CHAPTER

5

PUSH HARDER, PUSH SOFTER

Every Great Culture Embraces a Great Contradiction

Most firms operate with either a hard or soft edge.¹ Those with a hard edge emphasize the need for clear performance targets, disciplined practices, and absolute accountability for results. These groups are typically more formal and process driven. Think General Electric. Firms with a soft edge emphasize the importance of strong bonds among people working in a highly creative, sometimes chaotic environment. They are more informal and talent driven. Think Google. No firm or team is entirely hard or soft, but most favor one over the other based on the demands of their business, their individual histories, and even the idiosyncrasies of their leaders. This preference becomes, over time, part of a firm’s DNA—replicating and shaping the way people think, feel, and behave. The challenge is to create a work environment that embraces what is often a messy contradiction—a work environment that is at once both hard and soft. Cutting-edge firms, and their teams, do just that.²

The simplest definition of culture is “the way we do things around here.” Each company, and to some extent team, develops its own way of operating—distinctive in a manner similar to the way that personality is unique to each individual. Culture includes the core beliefs and assumptions that people have about their work, their company, and their competitive environment.³ These deeper-level elements of culture function at both a cognitive and emotional level. Cognitive beliefs center on what people think, particularly in regard to the factors that will result in success or failure within a team or company. For example, Pixar employees believe that a great story with memorable characters is the key to making a film that people love. Story takes priority over everything else. Other studios may believe otherwise—perhaps thinking that savvy marketing or technical innovation drives a film’s success. We can debate the degree to which each studio’s beliefs are true (or more helpful), but people at Pixar are convinced that great films are the result of great stories. This is an example of a core assumption that influences how people behave within the company.

Cultures, at their core, are more than just assumptions that people share—they evoke feelings and emotions.⁴ This element of culture, while related to assumptions, is more basic and visceral. The emotional connection that people at Pixar have with their films—and even the emotions they have about particular characters in those films, such as Woody in Toy Story 2 or Dory in Finding Nemo—goes beyond the need to tell a good story. We can imagine other film studios where people believe in the power of a good story but are far less emotional about their work. They may, for example, operate in an analytical manner with a focus on what storylines will appeal to a target audience. While Pixar is certainly savvy in marketing its films, that knowledge is not what drives people within the company. People’s emotions, and even their personal experiences, are critically important in the making of its films. People at Pixar want their stories to move people, but the story needs to move them first. Pixar has one of the most disciplined processes in its industry for making animated films, processes that are incredibly complex and highly disciplined—but it never forgets that emotion is at the core of its business. Most of those who write about culture emphasize its cognitive elements—what people believe and the assumptions they hold about their firm and the world around them. But culture, more importantly, is based on emotions that arise from people’s experiences working in a company and, more specifically, in a team. Culture, from this viewpoint, is more about emotions than beliefs and assumptions. Culture can be viewed as “how we do things around here” or “what we think around here.” But more important is “what we feel around here.”

An emphasis on experience, and the emotions that arise from experiences, originated in some cutting-edge companies with a focus on customer experiences. Starbucks, for example, stated that its goal was to be the “third place” for people to go after home and work. For that to happen, customers needed to feel comfortable in its stores and feel that they were part of the community (just as many people in the United Kingdom feel connected to their local pubs). The firm’s CEO, Howard Schultz, emphasized that Starbucks was about the experience of being in its stores. That experience, particularly the interaction of its baristas with customers in the making of a coffee drink, was at the core of its brand. Schultz wrote in his book Onward that “Starbucks’ coffee is exceptional, yes, but emotional connection is our true value proposition.”⁵ He was dismayed that this subtle concept was lost on some analysts and investors who were unable to appreciate its power because they didn’t share his vision or were simply cynical regarding the financial return on Starbucks’s investment in emotion. Schultz was resolute in his vision for the company; his mantra became “Starbucks is not a coffee company that serves people. It is a people company that serves coffee.”⁶

Airbnb exhibits a similar obsession with experience. The firm strives, above all, to create a feeling of belonging on the part of guests who stay in its rentals when traveling. Its goal is for customers to feel personal connections to the people renting them rooms and a deeper sense of belonging in the communities they are visiting. This emphasis is intended to overcome the “stranger/danger bias” that makes most people uncomfortable when staying in the home of someone they have never met (or, on the other side of the interaction, makes hosts uncomfortable renting rooms in their homes to people they don’t know). Each action of Airbnb is designed to enhance the level of trust between guests and hosts.

