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

by Ben Horowitz

Is culture dogs at work and yoga in the break room? No, those are perks. Is it your corporate values? No, those are aspirations. Is it the personality and priorities of the CEO? That helps shape the culture, but it is far from the thing itself.

When I was the CEO of LoudCloud, I figured that our company culture would be just a reflection of my values, behaviors, and personality. So I focused all my energy on “leading by example.” To my bewilderment and horror, that method did not scale as the company grew and diversified. Our culture became a hodgepodge of different cultures fostered under different managers, and most of these cultures were unintentional.

There aren’t any “right answers” to those questions. The right answers for your company depend on what your company is, what it does, and what it wants to be. In fact, how your employees answer these kinds of questions is your culture. Because your culture is how your company makes decisions when you’re not there. It’s the set of assumptions your employees use to resolve the problems they face every day. It’s how they behave when no one is looking. If you don’t methodically set your culture, then two-thirds of it will end up being accidental, and the rest will be a mistake.

The culture that works for Apple would never work for Amazon. At Apple, generating the most brilliant designs in the world is paramount. To reinforce that message, it spent $5 billion on its sleek new headquarters. At Amazon, Jeff Bezos famously said, “Your fat margins are my opportunity.” To reinforce that message, he made the company be frugal in everything, down to his employees’ ten-dollar desks. Both cultures work. Apple designs dramatically more beautiful products than Amazon, while Amazon’s products are dramatically cheaper than Apple’s.

There’s a saying in the military that if you see something below standard and do nothing, then you’ve set a new standard. This is also true of culture—if you see something off-culture and ignore it, you’ve created a new culture. Meanwhile, as business conditions shift and your strategy evolves, you have to keep changing your culture accordingly. The target is always moving.

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.” This created a new culture, a culture of empowerment: everyone was in charge and Noyce was there to help. If a researcher had an idea, he could pursue it for a year before anyone would start inquiring about results.

Grove would ask, “How would you sum up the Intel approach?” Someone might answer, “At Intel you don’t wait for someone else to do it. You take the ball yourself and run with it.” Grove would reply, “Wrong. At Intel you take the ball yourself and you let the air out and you fold the ball up and put it in your pocket. Then you take another ball and run with it and when you’ve crossed the goal you take the second ball out of your pocket and reinflate it and score twelve points instead of six.”

This atmosphere allowed ideas to prosper; if Silicon Valley is about anything, it’s about the primacy of the idea. 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.

Hierarchies are good at weeding out obviously bad ideas. By the time an idea makes it all the way up the chain, it will have been compared to all the other ideas in the system, with the obviously good ideas ranked at the top. This seems like common sense. The problem is that obviously good ideas are not truly innovative, and truly innovative ideas often look like very bad ideas when they’re introduced.

Understanding how historical cultures shaped people’s views led me to begin considering what they had to do to change themselves and their culture. Grasping that seemed to be the key to creating the kind of culture that I wanted. I selected four models in particular, one of whom is still very much alive. I wasn’t looking for ideal cultural end states—some of the models produced extremely violent or otherwise problematic cultures—but for people who were outstandingly effective in getting the cultures they wanted.

How did bushido, the code of the samurai, enable the warrior class to rule Japan for seven hundred years and shape modern Japanese culture? What set of cultural virtues empowered them? The samurai called their principles “virtues” rather than “values”; virtues are what you do, while values are merely what you believe. As we’ll see, doing is what matters.

To get them to be who you want, you will first need to see them for who they are.

I begin the second part of the book by walking you through how to understand your own personality and your company’s strategy and how to use that understanding to build the culture you need to succeed. Culture only works if the leader visibly participates in and vocally champions it.

But most people don’t walk around with a supersharp definition of their personal cultural values. So how do you identify who you are and what parts of you belong in the organization (and don’t belong)? How do you become the kind of leader that you yourself want to follow?

