Organizational culture

Organizational culture is a very important theme for product managers and has a tremendous impact on the success of a digital product. Therefore, let’s dig into it. In a way, this subject complements the previous chapter on leadership tips for product managers.

Organizational culture is a feature of every group of people. Even within companies, there are sub-cultures. In other words, each area or team within a company can have its own culture. For instance, the culture of a commercial team has always some differences compared to the culture of the software engineering team.

There is not a right or wrong culture. Different companies have different cultures, and they can be successful in spite of these differences. The following cartoon illustrates the cultural difference between Amazon, Apple, Facebook, Google, Microsoft, and Oracle. Even with all the cultural differences, these are all successful companies.

Culture differences by Manu Cornet

But what is organizational culture? Edgar Schein, professor at MIT Sloan School of Management, was one of the first to talk about organizational culture in the 70s. According to him, each company had its own personality and its own approach to act and react to situations; and this approach has been passed on from employee to employee since the company’s founders. Schein’s definition for organizational culture is:

Culture is a set of premises that have been learned and shared by a group of people while they were solving problems on external adaptation and internal integration. This set of premises works well enough to be considered valid and, consequently, to be taught to the new members of the group as the correct way of perceiving, thinking, and feeling regarding those problems.

SCHEIN, Edgar. Organizational Culture and Leadership. Jossey-Bass, 2010.

Culture comes from the company’s founders. They have their own culture and it’s only natural that they spread this culture in the organization they are creating. That’s why it is very common to think it emerges in an organization.

The founder brings the culture and when hiring new people, always looks for those with similar cultures. This ends up creating a new common culture, very close to that one brought by the company’s founder. This concept of emerging culture gives the impression that we cannot alter it deliberately and that it would develop organically.

Schein warns that this is a mistake. Cultures can and must be planned. For that reason, I’ll share with you three essential organizational culture values that I’ve seen in some companies when creating successful software products.

Don’t waste time looking for culprits

When mistakes take place, some people naturally tend to react by looking for culprits, especially in group activities. As if having anyone to blame for that mistake could be, in some way, less harmful. That is a great waste of time and energy. Let me explain why.

Blame game, by Ron Tandberg

A mistake took place. Mistakes happen. That’s a fact of life. No matter what you are doing — building software, publishing a code in production, operating a patient, cooking dinner, building a house, playing guitar, playing soccer, etc. –, there are good chances that mistakes are going to be made.

When you spend your time trying to figure out who was responsible for that mistake, you will postpone the most important tasks in relation to it:

  • Understand what happened;
  • Figure out how to correct;
  • Find ways to avoid from happening again.

When you spend your time trying to figure out who was responsible for that mistake, people might naturally try to hide the mistake, fearing the consequences. Will I get fired? Will I be excluded from the group? Will I be punished? Will people make fun of me?

When people try to hide who was responsible, you will end up postponing the most important tasks in order to fix the mistake. It’s going to be more difficult to understand what happened. People will not tell the whole truth about the mistake and about the circumstances in which it happened.

If, in the process of understanding what happened, you find out that someone was responsible for the mistake, deal with this person in private. It is most likely that the mistake was caused unintentionally. That’s why you need to help this person to improve, so this same kind of mistake does not happen again.

On the other hand, you are responsible for creating an environment in which it is safe to talk about mistakes so they can be detected as soon as possible. However, if you find out that the mistake took place with the intention to harm the company, the product, or someone, then you should be resolute on reprehending it, saying that this type of behavior is unacceptable and, if it happens again, you’ll invite the person to leave the group.

War

It is common to hear comparisons between the business world and war situations, combat or fighting. By the way, the word strategy itself, so common in business nowadays, comes from the military vocabulary. It derives from the Greek word strategos, a union between stratos (army) and agos (leader). In other words, strategos originally means the army leader, the general, the one who defines how the troop must act facing the situation.

One of the books that constantly appears on the list of most recommended administration books is “The Art of War”, a military treatise written on the 4th century BC by the Chinese general Sun Tzu.

