fortress of learning and enlightenment located at 515 Malcolm X Boulevard in the heart of historic Harlem. Almost a century later, another visionary in our midst, the Silicon Valley tech entrepreneur Ben Horowitz, has produced a fascinating volume at the intersection of business, leadership, and culture studies that rests on the same intellectual foundation as the mighty Schomburg. There is a lesson within a lesson at play in these pages. Instead of turning out one more book using winning case studies on the importance of fostering a thriving, mutually supportive workplace culture, Horowitz roots his own definition of innovation in the deliberate choices he makes to center the leadership stories of present, past, and long past people of color far outside the C-suite or open floor plans of today’s tech giants. They include Toussaint Louverture, the genius behind the only successful slave rebellion in the history of the western hemisphere, the Haitian Revolution of the late-eighteenth/early-nineteenth century; the samurai of Japan, whose bushido code elevated virtues above values; Genghis Khan, the ultimate outsider who led one of history’s most dominant armies by absorbing the best and brightest among those he defeated; and, perhaps most moving of all, James White, aka Shaka Senghor, who, on a devastating murder conviction, stepped out of quarantine into the belly of the Michigan prison system to become the leader of a violent squad called the Melanics that, over time, he shepherded toward a culture revolution focused on community uplift after prison. By placing these dynamic figures at the center of his study, Horowitz underscores his own reputation as one of the tech industry’s most philosophically committed innovators—someone who defines creation not as the execution of an already good idea but as an original one that is so cutting edge that it is considered contrarian at best. Here, Horowitz is out to persuade readers to adopt his experiential view that the most robust, sustainable cultures are those based on action, not words; an alignment of personality and strategy; an honest awareness and assessment of the norms imbibed on the first day of work by new—not veteran—employees grasping at what it will take to make it; an openness to including outside talent and perspectives; a commitment to explicit ethics and principled virtues that stand out and have meaning; and, not least, a willingness to come up with “shocking rules” within an organization that indelibly and inescapably prompt others to ask, “Why?” To prove “why” himself, Horowitz doesn’t go to the usual well of Fortune 500 winners but to the outer edges of history, where we discover leaders whose stories reveal lessons and insights that are actually core to the creation of culture itself. In its essence, What You Do Is Who You Are is a book whose content and structure—including the epigraphs Horowitz invokes from the canon of hip-hop legends—perfectly reflect the thesis at work in its pages. It also happens to be an energetic read, with surprising and illuminating applications of the lessons of Louverture, Senghor, and company to the contemporary business and political scene that Horowitz himself, as the former CEO of LoudCloud and cofounder of Andreessen Horowitz, inhabits as one of today’s most uniquely gifted leaders. In this way, Horowitz calls upon a key aspect of the African-American tradition of “signifying”—riffing as a mode of homage, a nod of admiration and respect—and he does so with penetrating insight and memorable effect. The book is also an inspiring nod to an historical tradition that intellectual antecedents such as Arturo Schomburg—caught in the throes of Jim Crow segregated America—sacrificed so much to canonize, hoping that generations hence would see “behind the veil,” as W.E.B. Du Bois put it, to mine lessons for a new, truly cosmopolitan world culture in which they could only dream of flourishing. By centering his transformational volume on culture-makers whose wisdom is found on the margins, Horowitz gives us an instant classic with the potential to redefine “what we do” and, thereby, “who we are.” INTRODUCTION: WHAT YOU DO IS WHO YOU ARE (#u90ada14f-717f-5c57-ba46-68a0f789ed63) Revel in being discarded, or having all your energies exhausted in vain; only those who have endured hardship will be of use. Samurai who have never erred before will never have what it takes. —Hagakure When I first founded a company, one called LoudCloud, I sought advice from CEOs and industry leaders. They all told me, “Pay attention to your culture. Culture is the most important thing.” But when I asked these leaders, “What exactly is culture, and how can I affect mine?” they became extremely vague. I spent the next eighteen years trying to figure this question out. Is culture dogs at work and yoga in the break room? No, those are perks. Is it your corporate values? No, those are aspirations. Is it the personality and priorities of the CEO? That helps shape the culture, but it is far from the thing itself. When I was the CEO of LoudCloud, I figured that our company culture would be just a reflection of my values, behaviors, and personality. So I focused all my energy on “leading by example.” To my bewilderment and horror, that method did not scale as the company grew and diversified. Our culture became a hodgepodge of different cultures fostered under different managers, and most of these cultures were unintentional. Some managers were screamers who intimidated their people, others neglected to give any feedback, some didn’t bother returning emails—it was a big mess. I had a middle manager—I’ll call him Thorston—who I thought was pretty good. He worked in marketing and was a great storyteller (an essential marketing skill). I was shocked to find out, from overhearing casual conversations, that he was taking storytelling to another level by constantly lying about everything. Thorston was soon working elsewhere, but I knew I had to deal with a much deeper problem: because it had taken me years to find out that he was a compulsive liar, during which time he’d been promoted, it had become culturally okay to lie at LoudCloud. The object lesson had been learned. It did not matter that I never endorsed it: his getting away with it made it seem okay. How could I undo that lesson and restore our culture? I hadn’t the first clue. To really understand how this stuff works, I knew I had to dig deeper. So I asked myself, How many of the following questions can be resolved by turning to your corporate goals or mission statement? Is that phone call so important I need to return it today, or can it wait till tomorrow? Can I ask for a raise before my annual review? Is the quality of this document good enough or should I keep working on it? Do I have to be on time for that meeting? Should I stay at the Four Seasons or the Red Roof Inn? When I negotiate this contract, what’s more important: the price or the partnership? Should I point out what my peers do wrong, or what they do right? Should I go home at 5 p.m. or 8 p.m.? How hard do I need to study the competition? Should we discuss the color of this new product for five minutes or thirty hours? If I know something is badly broken in the company, should I say something? Whom should I tell? Is winning more important than ethics? The answer is zero. There aren’t any “right answers” to those questions. The right answers for your company depend on what your company is, what it does, and what it wants to be. In fact, how your employees answer these kinds of questions is your culture. Because your culture is how your company makes decisions when you’re not there. It’s the set of assumptions your employees use to resolve the problems they face every day. It’s how they behave when no one is looking. If you don’t methodically set your culture, then two-thirds of it will end up being accidental, and the rest will be a mistake. So how do you design and shape these nearly invisible behaviors? I asked that of Shaka Senghor, who ran a powerful gang in the Michigan prison system in the 1990s and 2000s. Senghor knew that the lives of his guys depended on the gang’s culture. He told me, “It’s complex. Say someone steals one of your guys’ toothbrushes, what do you do?” I said, “That seems innocent enough. Maybe the thief just wanted clean teeth?” He corrected me: “A guy doesn’t take that risk for clean teeth. It’s a diagnostic. If we don’t respond, then he knows he can rob your guy of something larger or rape him or kill him and take over his business. So if I do nothing, I put all our members at risk. Killing the guy would be a big deterrent—but it would also create a superviolent culture.” He spread his hands. “As I said, it’s complex.” Identifying the culture you want is hard: you have to figure out not only where your company is trying to go, but the road it should take to get there. For many startups, a culture of frugality is vital, so it makes sense to require that employees stay at the Red Roof Inn. But if Google is paying a salesperson $500,000 a year and it wants to retain her, it will probably prefer that she sleep well at the Four Seasons before her big meeting with Procter & Gamble. Likewise, long days are standard in the startup world—you’re in a race against time. But at Slack, CEO Stewart Butterfield is convinced that if you actually work hard when you are at work, you can efficiently get a lot done. He punches out early and encourages his employees to do the same. The culture that works for Apple would never work for Amazon. At Apple, generating the most brilliant designs in the world is paramount. To reinforce that message, it spent $5 billion on its sleek new headquarters. At Amazon, Jeff Bezos famously said, “Your fat margins are my opportunity.” To reinforce that message, he made the company be frugal in everything, down to his employees’ ten-dollar desks. Both cultures work. Apple designs dramatically more beautiful products than Amazon, while Amazon’s products are dramatically cheaper than Apple’s. Culture is not like a mission statement; you can’t just set it up and have it last forever. There’s a saying in the military that if you see something below standard and do nothing, then you’ve set a new standard. This is also true of culture—if you see something off-culture and ignore it, you’ve created a new culture. Meanwhile, as business conditions shift and your strategy evolves, you have to keep changing your culture accordingly. The target is always moving. CULTURE IS THE STRONG FORCE In business, if you have a strong culture but a product nobody wants, you fail. So culture might appear to be weaker than product. But if you look more deeply, over time, culture can overcome the seemingly invincible structural barriers of an era and transform the behavior of entire industries and social systems. From this broader perspective, culture is the strong force in the universe. In the 1970s, a bunch of poor kids from the Bronx created a new art form, hip-hop. In a single generation they overcame poverty, racism, and massive opposition from the music industry to build the world’s most popular musical genre. They changed global culture by inventing a culture premised on candor and a hustler’s mentality. The hustler’s mentality