On Making Organizational Culture Great With Professor Glenn Carroll

TITLE: “On Making Organizational Culture Great,” with Professor Glenn Carroll CHANNEL: Stanford Graduate School of Business DATE: 2026-06-26 ---TRANSCRIPT--- [GLENN CARROLL] Thank you, folks, for spending the morning, evening, afternoon with us. It’s really a pleasure and a delight for me to be here and talk to you about a new book that Jenny Chatman and I have just published about organizational culture Let me give you a little bit of background. So Jenny is a social psychologist, and she is currently the dean at the Haas School of Business in Berkeley. And I am a sociologist who’s been here at Stanford since 2000. And before that I worked at Berkeley. So we’ve known each other a long time, and we haven’t really ever worked together until this book on any paper project. But we have traded a lot of experiences and stories and students across the years. And she’s not only a colleague, but a good friend. I think the book is unique in at least one sense in that she’s a social psychologist and I’m a sociologist, and you hear a lot of talk in the university about multidisciplinary, interdisciplinary efforts, but in fact, they rarely are real things. This really was. We both have studied culture, but from very different perspectives, and we tried to write a book for a general audience, for managers and executives. So first, a couple comments about why we wrote the book. Because there’s plenty of books out there. So, you know, when I started in this business some years ago, it was commonplace for people to deny the importance of culture. People in the business world often said, well, I know all that’s fun and games and fine, but, you know, it doesn’t really matter. Compare that to today. I think there are some people clearly who still believe that, but they won’t say that in public for the most part. So almost everyone today claims to say that organizational culture is very serious and that’s important for running a business, and that includes a lot of top executives on record. And I have reproduced here some slides from some quotes from some surveys that the top executives, top consulting firms have done that kind of verify that. And the numbers are astounding. Something to the tune of eighty to ninety percent of top executives, including CEOs, will say that culture is a very important part of their business and is one of the reasons why they’re successful or not. Yet even with this, Jenny and I both teach a lot of classes in executive education sessions. What we found when we do that is that there is still some noticeable discomfort in the room. People accept that this is important. They recognize it. They want to do something about it. They’re not quite sure what to do about it. There’s some discomfort. Sometimes they’ll delegate it. There’s just a kind of uncertainty about what to do with it There are lots of tales, stories, if you will. But in fact, when we thought about why this is the case, why, you know, there are some people who are just natural, so it’s not true, but an awful lot of people it is. It’s in fact that, you know, if many business people and managers and executives have in fact received very little formal training about culture and cultural management. Most likely, many of you got one course session in one class, possibly in strategy, sometime when you were getting your MBA. And you might have read some books here and there. They’re all over the airport bookstores. They say all kinds of things. So as a result of the fact you have no, really very little training and you’re not sure what to believe, we decided we’d try to, you know, step in and say what we think is true as social scientists. And so the main reason we wrote the book was really to take our knowledge as social scientists and try to write in a common way that laypeople could understand to inform People, what we as professional social scientists think about organizational culture and why we think it’s important. And the book kind of hinges around two things. One is a set of five common beliefs that we think are reasonably pervasive in the world, and we confront those. They’re not just all myths. Some of them are sort of true, but each chapter in the book addresses one of these myths in some length. And then we have a chapter near the end that is kind of like a managerial how-to playbook, which is a list of levers that managers have at their disposal to use to try and build and sustain strong culture. And these are things I’ll get to in the end. They’re definitely underutilized, even though you will do and recognize many of them themselves. I should say at any point, if you want to feel free to, interrupt me and ask me to clarify or elaborate, anything like that, I’m happy to do that. So, so don’t be shy. So why do we want to do this? So one reason, I think a very vivid reason is Recounted by Reed Hastings. And Reed, of course, is the founder and previous CEO of Netflix, who wrote a book, about the culture of Netflix, No Rules Rules, which I highly recommend to you. It’s a very good book. But in the book, he tells one story about when Sheryl Sandberg came to visit him. He says, you know, Silicon Valley executives do this shadowing all the time where they come and they spend a day, a week with somebody watching them. And then at the end of the day, they sit down and they have a debriefing to say what surprised them, what they learned, what they didn’t learn, and give them some advice even too sometimes. And he writes in the book, he says, “Afterwards, when Sheryl and I debriefed, she said” The amazing thing was to sit with you all day long and to see that you didn’t make one single decision. One decision in a whole day at Netflix, a rapidly changing industry So why is that, you might ask? And I think the answer to that shows the power of organizational culture. He didn’t make decisions because he has a lot of people in those, most people in those positions that are making decisions for him, and they’re not necessarily making the exact same decision he would make. They’re making something pretty close. They’re making something in the ballpark. They might even be better than the decision he would make. And he’s letting them do it because it’s a way of empowering them, letting them take over, take control, and run the business. And so as a result, he actually has less to do. It’s an easier job for him once he has all this in place There’s some very systematic research on organizational structures that shows, in fact, what I’m going to call in this session, what most social scientists call a strong culture organization. In fact, those organizations have fewer managers, fewer administrators. The managerial overhead is lower in strong culture organizations than in regular conventional organizations. Why is that? It’s this reason here. It’s that you don’t need as many managers because often Is being done, the managerial work is being done by the peers and the workers themselves and never gets to be seen by the manager, let alone need for the manager to intervene. So what I want to talk about today is really, really four things here. So the first definition, which I think many of you know because you’ve had a good Stanford education, which is what is a good culture? And then from that, how culture affects performance. And then the core of the book is about these five beliefs. I’ll run through them, and we can see, you know, how your knowledge measures up