The importance of culture

Grant Leboff:
Shaun, when we talk about purpose and a purpose driven organization I think so much of what comes out of that, is company culture. How important for you is it to have this company culture solidified from the purpose?

Shuan Smith:
The two things need to be concurrent. One needs to be a mirror for the other. That’s very important because it’s the culture which sustains you in the long term. You can be a purposeful organization, you could be very successful, but unless you build a culture that reinforces that intentionally then it’s likely to decay over time. If we think of those brands that we admire, let’s take John Lewis. [John Lewis Partnership is a leading department store group in the UK] What is it about John Lewis that we admire? It’s usually because they are so consistent over many many years. We know what they stand for. We have a high regard for how they operate. They are very good in terms of consistently delivering against our expectations. The reason is because they have a very strong culture. They happen to be a partnership model, so all of the employees are partners in the business. It doesn’t have to be that way, but that’s the model that they particularly choose to use.

Another example of a strong brand is Zappos, the online retailer in the states. They … Tony Hsieh is famous for paying huge amounts of attention to building the culture. They go to a lot … Enormous lengths to hire the right people and then they train them, but that’s not enough. What he does at the end of the training period he goes into the room where perhaps they’ve been training some contact centre agents and he’ll offer them $3,000 to leave the organization before they actually go live on the job, having trained them. Why would he do that? Well, he wants to make sure that they are absolutely committed to being part of the Zappos culture. If they’re ambivalent about it, if they’re in two minds about it, he would rather they leave with the $3,000 rather than stay and perhaps become toxic.

Grant Leboff:
How does a company start building that culture? I think a lot of people would say, “Yes it’s important,” and yet so many companies don’t seem to be able to do it very well. What are the key ingredients to getting that culture right?

Shuan Smith:
If you’re clear about your purpose and you’re then clear about the kind of experience you want to create, that helps you then define the kind of people that you need to deliver that experience. That in turn then leads you to perhaps being innovative around how you hire them. An example here is Citizen M. Citizen M is one of the most innovative brands in the hotel industry. They create a fabulous experience. What they’ve tried to do is to break all of the common practice in the hotel industries. They don’t have the same structure, they don’t create the same kind of experiences and so on.

One of the things that they do is to hire people through auditions. They’ll ask maybe 100 people to come to a venue and to go through a series of tests, selection processes and so on. At the end of that day they’ll make the decision and they’ll give everybody, all of those people, a fabulous day. Whether you’re hired or you’re not you walk away with a very positive view of Citizen M and you tell your friends and family about it. The reason that they go about it in that way, sort of an auditioning process, is because they’re more interested in how these people relate to one another than they are in the traditional things of experience or, “Where have you worked before? What qualifications do you have?” Those things are important, but not as important as how people interact together.

Grant Leboff:
All of what you talk about with the Zappos idea and Citizen M is it’s about the right people and defining that. In your experience when you go into organizations, how good are organizations at defining the right people? You’ve given us some good examples, but do you see a lot of …

Shuan Smith:
The problem is in many organizations is that people measure what is easy rather than what is important. They tend to define those things that are easy to define. Whether that’s experience or qualifications or previous roles, the traditional sort of HR perspective of the world, if you will. If you are wanting to hire people for something less tangible, which is… their ability to relate to other people for example, you have to be just a bit more innovative about it. We talked about loose/tight principles earlier. If you’re tight in terms of your understanding of the culture and the kinds of people that you have, you can then afford to be a bit looser about specification for those people. In a sense, you know it when you find it. When you find that right person it just becomes very obvious because of the way you feel about that organization or about that person.

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