could be seen in how hip-hop DJs sourced their basic building block: breakbeats. Breakbeats were the part of the song that everyone got excited about on the dance floor—the beat-heavy breakdown sections that featured drums and bass, or just drums. The freshest breakbeats, the ones people hadn’t heard before, were often found on obscure records. Because these records were obscure, the record companies wouldn’t restock them if they suddenly sold out, which created a supply-chain problem. Hip-hop’s entrepreneurial culture worked right around it. Ralph McDaniels, who put the first rap videos on television and who coined the term “shout-out,” told me: A guy named Lenny Roberts supplied these records to the stores and he knew precisely what was going to sell, because he was from the Bronx and that’s where it was all breaking. He marketed these breakbeats by giving them to Afrika Bambaataa or Grandmaster Flash, and when Flash played it every DJ would go, “Oh, I’ve got to have that record,” and the records would instantly sell out. So Lenny pressed his own records with just the breakbeats: the Breakbeats Volume One, Breakbeats Volume Two, etc. He didn’t have the rights, of course, but nobody was paying any attention. People often ask me why I preface much of what I write with quotes from hip-hop. In part it’s a hangover from my failed career as a rapper—true story. But mostly it’s because the majority of my ideas about entrepreneurship, business, and culture occur to me while I’m listening to hip-hop, so it’s my way of giving credit where credit is due. I always felt that early hip-hop songs like Eric B. & Rakim’s “Follow the Leader” or Run-DMC’s “King of Rock” were about what I was doing as an entrepreneur. They are the culture in which I work. While the hustling part of hip-hop culture made the business go, it was the honesty that drew the fans. The great rapper Nas told me that as a kid: The rawness was what I gravitated towards. The world was supposed to be this picture-perfect place, the Brady Bunch. We’re all trying to be the Brady Bunch, but really we’re the Little Rascals. Rap explained what’s really going on—the crimes, the poverty, the corrupt police. Rap cleansed itself of pimp-sounding music or gospel-sounding music or a funky sound or a hippie sound. It extracted all that other stuff out of it and ripped itself raw until it was simply about honesty. A continent away from the Bronx, a group of engineers in California established a set of cultural innovations that would end up changing how almost every business operates. In the 1960s, Bob Noyce, the coinventor of the integrated circuit, or microchip, ran Fairchild Semiconductor, a unit of Fairchild Camera and Instrument Corporation. Fairchild Camera, based in New York City, did business the east coast way, which had become the way big businesses across the country conducted themselves. Fairchild’s owner, Sherman Fairchild, lived in a glass-and-marble town house in Manhattan. His top executives got cars and drivers and reserved parking places. As Tom Wolfe observed in his 1983 Esquire story “The Tinkerings of Robert Noyce,” “Corporations in the East adopted a feudal approach to organization, without even being aware of it. There were kings and lords, and there were vassals, soldiers, yeomen, and serfs.” Bob Noyce didn’t believe any of that made sense when it was his individual engineers—the yeomen—who were inventing products and driving the business. So Fairchild Semiconductor did things differently. Everyone was expected at work by 8 a.m., and whoever got in first got the best parking space. The company’s building in San Jose was a warehouse filled with cubicles, and nobody wore a suit. Noyce didn’t hire professional managers. He said, “Coaching, and not direction, is the first quality of leadership now. Get the barriers out of the way to let people do the things they do well.” This created a new culture, a culture of empowerment: everyone was in charge and Noyce was there to help. If a researcher had an idea, he could pursue it for a year before anyone would start inquiring about results. Employees who got a taste of Noyce’s culture of independence split off to start their own companies, including Raytheon Semiconductor, Signetics, General Microelectronics, Intersil, Advanced Micro Devices (AMD), and Qualidyne. Without exactly meaning to, Noyce had created the culture of Silicon Valley. In 1968, Noyce himself split off to start a new company, resigning from Fairchild Semiconductor after being passed over for CEO of Fairchild Camera. He and his colleague Gordon Moore—the coiner of Moore’s law, which holds that microchip capacity doubles every eighteen months while its price falls in half—and a young physicist named Andy Grove founded Intel to tackle the nascent field of data storage. At Intel, Noyce took his egalitarian ideas to a new level. Everyone worked in one big room with partitions separating them; Noyce himself sat at a secondhand metal desk. Lunch was deli sandwiches and soda. There was no layer of vice presidents; Noyce and Moore oversaw business segments run by middle managers who had enormous decision-making power. In meetings, the leader set the agenda, but everyone else was equal. And, crucially, Noyce gave the engineers and most of the office workers substantial stock options. He believed that in a business driven by research and products, the engineers would behave more like owners if they actually owned the company. Wolfe observedthat “At Intel everyone—Noyce included—was expected to attend sessions on ‘the Intel Culture.’” The culture was drilled into new employees by Andy Grove (who would go on to become the company’s CEO and a famous cultural innovator). Grove would ask, “How would you sum up the Intel approach?” Someone might answer, “At Intel you don’t wait for someone else to do it. You take the ball yourself and run with it.” Grove would reply, “Wrong. At Intel you take the ball yourself and you let the air out and you fold the ball up and put it in your pocket. Then you take another ball and run with it and when you’ve crossed the goal you take the second ball out of your pocket and reinflate it and score twelve points instead of six.” This atmosphere allowed ideas to prosper; if Silicon Valley is about anything, it’s about the primacy of the idea. Breakthrough ideas have traditionally been difficult to manage for two reasons: 1) innovative ideas fail far more than they succeed, and 2) innovative ideas are always controversial before they succeed. If everyone could instantly understand them, they wouldn’t be innovative. Imagine a culture of strict accountability that punishes failure—a very common culture back east, where executives strove to maintain their status, and failure was to be avoided at all costs. Now consider an idea that has a 90 percent chance of failing, but that would pay off at 1,000 to 1. Despite it being an extraordinarily good bet, the company that punishes failure will never fund it. Hierarchies are good at weeding out obviously bad ideas. By the time an idea makes it all the way up the chain, it will have been compared to all the other ideas in the system, with the obviously good ideas ranked at the top. This seems like common sense. The problem is that obviously good ideas are not truly innovative, and truly innovative ideas often look like very bad ideas when they’re introduced. Western Union famously passed on the opportunity to buy Alexander Graham Bell’s patents and technology for the telephone. At the time, phone calls were extremely noisy and easy to misinterpret, and they couldn’t span long distances, and Western Union knew from its telegram business that profitable communication depended on accuracy and widespread reach. And Wikipedia was considered a joke when it started. How could something written by a crowd replace the work of the world’s top scholars? Today it is so much more comprehensive than anything that came before it that it’s widely considered the only encyclopedia. The Intel culture, by elevating the individual and giving breakthrough ideas a chance, inaugurated a better way to do business. My business partner Marc Andreessen wrote an essay a few years ago called “Software Is Eating the World.” He described how technology has spread beyond the technology industry to take over every traditional business, from bookstores to taxi fleets to hotels. Existing companies have been forced to adopt aspects of Noyce’s culture or else expose themselves to an onslaught of existential threats. We’ve seen General Motors adopt stock options as it moved into autonomous vehicles by buying Cruise Automation, and Walmart employ a similar approach with its purchase of Jet.com (http://www.Jet.com). Since tech became a consumer phenomenon, thousands of nontech people have come up with great ideas that use technology. But if their startups outsource their engineering, they almost always fail. Why? It turns out that it’s easy to build an app or a website that meets the specification of some initial idea, but far more difficult to build something that will scale, evolve, handle edge cases gracefully, etc. A great engineer will only invest the time and effort to do all those things, to build a product that will grow with the company, if she has ownership in the company—literally as well as figuratively. Bob Noyce understood that, created the culture to support it, and changed the world. WHAT MAKES A CULTURE WORK? Culture clearly has a powerful effect. So how do you shape it, how do you set it deep in people’s minds, and how do you fix it when it goes wrong? These questions led me to larger questions and a wider frame of reference. How does culture work in a variety of different contexts? What makes it last for more than a few years? I have long been interested in history, and particularly in how people behaved differently from what I would have expected, given the circumstances they were born into. For instance, I would never have expected that a man who was born into slavery and who would one day free the slaves of Haiti would own slaves himself along the way—but he did. Understanding how historical cultures shaped people’s views led me to begin considering what they had to do to change themselves and their culture. Grasping that seemed to be the key to creating the kind of culture that I wanted. I selected four models in particular, one of whom is still very much alive. I wasn’t looking for ideal cultural end states—some of the models produced extremely violent or otherwise problematic cultures—but for people who were outstandingly effective in getting the cultures they wanted. Each of these models made me ask giant questions: Why has there been only one successful slave revolt in human history? And how did Haiti’s Toussaint Louverture reprogram slave culture to orchestrate it? How did bushido, the code of the samurai, enable the warrior class to rule Japan for seven hundred years and shape modern Japanese culture? What set of cultural virtues empowered them? The samurai called their principles “virtues” rather than “values”; virtues are what you do, while values are merely what you believe. As we’ll see, doing is what matters. (In what follows I will use “virtues” to refer to the ideal, and “values” to refer to