to others. And then I’ll briefly mention the managerial levers for culture to give you a pitch To study or look at chapter eight if you haven’t already. Okay, so a good way to anchor this is with Stanford’s culture since that’s the one place we all have in common. So what do we think about Stanford’s culture? We all admire Stanford at many levels. We probably have some things that we don’t like about it so much. And so when we wanted to evaluate Stanford, Stanford’s culture, you know, what would be the things that we would use? And so how do you know if an organization has a good culture? So, this is the basic question we all ask. There’s lots of ways to evaluate. Many people say, you know, are people happy? Are they comfortable? Do they not leave? Things like this. To me, as an organizational theorist, a strategy analyst, a management analyst, I’m not very inventive. I agree with what almost everybody says who’s looked at this seriously, which is it has to do with alignment. And what do I mean by alignment? I mean that the culture itself is aligned with the strategy. So in many ways, the strategy precedes the culture. So you have executive leaders. This is a kind of framework that’s commonly used for organizational design. The first question they ask is, you know, what business are we going to be in? How are we going to compete? What’s our vision? Lay out our Imperatives for strategy. How are we going to do this? And then from there, break it down one level to the key success factors. You know, what do we need to get it done? What are the specific accomplishments, tasks that we need to have fulfilled in a capable way? And then the other part of it is the organization part. So there’s human resources, where the people we need, how do we need to design the formal structure around it? But today we’re talking about culture. So it’s really culture, and culture is the butter to the strategy. It’s how do we get people to behave in order to execute the strategy? One way to think about culture is that, you know, strategy can only tell you so much And anybody who’s working in an organization has all kinds of things that they encounter, all kinds of decisions that they have to make, all kinds of resources that they have to allocate. And in order to do those, they can’t run to their boss every time or their peers. They have to decide themselves. And so they ask themselves, you know, what would, what’s the appropriate thing to do here? What’s the right thing to do for this organization? What would, how should Stanford behave? What would a Stanford person do here? And that’s really the question of alignment. So how do we behave in order to successfully execute our strategy? And so you can have a bad strategy, bad culture. You can have a benign culture that doesn’t do anything, or you can have a highly aligned culture. Now, I’ll walk through some examples of this. So here is a cultural, this is an actual cultural messaging statement from a company I did some work with quite a few years ago. And this is what, you know, they used to tell their employees and they developed it with their employees, what their culture is. And they, you know, they were From a bygone era and some kind of hippie type guys, but even though it was very serious business and multi-billion dollars, they called their culture the Grooves. And, you know, they created these little cards that you see the five, ten tenets here of the Grooves, really about, you know, human empowerment, respect for individuals. The Ready-Fire-Aim is supposed to exemplify a bias for action. But each one of these is developed at some length and they train their people and teach them about it. And really, really highly embraced by the people in the company. And, you know, you meet people and they say, “This is why I work here.” Yeah, “This is, this is what this company means to me, and I’d do anything for this company because of this.” These were the attachments. These were the things that kept people going. And so, you know, I came in, wrote a case. I’ve taught this case many times, and I look at it And I say, you know, “Well, let’s use my criteria for a good culture. Is it a good culture?” People like it, yeah. But is it a good culture? Is it aligned? How do I know if it’s aligned? Well, the first question, the only real question for alignment is about the strategy. What’s the strategy of the firm? And I will contend that if your culture is highly aligned, that you should be able to tell from the cultural messaging statement alone what the strategy of the company is, what the business is they’re in, how they intend to compete, what the industry is they’re in And in this case, anybody want to volunteer what they think this industry might be? This is a trick question, obviously. Not much planning, somebody says. That’s true. It’s kind of impulsive. Can you guess what business they’re in? What strategy they’re in? And again, it’s kind of a trick question. I use this a lot because hardly anybody ever gets it right unless they happen to know the company well. So the company is a very big, well-known company. As investment, a lot of people say startups, customer service. They do do customer service, but that’s not it. It is recruitment, sports. All of those are good answers, but not right. It is Grand, Dreyer’s Grand Ice Cream, which now is part of Nestle’s, has been for some years. Dreyer’s Grand Ice Cream was this big ice cream company built out of Oakland that was one of the two American players in the ice cream industry nationwide. And it was highly successful with this Cultural message, including when the company almost went down in the year 2000. This is what pulled them through. Nonetheless, when I look at this, I think, well, I wouldn’t call this cultural message and the culture built around it. I wouldn’t call this Non-aligned or negatively aligned. There’s nothing wrong with it. All this is good, good for the company. But you could probably get more out of your culture than they do. So you can make it more tightly aligned by adding something about… I mean, they’re in the manufacturing business. They make hundreds of gallons, thousands of gallons of ice cream. They own trucks. They truck them around to all these grocery stores. They deal with retailers. They deal with their own shops as well as the grocery stores. So they have a lot of things where they interact with people. So they could have something in there about customers Uh, um, service, they could have something. They’re very proud of their product innovations. Uh, it’s Silicon Valley, so it’s a little I. So, you know, it’s not real big-time innovation, but, you know, innovation in flavors is what they do. And, you know, shortly after this case, they made a big revolution in ice cream that’s still with us today. So, you know, they missed all that in the strategy. So it’s not that it doesn’t happen, it’s just that it’s not reinforced by the culture itself. So that’s an example of somebody that’s not aligned but still doing okay. You could have some that are, you know, they’re well-aligned but have a lot of bad aspects to it. You have some that are not well-aligned and have good things to it as well. Good. Too many things going on here. Let me now put on my professor sociologist hat and talk about this as a social scientist. So what is organizational culture generally? What are we talking about? So organizational culture, we all know, but we never really try to define it. So, you know, the first