Airbnb then goes one step further. It thinks of its own culture in terms of experience—seeking to enhance the feeling of belonging and community within its own ranks. It takes its customer experience mantra and looks at its own culture and, more generally, way of operating.⁷ The firm wants its customers to have a personalized experience in terms of the types of rentals they want, the neighborhoods they want to stay in, and even the types of hosts they prefer. The focus to date has been primarily on the types of rentals, but the company is developing approaches to help guests find neighborhoods and hosts that fit their preferences. It is now doing the same with its employees, looking at how to provide them with what they need to make working at the firm a memorable experience. Airbnb is trying not just to shape what its people think (“we work together to create a great sense of community”) but, more importantly, it wants to shape what they feel as a result of the experiences they have within the company. This perspective has led to a deliberate set of choices in regard to all things that touch employees. The firm’s head of employee experience (who assumes the responsibilities of a traditional human resources leader and more) leads a team that is dedicated to creating memorable experiences for Airbnb employees. Every point of connection that an employee has with the company is examined and improved with this goal in mind (including functions such as recruiting, training, facilities, people development, compensation and benefits, and communication). One example of the firm’s emphasis on enhancing experience is how it manages its hiring process. The team responsible for this process delineated each “touch point” in the Airbnb interactions with potential hires and sought to make them as positive as possible. This included a personal acknowledgement of each application, regular updates on the status of the application, suggestions on how they can learn about the company, a process to welcome and integrate those who are accepted, and an offer for someone in the firm to speak to those who are rejected to provide feedback and encouragement.⁸ The emphasis on experience also impacts life at the Airbnb headquarters building, where people can work in any location they prefer (for example, the conference room, library, or cafeteria) or work remotely. The firm’s founders, two of whom are graduates of design school, even took pains to create conference rooms that more fully engage people. One had an idea when walking by an IKEA furniture store and seeing an area set up like a room to show potential buyers what its furniture would look like in their own homes. He wondered what it would feel like to have a meeting in that room—wouldn’t it be more interesting, more fun, and more productive than sitting in the boring conference rooms found in most corporations? At the Airbnb headquarters in San Francisco, each conference room is a nearly exact replica of an Airbnb rental somewhere in the world. Attend a meeting at Airbnb and you may be working in a room that replicates one of its apartment rentals in Paris. Or you may find yourself in a replica of Frank Sinatra’s former home in Palm Springs, which is also a listing on the Airbnb website. At most firms, you find photographs of the firm’s products or customers in the lobbies or on conference room walls—Airbnb, as in many areas, goes one step further.

The company also provides a range of benefits, including free gourmet food three times a day. It is puppy friendly, allowing its employees to bring their dogs to the office. Each employee receives $2,000 a year to stay in Airbnb rentals anywhere in the world when on vacation. As with the conference room design, the company wants its employees to stay connected to its customers, and giving them money to stay in its rentals promotes that goal.

Airbnb’s focus on experience recently resulted in it displacing Google as the highest rated “great place to work” on an annual survey conducted by the career website Glassdoor (with the results based on employee input).⁹ Airbnb’s CEO Brian Chesky, on the same survey, received a 97 percent favorable rating from those working in the company. Airbnb’s obsession with enhancing experience suggests that the culture of every firm should be viewed through the lens of experience and, more directly, the emotions that people have as a result of working in a company. This mandate becomes even more important when we realize that many people view the workplace as second only to their homes as a central place in their lives. Some, in fact, view the workplace as the most important place in their lives—more important than their family homes.¹⁰ The key idea is that, like a great product, the feeling that people have about their company, how they emotionally respond to it, is more important than what they think about it.

