I got into entrepreneurship about 13 years ago. I've been fortunate enough to be a part of some companies that have gotten to nine-figure run rates and revenue, and I've been a part of companies that went to zero. And pretty much the main thing that I have learned is something that everybody in this room probably knows which is, business is very hard. Specifically to me what makes business so hard is there are so many things that impact our success [00:01:00] that we don't control.

I don't control the Fed. I don't control unemployment. I don't control what China's doing. I don't control the election. We can go on and on with all of the variables that ended up impact impacting our success and even our ability to hire people that we don't control. This is a talk about something that everyone in this room does control and can highly influence and will absolutely make your organization more successful, which is your culture.

So let's start by talking about what culture actually is. Somebody else came up with this definition, but originality is forgetting where you stole something from. So I'll use it as mine. Culture is a 90-day moving average of what people experience inside of your organization. This is both what is explicitly said and what is implicitly taken away by people by the way that you hire, you fire, you promote, the way that you affirm.

It's the norms and the rituals that make up the specific way that a group of people [00:02:00] interact with each other and get work done. The thing about cultures and one of the reasons why it's difficult for me to talk on the subject in some ways is because every single person in here is probably a part of multiple cultures, whether it's your family or your business or whatever else, and that they're all unique in some way.

No two cultures are the same. In the same way, all of us have an indexed fingerprint that we know is unique. That they're differentiated from each other. But it's also true about fingerprints that they have the same general features. Even if they're not exactly the same, they have the same general features.

And it turns out that the research says, when it comes to building a great culture, that the same is true. No two cultures are alike, but winning cultures, successful cultures, tend to have features. Today I'm going to talk about three of those, and this is not an exhaustive list of things that make a winning culture, but there are three things that I often see under-emphasized or under-focused on in [00:03:00] organizations.

So we're going to talk about them today. The three are trust, purpose, and ownership. Let's start with trust. One of the ways that we can think about trying to get our arms around how much trust exists in an organization is through an equation called the trust equation that was popularized quite a bit ago.

I really like it and it helps me have a framework for thinking how much trust does exist in this group. So think about it like this, 

trust = credibility + reliability + intimacy divided by, reduced by, self-orientation. 

Okay, what do each of those things mean? 

Credibility means people know what they're talking about. The job that they have, they have real expertise in that area. And that when they give their opinion on that subject, people know that they have done research and that they know what they're talking about. 

Reliability means that they're not erratic, they're predictable. They do what they say they're going to do. They show up when they say they're going to show up. I [00:04:00] would call these performance dimensions. 

Intimacy is the ability to be transparent and have relationships with other people within an environment. 

And then on the bottom here, we have self-orientation. Self-orientation, another way to think about it, is self-absorption. It is how much are the people within this team or organization focused exclusively on self? What percentage of their thoughts are focused on themselves versus those around them? And the higher the self-orientation, the higher the self-absorption of people within a team, It basically destroys all the things that are being built up at the top half of the equation.

I'll break this into a couple of pieces, what I'll call performance dimensions and then what I'll call interpersonal dimensions. And today we're going to really focus on the interpersonal dimensions. The reason that I want to focus on the interpersonal dimensions is because we all intuitively understand how much the performance dimensions really matter, right?

If we have ever [00:05:00] been on a team with someone that was just very incompetent, right? It's a terrible experience. Nobody wants that or somebody who is completely unreliable. You can't build teams. You can't build a business around people like that. 

This is a recent poll that somebody did on Twitter and said, out of the four things in the trust equation, which of the four would you say is the most important to you in developing trust? Not surprisingly, the performance dimensions came in first and second. Now, there's still 30 percent of people that are saying these other interpersonal dimensions are their number one. But the majority drift towards the performance dimensions. 

The problem is that this isn't like other areas of life. There's a lot of research that says when it comes to your strengths and weaknesses, it's better to focus on your strengths than trying to get better at your weaknesses. This is not one of those areas. You can't have a culture that only focuses on performance dimensions and hope to achieve trust. It just doesn't work that way. You have to have at least some semblance of balance across all four. [00:06:00] 

To make my point, maybe some of you have been a part of a team or an organization or culture that was like this. I want you to imagine working with a group of people that are hyper competent and incredibly reliable, but you have no relationship with and they have no care about you or your life. They're only in it for them. That sounds a lot more like a Game of Thrones episode than an environment of trust. We have to have balance across all four. And my argument would be that we overweight on these performance dimensions because they are so important at the detriment of focusing on the interpersonal aspects of culture.

And so that's what we want to focus on today. I'm going to share an example from Simple Modern's culture of each of these. This isn’t exhaustive. It's just one example and then some questions you can ask with your organization ways that you could apply this. 