thing to recognize is that it’s a naturally occurring phenomena Every organization has a culture, no matter what. And I liken it to the personality of an individual or a human. So I have a daughter who’s now grown up, thankfully, and my wife and I spent a lot of our time trying to raise our child To have a certain personality or, or to have not a certain personality, to avoid a certain personality. And so we’ve all done this as parents, and we all know, you know, it’s a tricky process. You can be successful or you can be not successful. At best, it’s kind of you got your successes and hope they’re more than your losses. It’s really, really difficult. And you recognize it’s not a static process. It’s a dynamic process. So once you do something, once you touch it, you’re likely to produce a reaction. It’s socially reactive. And so, you know, for you as a manager, it isn’t— for the most part, except for sexual harassment in the US, it’s entirely optional whether you want to manage the culture If you don’t, you’re leaving a lot on the table, a lot of things you could do. And these days, especially with the high-tech companies, and you see Lou Gerstner from IBM there, the high-tech companies, they think that, you know, this is the secret sauce. This is the thing that determines their success. And so they work very hard and spend a lot of time on their culture, companies like Google, like Netflix, like Meta. Let me here, you know, I’m not gonna get into this. So culture makes sense to the organization, interprets it to others. Cultural behavior in an organization is behavior that occurs without thought, without thinking. It’s automatic behavior almost, as opposed to deliberative behavior. Deliberative behavior, you have to think it through, you have to cognitize it. You can cast culture at various levels of abstraction. Personally, I prefer at a more tangible level and talk about norms and expectations, which is something in the middle of beliefs and special languages, let’s say. The most surprising thing I’ll say, so this slide I’m just gonna jump over. So you guys know that, you know, culture’s not just the fun and games and the food and all that So when I think about culture as a social scientist, like most social scientists, I think about three big dimensions. This is rather important. So the first dimension is what we call content. So content is the actual description of the norms, expectations, values, and beliefs. When an anthropologist goes off to a faraway island, spends a year there studying some tribe or group Comes back, writes a book, describes their eating habits, their intermarriage habits, how they pass down property, et cetera, et cetera. This is a book describing the content of their culture. I mean, he may get into some analysis of it, what it does, but it’s really basically descriptive content. And when we think about culture, this is the most natural way to do it. So when I ask you about, you know, Google or Netflix, you know, you say, well, yeah, you know that you can, they don’t have a vacation policy or, you know, they come to work when they want, or, you know, they have free food or they get Laundry services and tailoring provided online so they don’t have to do that. So there’s all kinds of things like that. Those are content descriptions. In my way of looking at it, content is not all that important, and I’ll explain why as we go along. It has to do with the other two dimensions, which are what define what I’m gonna call, and what most social scientists would call a strong culture So a strong culture is when you have the combination of high intensity and high agreement. Let me take a moment on each of those. Intensity is when I not only hold a particular norm or belief or value, I feel very strongly about it. So strongly that when I’m working next to somebody who’s doing some task similar to mine, in a normal organization, I might let it go because it’s gonna make me look good because I look better, my numbers are better. In a strong culture organization, I will go out of my way To look at what they’re doing and say, “Oh, maybe you’re new here. Let me help you. Let me show you how we do this here. Let me show you the way we do it at Stanford.” So they feel so strongly about this being done right that they will intervene personally without the boss even seeing, and they will help the person to get it right, to do it the way they think they could. And agreement — what it means is that, you know, on those core beliefs and values that we’ve agreed are important for the success of our business and for us to execute our strategy, that we don’t, we don’t argue. We agree. We have basic agreement on those for the most part. So we have a strong, pretty strong belief about that So to put it another way, so just another diagram here. So a strong unified culture or a strong culture is where we have this high intensity and high belief. Now, why is content irrelevant? Well, I can name you very common, obvious organizations you would know among this whole list of types of organizations that all have strong culture. They all use, you know, they all rely on high intensity and high agreement. Things like SWAT teams for the police, terrorist cells, you know, for terrorists, Navy SEALS, religious cults, social movements, nonprofits, all kinds of firms in different industries, mature companies, startups, business firms, you name it. I mean, just about any kind of content. So content is almost irrelevant. Any content can be used to build a strong culture around. So you can use it for good or for bad, and, you know, it’s up to you how you use it and what you use it for. But it’s really, it’s really a set of techniques for producing this strong intensity and this strong agreement So let me stop there and see if I’ve… So I guess if somebody said, got me to touch the thing about touchy-feely. Yes, a little bit. There’s some of that here for sure. But you know, the thing about— So one of the myths in our book is that culture is soft. And, you know, our view is culture is a social control system And there is nothing tougher than a social… Think about, you know, when you get eliminated, you get terminated from your firm or from your business. That would be like getting terminated from your family. You know, if your family came to you one day and said, “No, we don’t think you’re a good daughter anymore. We don’t think you’re a good sister, so we’re gonna cut off relations.” Well, that’s not soft at all. That’s as hardcore a business decision as you can make. And many strong culture companies, at the end of the day, if they can’t, they give people lots of chances to conform, but if they can’t get them on board, you know, it’s best for everybody if they depart, they go away. Okay, so the upside, what do you benefit from this? I mentioned earlier about performance. You get commitment from your employees. You get an easier way to get things done. You get more agility. You get more resilience. There’s lots of benefits to a well-aligned, strong culture. Now, when I think about how culture affects basic organizational performance in a basic way So far, this is kind of encapsulating what we’ve done with some examples. There are two basic ways. So you can hire people based on their skills or you can base on their fit, and we’ll talk about this in a minute. But when we think about how it affects performance, there are two ways. One is this earlier thing I was talking about is content alignment. Is your