what most companies now espouse.) How exactly did the samurai focus their culture on actions? How did Genghis Khan build the world’s largest empire? He was a total outsider, imprisoned as a youngster by his own tiny nomadic tribe. It’s easy to see how that made him want to smash existing hierarchies. But how, exactly, was he able to create an innovative and inclusive meritocracy? One that enabled him to constantly grow and improve while his foes were standing still? How did Shaka Senghor, sentenced to nineteen years in a Michigan prison for murder, make his prison gang the tightest, most ferocious group in the yard—and then transform it into something else entirely? How did culture turn him into a killer? How did he rise to dominate that culture? How did he take a group of outcasts and turn them into a cohesive team? Finally, how did he recognize what he disliked about his regime, and, by changing himself, change the entire prison culture? Companies—just like gangs, armies, and nations—are large organizations that rise or fall because of the daily microbehaviors of the human beings that compose them. But figuring out whether the root cause of a company’s success is its culture or some other factor isn’t easy. Most business books don’t look at culture from a wider, more sociological perspective. And most attempt to dissect successful companies’ cultures after the companies have succeeded. This approach confuses cause and effect. There are plenty of massively successful companies with weak, inconsistent, or even toxic cultures; a desirable product can overcome a miserable environment, at least for a while. If you don’t believe me, read up on Enron. To avoid survivorship bias—the logical error of concentrating on companies that succeeded and falsely concluding that it was their culture that made them great—I try not to reverse engineer. Instead I look at the cultural techniques that leaders used as they tried to strengthen their culture in specific ways, and show how those efforts played out. So you won’t find any absolute “best cultures” in this book, just techniques to make your own culture do what you want it to. HOW TO READ THIS BOOK I start by examining the four historical models described earlier, and then break out modern-day examples of those same cultural techniques. As you read these first seven chapters, think about how leaders like Toussaint Louverture and Genghis Khan saw culture, and the tools they devised to shift it even under extremely difficult circumstances, when everything seemed to be conspiring against them. Take note of practices you might want to emulate, and how perspectives well outside your own might be surprisingly pertinent. How did the samurai design a culture whose elements all fit neatly together? How is Shaka Senghor’s experience, coming into prison as a young man and having to figure out how it worked, relevant to new employees at your company? Creating a culture is more complex than just trying to get your people to behave the way you want them to when no one is looking. Remember that your employees are far from uniform. They come from different countries, races, genders, backgrounds, even eras. Each one brings to your organization a different cultural point of departure. To get all of them to conform to and be reasonably happy with a common set of norms is a challenging puzzle. To get them to be who you want, you will first need to see them for who they are. I wish I could give you a simple set of steps to do that, but there is no formula. Instead we’ll consider all these questions from a variety of perspectives. To that end, these chapters also feature modern-day case studies, usually worked up from my conversations with leaders who tried to change their companies. For instance, I examine how Toussaint Louverture’s cultural techniques were applied—or should have been applied—by Reed Hastings at Netflix, Travis Kalanick at Uber, and Hillary Clinton, and how Genghis Khan’s vision of cultural inclusiveness has parallels in the work of Don Thompson, the first African-American CEO of McDonald’s, and of Maggie Wilderotter, the CEO who led Frontier Communications. I begin the second part of the book by walking you through how to understand your own personality and your company’s strategy and how to use that understanding to build the culture you need to succeed. Culture only works if the leader visibly participates in and vocally champions it. But most people don’t walk around with a supersharp definition of their personal cultural values. So how do you identify who you are and what parts of you belong in the organization (and don’t belong)? How do you become the kind of leader that you yourself want to follow? Then I look at edge cases that can place your culture in conflict with itself or with your business priorities. And finally, I discuss a few components that probably belong in every culture, and give you a checklist of crucial principles. Culture isn’t a magical set of rules that makes everyone behave the way you’d like. It’s a system of behaviors that you hope most people will follow, most of the time. Critics love to attack companies for having a “broken culture” or being “morally corrupt,” but it’s actually a minor miracle if a culture isn’t dysfunctional. No large organization ever gets anywhere near 100 percent compliance on every value, but some do much better than others. Our aim here is to be better, not perfect. As a final word of discouragement: a great culture does not get you a great company. If your product isn’t superior or the market doesn’t want it, your company will fail no matter how good its culture is. Culture is to a company as nutrition and training are to an aspiring professional athlete. If the athlete is talented enough, he’ll succeed despite relatively poor nutrition and a below-average training regimen. If he lacks talent, perfect nutrition and relentless training will not qualify him for the Olympics. But great nutrition and training make every athlete better. If a great culture won’t ensure success, why bother? In the end, the people who work for you won’t remember the press releases or the awards. They’ll lose track of the quarterly ups and downs. They may even grow hazy about the products. But they will never forget how it felt to work there, or the kind of people they became as a result. The company’s character and ethos will be the one thing they carry with them. It will be the glue that holds them together when things go wrong. It will be their guide to the tiny, daily decisions they make that add up to a sense of genuine purpose. This book is not a comprehensive set of techniques for creating a perfect culture. There is no one ideal. A culture’s strengths may also be its weaknesses. And sometimes you have to break a core principle of your culture to survive. Culture is crucial, but if the company fails because you insist on cultural purity, you’re doing it wrong. Instead, the book will take you on a journey through culture, from ancient to modern. Along the way, you will learn how to answer a question fundamental to any organization: who are we? A simple-seeming question that’s not simple at all. Because who you are is how people talk about you when you’re not around. How do you treat your customers? Are you there for people in a pinch? Can you be trusted? Who you are is not the values you list on the wall. It’s not what you say at an all-hands. It’s not your marketing campaign. It’s not even what you believe. It’s what you do. What you do is who you are. This book aims to help you do the things you need to do so you can be who you want to be. 1 (#ulink_1bac8617-9f1a-5b04-9b21-b1c100df0a2d) CULTURE AND REVOLUTION: THE STORY OF TOUSSAINT LOUVERTURE (#ulink_1bac8617-9f1a-5b04-9b21-b1c100df0a2d) Blood of a slave, heart of a king. —Nas After I sold my company Opsware to Hewlett-Packard in 2007 and helped with the transition, I had nothing to do. As an entrepreneur, I had trained myself to think in contrarian ways. The secret to finding a breakthrough idea, as Peter Thiel says, is that you have to believe something that nobody else does. So I started thinking about ideas that everyone believes. The first that came to mind was “Slavery was so incredibly horrible that it’s almost unimaginable that it existed at such scale.” What was the contrarian point of view? What if it were more shocking that slavery ever ended? As absurd as that sounded, once I dug into the matter, I felt like I might be onto something. Slavery had been around since the beginning of recorded history. It was endorsed by all the major religions; long and detailed sections of the Bible and the Koran are dedicated to it. In the 1600s, more than half of the world’s population was enslaved. How did it ever end? The stamping out of slavery is one of humanity’s great stories. And the best story within that story is the Haitian Revolution. In our long history, there has been only one successful slave revolution that led to an independent state. There were surely uprisings by the slaves of the Han Dynasty and the Christian slaves of the Ottoman Empire, and there are numerous accounts of rebellions by some of the ten million Africans held in bondage during the slave trade that thrived from the fifteenth to the nineteenth centuries. But only one revolt succeeded. Certainly, strong motivation fueled every attempt—there is no more inspiring cause than freedom. So why only one victory? Slavery chokes the development of culture by dehumanizing its subjects, and broken cultures don’t win wars. As a slave, none of your work accrues to you. You have no reason to care about doing things thoughtfully and systematically when you and your family members can be sold or killed at any moment. To keep you from learning about other ways of life, communicating with other slaves, or knowing what your masters are up to, you are forbidden to learn to read and have no ready tools for accumulating and storing knowledge. You can be raped, whipped, or dismembered at your captor’s pleasure. This constellation of atrocities leads to a culture with low levels of education and trust and a short-term focus on survival—none of which help in building a cohesive fighting force. So how did one man, born a slave, reprogram slave culture? How did Toussaint Louverture build an army of slaves in Saint-Domingue (the prerevolutionary name of Haiti) into a fighting force so fearsome it defeated Spain, Britain, and France—the greatest military forces in Europe? How did this slave army inflict more casualties on Napoleon than he would suffer at Waterloo? You might suspect that slavery was less brutal in Saint-Domingue than elsewhere. Did Louverture have a particularly easy go of it? Nope. During the slave-trade era, fewer than 500,000 slaves were brought to the United States, while about 900,000 were introduced to Saint-Domingue. Yet by 1789, the United States contained nearly 700,000 slaves and Saint-Domingue just 465,000. In other words, the death rate on Saint-Domingue overwhelmed the birth rate. The island was a slaughterhouse. Slaves in Saint-Domingue were treated with almost incomprehensible brutality. C. L. R. James describes it in his masterpiece, The Black Jacobins: Whipping was interrupted in order to pass a piece of hot