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The value of company culture

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Culture stems from values

As a start-up or business grows, it becomes increasingly important that you can trust your fellow co-workers to make decisions independently that aligns with your organization’s overlying mission and goals. Without a clear definition of values, people either end up making wrong decisions or are confused and end up escalating problems, which is an inefficient process.

Values act as moral compasses that steer your people in the right direction and help them make decisions (especially the difficult ones). Therefore, it is important for founders to establish what values they want their company to have. The way a founder operates and acts will define the values and culture of their company because their people are like children, who learn more from the way their founders execute, rather than what they say.

The whole point of being a founder is you get to build the business you want to work at. Your business, your values.

Shiyan Koh

Hopefully it (your business) is also where other people want to work at. Leadership should always be open to feedback from past and current employees on how to improve the company culture. Good reviews can help your company recruit other good people to join.

Source: Glassdoor.com, Xendit company review

Defining values

Since culture stems from values, founders should try to define these values early on, as values are principles that guide internal conduct. Values may lead people to go out of their way to do the right thing, but misdefined values may cause people to misrepresent these values through negative behaviors.

Netflix

Netflix’s culture deck highlights that the company values integrity, excellence, respect, inclusivity, and collaboration are well-known for its unusual employee culture where they:

  1. encourage independent decision-making by employees
  2. share information openly, broadly, and deliberately
  3. are extraordinarily candid with each other
  4. keep only their highly effective people
  5. avoid rules

Netflix shares that their core philosophy is to put people over process. They make it clear about the trade-offs they are making when they lay down their company culture. Employees know that Netflix will not hesitate to fire people who are not the best for their roles because they understand that what “is best for Netflix” is to hire someone more skillfully suited for the specific role.

NerdWallet

NerdWallet founders defined their values by gathering people from across the company and asked them to define who they are now as a company and what they wanted to be.

NerdWallet established the following as their core values:

1. Make decisions based on order of importance: consumer, company, team, self

2. Drivers before solutions:

This value was particular to NerdWallet’s founder,Tim, who is a very cerebral person. He would often question the driver behind doing anything and preferred to go slow before going fast to avoid wasting resources on random solutions.

3. Healthy relationships, hard conversations, which later changed to “candid and constructive”:

They wanted to create an environment where people were welcome to give feedback, which surprisingly caused others to feel bullied because some were taking the values too literally. They then changed it to candid and constructive to soften the hard conversations a little bit.

4. Relentless self-improvement:

They put this value to practice by requiring each employee to have one of their OKR on how to become a better version of themselves.

5. Hypothesize, build, measure, learn:

To encourage people to run experiments rather than sitting and thinking all day.

These values may be suitable for larger organizations (300-400 people) but not be neccessary or suitable for a  small 10 person organization. 

Xendit

Xendit’s values were built from the bottom-up too — Xendit founder, Moses, had asked each team within Xendit what they thought their values were and what they used to drive decisions to come up with the following:
1. Solve for customers

Every person and team in the organization exists to serve their customers. A customer can be internal or external. We are here to listen and to understand our customers’ needs better than they do and deliver a solution that exceeds their expectations

2. Build a family of honey badgers (a mammal known for its aggressiveness, intelligence and ability to work as a team):

As a startup, Xendit does not have the luxuries afforded to other companies like funding, number of people, influence, etc. What we have is a tight-knit family that will continue to fight off larger threats until we win.

3. Be trustworthy:

Trust is central to how Xendit operates. We can only grow if we trust, we can only be creative if we trust, we can only understand each other if we’re willing to trust that others will do the same. 

4. Be golden:

Treat others as you would like to be treated. This is how we spread our culture and influence others.

5. Grow:

People are the foundation of Xendit, if people do not grow, then our company cannot grow. Therefore, it is the responsibility of each individual to grow in order to guide themselves, their team, and our company towards new heights.