content aligned with your strategy so when people know the culture, it provides them guidance or steers them in the right direction for how to execute on the strategy? The other way is almost independent of that. It’s do you have stronger commitment, and does that allow coordination to proceed more food- more smoothly? Let me give you a couple of examples. These are kind of throwaway examples, easy examples, because I think they’ll resonate with you, and I don’t think it’s been a lot of detail. So Walmart. Walmart, of course, everyday low costs. They do everything they can to produce costs. So, you know, if I go into Walmart and I’m looking for a product, I never check the price anywhere else. Because I know I don’t need to. I have done that before. I’ve checked with Costco, with other low-costs… Look, Walmart has the lowest prices of anybody, and they advertise that, and they preach that in their culture. And everything, every decision somebody has to make that they’re not sure what to do, it comes down to a question of, you know, where are we going to save the most money? What are we going to do? And how are we going to do it? And, you know, Walmart is very, very serious about that and continually reinforces that. On the other side, you have Amazon, which is a very different culture, which is innovation-oriented, and what they call customer-centric. So they hire really smart people, and they try to build new things that people haven’t thought of, and they try to figure out ways to satisfy people. Now, they have a weird customer-centric attitude in that they don’t actually like to talk to people directly when they have problems. They prefer to automate it all. But it is a customer-centric company for sure So those are two of the best examples I can come up with, with content alignment. But you know, if you’re looking at a strategy, at a company with a strategy in healthcare or education services or IT or whatever, you have to say, “Well, what is, what is it we’re trying to do?” Are we trying to be the low-cost provider? Are we trying to provide high perceived quality? And what kind of quality? And how do we do that? And then what’s the culture? What are cultural attributes that are going to be the kinds of things that we need in our people in order to help them Execute on that strategy. That’s content alignment. And somebody says Amazon has a bifurcated culture for sure. And a lot of these companies do. The back place is very different. We’ll talk more about the Amazon. Amazon, I know something about, I don’t know a lot about in detail. They are kind of weird. I made an aversion to their customer centricity. Try calling Amazon one day. Your package doesn’t arrive. Try giving them a call. You’ll be lucky to get their phone number. You know, I spent a whole day as kind of a research effort to try and do it, and it takes a long time. It takes a… You know, eventually I got the right answer and everything worked, and they deliver, so they pull it off, but it’s not, what they’re trying to do is not easy. Okay, so let me talk about the other, the other way in which culture delivers on performance, and that is with the increased commitment and enhanced coordination. So when you have a lot of people who are together, interact regularly, who have the same values, norms, and beliefs They create solidarity. They identify with each other. They develop broad relationships, do lots of things with each other, and they develop a loyalty to each other that is long lasting. They also, because it’s internalized, the value, the norm is internalized. It’s not that they’re doing it because the boss wants them to do it. It’s because they’re doing it because they think it’s the right thing to do. That’s what psychologists call intrinsic motivation. There are literally thousands of studies comparing intrinsic motivation with extrinsic motivation, which is material rewards. Both of them work. Both of them work. The real question is which one is more powerful? Which one works better? And the jury’s still out a little bit on this, but most people think intrinsic motivation is a much more powerful motivator. And certainly in a strong culture organization, intrinsic motivation is where the bets are placed. There’s also enhanced coordination. Everybody’s on the same page. They have quite a bit of agreement. When faced with a new situation, they’re gonna act in pretty similar circumstances. They don’t debate it. They don’t spend a lot of time worrying about it, and they offer them this advice without the boss getting involved, so it’s a very efficient mode of coordination. So there’s this enhanced coordination. So with a strong culture, you’re usually gonna get either content alignment, or you’re gonna get, enhanced communication and coordination. And one or both of those is gonna be very impactful to the bottom line of your company. Most of you know Mary Barra Mary Barra is an alum of the GSB. She got a master’s of MBA, and before that she got an electrical engineering degree in Detroit. She’s worked her whole life at General Motors, and she’s currently the CEO of General Motors. Well, as is the way in those big companies, especially in the old days, when somebody was going up through the managerial ranks and had the talent that they thought could rise to the top, at some age, 45 or 50, they would start rotating them through different functions in the company for a year or two, or different parts, different locations in the company for a year or two. So by the time they got to be 60 or so and were a candidate for the CEO, you know, they had a pretty broad perspective of the whole company So Mary did, Mary got anointed, and Mary did that. And Mary went to new product development and a bunch of other things. And her last stop before she became CEO, she was put in charge of HR, human resources. And so she knew nothing about HR And so, uh, so she had a meeting, got the HR team there together, and said, “You know, I don’t know anything about HR. You guys are gonna really have to help me.” So it’s like, you know, “Could you tell me what’s, what’s on the top of the list? What’s the most important thing that you guys are working on in HR now?” And so there’s silence around the room first. They’re kind of quiet, and then she presses them again. So finally she says, “Well, you know, last couple of years we’ve been working on the dress code.” And the room is silent. She looks at them all. She says, “The dress code.” So, “I didn’t even know we had a dress code.” So some guy runs out of the room, scampers into the back room, comes back with a draft of the dress code. It’s 10 pages single-spaced. And she hands it to him, and she takes it in front of the whole room, rips it to shreds. As she says, “From now on, the dress code at General Motors is going to consist of two and only two words, dress appropriately.” What she says there is that the first group to push back was HR, and she called them on it and asked them what was the problem. They said, “Well, it needs to be more elaborated.” And so everybody kept saying they needed a more elaborated code. She says, “No, it’s these two and these only two words.” They said, “Well, let’s use the two words, and make the manual have to say more.” She said, “No, it’s the two and only two words.” And then she realized that, like, although this was a pretty small thing, this was a window into the culture. Because if people weren’t feeling empowered enough- To make a decision about the dress code