Culture isn’t a magical set of rules that makes everyone behave the way you’d like. It’s a system of behaviors that you hope most people will follow, most of the time. Critics love to attack companies for having a “broken culture” or being “morally corrupt,” but it’s actually a minor miracle if a culture isn’t dysfunctional.

As a final word of discouragement: a great culture does not get you a great company. If your product isn’t superior or the market doesn’t want it, your company will fail no matter how good its culture is. 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.

This book is not a comprehensive set of techniques for creating a perfect culture. There is no one ideal. A culture’s strengths may also be its weaknesses. And sometimes you have to break a core principle of your culture to survive. Culture is crucial, but if the company fails because you insist on cultural purity, you’re doing it wrong.

Instead, the book will take you on a journey through culture, from ancient to modern. Along the way, you will learn how to answer a question fundamental to any organization: who are we? A simple-seeming question that’s not simple at all. Because who you are is how people talk about you when you’re not around. How do you treat your customers? Are you there for people in a pinch? Can you be trusted? Who you are is not the values you list on the wall. It’s not what you say at an all-hands. It’s not your marketing campaign. It’s not even what you believe. It’s what you do. What you do is who you are. This book aims to help you do the things you need to do so you can be who you want to be.

Louverture was just five feet two and by no means handsome. Laconic, with a stern, probing glance, he was immensely energetic and focused. He slept two hours a night and could live for days on a few bananas and a glass of water. His education, position, and character gave him tremendous prestige among his fellow slaves long before the revolution. He never doubted that his destiny was to be their leader.

While still a teenager, he was made caretaker of the estate’s mules and oxen—a post usually held by a white man. Louverture seized this rare opportunity to educate himself in his free time and to read through his master’s library, including Julius Caesar’s Commentaries and Abbé Raynal’s Histoire des deux Indes, or History of two Indies, an encyclopedic account of trade between Europe and the Far East. Caesar’s work helped him understand politics and the art of war, and Raynal’s gave him a thorough grounding in the economics of the region and of Europe.

Louverture used every carriage ride with Libertat to expand his network, making contact with nearly all of his future allies. The rides also enabled him first to understand, and then to master, French colonial ways. Louverture gradually came to a realization that no one else in colonial Saint-Domingue had arrived at: culture, not color, determined behavior.

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

As an organization grows, communication becomes its biggest challenge. If soldiers fundamentally trust the general, then communication will be vastly more efficient than if they don’t.

When everyone wants to know “Why?” in an organization, the answer programs the culture, because it’s an answer everyone will remember. The explanation will be repeated to every new recruit and will embed itself into the cultural fabric. New officers would ask, “Tell me again why I can’t have a concubine?” And be told: “Because in this army, nothing is more important than your word. If we can’t trust you to keep your word to your wife, we definitely can’t trust you to keep your word to us.” (The matter is complicated by the fact that Louverture had illegitimate children, but no leader is perfect.)

As we will see in the next chapter, something as seemingly simple as a dress code can change behavior, and therefore culture, not only in war but in business.

Incorporate Outside Leadership A leader can transform a culture by bringing in leadership from a culture whose ways she wants to adapt. Julius Caesar did this to great effect when he built the Roman Empire. Rather than executing vanquished leaders, he often left them in place so that they could govern the region using their superior understanding of the local culture. Louverture probably absorbed this idea when he read Caesar’s Commentaries.

I often see companies that plan to go into new areas, but don’t want to shift their culture accordingly. Many consumer companies want to penetrate the enterprise market—that is, selling to big companies—but resist having employees who walk around in fancy suits. They believe that their original culture should suffice. But their results prove otherwise. Building a great culture means adapting it to circumstances. And that often means bringing in outside leadership from the culture you need to penetrate or master.

Make Decisions That Demonstrate Cultural Priorities The more counterintuitive the leader’s decision, the stronger the impact on the culture. Louverture set his culture by making one of the most counterintuitive decisions of the revolution.