wood on the buttocks of the victim; salt, pepper, citron, cinders, aloes, and hot ashes were poured on the bleeding wounds. Mutilations were common, limbs, ears and sometimes the private parts, to deprive them of the pleasures which they could indulge in without expense. Their masters poured burning wax on their arms and hands and shoulders, emptied the boiling cane sugar over their heads, burned them alive, roasted them on slow fires, filled them with gunpowder and blew them up with a match; buried them up to the neck and smeared their heads with sugar that the flies might devour them. This torturous environment led to a predictably abject and suspicious culture. Black slaves and mulattoes hated each other. The man of color who was nearly white despised the man of color who was half white, who in turn despised the man of color who was a quarter white, and so on. What’s more, the military power poised to crush any rebellion was enormous. Saint-Domingue provided a third of the world’s sugar and half of its coffee; it was the most profitable colony in the world, and therefore of massive strategic interest. Every empire wanted to control it. So no, this environment was not ideal for rebellion. Louverture’s rebellion was no mere slave revolt, but a much more complex disruption premised on meticulous military strategy and aimed at lasting change. Considered a genius even by his enemies, Louverture was able to blend the best, most useful elements from slave culture and from the colonial European culture that had enslaved him—and to mix in his own brilliant cultural insights. The resulting hybrid culture inspired a ferocious army, a cunning diplomacy, and a farsighted perspective on economics and governance. WHO WAS TOUSSAINT LOUVERTURE? Louverture was born into slavery on the Br?da estate sugar plantation in Saint-Domingue in, we think, 1743. Much of his personal history is fragmentary and uncertain—no one bothered to keep detailed records about obscure slaves. Historians also disagree about many of the turning points in the country’s revolution, agreeing only that its leader was an extraordinary man. As a child, Louverture was so frail his parents called him “Sickly Stick” and did not expect him to live. Yet by age twelve, he had surpassed all the boys on the plantation with his athletic feats. In time he became known as the colony’s greatest horseman. Even as he neared sixty, he often rode 125 miles in a day. Louverture was just five feet two and by no means handsome. Laconic, with a stern, probing glance, he was immensely energetic and focused. He slept two hours a night and could live for days on a few bananas and a glass of water. His education, position, and character gave him tremendous prestige among his fellow slaves long before the revolution. He never doubted that his destiny was to be their leader. While still a teenager, he was made caretaker of the estate’s mules and oxen—a post usually held by a white man. Louverture seized this rare opportunity to educate himself in his free time and to read through his master’s library, including Julius Caesar’s Commentaries and Abb? Raynal’s Histoire des deux Indes, or History of two Indies, an encyclopedic account of trade between Europe and the Far East. Caesar’s work helped him understand politics and the art of war, and Raynal’s gave him a thorough grounding in the economics of the region and of Europe. But his education and position did not exempt him from the fundamental indignity of being black. One day, as he was returning from Mass carrying his prayer book, a white man took notice. Louverture would recall that the man “broke my head with a wooden stick while telling me ‘do you not know that a negro should not read?’” Louverture apologized and stumbled home. He kept the vest soaked with his blood as a reminder of the incident. Years later, after the rebellion began, he met his tormenter again and, his biographer Philippe Girard writes with satisfaction, “killed him on the spot.” The estate’s attorney, Fran?ois Bayon de Libertat, recognized Louverture’s abilities and made him coachman. Around 1776, he freed Louverture; Louverture was now paid to drive Libertat’s coach. At the time, fewer than one in a thousand black men were set free. The father of the Haitian Revolution earned his freedom by forming a special bond with a white man. Louverture used every carriage ride with Libertat to expand his network, making contact with nearly all of his future allies. The rides also enabled him first to understand, and then to master, French colonial ways. Louverture gradually came to a realization that no one else in colonial Saint-Domingue had arrived at: culture, not color, determined behavior. One astonishing demonstration of this truth was that after he’d been freed, Louverture purchased slaves, usually to free them in turn. But he also strove to get ahead in the colonial manner, the only manner available to him at that point: off of slave labor. In 1779, in a brief and unsuccessful attempt to make money, he leased a coffee plantation worked by thirteen slaves. One of them was Jean-Jacques Dessalines, who in later years would become his second in command—and then go on to betray him. If there was a motivational trigger for Louverture to turn from commerce to statecraft, perhaps it came in 1784, when he read a famous passage written by Abb? Raynal, a proponent of liberty who hoped for a slave revolt: “A courageous chief only is wanted. Where is he, that great man whom Nature owes to her vexed, oppressed, and tormented children? Where is he?” According to one account, Louverture read this passage over and over, dreaming that he might be that courageous chief. LOUVERTURE’S RISE Once news of the French Revolution of 1789 reached the island, insurrection was in the air. The initial rebellion on the Manquets plantation in 1791 stirred up slaves on the surrounding plantations, and within a few years the insurrectionary force grew to fifty thousand men, one hundred times the size of the largest slave revolt in U.S. history. Louverture had known of and perhaps helped shape plans for the uprising, but he waited to see how it would go, only joining in a month after it began. The colony’s political situation was extremely complicated, with numerous factions, parties, and shifting alliances, and it was unclear what would happen on your plantation next week, let alone to the whole island over time. When Louverture joined the rebels he was about forty-seven and already known as “Old Toussaint.” Within a few months he had appointed himself brigadier general and was leading one of the three chief rebel groups. To build support, Louverture implied that he was acting on behalf of the French king, Louis XVI, who, he said, had issued him a document promising the rebels three days of rest a week in exchange for their efforts. He was able to pull off this ruse because almost none of his followers could read and write. Between 1791 and 1793, he and the rebels made such progress that France dispatched eleven thousand troops to hold them back—more than the nation sent abroad during the U.S. War of Independence. After Louis XVI was guillotined in Paris in 1793, the British and Spanish invaded Saint-Domingue, each hoping to seize the prize while France was preoccupied. Once Spain declared war on France, Louverture went to the Spanish commander and offered to integrate his six hundred men into the Spanish army, which other rebellious slave groups were also joining. And so Louverture became a colonel in the Spanish army, fighting the French. The following year, seeing an advantage for himself and his troops, Louverture defected to the French army. Within a year, he and his men, now five thousand strong, had retaken almost all of the French towns he had just conquered for Spain, and subdued several rebel groups still allied with the Spanish. These victories, in concert with military setbacks in Europe, forced Spain to sue for peace. Louverture had defeated his first European superpower. Next he faced the British, who had sent two large battalions to Saint-Domingue. Unprepared to tackle a large professional army, Louverture began retreating in 1795 and maintained a defensive posture for two years, even as the remaining blacks on the island, some 500,000 men in all, joined his side. Time, guerrilla skirmishing, and yellow fever wore down Louverture’s foes. Twelve thousand of the twenty thousand British soldiers who arrived on the island were buried there, and in 1798 Louverture negotiated the departure of their remaining forces. He had defeated his second European superpower. In 1801 he invaded Santo Domingo, the Spanish part of the island that is now the Dominican Republic, and defeated the Spanish for good. On July 7, 1801, he became governor of the entire island where he had once been a slave. He promptly published a new constitution. Saint-Domingue would still be a French colony, in name, but the constitution abolished slavery, opened all jobs to all races, and made the territory functionally independent. In just ten years Louverture and his army had accomplished the unimaginable. HOW LOUVERTURE REPROGRAMMED SLAVE CULTURE In 1797, in the midst of the long revolt, Louverture demonstrated that he could not only lead troops, but also persuade and inspire civilians with his vision for a new way of life. Vincent de Vaublanc, a white deputy from Saint-Domingue, warned the French Parliament that the colony had fallen under the control of “ignorant and brutish negroes.” Vaublanc’s speech had a tremendous impact, and there were rumors of a counterrevolution being plotted in Paris. Louverture’s response was to publish a justification of the Haitian Revolution that laid out his theory of race and culture. As Philippe Girard wrote, “One by one he listed Vaublanc’s accusations; one by one he took them apart. Blacks were not lazy and ignorant savages: slavery had made them so. Some violence had indeed taken place in the Haitian Revolution, but violence had also taken place in the French Revolution, he reminded his readers; the slaves had in fact proved remarkably merciful toward the planters who had so cruelly oppressed them.” Louverture demonstrated that these former slaves had elevated their culture to a point where he could in justice close the letter by reaffirming black freedmen’s “right to be called French Citizens.” In 1798, after Louverture negotiated peace and a diplomatic relationship with the British, the London Gazette wrote: Toussaint L’Ouverture is a negro and in the jargon of war has been called a brigand. But according to all accounts, he is a negro born to vindicate the claims of this species and to show that the character of men is independent of exterior color. This newspaper, in a nation that traded more African slaves than any other, published that encomium thirty-five years before Britain abolished slavery. As Louverture had envisioned, Europeans were beginning to see that it was the culture of slavery rather than the nature of the slaves themselves that shaped their behavior. Some Americans began to see it that way, too. In 1798, during a rift with France, the U.S. Congress banned all trade with France and its colonies. Commerce to and from Saint-Domingue came to a standstill. Louverture