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

by Ben Horowitz

Intel created a casual-dress standard to promote meritocracy. Its leaders believed the best idea should win, not the idea from the highest-ranking person in the fanciest suit. Many current Silicon Valley companies don’t know that history, and adopt the casual dress without adopting the meritocracy that underpinned it.

If you’re a leader, how do you know what your culture is? The question is harder than it sounds.

When you ask your managers, “What is our culture like?” they’re likely to give you a managed answer that tells you what they think you want to hear and doesn’t hint at what they think you absolutely do not want to hear. That’s why they’re called managers.

Go around your managers to ask new employees these questions directly after their first week. And make sure you ask them for the bad stuff, the practices or assumptions that made them wary and uncomfortable. Ask them what’s different than other places they’ve worked—not just what’s better, but what’s worse. And ask them for advice: “If you were me, how would you improve the culture based on your first week here? What would you try to enhance?”

Your first day, your first week in an organization is when you’re observing each detail, figuring out where you stand. That’s when your sense of the culture gets seared in—especially if someone gets stabbed in the neck.

People’s receptivity when they join, and the lasting impact of first impressions, is why the new-employee process is the most important one to get right.

trying to screen for “good people” or screen out “bad people” doesn’t necessarily get you a high-integrity culture. A person may come in with high integrity but have to compromise it to succeed in your environment.

When I was CEO, I had a rule that everyone, including me, was held to: if you don’t complete all your written performance reviews, nobody who works for you will receive their raises, bonuses, or stock-option increases.

If you are charismatic enough, you can sometimes get away with saying your culture is something it isn’t. People will believe you, at least for a while. But you won’t get the behaviors you need and you’ll never become who you said you were.

virtues are superior to values, but until that understanding becomes widespread, a lot of companies will continue to have values.)

Butterfield had to send a clear message about which behaviors were and were not part of the culture. So he began to shift the emphasis away from empathy and toward one of the core attributes he wanted to build into the culture: being collaborative. Then he defined what that value meant in practice. At Slack, “collaborative” means taking leadership from everywhere.

Collaborative people know that their success is limited by uncollaborative people, so they are either going to help those people raise their game or they are going to get rid of them.

To change a culture, you can’t just give lip service to what you want. Your people must feel the urgency of it.

Genghis created a remarkably stable culture by founding it on three principles: meritocracy, loyalty, and inclusion.

Typically, leaders asked warriors to die for them, but Genghis viewed loyalty as a bilateral relationship that gave him significant responsibilities.

She asked the employees what they loved about the company and what they hated. Finally, she spent time thinking about how to dismantle the hierarchy and close the communications gap between the white- and blue-collar workers.

She began by firing her most lackluster executives.

Compare this to modern companies where: CEOs delegate inclusion programs to “heads of diversity.” These heads of diversity are tasked with achieving diverse representation rather than with the whole company’s success. So they often focus on achieving specific race and gender targets rather than on finding talent from diverse pools. Companies often outsource integration to hired diversity consultants who have no understanding of the company’s business objectives. That is, the companies make no further efforts to turn themselves into a great place to work for their new hires. As a result, while hiring numbers show progress, the real story lies in employee satisfaction numbers and the attrition rate of new hires. The first will be low, the second high.

If you’re having trouble seeing the value in a particular talent pool, the answer is not to set up a parallel talent process for those groups; the answer is to fix the talent process you have so you can cure your blindness.

Cultures, like the organizations that create them, must evolve to meet new challenges.

While you can draw inspiration from other cultures, don’t try to adapt another organization’s ways. For your culture to be vibrant and sustainable, it must come from the blood, from the

The CEO should tell the board member, “Great. Let me know what you think makes those CFOs better than our guy, and please introduce me to them.” The CEO should spend time with those CFOs, decide for herself whether she comes to the same assessment of a skills gap, then—and this step is critical—decide how important those skills are for her company. If the skills are vital and the difference in skills between her CFO and the external CFOs is real, she can go back to her CFO, tell him where he stands, and let him know that he’s not going to make it. She can be herself. If she disagrees with the board member, she can be herself with him, too. And she’ll have done the work to back up her response.