Everyone who met me knows that I’m a peaceful person. I hate fighting. I hate watching fights, even on TV. By the way, if I accidentally get into one, I’m even willing to pay to get out of it. That’s why every time I see these kinds of comparisons between the business world and wars, combats, fighting or competition, I feel deeply bothered.

I believe the images speak for themselves.

Using war (combat or fighting) as an analogy for the business world does not make any sense. The goal is to defeat the opponent. It is awkward to picture a company which goal is to defeat something or someone.

Some people have said to me that, in a war, the battle itself is not the goal but a means to reach a goal. Ok, this makes sense but there are several means to achieve a certain goal. War is not the only one. So, why insisting on using war as an analogy for businesses?

Business is the activity of making one’s living or making money by producing or buying and selling products (such as goods and services).

vWikipedia definition of Business: https://en.wikipedia.org/wiki/Business

This definition makes it clear that the business exists to produce and / or serve. How can something that aims to produce and / or serve by analogy have something that aims at destruction? The right way to look at a company and its goals is to think about building a win-win relationship, that is, where the customer, the employees, the owners of the company, and the society in which the company operates are winning. Whenever we direct energy to defeat the “opponent” (customer, competitor, employee, etc.), we are wasting energy that could be used in something constructive.

Air, food and profit

Often we see shareholders, investors, and employees of a company totally focused on its financial results. When there’s a period of crisis, this focus can be over 100%… :-/

Once I heard a sentence that became popular with Dick Costolo, Twitter’s former CEO, that compared revenue to oxygen:

Revenue is like oxygen, it is vital for the health and the success of a company, but is not the purpose in life. Do you wake up in the morning and the first thing that comes to your mind is “how can I get more air?”

I’m very fond of this comparison. Every company must have a purpose, and this purpose should not be to defeat the enemies (as explained previously) nor getting the biggest amount of money as possible.

The financial outcome must always be used as one of the metrics that indicate that the company is being successful, that it is meeting its purpose. However, even as a metric, it should not be seen isolated, for there is the good and the bad revenue.

The bad revenue is obtained at the expense of the prejudice of the relationship with the client. For example, imagine a company that provides a service over a monthly payment; when a client wants to cancel this service, the company makes it difficult in order to keep that revenue source for a few more months. That is bad revenue. The international roaming charges are also a good example of it, such as car rentals that charge for gas when you return the car without a full tank, using a more expensive price for gas than the one you find in the market.

If a company sells something at a higher price, taking advantage of the fact that you need that item, such as the cost of a bottle of water in a hotel, that is also bad revenue.

In other words, although the comparison between revenue and profit with oxygen is good, it is also incomplete, because it doesn’t capture the effect of bad revenue. You rarely think about oxygen, unless you are with shortness of breath. I don’t think that the revenue should only be remembered when there’s a shortness of it. Revenue is what keeps the company alive, able to fulfill its purpose. If it’s good revenue, the company will continue to meet its purpose for many years. If it’s bad revenue, it will have difficulties in the long run.

For that reason, I prefer to compare revenue and profit to food. In the same way, healthy people don’t think about oxygen all day long, healthy people don’t think about food all day long. However, unlike oxygen, when we talk about food, there’s good, healthy food that is good for your body; and there’s bad food, harmful for your body, with the possibility of getting you sick. It is very important that people know what is good and bad food, and that everyone thinks about how to get the good one and avoid the bad one.

Taking the sentence above, improving it, and changing oxygen for food, we have:

Revenue is like food, it is necessary, it is vital for the health and the success of a company, but is not the purpose in life. Do you wake up in the morning and the first thing that comes to your mind is “how can I get more food?”. However, both a company and a person must be always alert to the quality of the food they are ingesting, in order to assure that is not going to cause any harm.

Concluding

We saw in this chapter how important the organizational culture is for the success of your software product, and that culture is not a theme to go with the flow, it can and must be planned. Here I’ll share three cultural values that, in my point of view, are essential for creating successful software:

  • Do not waste time looking for culprits;
  • Do not compare making business with making war, combat or fighting;
  • Think about revenue as good food, that is, something necessary for living but not the reason for living.

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