sent a man named Joseph Bunel to see the U.S. secretary of state, Thomas Pickering, about lifting the embargo. Louverture shrewdly selected a white man as his ambassador to appeal to the sensibilities of the slave-owning country. It worked. In 1799, the U.S. Congress authorized President John Adams to exempt from the trade embargo any French territory that did not interfere with American trade. The law was so transparently intended for Saint-Domingue that it was nicknamed “the Louverture clause.” Pickering wrote Louverture to let him know that the United States would resume commerce with Saint-Domingue. Philippe Girard characterizes the letter beautifully in his masterpiece, Toussaint Louverture: He closed with an arresting flourish: “I am with due considerations, Sir, your obedient servant.” To a former slave, the niceties of diplomatic language must have had a peculiar ring: Louverture was not used to hearing prominent white men refer to themselves as his “obedient servant.” More than sixty-five years before the Thirteenth Amendment ended slavery in the United States, Congress made special provisions for a black man. They negotiated with him not through the lens of the color of his skin but through the lens of the culture he had created. Louverture used seven key tactics, which I examine below, to transform slave culture into one respected around the world. You can use them to change any organization’s culture. Keep What Works To create his army, Louverture began with five hundred handpicked men who learned the art of war with him as he drilled and trained them assiduously. In this way, he was able to create the new culture with minimal divergence. He knew he had to elevate his fighters’ culture to make the army effective, but he also knew that his slave culture had great strengths and that creating a new civilization out of whole cloth—as Lenin would later try and fail to do—would never succeed. People don’t easily adopt new cultural norms and they simply can’t absorb an entirely new system all at once. He used two preexisting cultural strengths to great effect. The first was the songs the slaves sang at their midnight celebrations of voodoo. Louverture was a devout Catholic who would later outlaw voodoo—but he was also a pragmatist who used the tools at hand. So he converted this simple, memorable vocal template into an advanced communications technology. The Europeans had no means of long-distance, encrypted communication, but his army did. His soldiers would place themselves in the woods surrounding the enemy, scattered in clumps. They would begin their voodoo songs—which were incomprehensible to the European troops—and when they reached a certain verse, it was the signal to attack in concert. Second, many of Louverture’s soldiers brought military skills with them. Among his warriors were veterans of wars on the Angola-Congo coast. Louverture applied their guerrilla tactics, particularly their way of choosing to meet the enemy in the woods to envelop them and crush them with sheer numbers. As we will see, he would combine this stratagem with the most advanced European tactics to create a hybrid force unlike any his opponents had faced. Create Shocking Rules As a slave, you own nothing, have no way to accumulate wealth, and can have everything, including your life and your family, taken without warning. This usually inspires overwhelmingly short-term thinking, which eradicates trust. If I am to keep my word to you rather than to pursue my short-term interests, I must believe there will be a bigger payoff from the relationship in the future than whatever I can get by betraying you now. If I believe there is no tomorrow, then there can be no trust. This dynamic becomes problematic in an army, because trust is fundamental to running any large organization. Without trust, communication breaks. Here’s why: In any human interaction, the required amount of communication is inversely proportional to the level of trust. If I trust you completely, then I require no explanation or communication of your actions at all, because I know that whatever you are doing is in my best interests. On the other hand, if I don’t trust you in the slightest, then no amount of talking, explaining, or reasoning will have any effect on me, because I will never believe you are telling me the truth and acting in my best interests. As an organization grows, communication becomes its biggest challenge. If soldiers fundamentally trust the general, then communication will be vastly more efficient than if they don’t. To instill trust throughout his army, Louverture established a rule so shocking it begged the question “Why do we have that rule?” The rule forbade married officers from having concubines. As raping and pillaging were the norm for soldiers, requiring officers to respect their marital vows must have seemed absurd. One can almost hear the officers saying, “You must be kidding!” Certainly they would have demanded the rationale for this edict. When everyone wants to know “Why?” in an organization, the answer programs the culture, because it’s an answer everyone will remember. The explanation will be repeated to every new recruit and will embed itself into the cultural fabric. New officers would ask, “Tell me again why I can’t have a concubine?” And be told: “Because in this army, nothing is more important than your word. If we can’t trust you to keep your word to your wife, we definitely can’t trust you to keep your word to us.” (The matter is complicated by the fact that Louverture had illegitimate children, but no leader is perfect.) Marriage, honesty, and loyalty were symbols of the society that Louverture aspired to lead—and he programmed them all into his culture with one simple shocking rule. Dress for Success When Toussaint Louverture joined the rebel army, most of its soldiers didn’t wear clothes. They had joined up straight from the fields, and were accustomed to working naked. To help transform this ragtag group into an army—to give them a sense that they were an elite fighting force—Louverture and his corevolutionaries dressed in the most elaborate military uniforms attainable. It was a constant reminder of who they were and what they might achieve. Philippe Girard writes: Eager to show that they were more than a pillaging mob, the rebels took on all the trappings of a European army of the Old Regime, complete with aides-de-camp, laissez-passers, and fancy officer brevets. To many of Toussaint’s biographers, this behavior seemed clownish and absurd. Weren’t the rebels trying to destroy the Europeans and all that they stood for? Definitely not. The rebels were trying to build an army that could set them free and a culture that could sustain their independence. So they adopted the best practices from armies that had succeeded before them. As we will see in the next chapter, something as seemingly simple as a dress code can change behavior, and therefore culture, not only in war but in business. Incorporate Outside Leadership A leader can transform a culture by bringing in leadership from a culture whose ways she wants to adapt. Julius Caesar did this to great effect when he built the Roman Empire. Rather than executing vanquished leaders, he often left them in place so that they could govern the region using their superior understanding of the local culture. Louverture probably absorbed this idea when he read Caesar’s Commentaries. Unlike Caesar, Louverture faced a situation where the oppressors and the oppressed were accustomed to pigeonholing each other by skin color. Nonetheless, he brought mulattoes into his army and incorporated deserting French royalist officers, whom he used to organize an efficient staff and train his army in the orthodox military arts. This wasn’t easy—there was consternation when he showed up with white men in tow—but he insisted. When blacks told him they wouldn’t obey whites or mulattoes, he would pour a glass of wine and a glass of water, then mix them together and say, “How can you tell which is which? We must all live together.” Company cultures organize around a simple goal: build a product or service that people want. But when those companies progress beyond their initial battles they must evolve to take on new challenges. To defeat the French, Louverture needed to understand and master that culture and its military tactics, so he brought in leaders with that knowledge. I often see companies that plan to go into new areas, but don’t want to shift their culture accordingly. Many consumer companies want to penetrate the enterprise market—that is, selling to big companies—but resist having employees who walk around in fancy suits. They believe that their original culture should suffice. But their results prove otherwise. Building a great culture means adapting it to circumstances. And that often means bringing in outside leadership from the culture you need to penetrate or master. Make Decisions That Demonstrate Cultural Priorities The more counterintuitive the leader’s decision, the stronger the impact on the culture. Louverture set his culture by making one of the most counterintuitive decisions of the revolution. Once the rebels won control of the island, many of Louverture’s soldiers wanted revenge on the plantation owners. It would have been the course of least resistance for Louverture to order the owners shot out of hand. They would certainly have done the same to him. But he abhorred the spirit of revenge, believing it would destroy rather than elevate the culture. He also had to fund his war against France. If his country went bankrupt, his revolution would fail. Crops were the entire economy of Saint-Domingue: without them, it could never be an important nation. As Louverture declared, “The guarantee of the liberty of the blacks is the prosperity of agriculture.” He knew that plantations had to remain large to be economically viable, and that the owners had the knowledge, education, and experience the colony needed to keep the plantations going. So Louverture not only let the plantation owners live, he let them keep their land. But he insisted that they pay their laborers one-fourth of the profits. And he ordered them to live on their plantations, so they would be directly accountable for paying their workers and treating them well. If they disobeyed, their land was confiscated. With these decisions, Louverture established what a thousand speeches could not have: that the revolution wasn’t about revenge and that the economic well-being of the colony was its highest priority. It was all very well for him to say “no reprisals,” but it was what he did that set the culture. Walk the Talk No culture can flourish without the enthusiastic participation of its leader. No matter how well designed, carefully programmed, and insistently enforced your cultural elements are, inconsistent or hypocritical behavior by the person in charge will blow the whole thing up. Imagine a CEO who decides that punctuality is critical to her company’s culture. She delivers eloquent speeches about how being on time is a matter of respect. She points out that employee time is the company’s most valuable asset, so that when you show up late, you are effectively robbing your colleagues. But she then shows up late to all