Culture, then, is a combination of cognitive assumptions and emotional experiences. Cutting-edge groups pay attention to both, but most notable is their focus on the emotional side of company life and, in particular, the experiences that shape those emotions. Zappos and Whole Foods are highly visible in their efforts to create an optimistic and happy company culture. Alibaba’s founder, Jack Ma, doesn’t want to hear people in his company complain—instead, he wants them to take responsibility to act on improving those things that need to be improved. Support for this approach comes from Kim Cameron, a professor at the University of Michigan, who studies the impact of sentiments on company performance.¹¹ He found, overall, that firms that create positive work environments have better results. He defines a positive environment as one where people provide support to one another, avoid placing blame when things go wrong, and treat each other with gratitude and respect. He suggests that these sentiments produce better outcomes because they increase people’s ability to work collaboratively, think creatively, and bounce back from adversity.

Emotions, of course, are both positive and negative. Cutting-edge firms also manage the negative emotions of team life. The leaders of Pixar, for example, believe that experimentation in the making of its films is essential if it is to remain creatively vital—avoiding the trap of only repeating what worked in the past. However, experimentation always raises the possibility of failure in that new ideas and practices often don’t work. Intellectually, people understand the learning that comes from failure, but the emotions of failing are still problematic. Their minds tell them to try something new, but their guts say that failure is painful and should be avoided. As a result, Pixar strives to create a level of psychological safety that allows directors and their teams to be willing to try new things.¹² They do this through a variety of actions, but the most important is the support given to directors by the senior leadership of the firm. That support has limits, as noted earlier, but goes further and deeper than what one finds at most conventional companies.

One reason why culture provides a competitive advantage is that it can’t easily be replicated. The fact that culture is difficult to build and sustain is what makes it valuable. Those firms that get it right realize how hard it is for other firms to do the same. Competitors can’t simply mandate what people should think and feel (“We will start, beginning next month, caring more about our employees.”). Jack Ma, the founder of Alibaba, knows that many firms want to compete with his firm and emulate its practices. He tells them that they will fail because they don’t realize the effort required to get culture right—through recruiting the right people, training them in the core values of the company, developing formal and informal processes that reinforce cultural traits, and taking action on those who violate its norms. Ma spent 10 years shaping his firm’s culture and believes that those who want to replicate his success often lack the creativity and commitment needed to do the same.

Culture change is difficult for at least two reasons. First, culture evolves from what worked in the past for a particular firm and its leaders. In some cases, core cultural values go back decades and are linked to the beliefs and behavior of a firm’s founders. For example, a firm that thrived as a result of aggressive financial management will have difficulty changing that belief and its associated practices, even when its market share is eroding due to inferior products or poor customer service. Financial engineering produced success at an early point in its growth cycle and is part of the firm’s DNA. Culture, viewed in this light, is not an irrational set of beliefs and emotions but instead the embodiment of practices that become institutionalized as a result of past success. Cultures reflect what produced positive results and even when those practices are outdated, people are resistant to leave them behind. Even more challenging is the fact that most cultures have a taken-for-granted quality that makes it difficult for insiders to understand and change what needs changing. It is often newcomers, those experiencing a culture for the first time, who see things that need to change that others no longer notice.

The second challenge in changing culture is that one size doesn’t fit all. What is right for one firm may not be right for another firm. What works at Netflix will not work at Zappos. Those seeking to develop the right culture can’t simply mimic the values or practices of other companies or teams—they can learn from them, but each company needs to develop, and refine over time, a set of cultural norms that fit its specific needs. Many firms, for example, want to help their people manage the professional and personal demands on their time. Most cutting-edge firms give their people greater flexibility in the hours they work (with a few exceptions, such as the need to attend key meetings or work set hours for those in customer-facing groups). Pixar promotes this type of flexibility, in part, by keeping its headquarters open 24 hours a day, seven days a week. It realizes that some employees prefer to work off-hours and encourages them to work times that are best for them. Patagonia, in contrast, locks the doors of its headquarters at 8 p.m. every night and over weekends. It wants its people to take time away from work and recharge. Both firms are doing what they believe is in the best interests of their employees but take very different approaches. Which is correct? That depends. The experience of working in a building that is open all hours may feel right and positive to Pixar employees. But that same approach may feel hypocritical to Patagonia employees (given the firm’s emphasis on taking time outside of work to play and experience nature). In developing culture, there is no cookbook—each firm needs to chart its own path. Jack Ma put it this way: “You should learn from your competitor, but never copy. Copy and you die.”¹³

