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Creating the right culture in a business

IT SEEMS obvious that, for a company to succeed, it needs the right products. But many people believe the right culture is just as important. Creating that culture has been the holy grail for managers ever since Tom Peters and Robert Waterman focused on the issue back in 1982 in their book “In Search of Excellence”. The idea is back in fashion today.

A prime example is a new book called “What You Do Is Who You Are: How to Create Your Business Culture” by Ben Horowitz, of the venture-capital firm Andreessen Horowitz. Mr Horowitz uses some unexpected case studies—Genghis Khan, Japanese samurai, Toussaint Louverture (leader of a slave revolt in Haiti) and a reformed gang leader called Shaka Senghor.

It is easy to sense some wish fulfilment in these archetypes: the Silicon Valley tycoon, armed only with a spreadsheet, seeing himself as the modern equivalent of a historical warrior. That sense is heightened when Mr Horowitz talks of the contrast between “wartime” and “peacetime” chief executives, an analogy seemingly drawn from “The Godfather”, a movie about the mafia.

Thankfully, the book is not the orgy of macho chest-thumping that these examples might suggest. Mr Horowitz draws some thoughtful lessons from each of his examples. Take Genghis Khan, best known for his rapid conquests and bloody massacres. The leadership lesson that the author draws relates to Genghis’s meritocratic approach; he was willing to promote people from conquered tribes and allowed religious freedom in his empire. The only condition was allegiance to his rule.

Toussaint Louverture was notable for his strong ethical code and his willingness to forgive his enemies; he even allowed slave owners in Haiti to keep their land, provided they agreed to reward their workers properly. Shaka Senghor also imposed a strict code of behaviour on his prison gang.
The underlying principle is that culture cannot be merely a pious-sounding mission statement in the annual report. It has to be expressed in the form of actions on a daily basis. The goal is to embed the culture so deeply that employees will behave in the right way when no one is looking.

Leaders set the tone. If they lie, shout or swear, then others will do the same. The corollary is that if they want to encourage good behaviour, they have to get involved. Companies may want a diverse staff but all too often, Mr Horowitz says, they try to achieve this by appointing a “head of diversity” or hiring consultants. At Andreessen Horowitz, managers are required to consult more widely by asking, for example, African-Americans what talents they would be looking for in a new candidate. The firm’s staff is now 55% female and 22% African-American.

Some cultures have bad effects, of course. At Uber, the ride-hailing company, values were encapsulated in such slogans as “champion’s mindset” and “always be hustlin’ ”. The effect was to create a highly competitive culture that eventually led to several scandals and the departure of Travis Kalanick, the co-founder. Mr Horowitz argues that Uber’s board should have realised that the firm’s aggressive culture would inevitably lead it into difficulty.

The author’s examples are certainly colourful but they seem just as likely to have inspired Mr Kalanick as they might a culturally sensitive chief executive. Running a business is not like conducting a war where the only goal is victory and any casualties are simply regarded as collateral damage.

It is also worth remembering that Genghis Khan’s empire disintegrated within a generation of his death and that the Japanese economic miracle only occurred after they had thrown off the rule of the samurai class. Great leaders in history have not all been men of violence; some have been women. Managers looking to set the right corporate culture might want to draw their role models from a more diverse group.

This post was originally posted at https://www.economist.com/business/2019/10/20/creating-the-right-culture-in-a-business.

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