her meetings. How many employees will adhere to that value? Louverture understood this perfectly. He asked a great deal from his soldiers, but he was more than willing to embody his own standards. He lived with the men in his army and shared their labors. If a cannon had to be moved, he pitched in, once getting a hand badly crushed in the process. He charged at his troops’ head, something Europe had rarely seen from a leader since Alexander the Great, and was wounded seventeen times. Louverture began building trust by being trustworthy himself. As C. L. R. James observed, “By his incessant activity on their behalf he gained their confidence, and among a people ignorant, starving, badgered, and nervous, Louverture’s word by 1796 was law—the only person in the North whom they could be depended upon to obey.” Because the culture he wanted was a straight reflection of his own values, Louverture walked the talk better than most. His commandment against revenge was put to the test after he defeated his rival Andr? Rigaud, a mulatto commander in the South, in the bloody War of Knives. Rigaud had not only rebelled against Louverture, but he had scoffed at the basis of his authority, proclaiming that the caste system, which put mulattoes just below whites and blacks at the bottom, was correct. Facing Rigaud’s last supporters, Louverture delivered his verdict: “Forgive us our trespasses, as we forgive those who trespass against us. Return to your duty, I have already forgotten everything.” For a culture to stick, it must reflect the leader’s actual values, not just those he thinks sound inspiring. Because a leader creates culture chiefly by his actions—by example. Make Ethics Explicit Every company likes to believe it has integrity, but if you asked its employees you’d hear a different story. The trouble with implementing integrity is that it is an abstract, long-term concept. Will integrity get you an extra deal this quarter? Unlikely. In fact, it may do the opposite. Will it make your product ship a week early? No chance. So why do we care about it? Integrity, honesty, and decency are long-term cultural investments. Their purpose is not to make the quarter, beat a competitor, or attract a new employee. Their purpose is to create a better place to work and to make the company a better one to do business with in the long run. This value does not come for free. In the short run it may cost you deals, people, and investors, which is why most companies cannot bring themselves to actually, really, enforce it. But as we’ll see, the failure to enforce good conduct often brings modern companies to their knees. One difficulty in implementing integrity is that it’s a concept without boundaries. You can’t pat yourself on the back for treating your employees ethically if you’re simultaneously lying to your customers, because your employees will pick up on the discrepancy and start lying to each other. The behaviors must be universal; you have to live up to them in every context. Understanding this, Louverture painstakingly, systematically, and relentlessly moved his slave army to higher and higher levels of conduct. He was not playing a short-term game; he was determined to create an army, and then a country, that people would be proud to be a part of. Because he was determined not just to win the revolution, but to build a great country, he knew he had to take the long view. Louverture’s new state would be based on personal industry, social morality, public education, religious toleration, free trade, civic pride, and racial equality. He emphasized that attaining these goals would be each person’s responsibility: “Learn, citizens, to appreciate the glory of your new political status. In acquiring the rights that the constitution affords all Frenchman, do not forget the duties it imposes on you.” His instructions to his army were particularly direct: “Do not disappoint me … do not permit the desire for booty to turn you aside … it will be time enough to think of material things when we have driven the enemy from our shores. We are fighting that liberty—the most precious of earthly possessions—may not perish.” Crucially, Louverture’s ethical instruction was explicit. Often CEOs will be exceptionally explicit about goals such as shipping products, but silent on matters such as obeying the law. This can be fatal. It’s because integrity is often at odds with other goals that it must be clearly and specifically inserted into the culture. If a company expects its people to behave ethically without giving them detailed instructions on what that behavior looks like and how to pursue it, the company will fall far short no matter whom it hires. This is why Louverture underlined his instructions with strict enforcement. Pamphile de Lacroix, a French general who fought against Louverture, wrote, “Never was a European army subjected to more severe discipline than that observed by Louverture’s troops.” The contrast with the French was stark. As C. L. R. James observed, “The soldier emigres, Dessources and some others, vicomtes, and chevaliers, broke the terms of the amnesty, destroyed cannon and ammunition dumps, killed all the animals, and set plantations on fire. Louverture’s Africans, on the other hand, starving and half-naked, marched into the towns, and such was their discipline that no single act of violence or pillage was committed.” When Louverture’s own army was starving during its campaign against the British, he nonetheless gave food to destitute local white women. He wrote: “My heart is torn at the fate which has befallen some unhappy whites who have been victims of this business.” The women reported the assistance that they had received from this “astonishing man,” and called the ugly old ex-slave their father. If you stop reading this book and go tell your friends that the slave who led the Haitian Revolution was called “Father” by the white women of the colony, they won’t believe you, because it’s unbelievable. But it’s true. Such is the power of ethics. By 1801, Louverture’s massive investment in the culture began to pay off. With blacks and mulattoes running the country, cultivation had been restored to two-thirds of its peak level under the French. Integrity proved its worth. WHAT HAPPENED TO LOUVERTURE? The end of Louverture’s story is dismaying. After Louverture wrote his constitution in 1801, Napoleon became furious at this display of independence and decided to overthrow him. The following year, Louverture’s second in command, the fierce General Jean-Jacques Dessalines, coordinated a double cross with Napoleon’s top general in Saint-Domingue. Louverture was arrested at a diplomatic meeting and sent by ship to France, where he would spend the brief remainder of his days being badly treated in a French jail. He died of a stroke and pneumonia on April 7, 1803. Meanwhile, Napoleon began restoring slavery throughout the Caribbean. It was this, in great part, that led Dessalines to turn against Napoleon. He united all rebel factions under him, defeated Napoleon’s army, and declared independence in January 1804. He changed the country’s name to Haiti, and later that year had himself proclaimed emperor. Dessalines completed the revolution that Louverture had spearheaded for so long, but he promptly made two decisions that Louverture would have abhorred: he ordered that most of the French whites in Haiti be put to death and he nationalized all private land, abruptly reversing much of the cultural and economic headway that Louverture had made. Though the French would eventually give Haiti diplomatic recognition in 1825, they would also exact cruel reparations for Dessalines’s shortsighted decisions, forcing Haiti to pay the modern equivalent of $21 billion for France’s loss of its slaves and plantations. These events continue to haunt the country, which remains the poorest in the Western world. Sad story, but how could it happen? How could Louverture, genius of culture and human nature that he was, not perceive the brewing treachery? In a sense, he was like the Greek hero Oedipus, who solved the riddle of the Sphinx but who couldn’t clearly see those closest to him. Louverture’s optimistic view of human potential blinded him to certain home truths. Because Louverture believed in the French Revolution and the freedoms it claimed to embody, he saw Napoleon as an enlightened product of the revolution rather than as the racist he was. In one outburst, Napoleon said: “I will not rest until I have torn the epaulettes off every nigger in the colonies.” Because of Louverture’s loyalty to France, he didn’t declare independence when the French army invaded, which would have united the whole island behind him. He vacillated. And because Louverture trusted—all too much—that his army would trust him to act for the best, he didn’t grasp that his soldiers were restless about everything from his position on agriculture to his constant efforts to attain a diplomatic solution with France, to his rule against revenge. Louverture did not grasp the emotional power of retribution, whereas Dessalines did. C. L. R. James put it well: “If Dessalines could see so clearly and simply, it was because the ties that bound this uneducated soldier to French civilization were of the slenderest. He saw what was right under his nose so well because he saw no further. Louverture’s failure was the failure of enlightenment, not darkness.” Yet though Louverture’s culture proved tragically difficult for his flawed subordinate to live up to, it had an enduring power. After Napoleon captured Louverture, he attempted to reinstitute slavery on the island—but was beaten by the army Louverture left behind. Though he was already dead, Louverture defeated his third European superpower. Napoleon suffered more losses in Saint-Domingue than he would at Waterloo, and these reverses forced him to sell Louisiana and parts of fourteen additional states to the United States for $15 million. The French emperor later confessed that he should have ruled the island through Louverture. HISTORICAL IMPACT The slave revolution of Saint-Domingue got into the area’s bloodstream and spread from island to island in the Caribbean. Later rebellions in Brazil, Colombia, Venezuela, Curacao, Guadeloupe, Puerto Rico, Cuba, and Louisiana were attributable, at least in part, to Haitian agents and their followers. These rebellions influenced the eventual withdrawal of the French, British, and Spanish empires from the region. In the United States, Louverture inspired the abolitionist John Brown to launch the raid on the armory at Harpers Ferry, which Brown hoped would prompt the local slaves to rebel. The attack failed and Brown was hanged, but the Harpers Ferry raid escalated tensions that, a year later, led to the South’s secession and the Civil War. While one of the greatest culture geniuses in history was unable to permanently establish the way of life he hoped for in his home country, he helped shift the Western world from a culture of slavery to one of freedom. Toussaint Louverture made missteps that locked him up for life, yet he helped liberate us all. 2 (#ulink_2eaa152f-edd0-53e2-a2c5-28114fe01b73) TOUSSAINT LOUVERTURE APPLIED (#ulink_2eaa152f-edd0-53e2-a2c5-28114fe01b73) I’m a murderer, n*gg*, but I