A dramatic case of culture change occurred at Disney Animation. When Disney bought Pixar in 2006, it gave Pixar’s leadership control over its studio. It was a reverse acquisition of sorts in that the acquired studio (Pixar) took control of the acquiring studio. Disney Animation, which achieved iconic status under the leadership of its famous founder, was no longer a pacesetter in its industry. In fact, it was producing what were charitably described as forgettable films that failed artistically and commercially. One veteran of the Disney studio noted, “I can’t pinpoint where we lost our way, but it was affected by the fact that the people in charge weren’t necessarily lovers of the art form.”¹⁴ In this case, the positive elements of the culture created by Walt Disney were not passed on to the next generation of leadership.

The new leaders took several months to assess what was ailing Disney Animation—observing how the studio operated and listening to people from all levels about what was needed to bring the company back to life. In particular, they were interested in what they called the “psychology and sociology” of how the studio operated. Their first major decision involved structure. Some within the company and externally wanted to combine the two studios, which, in essence, would mean that Disney Animation would be consumed within the more successful Pixar studio. John Lasseter and Ed Catmull, Pixar’s leaders, took a contrarian position and decided that the best course of action was to keep the two studios separate. They wanted to preserve the history and identity of each group. Disney, founded in 1923, was responsible for creating movies based on hand-drawn animation whereas Pixar literally invented computer animation. Each studio needed to evolve with the introduction of new tools and techniques but remain true to its heritage. The leaders went one step further and limited how much employees from one studio could interact with or influence those in the other studio (by restricting who could attend meetings in each group and the roles they could play when they did attend those meetings). Their intent was to ensure that Pixar sustained the culture that had produced a string of successful films, such as Toy Story, while Disney found its way back to the glory days of classic films such as Snow White. The goal was not to make Disney a replica of Pixar—the goal was to make Disney more like Disney.

The new leaders then took what they learned over two decades at Pixar and made selective changes at Disney. They started by assessing whether Disney’s decline was due to a talent deficiency. They determined that the creative staff at Disney was not the problem. Most of these individuals were highly skilled and dedicated to their craft. However, the executives running the studio lacked a passion for animation and great storytelling. “None of them grew up wanting to create animation. None of them,” a Pixar leader noted. “Those are the people we let go.” The next step was to form a group they called the Brain Trust to get the studio’s films on track. This group, consisting of people with deep experience in the making of successful films, is designed to review films in progress. The Brain Trust meeting starts with a review of a film in progress, followed by a candid and often intense give and take regarding what is working and what is not. Suggested changes that surface in the meeting are not forced on the film’s director, but the feedback must be taken seriously. The director of the hit Disney movie Frozen noted about these meetings, “Sometimes you come out very tired, but you never come out of it feeling like you don’t know what to do or where to go.”¹⁵

Another change designed to revitalize the studio was to upgrade the look and feel of the Disney building, with an emphasis on individual creativity. Ed Catmull, CEO of Pixar, describes how surprised he was during his first visit to the Disney Animation headquarters to find such a sterile environment—everything in its place, each desk clean and orderly, people exceedingly polite and professional. He mentioned this to his host for the day and was told that people in the studio wanted to make a good impression on him during his visit. Catmull and Lasseter quickly signaled that a creative company must not look, or act, like an accounting firm. They created a central gathering place, called the Caffeine Patch, which was decorated in what can best be described as a childlike environment full of colorful animated characters and posters from the most recent Disney films. The resulting space was one that a 10-year-old would love. The members of the studio were also encouraged to decorate their own work areas as they saw fit—the more colorful and quirkier the better. The intent of these actions by the new leadership was to build a creative community of people who shared a passion for their films and a responsibility for making them great.

