Bronwen Clune interviews Culture Amp Co-Founder and CEO Didier Elzinga about what Culture First means.
The Culture First Podcast explores what it means to be a culture first company. This episode was recorded in 2016 at our Melbourne headquarters. You can listen to other podcast episodes and view transcripts on our blog.
(Edited for grammar and syntax)
David: Hello and welcome to the Culture First Podcast. I'm David Ostberg. We sent Bronwen Clune, our Director of PR and Comms, to the land down under to interview Culture Amp Co-Founder and CEO Didier Elzinga about his thoughts on Culture First.
Bronwen: Didier, Culture First is a term you started using a lot of and actually envisaged that the company culture that you'd be running would be a Culture First company. Do you want to tell us how you came to the idea and how you came up with the phrase?
Didier: That's a good question. I'm trying to remember when we first started using it. The concept was something that was important to us. This idea that we wanted to create an organization where people mattered. Where culture mattered. That that was an important thing.
The phrase Culture First, I think came out of the simple use was that we want to put culture first and then that started being shorthanded to, "We are a Culture First organization." I think that's actually part of the power of the phrase. It has a simple meaning - you just put culture first. The longer we've gone on the more that's resonated with us and with other people we've spoken to, too. It's a powerful thing that fits with where I think organizations are going.
Why is it important to you or for other companies to be Culture First?
Didier: I think there are two different reasons it's important. One is why I think it's important to companies in general, why this should matter? Back in 1938, Henry Ford said, "Why is it when all I want is a pair of hands I get a brain attached?" So much of the prevailing word of work is based on that concept. That what we're trying to do is just get people's hands to move. I think what we're finding today, that the problems we're asking people to solve are increasingly, to use Dan Pink's phrase, "high cognitive load."
The work that we're asking people to do is not just move this bunch of bricks from here to over there. If you read all the research (Dan Pink's book Drive, is a good place to start) it takes a lot to engage not just the hands but actually the brain. It's a different approach than it has been traditionally. It's a more encompassing one. You actually have to get more of the person involved if you want to tap into that.
The opportunity is to engage people in the work of the organization and the reason it matters is it's actually the thing that drives everything else. Historically, people focused on the numbers and the finances. At the end of the day they want to make a profit or higher revenue or market share but in themselves that's a lag indicator, so the question is: what drives that? What makes it possible for you to have a higher profit, higher margin, higher revenues.
After a while people realized that that was actually the customer. So, we got pretty good at learning about customers and using data to better understand customers. I think what we're seeing now is the third wave, which is if you want to be customer centric you have to be people centric. You actually have to build a people and culture environment that delivers that customer.
I like to say, "Brand is a promise to a customer. Culture is how you deliver that promise." A Culture First organization means believing that. Believing that if you want financial success you have to be customer centric but if you want to be customer centric you have to put culture first.
Bronwen: Let's talk about what could be some of the perceived commercial tensions with a company saying they're Culture First. I think you told me the story when we originally were looking for funding we had some doubts whether we could find investors who would take in a company that was prepared to say that. It talks to a little bit of tension that people could see around a company putting its people first. Does that automatically mean they're not putting Culture First? Is it profits versus people?
Didier: Early on, one of the things that we decided we weren't going to take funding until we achieved two things. For anybody to be able to get funding in the VC world you have to prove that you have a viable business model, a potentially huge market, and some sort of unfair advantage. That's true for anybody to be able to get funding.
We decided that because we wanted to build a certain type of company, because we wanted to be Culture First, we not only had to do the first thing, we also had to know how we were going to scale our culture. We needed to be able to have that conversation with our investors and say, "This is the type of business we're building."
That manifests in certain ways, for example: we don't pay compensation to sales people. We have a different model. We needed them to buy into it. I think historically or traditionally there is a view that people in culture are soft and fluffy. That it's upmarket stuff so when it's a boom market then people spend more money and that's just because they're trying to keep talent and that this stuff doesn't really matter.
My favorite quote about the whole thing is from Brad Bird who is the director of The Incredibles and before that the Iron Giant. There's this fantastic interview with him in the McKinsey Quarterly and he says a whole bunch of really great things about culture and innovation and one of the things he says is, "If you have low morale, for every $1 you spend, you get about 25 cents of value. If you have high morale, for every $1 you spend, you get about $3 of value. Companies should pay much more attention to morale."