don’t promote violence. —Gucci Mane The techniques Louverture used with rare ingenuity and skill work brilliantly at modern companies. KEEP WHAT WORKS When Steve Jobs returned to run Apple in 1997, the company was in bad shape. Really bad shape. Its market share had fallen from 13 percent when Jobs was fired in 1985 to percent, and it was only a quarter’s worth of cash from insolvency. When rival computer maker Michael Dell was asked what should be done with Apple, he said, “I’d shut it down and give the money back to the shareholders.” Even within Apple, almost everyone believed the conventional wisdom that the company’s death spiral resulted from what was known as personal computer economics. The theory of PC economics held that because the industry had commoditized PC hardware—there were IBM knockoffs everywhere—the way to make money was not to be a vertically integrated provider that gave the user the machine and its operating system, but to focus on the horizontal option: selling an operating system to run on someone else’s hardware. Nearly every analyst was pushing Apple to make its Mac OS operating system the company’s product. In 1997, Wired proclaimed: “Admit it. You’re out of the hardware game.” Even Apple’s cofounder, Steve Wozniak, subscribed to this view: “We had the most beautiful operating system,” he said, “but to get it you had to buy our hardware at twice the price. That was a mistake.” Steve Jobs disregarded that advice. In fact, one of his first acts as CEO was to stop licensing Mac OS to other hardware providers. The industry’s other article of faith was that companies needed to maximize market share by having a presence in every link of the computer chain, from servers to printers to PCs to laptops. Likewise, they needed to make PCs in all shapes and sizes for every possible user. But Jobs immediately killed the majority of Apple’s products, including most of its PC models, as well as all of its servers and printers and its Newton handheld computer. Why? Jobs saw the situation entirely differently. At an early all-hands meeting he asked, “Okay, tell me what’s wrong with this place?” He answered his own question: “It’s the products!” He went on to inquire, “So what’s wrong with the products?” and to answer himself again: “The products suck!” For Jobs, the issue was not the economic structure of the PC industry. Apple just needed to build better products. He would need to transform its culture to make that happen, but it would only happen if he built upon Apple’s strengths, not Microsoft’s. Integrating hardware and software had always been Apple’s core strength. At its peak, the company had focused not on industry benchmarks like processor speeds and storage capacity, but on building products such as the MacIntosh that encouraged people’s creativity. Apple did integration better than anyone else. Part of the magic was its ability to control the entire product, from the user interface to the precise color of the hardware. Jobs went out of his way to keep the employees who understood this, user-experience perfectionists like him. Jobs said about one such employee, the great designer Jony Ive, “He understands what we do at our core better than anyone.” The company’s famous Think Different advertising campaign, which launched in 1997, featured creative geniuses such as Gandhi, John Lennon, and Albert Einstein. Jobs explained: “We at Apple had forgotten who we were. One way to remember who you are is to remember who your heroes are.” For Apple to become great again, it had to build on the aspect of its culture that had distinguished it in the past. Jobs narrowed the product line to ensure that the company focused on delivering great experiences to individual humans rather than an impersonal set of specs, feeds, and speeds aimed at no one in particular. Over time, he would expand to include iPods, iPads, and iPhones, but he never went “horizontal”—he kept the software and hardware integrated. To further control the customer experience, Jobs even opened Apple Stores, which would become one of the best-performing retail businesses in the world. When Steve Jobs came back to Apple, it was ninety days from broke. As of this writing, it is the most valuable company in the world. When Apple was an industry joke, it must have been tempting to purge the old culture entirely. Jobs’s predecessor, Gil Amelio, tried to do just that. But like Louverture, the former slave who preserved the best parts of slave culture within his army, Jobs, the former founder, knew that Apple’s original strengths should be the foundation of its new mission. CREATE SHOCKING RULES Here are the rules for writing a rule so powerful it sets the culture for many years: It must be memorable. If people forget the rule, they forget the culture. It must raise the question “Why?” Your rule should be so bizarre and shocking that everybody who hears it is compelled to ask, “Are you serious?” Its cultural impact must be straightforward. The answer to the “Why?” must clearly explain the cultural concept. People must encounter the rule almost daily. If your incredibly memorable rule applies only to situations people face once a year, it’s irrelevant. When Tom Coughlin coached the New York Giants, from 2004 to 2015, the media went crazy over a shocking rule he set: If you are on time, you are late. He started every meeting five minutes early and fined players one thousand dollars if they were late. I mean on time. Wait, what? At first, the “Coughlin Time” rule went over poorly. Several players filed grievances with the NFL and the New York Times wrote a scathing critique: In the player-relations department, the reign of Giants Coach Tom Coughlin started poorly and is already showing signs of unraveling one game into the season. On the heels of Sunday’s 31–17 loss to the Eagles, the N.F.L. Players Association confirmed that three Giants had filed a grievance against Coughlin for fining them for not being early enough for a meeting. A few weeks ago, linebackers Carlos Emmons and Barrett Green and cornerback Terry Cousin, all free-agent acquisitions in the off-season, were fined $1,000 each after showing up several minutes early for a meeting, only to be told they needed to arrive earlier. Coughlin’s response to the reporter didn’t make him seem more sympathetic, but it did solidify his rule: “Players ought to be there on time, period,” he said. “If they’re on time, they’re on time. Meetings start five minutes early.” Was the rule memorable? Check. Did it beg the question “Why?” He had players asking everyone from the league to the New York Times “Why?” so, check. Did they encounter it daily? Yep, they ran into it every time they had to be somewhere. But what was he trying to achieve? Eleven years and two Super Bowl wins later, backup quarterback Ryan Nassib explained the cultural intention to the Wall Street Journal: Coughlin Time is more of a mindset, kind of a way for players to discipline themselves, making sure they’re on time, making sure they’re attentive and making sure they’re ready to work when it’s time to start meetings. It’s actually kind of nice because once you get out in the real world, you’re five minutes early to everything. In business, creating partnerships that work is a difficult art. Success stories such as the partnership of Microsoft and Intel or of Siebel Systems and Accenture become legendary, but for every success there are a hundred failures. It’s difficult enough to align interests in your own organization, where everyone works for you, but doing it between companies is close to impossible. In the 1980s, the business literature promoted the concept of win-win partnerships. Unfortunately, the idea was pretty abstract. How do you know if a deal is win-win? Can you actually determine when it’s fifty-fifty? The idea also failed to address the cultural adjustment required: if everything in a business culture is about winning, what behavior changes are necessary to achieve a win-win mindset? Finally, its meaning was easy to twist. Devious negotiators routinely said, “We want this to be a win-win.” In 1998, Diane Greene cofounded a virtualized operating system company, VMware, whose success depended on her partnership strategy. But she was entering a field that had witnessed the biggest win-lose partnership ever—Microsoft winning total dominance by “partnering” with IBM on the desktop operating system. VMware’s potential partners would be extremely skeptical of any independent-operating-system company proposing a similar “win-win.” So Greene came up with a shocking rule: Partnerships should be 49/51, with VMware getting the 49. Did she just tell her team to lose? That definitely begs the question “Why?” Greene said, “I had to give our business development people permission to be good to the partners, because one-sided partnerships would not work.” Her rule was actually met not with resistance but with relief. Her people wanted to create mutually beneficial partnerships, and Greene’s rule gave them permission. It was of course no easier to measure an exact 49/51 split than a 50/50 “win-win,” but Greene’s employees understood her underlying point: “If you’re negotiating something on the margin, it’s okay to give it to our partner.” VMware went on to create a stunning set of partnerships with Intel, Dell, HP, and IBM that propelled the company to a market capitalization of more than $60 billion. One of the most distinctive large-company cultures is Amazon’s. It promulgates its fourteen cultural values in a number of ways, but perhaps most effectively through a few shocking rules. One value, frugality, is defined as Accomplish more with less. Constraints breed resourcefulness, self-sufficiency, and invention. There are no extra points for growing head count, budget size, or fixed expenses. That’s a nice definition, but how do you drive home that you mean it? Here’s how: desks at Amazon were built by buying cheap doors from Home Depot and nailing legs to them. These door desks weren’t great ergonomically, but when a shocked new employee asked why she had to work at a makeshift desk, the answer pinged back with illuminating consistency: “We look for every opportunity to save money so we can deliver the best products for the lowest cost.” (Amazon no longer gives everyone a door desk, as the culture has now been set—and as there are cheaper alternatives.) Some of Amazon’s values are fairly abstract. Dive deep, for instance, encourages leaders to operate at all levels, stay connected to the details, audit frequently, and investigate more thoroughly when metrics and anecdotal evidence disagree. Great idea—but how do you drive this kind of thoughtfulness into the culture? The shocking rule that helps is No PowerPoint presentations in meetings. In an industry where presentations rule the day, this rule definitely counts as shocking. To convene a meeting at Amazon, you must prepare a short written document explaining the issues to be discussed and your position on them. When the meeting begins everyone silently reads the document. Then the discussion starts, with everyone up to speed on a shared set of background information. Amazon executive Ariel Kelman explains that the rule makes meetings much more efficient: If you have to talk about