Building a Culture

Q. I own a small business. I believe that building the right culture is important, but I’m not sure how to do it. In fact, I’m not even really sure how to define culture. Can you help?

A. Supreme Court Justice Potter Stewart famously said of pornography, “It’s hard to define, but I know it when I see it.” In the same way, a great corporate culture can be difficult to define, but you know it when you see it. When you walk the halls of a company with a great culture, you know it. Certainly when you work there, you know it.

Defining corporate culture can be challenging, but we have used a rather simple definition for years, “Culture is how we get things done.” It’s that simple. It’s also that complex. How do you decide the way that things are going to get done? One thing is for sure, it starts at the top. It also starts at the beginning. A company’s culture isn’t something that gets built after it “grows up.” Culture is formed from Day 1.

Corporate culture is often passed down from experienced employee to new hire in the form of stories. At McKinsey & Company, one of the preeminent management-consulting firms in the world, new associates are told stories of Marvin Bower, the firm’s patriarch, turning down lucrative business because he didn’t think the client would implement the recommendations.

Marvin didn’t want to accept fees when he didn’t think the client would benefit -- he thought it was imperative to put the client’s interest ahead of the interest of the firm. This story happened in the 1930s, a time when the fledgling firm could ill afford to walk away from revenue. It was still being told 60 years later, and we suspect is still being told today.

Thomas Watson, the founder of IBM, wanted to create a culture that embraced failure and making mistakes. He is quoted as saying, “The way to succeed is to double your error rate.” Although Watson died in 1956, his legend of embracing failure and mistakes lives on. You may have heard the story of a 1940s IBM employee who made a mistake that cost the company about $1 million. Knowing that he was about to be fired, the employee typed up his letter of resignation, and handed it to Watson. Watson responded: “Fire you? I’ve just invested $1 million in your education, and you think I’m going to fire you?”

Capital One values analytic rigor. Stories abound of the early days when Rich Fairbank and Nigel Morris (the CEO and the president) met with business analysts to ensure that the analysis was accurate and to hammer out details of credit card offerings.

Stories are a powerful way to communicate how things get done -- the culture of the place. Sometimes leaders seek to solidify culture by writing the stories down. Marvin Bower published a book titled Perspective on McKinsey. It was given to every new associate but was never distributed outside of the firm.

Bill Marriott wrote, The Spirit to Survive, Marriott’s Way and put it in the bedside table of every Marriott hotel. Neither of these authors were trying to make money on their book. They were solidifying the culture of a company they loved.

However you define culture and however it gets communicated, there is very little in business that is more important than the culture of your company.