Each cutting-edge firm believes it is unique. These firms say as much on their websites and in their public statements. The firms profiled in this book are clearly different than traditional firms but are also different from each other—as noted in regard to the culture of each firm:

Contrast the cultural themes noted with what you find in many firms, whose cultures are so generic, so bland, that you could easily take the principles from one and apply them to another (“we focus on our customers and their needs,” “integrity is key to everything we do,” “quality is nonnegotiable,” “teamwork is the key to our success”). While noting the idiosyncratic nature of cutting-edge firms, we can also stand back and ask, at a deeper level, how are the cultures of these cutting-edge companies alike? What are the similarities in the experiences and emotions of people working within these firms and their teams?

The cutting-edge firms in this book embrace, in various ways, each of the listed cultural attributes. One company will emphasize some of these attributes more than others, but each has elements of all six. Netflix, for example, models the harder side of cutting-edge cultures (with its emphasis on accountability) while Zappos models the softer side (with its emphasis on a playful work environment). Determining the cultural traits that your company or team needs is a first necessary step in creating the right culture for your firm or team—but only a first step. Culture is created by practices and behaviors that foster the desired assumptions and emotions. These actions, not a firm’s statements of intent, require a high level of commitment and creativity on the part of a firm and, in particular, its leadership.

All In

Airbnb goes to great lengths to make work meaningful for its employees. First, it is an ideologically driven company with a larger purpose of creating trust and belonging in communities around the world. This “higher calling” taps into the needs of many people, millennials and otherwise, to work for a company that contributes to society. Second, Airbnb provides its people with a great deal of say in the projects on which they want to work. Members of the company can change projects depending on their interests and talents. While this doesn’t occur on a regular basis because continuity is important in finishing projects, staff and their supervisors will initiate changes that ensure the highest level of employee engagement with the work itself. A third element of making work meaningful at Airbnb is the attention paid to the work environment. The company wants people to feel fully supported in their work and connected to their coworkers—which includes a wide variety of company policies and practices designed to achieve that goal. The company hires “true believers” and then goes to great lengths to support them in pursuing the work that matters.

Patagonia is also a purpose-driven firm—but not in regard to growth or sales. Patagonia’s goal is to be a company that can survive for 100 years or longer, which the firm’s leaders believe requires a more moderate growth rate. Its primary purpose is lessening the impact that people and companies have on the environment. It recently sponsored a study examining the impact of the synthetic fibers used in its fleece jackets on the health of the Earth’s oceans and rivers. The findings suggest that the tiny specs of plastic shed from synthetic clothing when washed can be potentially dangerous to our public waterways. Patagonia, consistent with its mission and culture, is making the study’s findings public and will determine how it and other manufactures can minimize the resulting environmental damage. Patagonia is also sponsoring lower-tech initiatives, such as its Worn Wear program that encourages people to repair or recycle its clothing (versus discarding it and buying more clothing). This program has a vehicle, a recycled 1991 Dodge truck that runs on biofuel, that goes cross country, stopping at various locations—Patagonia retail stores, farmers markets, state parks, and coffee shops—providing free clothing repairs and environmental workshops.

Autonomous

Whole Foods’s highly decentralized approach is based on the belief that those closest to the customers are in the best position to make decisions on how to best serve those customers. The company also believes innovation is more likely when it begins at a local level and is then adopted by others if successful. The Whole Foods in Sonoma, California, was the first to have a Wine Bar. Venice, California, was the first to have a kombucha tea bar. Dallas, Texas, was the first to have a spa, including the option of having employees shop for customers as they receive treatments. Augusta, Georgia, home of the Masters golf tournament, was the first to have a putting green at the facility. None of these experiments were mandated or even suggested by the firm’s corporate office. These local experiments are in addition to larger-scale changes that the company is making to attract new customers. It is, for example, inviting outside vendors to lease space in its new brand of stores, called 365. The goal is to attract younger, more price-sensitive shoppers with lower costs and a range of customized products.