and they were in charge of decisions involving millions of dollars, like that didn’t sit very well with her. I mean, they should be able to decide this pretty easily given some of the decisions that they were in charge of. And so she tells that story a lot because she thinks it just illustrates how cultural management is different and how you kind of leave things to the judgment of the person rather than telling them exactly what to do and that it’s empowering in the process of doing that. But let me stop here before I get into the five beliefs of the book. We’ve got about 25 minutes left. I don’t want to take all the time with me just talking. But I will talk about the five beliefs and our judgment on those if there aren’t any questions here at this point Okay, so, uh, one question says that with thousands of employees in our litigious country, don’t you need to spell out the dress code in detail versus subjective appropriately? The answer is no. Uh, and they’ve worked through that. I mean, to this day, the dress code is dress appropriately, and you can go into… Now they’ve moved out of the Renaissance Center, but for many years you went to the Renaissance Center in Detroit, and you might see Mary running down the hallway in a black leather biker jacket And her hair rolled up. And it’s clear that’s not the day she’s seeing Wall Street brokers. There are other days when she’s going to Wall Street and she’s wearing a $25,000 suit, and that’s obvious. And that’s true for everybody in the company. So their responsibility is to dress in a way that’s not gonna offend the partner they’re transacting business with or the customer, but offend away. But if it’s a back office day and they’re just working on their computer or sitting at their desk Then they’re allowed to dress in a way that feels comfortable and seems appropriate in a way. So as far as I know, they haven’t gotten any trouble in this. And if they get in trouble, it would probably be that individual’s employee rather than the fact that the company doesn’t have an appropriate thing. How important is an overarching mission in guarding culture versus a set of principles? Amazon and death by process. Well, culture’s a funny thing. So what gets the most focus and attention is the five, six, seven, eight, however many core values that the company’s agreed upon. But the real work in culture is translating those down to the unit level, to the work group level, and to the individual level. So if you say, you know, we’re looking for assertive employees who explore and try bold new ideas, you know, that means one thing for a division manager and it’s another thing for a salesman. And so you need to work through What that means and what the appropriate metrics are to measure someone on all of those that work. And in my mind, this is the company, this is the place where most big companies fail. And as they go to some retreat and they do this set of exercises that comes up with a set of values or norms, and they advertise those, and they expect everybody to figure out what that’s gonna mean Well, it usually doesn’t. And it usually has to be a continuing process where you work through and figure out what it means in your particular unit. And that’s hard work and takes a long time. In our book, there is a chapter that Jennifer Cook at Genentech, goes through this process in a unit she takes over called GMIO and works through it, and we show the details of the workshop she created, pages she used to develop all these details and work this through the whole company. And it’s pretty impressive, but I’ve seen very few companies do that. So one question is, how quickly can a culture be changed? Well, it kind of depends on the culture and kind of depends on the people and the urgency. You know, there are people, um- Like the people who used to run HP who come to my class, they had Barnholt who started Agilent, and he started Agilent to take the ex-HP culture and add speed, focus, and accountability. And his take on it then and now was it would take about five years. Five years I mean, it’s a big company, but they’d already had the core of the culture in the HP values, and they just wanted to add speed, focus, and accountability. You’ll find other examples like Jennifer Cook and Alan Mulally, who turned around Ford Motor Company, as we discuss in the book, that changed their cultures in a radical way in a year or less. And so it’s a matter of how much resource you have at your disposal, how much determination you have, and how much urgency there is to do it or else the company’s going to go down. So it’s very important to have this. Uh, the question is, how important is it to have an overarching mission? Well, you don’t wanna have conflicts in the culture. You wanna have something, the big vision is kind of an arching, arching overall vision that is consistent with what happens before and what’s derived for it. But it’s not in a direct conflict with it most of the time. Or it’s got a very explicit reason why it does, if it does. Is the question: Would you consider a company’s stated core values like be curious and put people first to be their culture’s content? Um, well, they’re a high media kind of message way to try and do that, but I don’t think they really explain to people what it means. And so if you’re gonna say something like be curious or put people first, you’re gonna have to give them specific examples of how that matters in the content. And it’s gonna be, that’s gonna be much more meaningful than just say put people first, ‘cause that can be very ambiguous at times It says, do you recommend a unified statement like always low prices on top of these core values? I think any unifying statement you can do is good, but again, you shouldn’t stop there. One of the things about trying to find cultural message statements is when you look in company documents, unlike a strategy or mission, there’s usually not a statement per se that says, “Here’s our culture. Here’s our cultural message.” Sometimes there is, but a lot of times there isn’t. You have to look, and it’s hidden in all kinds of places. It could be called the mission, it could be called part of the strategy, it could be something else. It’s a very different thing than… than the usual kind of message that a company’s trying to put out. It’s kind of put in a less obvious way in many cases. Then I have a question here. Getting a lot of questions. Thank you. Why do individuals need to be empowered by others? Isn’t this a contradiction of the notion acting like an owner? Yes and no, but I think the reality is many of us would like to act like an owner, but they’re afraid to. They’ve seen too many people get in trouble when they act like an owner. And so in many companies, many people I talk to, they wanna know What’s the safe areas where they’re allowed to make decisions and to be bold and to be empowered, and that that’s not going to get them in trouble. So we hear a lot about the mantras of failing and fail fast. Well, nobody really is endorsing failure. They’re just saying, you shouldn’t be punished for effort and for trying things, especially if it leads to something better. So I think empowerment is something like that. You’re teaching people, if your intention is right and you’re trying to do something to help the company You know, it’s okay to kind of do something that an owner might do and you’re not gonna, you’re not gonna get in trouble. It’s not a contradiction per se, right? And so I