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

by Ben Horowitz

If somebody behaves in a way you can’t believe, remember that your culture somehow made that acceptable.

An object lesson, by contrast, is a dramatic warning you put into effect after something bad has happened and you need to correct it in a way that will reset the culture and make sure the bad thing never happens again.

you should fire not only the salesperson, but the entire chain of command he reports to. Though managers in sales understand that they’re legally responsible for their subordinates’ actions, the mass firing will still be wildly unfair to at least some of them. Yet in this situation a CEO must take a Confucian approach, as the needs of the many outweigh the needs of the few. The object lesson will be universally understood: at this company, we never do anything illegal.

If a salesperson merely tells a customer that a feature is coming when it isn’t, but he doesn’t bind the company to the feature’s arrival, then you should reprimand or perhaps fire him, but it won’t be necessary to remove the entire hierarchy above him.

Why would a smart person try to destroy the company he works for? He is disempowered. He feels he can’t access the people in charge, so complaining is his only way to get the truth out. He is fundamentally a rebel. Sometimes these people actually make better CEOs than employees. He is immature and naive. He cannot comprehend that the people running the company do not know every minute detail of its operations. He therefore believes they are complicit in everything that’s broken.

The cultural problem is that if a team is counting on the flake, and she’s allowed to flake without explanation, then everyone else on the team believes that he should be able to flake, too.

Note that this dynamic only occurs if the jerk in question is brilliant. Otherwise, nobody will care when he attacks them. The bite only has impact if it comes from a big dog. If one of your big dogs destroys communication on your staff, you need to send him to the pound.

There are three keys to managing PORs: Don’t give feedback on their behaviors, give feedback on their behaviors’ counterproductive effect.

Recognize that you can’t fix a POR.

Focus your coaching on what the POR can do.

you are saying that regardless of performance, you will not tolerate much deviance.

This raises the deeper-level question of what kind of culture you want. Are you a zero-exception place, or one that tolerates diversity and idiosyncrasy?

a great Prophet of Rage can be the most powerful force your company has.

The decisions you make influence your culture as much as anything. But the process you use to make those decisions also becomes a core part of your culture.

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—...

CEOs are judged on the efficiency of their process and the acuity of their decisions, and Everyone has input, then I decide tends to balance informed decision making with speed. It also acknowledges that not everyone in the organization has enough information to make a given decision, so someone ...

The most common cultural breakdown occurs after the decision has been made. Suppose you decide to cancel a software project. Suppose further that it was primarily a financial decision and the project’s manager disagreed. Now the manager has to inform the team. The team, frustrated that all their hard work is being thrown away, will be generally pissed. The natural thing for the manager to...

This is absolutely toxic to the culture. Everyone on the team will feel marginalized because they work for someone who’s powerless. This makes them one level less than powerless. They have just been demoted from the bottom of the totem pole to the ground beneath it. The strong-willed among them will make their displeasure known throughout the company, causing other employees to question the leadership team ...

So it’s critical to a healthy culture that whatever your decision-making process, you insist on a stric...

If you are a manager, at any level, you have a fundamental responsibility to support every decision that gets made. You can disagree in the meeting, but afterward you must not only support the final decision, you must be able ...

In the speed-versus-accuracy calibration, the cultural question of empowerment plays an important role. How far down the org chart can a decision get made? Do you trust lower-level employees to decide important matters, and do they have enough information to do so with accuracy? If employees have a real say in the business, they will be far more engaged and productive. It’s also often the case that sending the question up the hierarchy not only slows things down but results in a less accurate decision.

It can break communication across product groups.

It can break communication between divisions.

You can lose input from your very best minds.

Peacetime CEO knows that proper protocol leads to winning. Wartime CEO violates protocol in order to win. Peacetime CEO focuses on the big picture and empowers her people to make detailed decisions. Wartime CEO cares about a speck of dust on a gnat’s ass if it interferes with the prime directive. Peacetime CEO builds scalable, high-volume recruiting machines. Wartime CEO does that, but also builds HR organizations that can execute layoffs. Peacetime CEO spends time defining the culture. Wartime CEO lets the war define the culture. Peacetime CEO always has a contingency plan. Wartime CEO knows that sometimes you gotta roll a hard six. Peacetime CEO knows what to do with a big advantage. Wartime CEO is paranoid. Peacetime CEO strives not to use profanity. Wartime CEO sometimes uses profanity purposefully. Peacetime CEO thinks of the competition as other ships in a big ocean that may never engage. Wartime CEO thinks the competition is sneaking into her house and trying to kidnap her children. Peacetime CEO aims to expand the market. Wartime CEO aims to win the market. Peacetime CEO strives to tolerate deviations from the plan when coupled with effort and creativity. Wartime CEO is completely intolerant. Peacetime CEO does not raise her voice. Wartime CEO rarely speaks in a normal tone. Peacetime CEO works to minimize conflict. Wartime CEO heightens the contradictions. Peacetime CEO strives for broad-based buy-in. Wartime CEO neither indulges consensus-building nor tolerates d...

The truth about telling the truth is that it doesn’t come easy. It’s not natural. What’s natural is telling people what they want to hear. That makes everybody feel good . . . at least for the moment.

Trust derives from candor, and your company will fall apart if your employees don’t trust you. The trick—and it’s tricky—is to tell the truth without thereby destroying the company.

