Unless the current market conditions haven’t affected your business, chances are your company’s culture has been put to the test recently. Just last week, the founders of AirBnb were challenged to reconcile their ideal of “treating employees as family” with the economic reality of having to enact layoffs.
I’ve written about culture numerous times in this column. I have had the great opportunity to build and scale global teams. And I have experienced the difficulties of building lasting high performance cultures (we started documenting these learnings in a book over a decade ago).
Everything they say about culture is true: “it IS the only sustainable competitive advantage”.
It’s no surprise then that most leaders have latched on to the idea; according to a recent Sloan MIT Survey, more than 80% of organizations have published an official set of corporate values on their website. Yet, when the survey team asked if they had been respected and applied, the answer seems to be “Not So Much”.
Theories are great. But actions matter most. Let’s dive into how one of the world’s leaders in culture-building did it. We’ll close with 2 practices you can enact today, which are likely to help you, your team and your company.
Leadership & Culture
Respect The Data, The Process & The People
In his book Principles, Ray Dalio does a great job documenting how he built and “operationalized” a culture that values an “idea meritocracy”, radical truthfulness and transparency.
The best example of how Dalio’s team did it is the system they built in order to document and understand the decisions of their employees. The system is called the “dot collector” and it is used to determine how decisions are made throughout the company.
The “dot collector” is an application that meeting attendees use to rate the decision making process of colleagues during meetings. By doing so, the “dot collector” collects data about how people view others’ decisions and it also gives the company a perspective into the profiles of the people judging. The “dot collector”, in turn, creates a map of all of Dalio’s employees so he can understand them better and pair them into teams where skills can be complemented and better performance achieved.
This process, which he’s dubbed “algorithmic decision making”, enables the best ideas to be created. He calls the benefit of this system “idea meritocracy”, a state where decisions are neither imposed by the authority of one (“autocracy”), nor the result of compromise to match the desire of all (“democracy”).
If that feels like too much, that’s because few organizations operate this way, and because they haven’t operationalized their beliefs into daily habits. A side effect is that they often let go of the wrong people.
What can you do?
Designing a system like Dalio’s might not be for everyone but you might want to consider implementing 2 practices:
1 - Flag and Fight “HiPPO decision making”
HiPPO is an acronym for the "highest paid person's opinion" or the "highest paid person in the office." The acronym is used to describe the tendency for lower-paid employees to defer to higher-paid employees when a decision has to be made. As Dalio’s example illustrates, the best decisions are rarely made by a few powerful people at the top of your organization’s hierarchy. If you’re an executive at a company that suffers from it, you have the responsibility to fight “HiPPO decision making”. If you’re not in a position where you can change it, flag it!
2 - Mindset Switch: Excellence is not a given
“Everything happens for a reason” is an adage people use to justify decisions they can’t explain. Reject the adage and inspect the actions that have led to the poor decisions. Document them and make sure that they are exposed. The best strategy I have used to accomplish this goal is the “Pre-mortem”; a meeting that you can run before decisions need to be made or actions need to be taken. Gather your team and ask them to imagine all the reasons that would lead to poor decisions and poor results. Ask people to explain why and how bad decisions would occur. Then, proactively prevent the issues the team has anticipated. And say goodbye to the adage “everything happens for a reason” so you can avoid admitting that “perhaps we’ve been really bad at making decisions!”.
Finally, if you have not read Horowitz's book on culture, I highly recommend it. The title says it all: “You Are What You Do”. That’s right. Culture is not a set of words on wall drawings. It’s not ideals touted in a press release or on a website. It’s the actions that you allow every day. It is the processes you put in place to make sure your culture respects its data and its people.
Culture is the only sustainable advantage, and perfecting it might take you many tries, but it should definitely be a priority. I hope the above helps you in your quest.
Good luck!
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