says, “I’ve seen an Olympic team that have been successful. Some are a pleasure to be around, some are highly dysfunctional, but through it all we have success. Can you comment on sometimes dysfunctional teams have success?” Well, yeah, I mean, look, I’m not saying to be successful you have to have a good culture. We have plenty of examples of companies with not very good cultures that succeeded. You know, sometimes you’re in the right place at the right time, have the technology, have- Structural opportunity. So the person’s absolutely right. I will say all other things equal, having a good culture is probably going to help you. And since the person mentioned sports, I’ll talk about an example we use in the book, which is the Ryder Cup, which is the biannual golf match between the US and Europe And it happens every two years. Almost everyone, everyone agrees every year that it’s played that the United States has much better talent. The overall talent level from the Americans is better. And yet almost every year, the Europeans win. And so this is always held up as an example like, well, what’s going on here? What’s going on? And the usual explanation, and as far as I can tell, it’s probably true, although it’s probably too much to call it culture, is that the Europeans actually function more like a team. They get involved in planning and they, you know, do a lot of assistance. They help each other and it’s a year-long effort. The Americans come together and they just expect to play. They expect their brilliant play is gonna prevail, and often it doesn’t in team golf. And so I think that’s a case of where, you know, the talent doesn’t produce it alone. There are other cases when it does, and the talent is so overwhelming it will. But, you know, it’s again, it’s I think it’s a rarer thing. You’re really relying on chance there. I’m going down to questions now. A new CEO observes maladaptive practices at a company. Meetings start late. Let managers say what they want to say. Start on time equals meet commitments. How fast can you expect to fix this problem? Well, a problem like a meeting, I mean, you can fix it You can fix the old problem, whether you get the new problem in pretty fast. When you get the new system in place, takes a little more trust, a little more time. You know, you can just refuse to Meet on the old rules and point out to people what’s not working. But something like a meeting, I think you can get turned around pretty quickly in months, if not weeks. That’s pretty easy. The larger stuff with the culture and an organization is much, much harder in my view because it involves customers and investors and, whole groups of people, divisions and departments, and that’s a much harder thing to get realigned than just a set of people attending a meeting Another question is, if there is alignment, is there a risk that everyone will be wrong? Groupthink. That’s a good point. So, I’m going to jump ahead on my slides here. So Uber is an interesting case in point, I think. There was a lot of alignment. These are the original cultural values of Uber. And it’s a good case discussion to have because, there are a lot of people who say, Uber had to- Break a lot of barriers and had to, basically break into an established business of taxis and the medallions and the regulations and all this. And then nobody was going to let them do that. It was, it was not easy. So they had to be hard-nosed and tough, and they had to be aggressive. And they developed a culture, you know, that was like that, and they did that. And in fact, as a result, they succeeded. Some people that think that culture is why they succeeded. At the same time, that culture produced all kinds of byproducts, the most notable one about Susan Fowler and the way they treated women, that led people to think Uber was really a not very admirable company because of the way they treated women and others. And that’s certainly true. There’s no question about that. So they hired a new CEO, came in and revised, and they’re much better now, but they’re still pretty aggressive. I think it’s instructive to know, though, that Of the companies, Uber and Lyft were the competitors in. Lyft was the one that first broke the law. Uber did not break the law. It was a black car service, and they made sure to abide by the law even though they were very aggressive. Lyft was the one that broke the law, and Uber seemed to get all the blame because of their reputation, because of Uber’s. You know, they didn’t go down. Obviously, they’re still successful. Other companies that had groupthink that went down, I would think Eastman Kodak, let’s say. Eastman Kodak had the technology for digital photography long before anybody did. They had the, they had, think about that. They had the technology for digital photography, and yet they basically have disappeared because digital photographers took over the world and you know, promoted this technology and basically made cameras the way they are nowadays, and Eastman Kodak lost out. Well, why was that? Well, because everybody in that company was committed to film. Everybody was convinced it was a superior technology. It was cheaper. It was, you know, not gonna be, uh- Uh, superseded by something that was inferior and they had customers, they had everything. So it was just a minor blip, that they were gonna be able to get past. So I think that’s a great case of groupthink, dominating and the company going under. Other examples would be, you know, if you think about cults, religious cults like Synanon. Uh, Synanon, everybody pretty much thought the same and, you know, they were most people’s eyes evil and, you know, eventually the law caught up with them and, you know, they didn’t They, they’re convinced, I’m sure to this day, they’re all convinced they were right And they were really trying to rehabilitate people rather than transform them into robotitons or something like that. I’m gonna go, keep going down to questions, and then I’ll come back to a slide or two in the end. How was, how has the political polarization we’ve seen in recent years impact corporate cultures? That’s a good question. It’s a very good question. I don’t know any specific studies about that or exact data. I can’t help but think that it is a problem. And it may not— You know, I’m sure there are a lot of companies that say, “Okay, like, whatever political beliefs you want, have your political beliefs, but like, you know, that’s not about us. You know, we don’t fight about it. We don’t do that in your spare time or do that some other time.” And then there are others where it does impact Like at Google for whether or not you’re evil and have a government contract, and I think that becomes a problem. And exactly how they dealt with that, I don’t know. But it has been a problem for some of them, and it’ll probably be with AI more and more, more and more of a problem as we go along. In fact, you know, the idea of a strong culture organization itself is sometimes considered a problem, because the people who advocate diversity, and of which there are many, many studies that show that when it comes to decision-making, diversity is advantageous. I’m sure you all know that, you’ve all heard that and you got that in school. It’s a politically popular thing to say. Diverse groups make better decisions. There’s no question about that But there’s a difference in my mind between a diverse group making a decision and a team executing. When a team executes, you