Defining culture

When thinking about culture, there are a few frameworks founders and leaders can subscribe to. Brian Chesky defines culture simply as “a shared way of doing something with passion”. For our readers who prefer more immediately actionable definitions of culture:

  1. Justin Kan says that culture is an extension of the organization’s founders – how the founders operate and what their habits are. Meaning if a founders want to change company culture, they need to start with themselves.
  2. Culture are the rules by which we humans interface with each other, a company’s operating system. This definition frames culture as interactions between different groups within a company and it specifies where to focus (i.e. communication and processes). For example, Xendit tries to delete as much processes as possible to drive the culture of ‘flexibility’. 
  3. Culture is who you hire, fire, incentivise and punish. If you subscribe to the thesis that culture is formed by people, then culture is a function of the people that exist and the people you choose to hire and fire decides who can affect culture. Finally, what we corporately incentivise and punish shows where our values lie in a very actionable way. It also lends itself for leadership to be very conscious about how it’s building culture at scale. In the startup world, things move quickly and people who don’t produce output fast enough will not stay long. 
  4. Traveloka founder and CEO, Ferry Unardi, explains that culture is hard to control but can be formed and reinforced by the legends, rituals and symbols. This is also seen at national levels (anthems) and across cultures that permeate thousands of centuries (religions). And usually, this is what most people associate with culture.

Culture is a dynamic thing, it is a living and breathing thing

Culture is how people interact with each other and it changes as you add and lose employees. And it is important to remember that sometimes change can be good.

Because culture is a shared pattern of interactions, it is dynamic and changes as employees are added and leave

@HustleFundVC

Since culture is ever changing, founders get to decide how they want to operate, and what they want to push everyday to their organizations. As organizations grow, managing a larger group of people requires a different culture than the culture of a much smaller organization, prompting a change in culture.

For example, Facebook changed their culture from “move fast and break things” in 2004 to “move fast with stable infrastructure” in 2014.

Source: @HustleFundVC
Source: @HustleFundVC

Culture in practice

Culture is about inspiring more people to want to do more stuff together so that they can work together better.

Shiyan Koh

Shiyan’s partner, Eric, worked at Facebook on the Ads algorithm team and was compensated based on the volume of code his team shipped instead of increments in revenue (which Ads were directly linked to). Sometimes culture is impersonated through the way you compensate and incentivize in-house production. During a quarterly meeting with Mark Zuckerberg, Zuckerberg said that Facebook did a study on compensation drivers and found that teams that shipped more code learned more and brought more value in the long run for Facebook. The fact that Facebook wanted to optimize long term value add, instead of quarterly revenue showed how Facebook stood by their culture of “move fast and break things” (and learn to improve after you break them).

Rituals

Beyond day to day activities, it is important to have traditions that disseminate the organization’s values to the people. Rituals reinforces who people are, what the company values and are usually what people remember most. 

At NerdWallet, whenever someone new joins the company, they have a ritual to select a book to fill the company library (that any employee can borrow from) in line with the company’s value of “relentless self-improvement”. NerdWallet also holds an annual charity auction for all employees to come together and be part of building healthy relationships. Xendit has birthday rituals that has followed them through office relocations (from houses with pools to now, a building with an inflatable kiddie pool) where the birthday person would be dumped into the pool by their fellow coworkers, a joyous but wet ritual.

Source: Xendit, Moses Lo, Xendit founder, going through the ‘pool’ dump ritual on his birthday

If you want to build a ship, don’t drum up the people to gather wood, divide the work and give orders. Instead, teach them to yearn for the vast and endless sea.

Antoine de Saint-Exupéry

This article highlights the discussions during our public XenTalks event with Shiyan Koh and Moses Lo.

Shiyan is Managing Partner at Hustle Fund; a pre-seed firm founded by former 500 Startups partners Elizabeth Yin and Erich Bahn. Prior joining Hustle Fund, Shiyan was the VP of Business Operations and Corporate Development at NerdWallet, a personal finance company where she was employee #10, and now worth in excess of USD500 million. Shiyan holds an MBA at Harvard Business School and a BA from Stanford University. She writes blogs in her spare time.

Moses is the CEO and founder of Xendit, one of Forbes Asia’s 30 under 30. Moses has expertise in diverse sectors, from being in BCG to years of exposure in working and gaining experiences in various Silicon Valley companies, such as PayPal, Amazon, Expedia, Microsoft, IBM, and Ripple Labs. Xendit is the first Indonesian startup that graduated from Y Combinator (The world’s best incubators in the direction of Paul Graham who invested in companies such as Dropbox, Airbnb, Reddit) in San Francisco.

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