So Louverture not only let the plantation owners live, he let them keep their land. But he insisted that they pay their laborers one-fourth of the profits. And he ordered them to live on their plantations, so they would be directly accountable for paying their workers and treating them well. If they disobeyed, their land was confiscated. With these decisions, Louverture established what a thousand speeches could not have: that the revolution wasn’t about revenge and that the economic well-being of the colony was its highest priority. It was all very well for him to say “no reprisals,” but it was what he did that set the culture.

Walk the Talk No culture can flourish without the enthusiastic participation of its leader. No matter how well designed, carefully programmed, and insistently enforced your cultural elements are, inconsistent or hypocritical behavior by the person in charge will blow the whole thing up.

One difficulty in implementing integrity is that it’s a concept without boundaries. You can’t pat yourself on the back for treating your employees ethically if you’re simultaneously lying to your customers, because your employees will pick up on the discrepancy and start lying to each other. The behaviors must be universal; you have to live up to them in every context.

Steve Jobs disregarded that advice. In fact, one of his first acts as CEO was to stop licensing Mac OS to other hardware providers. The industry’s other article of faith was that companies needed to maximize market share by having a presence in every link of the computer chain, from servers to printers to PCs to laptops. Likewise, they needed to make PCs in all shapes and sizes for every possible user. But Jobs immediately killed the majority of Apple’s products, including most of its PC models, as well as all of its servers and printers and its Newton handheld computer.

For Jobs, the issue was not the economic structure of the PC industry. Apple just needed to build better products. He would need to transform its culture to make that happen, but it would only happen if he built upon Apple’s strengths, not Microsoft’s.

Integrating hardware and software had always been Apple’s core strength. At its peak, the company had focused not on industry benchmarks like processor speeds and storage capacity, but on building products such as the MacIntosh that encouraged people’s creativity. Apple did integration better than anyone else. Part of the magic was its ability to control the entire product, from the user interface to the precise color of the hardware. Jobs went out of his way to keep the employees who understood this, user-experience perfectionists like him. Jobs said about one such employee, the great designer Jony Ive, “He understands what we do at our core better than anyone.”

To further control the customer experience, Jobs even opened Apple Stores, which would become one of the best-performing retail businesses in the world.

Create Shocking Rules 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.

When Tom Coughlin coached the New York Giants, from 2004 to 2015, the media went crazy over a shocking rule he set: If you are on time, you are late.

Was the rule memorable? Check. Did it beg the question “Why?” He had players asking everyone from the league to the New York Times “Why?” so, check. Did they encounter it daily? Yep, they ran into it every time they had to be somewhere. But what was he trying to achieve?

Coughlin Time is more of a mindset, kind of a way for players to discipline themselves, making sure they’re on time, making sure they’re attentive and making sure they’re ready to work when it’s time to start meetings. It’s actually kind of nice because once you get out in the real world, you’re five minutes early to everything.

So Greene came up with a shocking rule: Partnerships should be 49/51, with VMware getting the 49. Did she just tell her team to lose? That definitely begs the question “Why?” Greene said, “I had to give our business development people permission to be good to the partners, because one-sided partnerships would not work.” Her rule was actually met not with resistance but with relief. Her people wanted to create mutually beneficial partnerships, and Greene’s rule gave them permission. It was of course no easier to measure an exact 49/51 split than a 50/50 “win-win,” but Greene’s employees understood her underlying point: “If you’re negotiating something on the margin, it’s okay to give it to our partner.” VMware went on to create a stunning set of partnerships with Intel, Dell, HP, and IBM that propelled the company to a market capitalization of more than $60 billion.

The shocking rule that helps is No PowerPoint presentations in meetings. In an industry where presentations rule the day, this rule definitely counts as shocking. To convene a meeting at Amazon, you must prepare a short written document explaining the issues to be discussed and your position on them. When the meeting begins everyone silently reads the document. Then the discussion starts, with everyone up to speed on a shared set of background information.