know, you really want people who don’t disagree, who don’t fight, who are kind of on the same page and trying to do it. And so you want in both parts of your organization the diversity to make decisions, but also the Agreement or homogeneity in order to Execute in an efficient way. And in an ideal world, and it is ideal, I don’t claim it’s happened, is what you would do is have a culture where you have everybody aligned on the five or seven values that you’ve decided are really important to execute on your strategy, the way you’re gonna perform But you have heterogeneity on everything else. So you say, okay, we want assertive people, we want bold people, we want people who are curious about this and that. Well, when you go out and hire those people, you find out that 80% of them are female who walk in the door, let’s say, or 80% of them are Chinese, or 80% of them are French. So in order to affect what I’m talking about, it takes a lot of money and a lot of effort to find the people with those characteristics in those much smaller populations And if you ask me, when I talk to like the leaders in Silicon Valley, I think that, for the most part, most of them are genuinely honest in wanting to diversify the employee base, including the executive base. They’re finding it hard to do. They find it very hard to do. One of the reasons they find it hard to do, though, is because they’re not willing to spend the money to find the assertive, bold, curious types, the type of the organization that aren’t the usual model. So, and the problem is, the problem is a sociological one, is that these characteristics are not randomly distributed Certain groups have certain types of features in much more predominant numbers than others. And so if you try and just take who comes in, you’re not gonna get it. If you wanna do something else, you have to spend a lot of time and money, and even then you’re not, you’re not necessarily guaranteed to succeed And then I often get an awful lot of questions, I think, I’ll end on this, unless you have another question, about, I’m surprised nobody’s asked yet, about AI. All everybody wants to talk about in the business world these days is AI. I don’t claim to know much about AI, so I admit that straight up. But I have watched a little bit about how AIs affect organizational culture. And, you know, most people think, well, it’s really just gonna affect who gets hired and how they get hired. Well, probably not, no. In fact, the people I know who’ve studied it in some depth, in particular a woman at LBS, Isabel Fernandez-Mateo, who wrote a recent article in Forbes, as well as some others, says that, you know, the real change is gonna occur not with the selection, but with the way the jobs get defined And the way people hear about those jobs in the first place. So it’s how you define the jobs, how you attract the candidates, and how you shape the applicant pool. And then the candidates themselves are also using AI to produce the application materials, which are apparently more and more homogeneous as a result of this And so the hiring process has become very, very difficult. Even though with AI, you can obviously process a lot more numbers of people, you’re still getting all kinds of problems there that you might— They’re different than we’ve ever seen before. And I don’t exactly know what’s gonna be the solution to that, but But something’s got to change. I mean, at the one hand, we have the promise of having AI to allow us to identify these kinds of people I talked about before, but it’s non-trivial how you actually go about it and do it, do it. Now, I also said, and I’ll leave this to you, one of the things I like to say about my book is if it does nothing else, it’s good for insomnia It’ll help you sleep. And the core of the book is these five beliefs that we think people hold about culture. One is the belief that culture is inert. Well, there is a lot of inertia in culture, but you know, there are also plenty of examples of where it’s been overcome. I mentioned Mulally and Ford, and some others that are in the book, and I encourage you to read those in one of the chapters. There’s another chapter on culture comes only from the leaders at the top. Well, yes, it starts with the leaders, but there are many other people who shape it, as we’ve talked about here today already, and who build it and who are very important for it as well. Third belief, culture is soft, fuzzy. I mean, firing people is one thing. You know, people like the SEALs use it and others convince you that it’s more than just a soft tool. Only people who fit benefit culturally from it. That’s not true because if you get too much fit, as we talked before with Uber and the like, you get conformity and you want to have Excuse me, I’m gonna sneeze, I think. You ideally want to have some, when I said homogeneity, you probably don’t want 100%, you want some dissent so that you have some discussion, some consent. We tell examples about all these things with books. And then the fact that the last one, which is definitely false, without a doubt, is that culture does not affect the bottom line. There are lots of studies now that show that strong culture organizations, all the other things controlled Help you with retention of employees, help you with lowering the managerial intensity, often help you with innovation and customer experience and risk. Not always. There are certainly companies that can have high execution without a strong culture, but for many of them, this is a way to do it, and it seems highly successful. So we’re just about out of time, so let me stop right now. And I see a couple of questions here that I haven’t answered. Ah, there’s one more. Any thoughts about what to do when cultures collide, as in the case of acquisitions? Yes, acquisitions are an interesting problem. So I think that the problem with acquisitions, and you’re right, many times they do collide because the two cultures can’t merge, or when they merge, it creates a fight. Usually it’s because the rationale, the reason for the culture occurring, the merger occurring in the first place is because of strategic considerations So if you look in the Wall Street Journal, an announcement of a merger acquisition, they always tell you about increasing scale, about access to capital, about access to employees, access to markets, et cetera, et cetera. And then somewhere down around paragraph 17 is always my favorite one. It says something like one of two things. Says one of two things. You know, cultural integration is not gonna be a problem because these two companies have very similar cultures. Maybe, maybe not. Or it says culture is gonna not be a problem because these two cultures have very different orientations. One is entrepreneurial and one is very bureaucratic, and we’re gonna combine the best of both to make an entrepreneurial culture that gets things done right And so that’s Ford and Daimler-Benz, let’s say, or Chrysler and Daimler-Benz. And so there’s a bunch of stuff like that. So it’s hard to do. We know how to, from Hewlett-Packard on, we know how to actually merge organizations Technically, we don’t know how to do it in terms of the values and norms. If you have different people, it’s just going to, it’s just going to be hard to do. So, so ultimately, I think most people think you’re probably going to have to have one, one side win out over the other, and the other has to, has to accept it, or you have to have some kind of merger