I think it's such a beautiful description of why this stuff matters and it's intuitively true. You talk to almost anybody in any organization and go back to where all of this stuff came from, morale of troops was a huge issue five hundred years ago, a thousand years ago. That concept of how do you give people a reason to be here or a reason to want to be here is through the management literature. That's true whether you're in an up economy or down economy and so I think we're seeing a slow shift.
I got asked in a conference, "Do senior managers really care about the staff? Don't they just say you should be happy to have a job?" The way I feel about it is when it comes to people and culture, certainly the board level and a lesser degree at the exec level, we're kind of where we were with marketing maybe twenty years ago. A brand was a bit soft and a bit fluffy and something that only certain organizations cared about. Now everybody realizes the brand is almost all of the value in an organization's position and so they spend an enormous amount of time and energy getting it right. We're slowly seeing that happening on culture as well but it's a journey. We're early in the process.
What is the thing you're most proud of that Culture Amp has achieved that is really Culture First in your mind?
Didier: What am I the most proud that we've achieved as a Culture First company? That is a fantastic idea. I don't know if this will sound right but that we continue to exist and succeed at all. You look at the stats, most startups fail. Most companies that try and start from nothing fail. Particularly, when you turbo charge that with growth. We did take funding and we did find someone that believed in our vision and where the world was going and so we're here today. That we're eighty odd people in four offices. We have five hundred plus clients around the world. Some of the most amazing companies rely on our technology.
From a Culture First manifestation that we've been able to do that at all is wonderfully incredible. In terms of specific Culture First aspect, one of the moments that I felt the most proud, even if it's not the proudest moment, was when Nicole Dominic, who works in our design team, was doing a re-brand. She came on board and we basically said, "How long do you think it'll take to pull together our visual identity because it's a little all over the place." We talked about it a bit and said, "Okay, you've got a month, start to end. Drive the whole thing and we need to get to the end of the month with something we can use."
She did a great exploration. Spoke to a lot of people. Tried lots of ideas. I think third week in none of it was quite working. We weren't really quite there and then suddenly it all just fell together and it fell together around this concept of the "enso," which is a Japanese watercolor or ink on grass paper and it's the drawing of a circle. It's designed as a daily meditation, and when she wrote up the final design and said, "Here's our visual identity and here's where it comes from and here's where it is." There was a few words in there where it basically said the, "The enso is a ritual. It's a process of asking and receiving every day and it's the process that matters. It's engaging in that ritual of asking and listening as a reflection of what our whole company stood for." That was a little moment, when I read that, and almost cried because I was like, "Somebody understands what I'm trying to do better than I've ever articulated it." It was a really beautiful moment.
What's the first thing a company has to do to work towards being a Culture First company?
Didier: It starts with believing that it matters. The worst thing would be if it goes the way that a lot of things have gone in the past, for example, innovation. For decades people have been saying, "We're going to be an innovative company and we're going to run innovation programs." But when you sit down and talk to people they don't want to be innovative. They just want to say they're being innovative because that's what they've been told they need to be.
When you think about Culture First a lot of the companies that do it well embrace the fact that to be Culture First you're hurting for things. You're actually saying, "This stuff matters and it's going to cause us pain in some shape or form to have that thing. To be this company. To be this type of company." That idea of being able to sit down and say, "What are we willing to hurt for." Is actually a really good starting point and sometimes for organizations that maybe have been around for a while, that's a process going back to why they started in the first place and rediscovering what made that company tick in the first place.
A Culture First company is not perfect. I like to joke that a perfect culture is a cult. They don't exist. The best ones where everyone in the organization shares a view on what's working, what's not working, and what you're doing about it, and they're all committed to saying, "Actually, this is not where we wanted to be. Let's get together and we believe we can do it. Let's improve this part of the organization."
It's great if a CEO or a Founder or someone on the exec team wants to champion that and has that desire and that skill to be, in a sense, a fulcrum on which this can be run but it doesn't have to be that.
The key thing I think for a CEO is:
- Decide it's important
- Willing to hurt for it
- Make sure it happens.
Even going back to the design process that we went through, I have a creative background, I'm not a designer but I spent a lot of time in film. It was a process I was heavily invested in but the end brand was not my work. It was somebody else's work but it's something I'm incredibly proud of. That's the goal for any organization, to find the people in the organization that can drive the process and then as a CEO your job is to help make that successful. One of my favorite quotes is, "Those who think that the something is impossible should not interrupt those that are doing it." The most important thing you can do as a CEO is create the space, create the space to allow people to make this thing happen.