Speed was the number one virtue he needed, so he created a shocking rule: Move fast and break things. Imagine you are an engineer hearing that for the first time: Break things? I thought the point was to make things. Why is Mark telling us to break things? Well, he’s telling you so that when you come up with an innovative product and you are not sure whether it’s worth potentially destabilizing the code base to push the product along, you already have your answer. Moving fast is the virtue; breaking things is the acceptable by-product. Zuckerberg later observed that the reason the rule was so powerful was that it stated not only what Facebook wanted, but what it would give up to get it.

Dress for Success When Mary Barra took over as the CEO of General Motors in 2014, she wanted to dismantle the company’s powerful bureaucracy. It stifled employees and disempowered managers: rather than communicating with employees and giving them guidance, the managers relied on the extensive system of rules to do the job for them. The ten-page dress code was the worst example. To shock the system and change the culture, Barra reduced ten pages to two words: dress appropriately.

The change sent a lasting visual message to GM’s entire management team. Every time a manager saw an employee, it would trigger the thought, Is he dressed appropriately? And, if not, What’s the best way for me to manage that? Do I have a good enough relationship with him to communicate effectively on this sensitive issue? The new code empowered—and required—managers to manage.

Two years later, Netflix launched its streaming service. Hastings later observed that the challenge wasn’t getting into a new business—almost every company could and would do that; it’s B School 101. The challenge was getting into a new business with the intention of making it the business. Almost no companies did that. Netflix’s entire high-customer-satisfaction, very-profitable culture was built around delivering DVDs. In 2010, Hastings felt that he had just enough streaming content to run an experiment in Canada, which had no DVD-by-mail service. The company signed up as many Canadian streaming subscribers in three days as it had expected to get in three months. The age of streaming was clearly at hand—but how could

Hastings make the jump to becoming a global business built around streaming? Obviously he’d have to bundle streaming with DVD to begin with, but what next? Every time he raised this vital topic with his team, trying to hyperleap the company into the future, the conversation reverted to optimizing the DVD service. Hastings made a hard decision to demonstrate his priorities. He kicked all the executives who ran the DVD business out of his weekly management meeting. “That was one of the most painful moments in building the company,” he said later. “Because we loved them, we’d grown up with them, and they’re running everything that’s important. But they weren’t adding value in terms of the streaming discussion.” Hastings had long kept looking over his shoulder for a pure-streaming company that would run right by Netflix. He knew that that competitor wouldn’t have any DVD execs in its meetings. So why should Netflix, if it was going to be that company?

Louverture knew that telling people that agriculture was a priority wouldn’t make it so. He had to do something dramatic to demonstrate that it was the highest priority—something everyone would remember. He forgave the slave owners and let them keep their land. Nothing could be clearer. Likewise, Hastings couldn’t just say that streaming was a priority; he had to demonstrate it.

But there was a flaw in the plan. Two-factor authentication was required on everyone’s work email. The phishing attack was sent to Podesta’s personal email. Now, what past behavior could possibly have given Podesta the idea that he could send and receive tons of highly confidential campaign emails from his personal email account? Oh, snap.

When you inevitably take an action that’s inconsistent with your culture, the best fix is to admit it, then move to overcorrect the error. The admission and the self-correction have to be public enough and vehement enough to erase the earlier decision and become the new lesson.

Clinton seems never to have contemplated this kind of admission and course correction; an ironclad rule of U.S. politics is “Never admit you were wrong.” (This rule is one reason why it’s hard to wholeheartedly admire most politicians.) In her book, she accepts some blame for her carelessness, but shrugs off most of the responsibility: “one boneheaded mistake turned into a campaign-defining and -destroying scandal, thanks to a toxic mix of partisan opportunism, interagency turf battles, a rash FBI director, my own inability to explain the whole mess in a way people could understand, and media coverage that by its very volume told the voters this was by far the most important issue of the campaign.”