Netflix is another firm built on the idea that people and teams must be free to determine how to go about their jobs. The company strives to hire extraordinarily talented people who want to have an impact—and then gives them the autonomy needed to achieve their goals. In particular, the firm doesn’t want process to be viewed as a substitute for people performing at a high level. It believes that the most talented people want to work in an environment that provides them with a great deal of independence and doesn’t dictate how they work. The company thus asks, “Do we really need this process? Isn’t there a simpler way that makes everyone’s life easier?” The goal, in short, is to have as few mandated processes and policies as possible. The few rules that remain in place are intended to prevent a catastrophe (such as the theft of customer credit card information) or people breaking the law (such as workplace harassment).¹⁷ To fight against what it describes as “rule creep,” Netflix doesn’t just simplify its work processes and administrative requirements—it does away with them whenever possible. It eliminated, for example, the reporting of vacation time by its employees.¹⁸ Each person determines the timing and duration of his or her vacation and then discusses it with his or her supervisor to avoid any confusion. Netflix also did away with detailed expense guidelines (such as airfare or hotel restrictions). It simply asks its employees to spend money as if it were their own. The firm’s expense policy is, “Act in Netflix’s best interests.” Another example is the elimination of performance reviews within the firm, which were replaced with ongoing supervisor/employee discussions combined with periodic peer feedback that asks what each person should stop, start, or continue. Some of these 360-degree reviews are even done in person, where a small group of people meet with an individual to provide feedback. The senior human resources leader at the company when these changes were made, Patty McCord, noted that “building a bureaucracy and elaborate rituals around measuring performance usually doesn’t improve it.”¹⁹

Transparent

Whole Foods is one of the most transparent firms in the world in sharing a wide range of information with its employees. The company, operating with an “open book” approach, makes available to everyone the performance results for each team, each store, and the company in total. The norm in the company is to share as much as possible, both in terms of performance data and the reasons behind its key decisions. The firm’s CEO, John Mackey, explains why it is so committed to sharing information:

The high-trust organization takes the risk of revealing too much information. We must be willing to take the risk that some valuable information may fall into the wrong hands because our commitment to empowerment and trust necessitates taking that risk. Creating transparency and authentic communication is an ongoing challenge that every organization faces. We must continually strive to remove the barriers that prevent it, knowing that we can’t maintain high levels of organizational trust without transparency and authentic communication.²⁰

Transparency is also important at Netflix, but it is less about data and metrics—and more about straight talk regarding where the company stands and what needs to be done to achieve its goals. A pivotal point occurred early in its history when expenditures exceeded sales. One-third of the workforce was let go, and those remaining were told the harsh truth about the company’s vulnerable financial position. The leaders of Netflix believe that people are aware of when their leaders are lying to them or spinning the truth in regard to performance, a key decision, or even an employee’s standing within the firm. As a result, Netflix strives to be very direct in how it communicates with its people. For example, new hires are told, in their first orientation session, that the company is not a family but a team—and successful teams upgrade talent whenever possible. People are told that they will not be with the firm if they don’t perform at a high level. They are also told that they should obtain information regarding their value in the marketplace (based on competitive salaries) and then engage in discussions with the supervisor and the human resources department regarding that information. The company wants to pay people based on market conditions, and that information is helpful.

Accountable

Netflix emphasizes that people and teams are fully accountable for the results they produce. If people prove unworthy of the freedom they are provided, based on a lack of performance, they are given a generous severance package. If someone stumbles and fails to perform, he or she is given time to recover—but not too much time.²¹ Accountability, at Netflix, means that effort, hard work, and past performance are largely irrelevant in assessing performance. This can be a tough reality for some people, but Netflix doesn’t try to accommodate them. Instead, the company seeks to hire those who can thrive in its culture and keep out, or remove, those who can’t perform with it. In the firm’s culture presentation, this approach is summarized as follows:

Netflix: Our High Performance Culture
is Not Right for Everyone

Many people love our culture, and stay a long time—they thrive on excellence and candor and change—they would be disappointed if given a severance package, their relationship with Netflix is marked by mutual warmth and respect

Some people, however, value job security and stability over performance, and don’t like our culture—They feel fearful at Netflix—They are sometimes bitter if let go, and feel that we are a political place to work

We’re getting better at attracting only the former, and helping the latter realize we are not right for them²²

