David Russo @ Business of Software. Company Culture.

“Company Culture and its DNA: “For Better For Worse, For Richer For Poorer …”

Bio – David Russo is Founder and President of Eno River Associates, Inc., a coaching and consulting practice which advises companies and executives on employee engagement issues, “Employer of Choice” initiatives, optimizing executive search efforts, and Human Capital Management best practices including HR technology choices. He is also the author of a “wake up call” talent management book, 17 Rules Successful Companies Use to Attract and Keep Top Talent. Previously, David was Chief People Officer for Peopleclick, Inc., the world’s premier vendor of strategic workforce acquisition software and services. He is also a past Vice President and Secretary/Treasurer for the world’s leading human resources professional association, The Society for Human Resource Management (SHRM), and served on the Board of The SHRM Foundation.

David Russo

David Russo

Leading a company is not a charitable event – being a great leader is not about being Mother Theresa.

The founding leadership in a business sets the world view, the tone for the culture that decides whether a business will succeed or fail in the long haul.

Three critical issues feed into the ‘DNA stew’:

  1. How do the leaders see and value people in the work place?
  2. How much control do those leaders need?
  3. How do you attract and retain people? What is the bonding agent between company, institution, enterprise and individuals?

DNA stew driven by:

How you select people?

Often, the first HR person in a business is CEO’s assistant, CFO is a part time person who works with one of angel investors, head of sales is first sales person etc. Networking is a key part of growth plan – I know someone… Needs are immediate and critical NOW. Not nearly enough thought goes into thinking about what is needed in the future. Everyone is always firefighting. Growing a company from the ground up means you are ‘birthing a tribe’. Need for cultural fit and camaraderie is critical early on in a business. Don’t just hire your friends and family, because it sucks when you have to fire them.

How do you control/unleash/co-ordinate people?

How do you control and move people? Charismatic leadership or process?

How do you attach and retain people?

Money is tangible compensation. The work in a startup is a key part. sending people on an important journey, do something important, be a part of something important. Love, for the community, camaraderie, liberte, egalite, fraternite’.

Three ingredients mix to create five distinct models of company culture.

  • Bureaucracy Model
  • Autocracy Model
  • Engineering Model
  • Star Model
  • Commitment Model

Bureaucracy Model – selection based on current competence. Coordination and control through policy and procedure. Most public institutions work on this basis. Attachment/retention based on the work and its value. BORING!

Autocracy Model – selection based on current competence. Coordination and control is direct – “When I want your opinion, I’ll give it to you” – WalMart. Attachment/retention based on money. No consensus management.

Engineering Model – selection based on current competence. Coordination and control is cultural. Retention based on doing cool stuff. Value is on achievement.

Star Model – selection based on potential upsides – stars from elite sources – Harvard, Stanford, Cambridge, Hull (I lied about that last one). Coordination and control is about professionalism. Push me, pull you. Attachment/retention based on meeting the challenge and being all that you can be. Value – autonomy, independence, rapid growth.

Commitment Model – selection based on fit – one heartbeat for whole tribe – Southwest Airlines. Coordination and control is about cultural fit – a band of brothers. Horizontal management – WH Gore doesn’t have job titles. Push me, pull you. Attachment/retention based on love. Value – long term relationships, a family. It hurts when people leave.

Start ups tend to be about disruptive innovation, enhancement of existing products, delivering different sales/marketing/services or about cost reduction. What does this mean for a Radical Disruptive Businesses which typically represent about 50% of all startups? Almost impossible to be radical within first three types of model.

Organisational Models vs Company Type

Organisational Models vs Company Type

Should you consciously adopt a model from the outset?

Most types of business gravitate towards certain cultural models. Changing your model is incredibly disruptive to the business – it reduces the likelihood of an IPO by about 50%. People hate it and the people in the organisation get thrown off their feet.

Commitment models have shown that they are fastest to go public, are most financially successful and are least likely to fail.

Founder philosophies and organisational design have lasting impact but not for the reasons that always appear on the surface. If you are sure of the market value and desirability of your product or service, but have doubts about the long term health of the organisation, DO NOT CHANGE THE MODEL, CHANGE THE MANAGEMENT PRACTICES.

The Signs of High Performance Management

David Russo's Signs of High Performance Management

David Russo's Signs of High Performance Management

High Performance Management

High Perfomance Management

High Performance Management

In a commitment company model, there is no need for leaders to manage. the people in the business can manage the people in the business. Leadership is about looking up, not down, in a company. Leaders are in the service of the company & the employees, not the other way around. Everyone in this room knows what to do but there is a huge gap between knowing and doing because of the fear of doing something wrong. You can manage nobody and create a great deal of leadership.