One of the things that I decided to do very early on, and this is not a novel idea, but I decided that anytime the [00:07:00] team was together, we would buy lunch for everyone.

And recently we took a Great Places to Work survey and the lunches came up again and again. And somebody asked me, why are people talking about the lunches? Is it that you guys get really good food? Like, what is it? And the reality is the reason why the lunches are so powerful in our culture has nothing to do with the free food or the quality of the food.

The lunches are a context where everyone is able to connect relationally. Our office transforms in some ways into a high school cafeteria. Everybody leaves their desk, everybody gets food, gets around these big tables, and the conversation is actually rarely about work. What we've done is intentionally invested money in creating a context where relationship building is a part of people's day-to-day experience at the job.

Can you guess what happens to intimacy when you find ways to funnel resources and time deliberately into people connecting with each other? Sure enough, you build more trust in the organization. 

Here's some questions that you can ask ways to think about this when it comes to [00:08:00] your organization.

First, how much are you considering interpersonal dynamics? Versus the performance dynamics when you're going through the hiring process. Recently, there was an academic paper about quarterback performance in the NFL that I thought was fascinating. They looked at quarterback performance by draft pick, and what they found is that basically there's no difference in performance between top ten picks and people taken with later picks, once you account for the amount of opportunity that they're given on the field.

Which is kind of shocking. The reason is because up to 65 to 70 percent of a quarterback's performance has to do with the coach and the system and the personnel they're surrounded by. We talk a lot about hiring A-players, right? The reality is no one can be an A-player or an A+ player in the wrong context. The cultural context plus the right hire is where you get special results.

So are you considering interpersonal [00:09:00] things like fit and intimacy and self-orientation when you're going through the hiring process?

Second, unlike the stock market, past performance is the best predictor of future performance when it comes to how people will behave.

Do they have a track record of forming healthy relationships in their life? If so, that's a good leading indicator that they will be a good teammate. And if not, that's a red flag. As I mentioned with the lunches, just like we all think really deliberately about how we invest resources in our companies to help them grow, we need to be thinking about how are we strategically investing resources in helping our team bond with each other.

One of the reasons why this is so critical, especially in a world with remote work, is that bonding helps create a glue that makes people not want to leave, right? Remote work has made it where no matter what market you're in, there's always going to be somebody who could come in and pay more money than you.

We need to [00:10:00] compete across more than just financial dimensions. We want to create, we want to compete across some of these other interpersonal and purpose dimensions that will help not just attract, but also retain and hang on to the best people. 

And I will say this about conflict. Great organizations are not devoid of conflict. They just do conflict well. Conflict is taken to the source. People are direct. Things get resolved. Just like a healthy marriage will have conflict, but it gets resolved well. The same is true of organizations that have a healthy culture. 

The second thing I want to talk about is purpose. I have a picture here from a Harry Potter movie. There's a reason why movies capture us. And that reason is because all of us, when we think about our lives, we think about it in a narrative form and we want our life to have meaning and purpose. This isn't unique to the people in this room. Everyone who works for us wants the same of their life.

I do a lot of teaching with college students. If you look at college students and the research that's coming out, what it would say is that they are more interested in what their work career will produce and the way it will impact the world than any generation that has come before them. It really matters to them.

Antoine de Saint Exupery once made this observation, which I love. He said, if you want to build a ship, don't drum up people to collect wood and don't assign them tasks and work, but rather teach them to long for the endless immensity of the sea. There's a simple principle there.

Teams do their best work. When you talk to them about something higher than work, when you're able to give them a purpose and a meaning that you can point towards, it's bigger than the mundane of the day-to-day. When we build cultures that effectively do that. It becomes a magnet for people who want their life to count and have a passion that will make our teams exceptional. 

An example of [00:12:00] how we do this at Simple Modern. We have a very counterintuitive mission statement. Our mission statement is we exist to give generously. Which seems like a great way to go bankrupt if you're a for profit company. But ironically, building a company that's all about giving away has helped us to be a very profitable company.

And part of the reason is because we attract very missionally minded people that really buy into their work. In fact, I would guess 50 to 60 percent of the people that we attract are people who spent time just like me in the nonprofit world before the business world. 

An example of how we apply this is we take 10 percent of our profits and we give it away every year and every employee, a section of that money is equally divided among every employee in the organization to give to whatever nonprofit they want to give towards.

Why does that matter? It matters because when you're having a back and forth with Walmart about that five cents of costs that they want to shave off. What's the motivation to go to the mattresses to make sure that you get that five cents? Well for our employees it's [00:13:00] more than just that it reflects well in their job performance, it's that they know that five cents means hey another 10,000 people in Africa get clean drinking water. Or I have more money that I can give towards a cause that I really care about.