There are three keys to assigning meaning: State the facts clearly . “We have to lay off thirty people because we came in four million dollars short of projections”—or whatever the case may be. Don’t pretend that you needed to clean up performance issues or that the company is better off without the people you so painstakingly hired. It is what it is and it’s important that everyone knows that you know that. If your leadership caused or contributed to the setbacks that necessitated the layoff, cop to that. What was the thinking that led you to expand the company faster than you should have? What did you learn that will prevent you from making that mistake again? Explain why taking the action you’re taking is essential to the larger mission and how important that mission is. A layoff, done properly, is a new lease on life for the company. It’s a hard but necessary step that will enable you to fulfill the prime directive, the mission that everyone signed up for: eventual success. It’s your job to make sure that the company didn’t lay off those people for no ultimate purpose—something good needs to come of it.

event, he gave meaning to the country itself. As you think about bad news and how you might fear your people finding out and freaking out, remember Gettysburg. Be it a deal gone bad, a whiffed quarter, or a layoff, this is your chance to define not only the event, but the character of your company. And no matter how badly you screwed up, you didn’t send thousands of soldiers to their deaths.

It seems to conflict with an ownership culture. A common management adage is “Don’t bring me a problem without bringing me a solution.” This idea encourages ownership, empowerment, and responsibility among the employees, but it has a dark side. For one thing, what employees are likely to hear is just “Don’t bring me a problem.” At a deeper level, what if you know about a problem but you can’t solve it? What if you’re an engineer who sees a fundamental weakness in your software architecture, but doesn’t have the authority or expertise to fix it? What if you’re a salesperson who believes one of your colleagues is making fraudulent promises? How can you solve that without help? If you encourage bad news, you must be careful not to disempower people in doing so.

The company’s long-term goals may not align with an employee’s short-term incentives. Imagine that your new product must ship this quarter. It’s so critical you’ve offered a shipping bonus to the engineers. Now imagine that the product has a dangerous security flaw. If you’re an engineer who discovers the flaw, but you need the bonus to buy holiday presents for your children, what do you do?

Nobody likes to get yelled at. If you know about a problem, there’s a reasonable chance that you caused it and have no idea how to fix it. Revealing it to your superiors m...

When I heard about a problem, I tried to seem ecstatic. I’d say, “Isn’t it great we found out about this before it killed us?” Or, “This is going to make the company so much stronger once we solve it.” People take their cues from the leader, so if you’re okay with bad news, they’ll be okay, too. Good CEOs run toward the pain and the darkness; eventually they even learn to enjoy it.

Many managers want to attend executive staff meetings, as it makes them feel needed and it puts them in the know. I made use of this desire by setting a price of admission to the meeting: you had to fess up to at least one thing that was “on fire.” I’d say, “I know, with great certainty, that there are things that are completely broken in our company and I want to know what they are. If you don’t know what they are, then you are of no use to me in this meeting.” This technique got me deluged in bad news, but it also created a culture where surfacing and discussing problems was not just tolerated, but encouraged. We didn’t solve all the problems that came up, but at least we knew about most of them.

If you find a problem, do a root-cause analysis and figure out what caused it. You will almost always find that the underlying issue was communication or prioritization or some other soluble problem rather than a particularly lazy or idiotic employee. By getting to the root cause and addressing that, rather than playing the blame game with an employee or two, you create a culture that won’t be secretive or defensive—a culture open to bad news.

Look for Bad News in the Regular Course of Business As you meet with people in your organization, either formally or casually, ask them questions that will help uncover bad news. Questions such as, “Is there anything that’s preventing you from getting your job done?” or “If you were me, what would you change in the company?” You may have to ask several times, but people will talk about the problems if you encourage them to. The more you demonstrate genuine eagerness to discover bad news, and genuine supportiveness once it’s discovered, the more open they’ll be to opening up.

We obviously can’t offer lifetime employment. I hope what we can deliver is that in fifteen years, when people look back, they will think that they were able to do the most meaningful work of their careers here. In exchange, I expect two things: first, ethical integrity. Second, that they optimize for the company rather than for themselves. If they satisfy those two expectations, then they have our appreciation, respect, and loyalty.

Ultimately, loyalty is about the quality of your relationships. People don’t leave companies, they leave managers. If there is no relationship between a manager and an employee or, worse, a bad relationship, you won’t get loyalty regardless of your cultural policy.

Cultural design. Make sure your culture aligns with both your personality and your strategy. Anticipate how it might be weaponized and define it in a way that’s unambiguous.

Cultural orientation. An employee’s first day at work may not be as indelible as Shaka Senghor’s first day out of quarantine, but it always makes a lasting impression. People learn more about what it takes to succeed in your organization on that day than on any other. Don’t let that first impression be wrong or accidental.

Shocking rules. Any rule so surprising it makes people ask “Why do we have this rule?” will reinforce key cultural elements. Think about how you can shock ...

Incorporate outside leadership. Sometimes the culture you need is so far away from the culture you have that you need to get outside help. Rather than trying to move your company to a culture that you don’t know well...

Object lessons. What you say means far less than what you do. If you really want to cement a lesson, use an object lesson. It need not be a Sun Tzu–...

Make ethics explicit. One of the most common and devastating mistakes leaders make is to assume people will “Do the right thing” even when it conflicts with other obje...

Give cultural tenets deep meaning. Make them stand out from the norm, from the expected. If the ancient samurai had defined politeness the way we define it today, it would have had zero impact on the culture. Because they defined it as the best way to express love and respect,...

Walk the talk. “Do as I say, not as I do” never works. So refrain from choosing cultural virtues that...

Make decisions that demonstrate priorities. It was not enough for Louverture to say his culture was not about revenge. He had to demonst...

If you don’t know what you want, there is no chance that you will get it.

Culture begins with deciding what you value most. Then you must help everyone in your organization practice behaviors that reflect those virtues. If the virtues prove ambiguous or just plain counterproductive, you have to change them. When your culture turns out to lack crucial elements, you have to add them. Finally, you have to pay close attention to your people’s behavior, but even closer attention to your own. How is it affecting your culture? Are you being the person you want to be? This is what it means to create a great culture. This is what it means to be a leader.