Chapter 4
Culture isn’t important – it’s everything
I truly believe that culture is the operating system of your company.
Every company has a culture. I’m not suggesting that what has worked for me over the years will work for everyone, but I couldn’t manage a company any other way.
At Com Tech we simply said:
We GENUINELY take care of our
Otherwise SOMEONE ELSE WILL.
You will notice that I have emphasised one of these important constituents: shareholders. Of course they’re important, especially if you’re one of them. However, I sincerely believe that if you genuinely take care of customers, staff and business partners, then your shareholders are going to be well taken care of too.
Taking care of customers, staff and business partners would be so simple to achieve if you didn’t have these other balls to juggle called cash flow and profitability. It would be easy to keep staff happy if you paid twice market-related salaries and told them, ‘Hey, this is a stressful industry, so don’t take four weeks leave, take eight.’ As a staff member you would have to keep your CV current, because it wouldn’t be too long before the company went broke and you needed to find a new job.
A buy now pay later (BNPL) provider offering a retailer its service for free when the industry average was a 4 per cent fee, or offering a full-featured product as a freemium version forever, would make you a great supplier – but for a very short period of time.
Somehow, you have to deliver unbelievably high levels of staff satisfaction, provide an amazing product combined with legendary customer service, and still make a buck at the same time. I told you this wasn’t going to be easy.
I know that Com Tech’s company philosophy was very similar to that of most companies. Did you ever hear a founder say: ‘Our number one asset is our furniture; number two, motor vehicles; number three, computer equipment; and number four … drum roll … our staff’? Or: ‘We don’t give a shit about customer service’? Of course, every company says that ‘Our number one asset is our staff and we are committed to providing legendary service’ – but how many actually deliver?
The difference was, we really did! We walked the talk and that is what culture is all about. It’s not about practising yoga at work, having a ping pong table in the lunch room or bringing your puppy to the office – it’s doing what you say you’re going to do, every single day. Whatever that may be.
Every day I worried about what more we could be doing for our customers and staff. I fully support Richard Branson’s sentiment: ‘Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.’ It’s not rocket science – happy staff will lead to legendary customer service. Excellent customer service means higher sales, repeat business and referrals – there is no better salesperson than a happy customer.
You only realise the importance of culture when you work in a toxic environment. I was asked to chair a financial services company, which was built on aggregating a number of independent financial-planning companies. The aim was to combine a number of leading financial planners and then IPO the company (initial public offering – list the company on the ASX). The planners were going to make millions. The trouble was, nobody planned on a global financial crisis. The IPO was put on hold and the planners then thought: What have we done? They did it for money, not love, and when the cash disappeared, the shit hit the fan. Nobody wanted to be there, but it was too late.
At the time, the company was owned by a large private equity (PE) company and I agreed to help out to try and save the business. I committed 20 hours a week. I started work on a Monday and by lunchtime Tuesday I had done my 20 hours. I called the head of the PE firm and said, ‘Bill, if I wanted to work this hard, I would be doing this for myself.’ I needed help. He sent his board representative, Ben, to work with me. Ben is a seriously smart Harvard MBA – and someone I very much enjoyed working with. We really had complementary skills.
What surprised me most – and I will never forget this – was when Ben said to me, ‘Dave, I never knew how important culture was until I met you.’ That was a huge compliment, coming from someone like Ben. It was a good lesson for me, too. I wanted to see whether my management principles would be as effective in financial services as they had been in technology. They sure were – people are people. There is no difference between a financial planner and a Java developer. There is no difference between a client looking for outstanding financial advice and a client looking for outstanding technical help. How much is culture worth? In this case, $160 million – that is what the PE firm eventually sold the company for. I know that it was pretty much zero when I got there.
But it could have been a whole lot worse. Ask Travis Kalanick, founder of Uber. Uber was supposed to IPO at $120 billion, but only got away at $75 billion – a $45 billion hole caused by a toxic culture. Instead of being able to focus solely on the business, the new Uber CEO Dara Khosrowshahi first had to fix Uber’s culture. He’s doing a great job!
As a founder, make sure that what you say, you do. As you grow, it is important to ensure that the management team you have hired not only meet their objectives, but also share the values of the company you have created. It’s hard enough running a well-managed company – don’t make it even harder by having a poor culture.
So, does a great culture mean a great business? You can’t have a great business without a great strategy – but try executing a great strategy with a lousy culture. It just won’t work.
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