Zappos has a softer culture than Netflix, but it has developed creative ways to ensure that people are accountable. For example, Zappos places great emphasis on customer service and, more generally, customer happiness (what it calls WOW). The company tracks a variety of statistics such as the number of calls handled, which its call-center people see every day. However, Zappos doesn’t set targets on call time or upsell revenue. The key metric is what the company calls the Personal Emotional Connection. This is assessed several times a week by staff who listen in on calls and assess the effectiveness of call-center members. Their ratings are shared with each person and improvement areas are discussed. Another key metric is what it calls a Net Promoter Score. This metric compares the number of people, as assessed by a follow-up survey, who recommend or promote Zappos to others versus those who are detractors of the company. This metric is tracked each day, and the company posts the scores for customers who fill out the survey.

Playful

Alibaba culture can appear strange to those who are accustomed to a more formal corporate environment. The firm acts like a large family where people connect in a manner that you don’t find in many corporations. Ma, for example, wants his people to take on kung fu nicknames upon joining the firm, names that fit their personalities. His nickname means “unpredictable and aggressive.”²³ Ma believes people should feel playfully engaged by their company and its leaders. He is comfortable acting out at Alibaba’s corporate gatherings—one year, he dressed liked Lady Gaga and sang pop songs to 15,000 of his cheering employees. He has conducted informal ceremonies blessing hundreds of Alibaba newlyweds, who are dressed in full wedding garb, at the firm’s annual company event. Such actions cause some to call him “Crazy Jack”—the man who founded a company that is on course to become the first trillion-dollar business in the world.

Zappos, much like Alibaba, thinks that play, including an element of weirdness, is good for business. Take, for example, the celebratory events that the company sponsors almost continuously to increase the level of happiness that its people experience at work. Over the span of several months this year, Zappos held the following fun events:

Celebrated Saint Patrick’s Day with a contest to determine the employee with the best kilt, along with live music and green beer.

Recognized Pi Day (3.14) with a pie-eating contest. The winner finished off two pies in five minutes without the use of his hands.

Hosted a concert in the headquarters building featuring the band Mercy Music.

Provided a day off for all employees on Leap Day (2/29). They were encouraged to use the day to check off something on their bucket lists. CEO Tony Hsieh spent the day officiating the wedding between two of his employees. The ceremony took place at the trailer park where Hsieh lives, with many members of the Zappos family, along with his two pet alpacas, in attendance.

Sponsored a Chinese New Year festival in its headquarters plaza, with singing, a dragon-blessing ceremony, and musical performances.²⁴

In looking at the “playful” side of the leaders of each firm in this book, we see that most if not all of them are quite different than a typical corporate leader. Consider that John Mackey of Whole Foods took off six months from his role as co-CEO to hike the Appalachian Trail. Or that Patagonia’s founder, Yvon Chouinard, now 73, continues to engage in risky outdoor activities.²⁵

Communal

Pixar believes in the need to create a sense community within a company. This results in an environment where people are more inclined to help each other. One employee noted, “Of great importance—and something that sets us apart from other studios, is the way people at all levels support one another. Everyone is fully invested in helping everyone else turn out the best work. They really do feel that it’s all for one and one for all.”²⁶ A director at the studio, Dan Scanlon, adds,

Sometimes those films go through some dark phases, where they’re really not working, and it’s important to have someone like John who always goes back to the beginning. When things aren’t working, he says, “When we came up with the idea for this, I heard this thing, and the heart that’s in there. I know that that’s still there.” . . . . “You’re responsible for your mistakes, but there’s no blame culture. As a freelancer in London, I knew that if I’d made a critical error, I’d be out of a job. Here, they’d say you have to learn from it, and strive to do better. It’s the most grown up place I’ve ever worked in that regard. It’s all about ownership.²⁷

