NEW YORK, United States — No one gave me a recipe for how to create company culture. I have been lucky to piece together the wisdom of many who have gone before me.
Most of the time when you need something at a young company, you make it. If you want to sell a product, you create it. If you need a head of marketing, you hire one. If you want to create a great company culture, what do you do?
The lack of a clear answer on this is why I believe most companies don’t have a great culture. They want culture to matter, so they say it does — but caring about having a great culture isn’t the same as having one. The reason? It’s not obvious how to make great culture. Sometimes, it can feel as if it is revealed to you, like a religious mystery. But do not despair. My belief is there is a science to it, although the recipe calls for ingredients that are not easy to conjure.
Culture is an output of a bunch of inputs that have to come together the right way. Specifically, it is the collision of people and their context, how they interact with each other in that context, and how that context evolves based on those interactions as they multiply. By the time you see a culture is bad — or more often (and just as pernicious) only okay — it’s a complex thing you’re dealing with, like a Mexican mole sauce with 29 ingredients that tastes funny but you don’t know why. To influence it can seem overwhelming. But it can be influenced if you have a passion for doing something incredibly hard — which is not only articulating what your culture is, but also influencing it by determining who gets to stay to create it.
This is hard to say because it sounds mean: the people you fire are more important to your culture than the people you hire. It’s a half-truth, as you have to hire people who are an outstanding fit, but an important half-truth because the best way to protect the environment is to recognise where you have erred and course correct. You reveal that culture as a by-product of who stays and who goes, and to effectively experiment your way into what your culture is by learning who fits and who doesn’t — and by learning what exactly it is they are fitting into. To do this requires courage and confrontation. You muster both of these by telling yourself it’s what you must do to make the company safe for your best people, which should be the only people.
By the time you see a culture is bad — or more often (and just as pernicious) only okay — it’s a complex thing you’re dealing with, like a Mexican mole sauce with 29 ingredients that tastes funny but you don’t know why.
During a scary moment of meaningful turnover during Bonobos’ early days, we articulated what we viewed to be the five core human values of the best people we had ever hired. These traits became our core virtues — self-awareness, positive energy, empathy, intellectual honesty and judgment — the centrepiece of what we look for in who we hire, promote, and fire. The bad news? It’s hard to find people who meet all of your criteria. The good news? There are a lot of people in the world and the difference between being willing to do the hard work of finding them and not doing so is the distance between mediocrity and greatness.
When hiring, it is tempting to employ someone who has done it before. You actually don’t want that person. You want someone who is about to do it. After all, if they’ve done it before, why would they do it again? Either they’re not ambitious, not growth-oriented, or weren’t that good in their previous role. No matter which it is, you don’t want them. This is one way to screw up your culture — experience-based hiring leads to bringing in those who have the right credentials, but not the right fire in their soul.
Once we put our core virtues in place, I wrongly thought we were done. We were only half way there. Half of fit is about personality; the other half is passion for the mission of the company. To gauge this, you need to actually know what the mission is. Most founders I talk to can’t articulate what their mission is — I would know, because I was one of them. When we finally articulated our mission, it enabled us to hire the right technology leader for the first time in six years after multiple tries. We’re now building the best software engineering team in the history of branded apparel retail because we finally did the hard work of finding someone who loves technology and clothes.
You’ve got the right people. Now you’re done, right? Wrong. People are only part of culture. The other part is the context in which they operate, which is influenced by myriad things: goals, feedback, promotions, compensation, seating arrangements, what’s celebrated and what’s left unsaid. Any of these are an essay in themselves, so here’s my belief on the most important things to do if you want to create the right context.
There are two basic ways to motivate people: fear and joy. I think the former is easier in the short term, and the latter is harder but more sustainable for the long term. I once thought that holding up a high bar for our team and withholding praise was a way to get the best out of people. I was wrong. From Joel Peterson I’ve learned that there are no diminishing returns to specific positive feedback.
We’ve made company-wide recognition a core part of every team meeting. More important are the back-channel conversations, the hand-written notes, the quick emails, the one-liners to honour people when they’ve done well, to be specific about what they’ve done well. Most important is to build a leadership team that observes the John Gottman principle that the healthiest relationships of any kind have a 5-to-1 ratio of positive to negative feedback. You have to develop a well of goodwill to be able to criticise someone. They need to feel they are in safe place to be able to see the ugly truths with you.
We once built a California office for our NYC-based company. That was a mistake. By creating a second office at this early stage in our company’s history, people couldn’t see who they were working with and they certainly couldn’t trust them. We ended up with two cultures, a costly travel budget, and a HipChat account that, while active, was woefully shy of the in-person collaboration required between groups to build a high-performing company culture. recognising that for all the benefits of jet travel and Skype, trust and tribalism are still powerful forces of human nature which create in-groups and out-groups in no time — this insight informed a momentous decision to close that Palo Alto office even though we had just built a great software engineering team and informed other decisions back at our reunited HQ, like the decision to invest in stairwell access and glass walls. It’s easier to trust what you see and it certainly makes it harder to throw stones. In 2011, Crain’s named us one of the top places to work in New York City. We fell off in 2012, the year we had a California office. After closing it in early 2013, we came back on. This might all be a coincidence, but I doubt it.
What’s more, if you want people to think like owners, make them owners. The balance sheet of most clothing companies are structured to assume that their owners are geniuses, their leaders are the only other ones who might deserve equity and that everyone else is a peon. This can’t be true. At Bonobos we are structured more like a Silicon Valley technology company than a clothing company and I believe this is a source of competitive and cultural advantage for the long-term. The best way to have a child behave like an adult is for them, over time, to become one. If you want an employee to act like an owner, why not simply make them an owner?
There is a saying: that which doesn’t kill me only makes me stronger. I disagree. It might make you stronger. It might also make you weaker, and I’ve seen people made weaker by the things that nearly killed them.
Similarly, I think the idea that you learn as much by losing as you do from winning is dangerous. Who do you think has more insightful learnings about the game of baseball over the past fifteen years — the Chicago Cubs, or the Boston Red Sox? I’ve been a Cubs fan for thirty-five years, my dad has for nearly seventy years, and we can tell you, you have nothing to learn from us. That’s why we just hired a new president. From Boston. Two years ago, our site fell over on Cyber Monday. We recovered impressively due to the amazing work by our customer service team, the Ninjas. Last year, we had an aggressive Cyber Monday plan at Bonobos. The goal was nearly $2 million in web sales. We hit it, right on the money. I think hitting our plan in 2013 — as a function of the whole company coming together — was a greater cultural moment than reacting to the crisis.
Coming together when you are losing is required to build a great team, but winning more often than you lose is required to build a great culture.
Andy Dunn is the co-founder and CEO of Bonobos Inc., a New York-based startup that has helped to define and prove a new model for vertically integrated fashion retail in the e-commerce era.
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