that, that combines the two. Most CEOs I work with seek not diversity of thought, not diversity of genetics Yes, you know, they want, they want diversity, but they also don’t want so much diversity that people say, “Why should I do that? I don’t wanna work. I don’t wanna do what you tell me to do. I don’t wanna work here. I, I think we should, I think we should have different products. I think we should have different people.” So it’s, it’s diversity within a limited set of ideas, most of which are bought into the basic plan, the strategy. And so within that, they want imagination Um, what’s the best question to determine if someone will fit into your culture? Well, most companies do this the same way. They do it with lots of interviews. They interview many, many people over a long period of time, and then many people… It’s very easy to figure out if you technically satisfy the qualifications for the job It’s much harder to figure out if you fit into the organization. And so they’ll have them interview with all kinds of people from all over the company, and then at the end of it, they’ll ask them a series of questions about how well the person… Is this a Stanford person or not? Does this person act like they belong at Stanford? Do they understand Stanford? Will they be a good Stanford employee? Would you like to go to dinner with this person? Would you like to have a beer with this person? Would you like to have a three-hour conversation with this person? And the interesting thing to me as a sociologist about that is people are really, really good at making those identifications. They’re really good at identifying someone who is like a Stanford person if they are already a Stanford person Yet when you ask them to articulate why, why is Allegra a Stanford person? Why do we think she really fits it? Like, “Well, I don’t know. You know, you can just tell she is.” I- they can’t articulate it in terms of specifics. They can just tell you the global judgment. Again, the global judgment is usually right, but it’s not something that is fully cognitized or thought about. So to me, that’s just fascinating how all that works. So some other questions. Um, some stuff about Apple Apple illustrates diversity after agreement on strategy, after extensive discussion on how to perceive the product. Yeah, so they, you know, they, I think it’s certainly a strong cultural organization. Everybody in there has bought into the idea that Apple’s an innovator, that Apple, you know, has customers, exceptional customer service, and they will do anything to make those things work. But to say they have agreement doesn’t mean they don’t debate or have discussion. It’s just not about the big things. So they don’t say, well, maybe, maybe rather than be Apple, maybe we ought to be, you know, Hewlett-Packard, or maybe we ought to be a company that provides $200 computers to the whole world rather than these $2,000 things to the high-tech people. So it’s really, it’s really not questioning the basic strategy. So as Apple employee here, we have a core value, listen, challenge, and commit. We can disagree, but once the decision is made, we commit fully. Yeah, so that, I think that particular line is taken from Intel and Andy Grove, which is when Intel went into the memory business a long time ago. They went out of the memory business a long time ago. They made a decision, you know. They left the building, they came back in. They said, “Okay, well, we’re going to disagree. We can disagree, but commit.” And so until we announce the timing for the decision, “Okay, we’re going to decide whether we’re going to build a new fab, whether we need to build a new fab. It costs $3 billion. We want to build it in Japan.” Blah, blah, blah, blah, blah. “Let’s spend between now and July 1st debating this.” And so within that debate period, anything goes. Anything. Yes, great idea. Terrible idea. Well, bad idea because… So, and lots of, all discussion again. Then they say, “Okay, July 1st, we’re gonna make a decision.” They announce how the decision’s gonna be made. Then they make the decision. Once the decision is made, you should be on board. And you can say, “Look, I didn’t disagree with it, but we decided, and now I’m on board. Now I’m trying to make that happen.” And so that, that again is, uh, very, very common in these organizations. And I think, uh Uh, here’s some more. What factor does workplace reward employees, employee perks, staff incentives play into the culture? Well, if you look in our book on chapter 8, so the one part I didn’t say, so chapter 8 is about these managerial levers. And for every class and executive education session I teach, I usually ask people to briefly describe their culture and then say, would they like to have something… Would they like to change something in their culture? I’ve been doing this for a long time. Invariably, this is just astounding to me. Invariably, 80% of the audience, 80% For 20 years, any audience, young, old, engineers, you know, salespeople, executives, 80% of them say, “Yes, our culture needs to change. Yes, our culture.” Think about that. 80% of the people who work in this country or in the world, maybe, think their culture needs to change. Now, some of them, it’s a small change, some of it’s a big wholesale thing, but 80% of them say they need to change. Then I ask them, “What are the three first things you would do to change it?” And again, For 30 years, 80% of them, the top three things rise to the top. Agree and align on the cultural attributes. Well, you almost have to do that to have a strong culture. Then they say align the incentives. Then they say train and communicate to the staff. These are all three very good things to do. Really good things to do. They will help you build and sustain a strong culture. No question about it. They’re all things that managers are quite comfortable doing because they do these regularly. I set incentives, I set salaries, that’s what I do. I set up training programs, that’s what I do. I hold a meeting, we get agreement on it. So these are things they know how to do, they’re comfortable doing. They don’t get outside of their comfort zone. And it’s three of 20, 25. So if I go to This list here from the list from chapter eight in the book, all the different things you could do, you see I have 20 different specific levers listed. They’re choosing, everybody choosing the three from there. So I say, you know, “Why don’t you think about some of these other things? Think about rotating jobs. Think about broadening the job design. Think about firing cultural misfits.” All these different things will have the same, have a similar effect. It’s not that you should do all 20, but you should do more than three probably to do this right. And, you know, any strong culture organization draws from this list, whether you buy into, believe, and think that their strategy, their goal and purpose is a good thing or not. So it’s pretty, it’s pretty compelling to me I have… Wow, every time I look, I have more questions. I have 16 more questions. Uh, I’m not gonna get to those. In acquisitions, so a lot of these are comments, and I’m gonna let you guys read them. Uh, um, I’m happy if you reach out, you have something specific you wanna ask me, please, please, please email me. I’m at the GSB, you know where I’m at. So, I enjoyed this a lot. I hope you did. I hope I didn’t waste your time. And, you know, like I said, you now have a good antidote for insomnia, if nothing else.