I was really excited to see this guest article from Julianna because she put an incredible amount of effort into creating something great. I hope to be able to get another great piece like this from her again in the future.
An Oversight in MBA Programs: A Real Discussion About Creating Good Company Culture
By Julianna Davies
A lot of important learning happens in business school, and entrepreneurs with MBAs tend to be better prepared for the realities of the corporate world once they have earned their degrees. Not everything can be learned in a classroom, however. To be a truly effective corporate leader, CEOs must demonstrate something of a flexible, plastic approach when it comes to fostering corporate culture.
The idea of “corporate culture” is subjective, and largely exists without parameters: there are right ways and wrong ways to approach it, certainly, but few hard-and-fast rules. For small start-ups in particular, a flexible culture that can quickly adapt to changing needs and new goals is essential. Young entrepreneurs who do not pay particular attention to the culture they are fostering at the beginning often pay the price down the line.
In the vast majority of cases, corporate culture reflects the ethos of the founders. This is often readily apparent in start-ups. If a software company’s founders are, say, in their early twenties with a relaxed, fun-loving view of life, the default culture of their company is likely to reflect this: the dress code will tend be casual, the workspace open, and attitudes liberal when it comes to snacks, coffee, and happy hours. Employees will often be expected to mirror the founders’ enthusiasm for projects and dedication to working long hours, as well.
There is nothing inherently wrong with this model. The problem for many start-ups occurs when executives let this default become standard operating procedure without ever firmly acknowledging it, or setting fixed cultural goals. Founders’ visions and obligations can change, and simply expecting employees to radically shift their habits and projects to follow is, more often than not, quite unrealistic. Frustrations in the workplace can stifle employee creativity, and lead to hostility that can hamper innovation.
“Over the years I have learned that good culture takes continued nurturing and full attention, and should begin at the company’s birth or soon after,” M.P. Mueller, president and founder of Internet branding company Door Number 3, told the Austin Business Journal in early 2012. “A business owner is designing a performance, and the sets have to be unique, the communication needs to be clear, and the story has to be engaging.” Simply “letting the chips fall” is not, Mueller said, a positive strategy—at least not for the long term. Employees who feel that they are simply cogs in the wheel of a fast-paced machine lose morale, and can bring even the most promising start-ups down.
In most cases, company culture needs to be a mix of employee needs and comforts and executive goals and long-term vision. “The first thing to do is spend more time communicating with and listening to your employees,” Karen Rubin, a product manager at marketing software company HubSpot, said in a Harvard Business Review blog post. The post emphasized the importance of strong corporate culture at web-based startups. “Hold town hall meetings with your whole team, and let them voice their complaints,” Rubin suggested.
Executive officers often have different ideas about what is acceptable, possible, and desirable than the employees, and scheduling time to really listen can help everyone see eye-to-eye, Rubin said. What a CEO might perceive as unwarranted grumbling amongst staff might turn out to be an issue that can be easily solved, if all parties listen to and respect each other.
Rubin offered an example from her own company. When HubSpot employees began voicing their frustrations about pay and benefits, executives held “a structured conversation” with the entire team where everyone’s voices and opinions were valued. “By understanding deeply what the problems were, they were able to work together to find solutions,” Rubin said. “This doesn’t mean that your company has to be run as a democracy, but the best compromises regularly come out of heated debates and discussions.”
A cautionary tale can be seen by taking a close look at Zynga, the San Francisco-based company best known for innovating games like FarmVille and Mafia Wars. Zynga’s culture is staunchly one of productivity. “Employees log long hours, managers relentlessly track progress, and the weak links are demoted or let go,” the New York Times’ DealBook reported in 2011. “While from the outside Zynga may have the fun and whimsy of the Willy Wonka chocolate factory, the organization thrives on numbers, relentlessly aggregating performance data.”
The DealBook piece speculated that the emphasis on performance over creativity may lead to trouble for the company in the long term. Those fears were largely confirmed when, in July 2012, Zynga missed its second-quarter sales and profit goals, and saw a dramatic dip in its share prices. Not all of this is due to office culture. In official statements, the company blamed most of its disappointments on transitions in the mobile gaming platform, as well as changes made by Facebook and its users. The most profitable Zynga games are designed particularly for Facebook.
Nevertheless, employee satisfaction likely had a role in some of the lead-ups to the July dip. Designers and game engineers have been overtly public about their job dissatisfaction, which has cost Zynga a number of acquisition deals. “We’ve learned that when companies treat talent as a commodity, the consequences are severe,” Gabrielle Toledano, head of human resources for Electronic Arts, told DealBook. Electronic Arts profited from Zynga’s competitive culture when game developer PopCap chose it over Zynga in a 2011 mobile games deal, citing engineer potential as one of its primary motivators. “It takes years to repair a reputation,” Toledano said.
Corporate culture is difficult to learn—or apply—in a vacuum. Even good ideas can go awry when implemented poorly, and success is rarely ever immediate. Fostering creativity is never as easy as it seems, and is often a matter of trial and error, at least at first. CEOs who are good listeners and adaptable are usually best able to create cultures that both satisfy employees and meet goals and benchmarks.
Julianna Davies is a freelance writer with http://www.mbaonline.com. Her main areas of interest are how technology is changing public spaces, like classrooms and the workplace, and start ups. Even though she never thought she would be writing about the intersection of business and anything, she is having a great time doing it. If you ever have any questions, feel free to drop her a line.