If you follow the first rule of leadership, not everybody will like you. But trying to get everybody to like you makes things even worse.

There are parts of any CEO’s personality that he doesn’t actually want in the company. Think carefully about what your flaws are, because you don’t want to program them into your culture—or else leading by example will bite you in the ass.

Not every virtue fits every strategy.

any company of any significant size will have subcultures in addition to its main culture.

Subcultures usually emerge because the divisions of a company are often quite distinct from one another.

When you ask an engineer a question, her instinct is to answer it with great precision. When you ask a salesperson a question, she’ll try to figure out the question behind the question.

Having their questions answered with questions drives engineers insane. They want answers fast, so they can get back to work. But if they hope to see their product succeed—if they want great salespeople to go sell it, so they can keep working for a company that’s still in business—they need to be able to tolerate that cultural difference.

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. So sales organizations focus on commissions, sales contests, president’s clubs, and other prize-oriented forms of compensation.

Great sales cultures are competitive, aggressive, and highly compensated—but only for results.

While every company needs core common cultural elements, trying to make all aspects of your culture identical across functions means weakening some functions in favor of others.

One way to think about designing your culture is to conceive it as a way to specify the kinds of employees you want. What virtues do you value most in employees?

Making your virtues precisely the qualities you’re looking for in an employee reinforces an important concept from bushido: virtues must be based on actions rather than beliefs.

Our values were really original—they included playfulness and solidarity, for instance—but they weren’t an effective guide to action. We were trying to find something that would help people make a decision.

when he was recruiting he looked for people who were smart, humble, hardworking, and collaborative.

If you’re humble, people want you to succeed. If you’re selfish, they want you to fail.

Hardworking. It does not mean long hours. You can go home and take care of your family, but when you’re here, you’re disciplined, professional, and focused. You should also be competitive, determined, resourceful, resilient, and gritty. Take this job as an opportunity to do the best work of your life.

Collaborative. It’s not submissive, not deferential—in fact it’s kind of the opposite. In our culture, being collaborative means providing leadership from everywhere. I’m taking responsibility for the health of this meeting. If there’s a lack of trust, I’m going to address that. If the goals are unclear, I’m going to deal with that. We’re all interested in getting better and everyone should take responsibility for that. If everyone’s collaborative in that sense, the responsibility for team performance is shared.

Collaborative people know that success is limited by the worst performers, so they are either going to elevate the...

The most important element of any corporate culture is that people care. They care about the quality of their work, they care about the mission, they care about being good citizens, they care about the company winning.

gigantic portion of your cultural success will be determined by what gets rewarded at your company.

Every time an employee works hard to make a change or to propose a new idea only to be met with bureaucracy, indecisio...

Every time an employee is recognized or rewarded for pushing the company forward,...

If your organization can’t make decisions, can’t approve initiatives quickly, or has voids where leadership should be, it doesn’t matter how many great people you hire or how much work you spend defining your culture. Your culture will be defined by indifference,

If I work hard and my neighbor does nothing and we both have the same impact at the company, then her behavior is obviously the way to go.

If you are tested on this virtue, will you pass the test?

Your employees will test you on your cultural virtues, either accidentally or on purpose, so before you put one into your company, ask yourself, “Am I willing to pass the test on this?”

Cultural rules can often become bloated sacred cows. Everyone tiptoes around them, trying to respect the culture—and then the cows topple and crush you. Strategies evolve, circumstances change, and you learn new things. When that happens, you must change your culture or you will end up pinned beneath it.

Determining that your culture is broken is hard. It would be great if you could trust your employees to tell you. But a) they’d need the courage to do that, and b) the person complaining would have to be a good cultural fit themselves or the complaint might actually be a compliment (your culture is working and therefore the complainer, who can’t get with the program, doesn’t like it), and c) most complaints about culture are too abstract to be useful.