something complicated, you want to load the data into people’s brains as quickly as possible so you can have an intelligent, facts-based conversation about the business decision you’re trying to make. So, say you’re meeting to figure out pricing for a new product, you’ve got to talk about the cost structure, how much is fixed, how much is variable, and then there might be three different pricing models, each with pros and cons. That’s a lot of information. Now, you can sit and listen to someone pitch all of this information, but most people don’t have the patience to pay attention long enough to be effective in absorbing all of this data and it typically takes too much time. There’s been a lot of research done on this that shows that most people’s brains can absorb new information several times faster and more effectively by reading information versus listening to it. Also, asking people to present their plans in written format forces them to express their ideas with a deeper level of detail. A culture is a set of actions. By requiring thoughtful action before every meeting, Amazon moves its culture in the right direction every day. In the early days of Facebook, Mark Zuckerberg was keenly aware that the more people he got on his network, the better his product would be. As MySpace had far more users, Facebook had to outgrow them by building better software—software that had better features, was more user-friendly, and that excelled at identifying potential new Facebook users. Zuckerberg knew that he didn’t have much time: if MySpace got big enough, it might transform from an entertaining application into an invincible utility. Speed was the number one virtue he needed, so he created a shocking rule: Move fast and break things. Imagine you are an engineer hearing that for the first time: Break things? I thought the point was to make things. Why is Mark telling us to break things? Well, he’s telling you so that when you come up with an innovative product and you are not sure whether it’s worth potentially destabilizing the code base to push the product along, you already have your answer. Moving fast is the virtue; breaking things is the acceptable by-product. Zuckerberg later observed that the reason the rule was so powerful was that it stated not only what Facebook wanted, but what it would give up to get it. After Facebook caught and passed MySpace, it had new missions to pursue, such as turning the social network into a platform. At that point, the move fast virtue became more liability than asset. When outside developers tried to build applications on Facebook, the underlying platform kept breaking, which jeopardized the businesses of Facebook’s partners. So in 2014 Zuckerberg replaced his by-now-famous rule with the boring but stage-appropriate motto Move fast with stable infrastructure. Cultures must evolve with the mission. When Marissa Mayer became CEO of Yahoo! in 2012, its reputation was of a company whose workforce didn’t give its all. She knew that to compete with her old company, Google, she would need a better effort from the team. She began by trying to lead by example, working relentlessly long hours. Yet she kept arriving at work to see an empty parking lot. So in 2013, Mayer created a rule so shocking that it created massive backlash not only inside but even outside the company: during work hours, you must be at work. Nobody is allowed to work from home. But this was the technology industry—the industry that had invented the tools that enabled people to work from home! As the world exploded in anger, Mayer calmly explained her position. She had examined the virtual private networking logs of employees who were working from home; they had to use the VPN to securely access their work files. The logs showed that most people “working from home” had in fact not been working at all. She shocked people because she had to make a dramatic cultural change. It’s worth nothing that while Mayer succeeded in building assiduousness back into Yahoo!’s culture, she never quite turned the company around. That’s the nature of culture—it helps you do what you are doing better, but it can’t fix your strategy or thwart a dominant competitor. DRESS FOR SUCCESS When Mary Barra took over as the CEO of General Motors in 2014, she wanted to dismantle the company’s powerful bureaucracy. It stifled employees and disempowered managers: rather than communicating with employees and giving them guidance, the managers relied on the extensive system of rules to do the job for them. The ten-page dress code was the worst example. To shock the system and change the culture, Barra reduced ten pages to two words: dress appropriately. She told the story at the Wharton People Analytics Conference: The HR department started arguing with me, saying, it can be “Dress appropriately” on the surface, but in the employee manual it needs to be a lot more detailed. They put in specifics like, “Don’t wear T-shirts that say inappropriate things, or statements that could be misinterpreted.” Barra was perplexed. “What does inappropriate, in the context of a T-shirt, even mean?” she asked the audience, half-jokingly. So I finally had to say, “No, it’s two words, that’s what I want.” What followed was really a window into the company for me. Barra promptly received an email from a senior-level director: He said, “You need to put out a better dress policy, this is not enough.” So I called him—and of course that shook him a little bit. And I asked him to help me understand why the policy was inept. The director explained that some people on his team occasionally had to deal with government officials on short notice, and they needed to be dressed appropriately for that. “Okay, why don’t you talk to your team,” I replied. He was an established leader at GM, responsible for a pretty important part of the company, with a multimillion-dollar budget. He called me back a few minutes later, saying, “I talked to the team, we brainstormed, and we agreed that the four people who occasionally need to meet with government officials will keep a pair of dress pants in their locker.” Problem solved. The change sent a lasting visual message to GM’s entire management team. Every time a manager saw an employee, it would trigger the thought, Is he dressed appropriately? And, if not, What’s the best way for me to manage that? Do I have a good enough relationship with him to communicate effectively on this sensitive issue? The new code empowered—and required—managers to manage. When Michael Ovitz ran Creative Artists Agency, Hollywood’s leading talent agency, he, too, had no explicit dress code. But he absolutely had an implicit one. “In the mid-seventies, we lived in a world coming off sixties culture, where everyone wore jeans and T-shirts,” Ovitz recalled. “That’s what I needed to counter-program.” The dress code he landed on came from the culture of authority he sought: “If you walk into the room wearing an elegant dark suit, you pick up unbelievable positioning power. If you want respect, carry yourself in a way that commands it.” Ovitz wore elegant dark suits every day, leading by example. He never explicitly asked anyone to follow his lead. That didn’t mean there weren’t consequences if you didn’t. “There was a downpour in LA, and some people came in in rain boots and jeans. I went up to one agent and said, ‘Nice outfit. Are you working on set today?’ And that rattled through our business.” Ovitz was giving him the hip-hop ultimatum: Are you a hustler or a customer? Are you a world-class agent or a wannabe actor? This steely but largely unspoken approach soon shifted CAA to nearly complete dress code compliance. “The only exception was our music department, because musicians don’t like guys in suits.” The results of the code on the culture were profound: It became part of our ethos: we were classy, elegant, conservative businesspeople. It spoke to everything we wanted to be without our having to say it out loud. Through our culture we built our business to a place where people respected it due to the culture itself. How you dress, the most visible thing you do, can be the most important invisible force driving your organization’s behavior. Ovitz sums it up: “Cultures are shaped more by the invisible than the visible. They are willed.” INCORPORATE OUTSIDE LEADERSHIP—HEY, MOTHERFUCKER! When I was CEO of LoudCloud, I had to shift the company from a high-flying cloud services company into a grind-’em-out enterprise software company so we could survive. After the dot-com and telecom crashes of the early 2000s, the market for cloud services had gone from nearly infinite to nearly zero overnight. After we squeaked through the transition as a new company called Opsware, we found ourselves getting killed in the software market by a competitor named BladeLogic. I knew that to compete with them we needed a major cultural change. At LoudCloud, we began with unlimited demand and built a culture oriented around fulfilling it. So we were focused on empowerment, removing bottlenecks to growth, and being a great place to work. To succeed as an enterprise software company, selling our platform to big businesses, we would have to become a culture distinguished by urgency, competitiveness, and precision. I needed to bring in a leader with those attributes. The person I hired as our head of sales, Mark Cranney, was not a cultural fit with the rest of us. In fact, he was a complete cultural misfit. Our employees were mostly irreligious Democrats from the west coast who dressed casually and who were cordial and easygoing. We assumed that everyone had the best intentions. Cranney was a Mormon Republican from Boston who wore a suit and tie, was deeply suspicious of everyone, and was one of the most competitive people on earth. But over the next four years he not only saved the company, but got us to an outcome nobody would have believed. I knew why I hired Mark: when I interviewed him, I could tell he had the urgency, the know-how, and the discipline we needed. But I did not understand why he took the job. He knew we were losing and, given our granola-eating demographics, that we were probably losers. So what made him take the risk? I recently asked him, and his reason surprised me: I had risen as far as I could at an east-coast-based company called PTC; they had nepotistic politics at the top level. I must have looked at forty sales jobs in Boston and there was nothing good. The Opsware recruiter called several times and I finally called him back and said, “I’m not going to California. In California the real estate sucks, the culture sucks, and they don’t appreciate the sales side. Plus, isn’t that the company the BladeLogic guys call Oopsware? What do you think, I’m fuckin’ stupid?” He keeps calling and finally, I say “Fine, I’ll go meet Marc and Ben, but that’s it.” [Marc Andreessen was the company’s cofounder.] Then I look at my BlackBerry when I land in San Francisco and I see there’s a whole fucking crew I have to interview with. Конец ознакомительного фрагмента. Текст предоставлен ООО «ЛитРес». Прочитайте эту книгу целиком, купив полную легальную версию (https://www.litres.ru/pages/biblio_book/?art=48654190&lfrom=688855901) на ЛитРес. 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