Community, at least at Pixar, also helps with the open exchange of ideas across group boundaries. Pixar believes that people in different groups need to interact on a regular basis. Steve Jobs, who bought what became Pixar from George Lucas, insisted on the firm’s building having a common area that would force interaction among people from different functional teams. As a result, the building is designed in a way that pulls people out of their offices and functional areas into centrally located spaces—a company restaurant, coffee bar, mailboxes, and restrooms. Jobs believed that these personal interactions, even if brief, are essential if a firm is to cross-pollinate new ideas and share the lessons people are learning. The Pixar building design is just the most visible element of its belief in fostering a community where ideas flow easily across boundaries. It has, for example, a norm that anyone in the company can engage anyone else with ideas or requests—there is no need to go through what in many firms is a formal chain of command. This norm came about in reaction to the negative experience of one of the firm’s founders when he worked at Disney 20 years earlier. In that culture, people needed to ask for permission from their supervisor before they could approach other departments—which resulted in a rigid culture where people were more concerned with protecting their own areas of authority than collaborating to make a great film. Pixar, in contrast, emphasizes that all people should feel free to express their ideas on any aspect of a film as it progresses. Catmull underscores the importance of culture in Pixar’s success:

If we get that right, the result is a vibrant community where talented people are loyal to one another and their collective work, everyone feels that they are part of something extraordinary, and their passion and accomplishments make the community a magnet for talented people coming out of schools or working at other places.²⁸

Zappos, with 1,500 employees and an estimated $2 billion in revenue, has many communal cultural traits. On its website, it notes,

We are more than just a team though—we are a family. We watch out for each other, care for each other, and go above and beyond for each other because we believe in each other and we trust each other. We work together, but we also play together. Our bonds go far beyond the typical “co-worker” relationships found at most other companies.²⁹

The company’s goal is to enhance happiness—first for customers, but also for employees. That purpose influences who the firm hires and how they treat them once they join the firm. In its value statement, the firm makes this clear: “The best team members have a positive influence on one another and everyone they encounter. They strive to eliminate any kind of cynicism and negative interactions. They strive to create harmony with each other and with everyone else they come in contact with.”³⁰

Zappos does a number of things to promote a positive work environment. The firm’s founders believe that bonds develop through personal interactions. As a result, employees are required to come into the office versus working remotely. The Zappos CEO notes, “We really wanted to build the company around culture, company culture being the number one priority. And it’s much easier to build a culture when it’s actually in person versus remotely by email.”³¹ The company also wants its people to spend time together socializing outside of work. Managers at Zappos are expected to spend upwards of 20 percent of their time outside of the office with their team members (at various social events that they host or attend). Zappos learned early in its history that a number of people applying for managerial positions don’t believe in socializing outside of the office, which was a problem in a company that views itself as a close-knit family. Zappos views this as nonnegotiable and does not hire people who want to keep their work and personal lives separate.

Zappos also uses technology in a creative manner to foster closer relationships among its people. It uses technology in what they call the Face Game to encourage connections among people. Those logging onto company computers are shown photos of other employees and asked if they know the people’s names. After responding, they are shown the person’s job profile. People are scored on their ability to identify others as they log on, with higher scores indicating a more connected individual. The company also looks at the Face Game data in aggregate to understand the networks across the company at a group level (with some groups or functions being more connected than others and the impact those connections have on the business).

Culture influences the way we view our environments, what we hold to be important, and how we go about our day-to-day work. David Foster Wallace, the novelist, makes the point that life in general often has a taken-for-granted quality to it. He suggests that this human tendency is something we need to fight—being careful to not simply go into what he called “default mode,” where we jump to quick conclusions about what is occurring around us. Wallace’s insight also applies to the cultures of our organizations and teams. He uses a simple parable to convey his point:

There are these two young fish swimming along, and they happen to meet an older fish swimming the other way, who nods at them and says, “Morning, boys, how’s the water?” And the two young fish swim on for a bit, and then eventually one of them looks over at the other and goes, “What the hell is water?”³²

Wallace’s point is that that which surrounds us is often the very thing we can’t see, question, or even discuss. In essence, people stop seeing that which is all around them. Cutting-edge firms and their teams are notable in being more aware of culture and more deliberate in what they want, and don’t want, in those cultures. They articulate what is important and continually debate the degree to which they are acting in a manner consistent with their particular beliefs and values. The lesson from these firms and teams is the need to question one’s own culture, along with a relentless commitment to getting it right.

TAKEAWAYS