What You Do Is Who You Are: How to Create Your Business Culture

by Ben Horowitz

There’s a saying in the military that if you see something below standard and do nothing, then you’ve set a new standard.

Noyce didn’t hire professional managers. He said, “Coaching, and not direction, is the first quality of leadership now. Get the barriers out of the way to let people do the things they do well.”

Breakthrough ideas have traditionally been difficult to manage for two reasons: 1) innovative ideas fail far more than they succeed, and 2) innovative ideas are always controversial before they succeed. If everyone could instantly understand them, they wouldn’t be innovative.

Culture only works if the leader visibly participates in and vocally champions it.

Culture is to a company as nutrition and training are to an aspiring professional athlete. If the athlete is talented enough, he’ll succeed despite relatively poor nutrition and a below-average training regimen. If he lacks talent, perfect nutrition and relentless training will not qualify him for the Olympics. But great nutrition and training make every athlete better.

In any human interaction, the required amount of communication is inversely proportional to the level of trust.

Company cultures organize around a simple goal: build a product or service that people want.

Integrity, honesty, and decency are long-term cultural investments. Their purpose is not to make the quarter, beat a competitor, or attract a new employee. Their purpose is to create a better place to work and to make the company a better one to do business with in the long run. This value does not come for free. In the short run it may cost you deals, people, and investors, which is why most companies cannot bring themselves to actually, really, enforce it. But as we’ll see, the failure to enforce good conduct often brings modern companies to their knees.

Here are the rules for writing a rule so powerful it sets the culture for many years: It must be memorable. If people forget the rule, they forget the culture. It must raise the question “Why?” Your rule should be so bizarre and shocking that everybody who hears it is compelled to ask, “Are you serious?” Its cultural impact must be straightforward. The answer to the “Why?” must clearly explain the cultural concept. People must encounter the rule almost daily. If your incredibly memorable rule applies only to situations people face once a year, it’s irrelevant.

One of the most distinctive large-company cultures is Amazon’s. It promulgates its fourteen cultural values in a number of ways, but perhaps most effectively through a few shocking rules. One value, frugality, is defined as Accomplish more with less. Constraints breed resourcefulness, self-sufficiency, and invention. There are no extra points for growing head count, budget size, or fixed expenses.

How you dress, the most visible thing you do, can be the most important invisible force driving your organization’s behavior. Ovitz sums it up: “Cultures are shaped more by the invisible than the visible. They are willed.”

He instilled in our eight-person sales team the crucial four C’s. To sell, you had have 1) the competence—expert knowledge of the product you were selling and the process to demonstrate it (qualifying the buyer by validating their need and budget; helping define what their buying criteria are while setting traps for the competition; getting sign-off from the technical and the economic buyer at the customer, and so forth) so that you could have 2) the confidence to state your point of view, which would give you 3) the courage to have 4) the conviction not to be sold by the customer on why she wasn’t going to buy your product. Cranney was obsessed with training every salesperson, testing them, and holding them accountable on the four C’s.

If you remember one thing, remember that ethics are about hard choices. Do you tell a little white lie to investors or do you lay off a third of the company? Do you get publicly embarrassed by a competitor or do you deceive a customer? Do you deny someone a raise that they need or do you make your company a little less fair? No matter how difficult such questions seem, your task will never be as challenging as implanting ethics in a slave army during a war.

The samurai defined culture as a code of action, a system not of values but of virtues. A value is merely a belief, but a virtue is a belief that you actively pursue or embody.

The samurai code rested on eight virtues: Rectitude or justice, courage, honor, loyalty, benevolence, politeness, self-control, and veracity or sincerity.

The samurai combined the virtue of politeness with the virtue of veracity or sincerity. Specifically, they defined politeness without veracity as an empty gesture. Lying to be polite is politeness without form and has no value.

Confucius, who wrote: “Sincerity is the end and the beginning of all things; without Sincerity there would be nothing.”

So what did Barksdale do? He created a piece of lore so memorable it outlived the company itself. At a company all-hands he said: We have three rules here at Netscape. The first rule is if you see a snake, don’t call committees, don’t call your buddies, don’t form a team, don’t get a meeting together, just kill the snake. The second rule is don’t go back and play with dead snakes. Too many people waste too much time on decisions that have already been made. And the third rule of snakes is: all opportunities start out looking like snakes.

The best way to understand your culture is not through what managers tell you, but through how new employees behave.

The self-help guru Tony Robbins says the quality of your life is a function of the quality of questions you ask yourself.

There were three keys to Genghis Khan’s approach to inclusion: He was deeply involved in the strategy and implementation, down to having his own mother adopt children from a conquered tribe to symbolize the integration process. He started with the job description he needed to fill, be it cavalry, doctors, scholars, or engineers, and then went after the talent to fill it. He did not assume that every person with a particular background could do the job that people with similar backgrounds had done—that all Chinese officials would make great administrators. Not only did he make sure that conquered people were treated equally, but through adoption and intermarriage, he made them kin. They weren’t brought into the empire under some separate but supposedly equal side program. As a result, they felt truly equal—and became more loyal to him and to the Mongols than to their original clans.

In 1993, the basketball player Charles Barkley famously said, “I am not a role model. Just because I dunk a basketball doesn’t mean that I should raise your kids.”

If you aren’t yourself, even you won’t follow you.

I learned to counterprogram the culture against my inclinations in three ways: I surrounded myself with people who had the opposite personality trait. They wanted to finish the conversation as soon as possible and move on to the next thing. I made rules to help manage myself. If a meeting was called without a tightly phrased written agenda and a desired outcome, we’d cancel it. I announced to the company that we were committed to running meetings efficiently—talking the talk that I did not like walking, and forcing myself to walk it as much as I could.

Great salespeople are more like boxers. They may enjoy what they do, but nobody sells software on the weekends for fun. Like prizefighting, selling is done for the money and the competition—no prize, no fight.

There are essentially three high-level decision-making styles: My way or the highway. This leader says, “I don’t care what you all think, we’re doing it my way. If you don’t like it, the door is right behind you.” This is maximally efficient as the decision-making process requires no discussion at all. Everyone has a say. This leader favors a democratic process. If he could call for a formal vote on every decision, he would. Decisions take a long time to get made, but everybody is guaranteed a say. Everyone has input, then I decide. This leader seeks a balance between getting the right information and using all the brain power available, and keeping the process efficient. Her process is not as empowering as Everyone has a say or as efficient as My way or the highway. In business, the third style tends to work best. My way or the highway disempowers everyone beneath the CEO and creates severe bottlenecks at the top. Everyone has a say, ironically, drives everyone completely nuts—employees dislike it even more than My way or the highway.