Some questions that you can ask: First does your team know how doing their job well leads to impacting the world in a positive way? Can they draw a straight line from even the mundane parts of their work to the larger things that your organization or your organization helps make possible? I mean, we make water bottles. There's nothing world changing about that. And yet we impact millions of people's lives. And between our giving and our products, there are a lot of ways that we impact the world around us. Some of this is developing the muscle of being able to help people see and have vision for how their work matters. 

Second, are talented people who do not buy into your mission allowed to stay at the organization? You just cannot keep those people no matter how talented someone is. [00:14:00] If they don't buy into the larger purpose, it's more cancerous than helpful. 

Third, does your mission clearly impact trade-off decisions? So when we make trade-off decisions within Simple Modern, these are obviously qualitative things. One example is we looked at, should we do domestic manufacturing? And part of that was not just in an Excel spreadsheet. It was asking, what would a company that's really about generosity do when it comes to how they make their products? This is one of the reasons why we ended up getting into domestic manufacturing, because we felt like it was consistent with our purpose and our mission.

Finally, your organization's purpose is authentic and sincere. And I cannot underline this enough. No organization perfectly accomplishes its purpose or mission. But the critical thing is that it is sincere and that it is authentic. And one of the great litmus tests that you can use for whether or not your organization's purpose is just a line on a piece of paper or a thing that's hung up in the lobby or something real is that you have [00:15:00] stories about how there has been sacrifice on its behalf.When has our organization had to pay the price? 

For us making the decision to give away 10 percent of our profits every year in a very fast growing inventory business cost us something. And we tell those stories over and over again so that even people who are new joining the team understand the way that this has impacted the trajectory and the history of the company.

The third is ownership. When our company was small, I was one of a few people. Now there are more than a hundred people at our company, which means that less than 1 percent of the experiences that people have at our company come directly from me. If our culture completely depends on the leader, then once you get to a certain size, your culture will fall apart.

I use this analogy. Culture is like a garden and the garden can only thrive if everyone pulls the weeds. Everybody fertilizes the soil and everybody waters the plants. When we hire a new employee, on their [00:16:00] very first day I sit down with them. I walk through our mission, our vision, our values.

And then at the end we have a proverbial handoff where I say, you joined because you wanted to be a part of this culture and you found it attractive. You heard about it throughout the hiring process. If we are going to continue to have a special culture, you have to own it with me. I know it's your first day, but I have to have you own it with me because it's the only way that it's possible for this thing to continue to be what you joined to be a part of.

We want to define our values broadly so that everyone feels like they can own them. An example here again, from Simple Modern, we have generosity as a value. So how do you define generosity broadly? In its worst form, we think about generosity as simply the act of writing checks. And if that's the way that we define generosity, then turns out nobody in my company can lead in generosity the way that I can.

But if instead we say generosity is an open handedness with everything that we have for the benefit of other people, then all of a sudden everyone from the customer support [00:17:00] representative all the way up to the CEO can be a leader in generosity. We're situated differently. The expression of that looks differently, but everyone can own it, whether it's with their words or with the sharing of knowledge or skills or whatever it is that they have to offer.

Finally, organizations with great ownership are very intentional about how they affirm and how they publicly recognize people within the organization. One of the things we do every month is we have a lunch that everyone comes to in the organization, our manufacturing arm, our office arm. And during that lunch, we will recognize employees where a bunch of their peers will write what they appreciate about that employee.

But one of the things that's really intentional here is we have people affirm how they demonstrate the values of the organization, how they see the lifeblood of the organization expressed in their day to day actions and behaviors and words. So you not only want to talk about your values, but then you have to clap loudest when people exhibit those [00:18:00] values.

Some questions that you can ask internally when it comes to building ownership within your teams. Are your mission and vision defined in a way that's relevant to everyone? Are they clear? Have you made them concrete? And are they clear? And is everybody aware of how they can own and lead in them?

Are you talking about culture and values even during the hiring process? It is our lead foot in recruiting. We end up hiring people that come in expecting these things. And it's a lot easier when somebody's coming in saying, I'm ready to come in and lead and these values are the things that matter the most to me.

How can you encourage new people in your organization to take ownership very early on from day one? And then what are ways that you as a leader can reward when people do take cultural ownership? 

I'll end with this: When we focus on culture, we build [00:19:00] organizations that win twice. You will recruit better talent. You will win in the talent wars. And as a result, you will win on the income statement. But even more importantly, maybe you'll win because you'll have a business that you and your team love working on.

This transcript was generated with Descript AI