Bronwen: One thing we haven't touched on is where we see the role of data and analytics in this big culture picture. We talked about fairly inspirational ideas but actually the product you set about creating with your co-founders is a data and insights platform in order to enable these Culture First companies.
What's the role data and analytics plays in Culture First companies?
Didier: We go back to the concept of the three waves, so at first we build better businesses with financial metrics and at the heart of that was data, depending on what side of the world we're on. If you look at the way people use financial metrics and data it's pretty sophisticated in most businesses today. The second wave was around the customer and, once again, we've gotten much, much better at using that data. I think as people have shifted to online business models, to having more and more engagement with the customer online. You look at things like Google Analytics. What that's done has actually transformed people's relationship to the data. If you go back to twenty years ago, people did market research but they went and employed a company to do the market research and then they talked about it, but they didn't do it again.
What we're seeing now, on the customer side, organizations increasingly want to have access to that data. They want to own that data. They want to collect that data. They still may use external consultants to develop capability. They still may have people come in and do specific bits but they see that data around their customers is critical for their success. Exactly the same thing needs to happen with people and culture. Organizations need to realize that they need to have this data. It needs to be available. It needs to be part of the decision making process and it's not something that you can give to somebody else.
It's something that you as an organization have to have the capability to collect and interpret. So our mission as an organization is to be that platform. To make that accessible to everyone. A lot of people don't even really know where to start. What do I ask? What do I do with the data? Our goal was to build a platform that allowed you to do that and allowed you to collect that data much in the way that you see things like Google Analytics at the base level. Companies like Optimzely and so on, that have allowed people to essentially democratize understanding the customer. We want to democratize understanding people and culture.
Bronwen: What are some of the insights companies can have on their culture from data and insights that you wouldn't otherwise get?
Didier: I think there are a couple of levels that play into it. One of the first really powerful moments when you start using the data is that things that were otherwise anecdotal become stuff you can actually talk about. It's not, "I think we might have a morale problem or it feels like people leaving or it feels like there's a change in the positive engagement the way people get." You can actually look at numbers and go, "Yeah, six months ago half the people felt like this. Now, three quarters of people feel like this." There's a shift. We know we've succeeded on something.
The core topics that you're often looking at, things like management, leadership are things that you care deeply about. Do people trust their leaders? Are people being given what they need by their managers? Much of the value we bring to customers is not are you a good company or a bad company but what's the variation throughout the organization. Usually, whatever you're striving to be, you are to a portion of the company. The real value is not just that twenty people out of a hundred feel great but that you've been able to take that thing and deliver it to ninety five out of a hundred.
It sort of goes back to this idea of alignment and the power of having people all working together. I can't remember who it was who said it, but they said, "Success is one percent vision and ninety nine percent alignment." If you can get everybody around an idea, even if the idea itself is not the best idea. You'll still out-execute everybody else. A lot of bringing the data together is making sure that you are delivering that experience that underpins that to everybody.
When you imagine what success looks to you as a CEO of a Culture First company, what's your big aspirational goal?
Didier: The first thing that comes to mind is probably egotistical but I'll share it anyway. Success to me personally would be that twenty to thirty years from now companies worked in a certain way. They did things to be more Culture First because of the way we ran our company. I look at the effect that companies like Patagonia, Zappos, organizations that other people look to and say that, "We are inspired by the way they chose to run their company and we're going to choose to run our company differently because of what they did. They showed A. You could do it, B. That you could be successful, and C. They created a roadmap."
When I think about the legacy I want to leave with Culture Amp, I want to build a big successful global business. That's important for me to do, but more important to that I want to leave a legacy of what it means to create a Culture First company.
We were four people when we started the company, to eighty people now, get to eight hundred, become a company with thousands of people. One of the justifications, one of the reasons for wanting to do that is to be able to show people how we did it. We won't be perfect but if you can get somebody to say, "There is a company that scaled to be this really significant, amazing company with great customers, but they did it in a certain way. They found success in a way that a lot of other people haven't had the courage to do before." Don't pay sales people commission, we've probably made more of a change just with that than anything. That's for me, what it ultimately will mean is that other companies will look at what we've done and take those ideas and adapt them to themselves.