Building the Right Culture – Going from Entrepreneur to CEO

Building the Right Culture – Going from Entrepreneur to CEO January 30, 2014

As your company grows, the capabilities that got you to that growth may no longer serve you in the future.  The successful path from entrepreneur to CEO involves making changes in three key areas:

  1. Letting go of your role as Chief Sales Officer
  2. Disciplining yourself to Focus
  3. Building the Right Culture

Last time we looked at disciplining yourself to Focus. This time, let’s look at Building the Right Culture. Having the right culture can make the difference between being in business or not.

Initially, entrepreneurs hire those they can afford who can do the job. They work closely with all the employees in the company and people learn what matters by working side by side with the entrepreneur. Often entrepreneurs assume that they have seeded the development of a strong culture by what they say and do. In my work with them, I often hear statements like “we’re a family.” As the company grows more complex, the entrepreneur is no longer as visible and unable to work as closely with employees as before. Other managers in the company began to influence their direct reports in ways they find appropriate. Unless the leadership focuses on unifying the culture, the company can turn out quite different than the founder intended.

A strong CEO leads the way by clearly defining the values and expected behaviors for all employees, taking time to make sure that those hired fit the culture and rewarding and recognizing those who model the essence of the culture. They should be models too. Culture can be defined as a combination of behaviors, values, morals, rituals, thinking and relationships that reveal “how” people approach each other, their customers and their work. Culture shows the true internal priorities of the company.

Research indicates that company culture is a key factor in company productivity and success.  Ultimately, it’s the people that make a company great and it’s how they work together that serves as the foundation for the company’s culture. How do you create a strong, positive culture in your workplace? Let’s look at a well-known example.

The shoe business is tough. Shoes have become a commodity and as with most commodities, price is the name of the game. Undaunted by the odds, on-line shoe retailer, Zappos, started as a small entrepreneurial company and built its business on outstanding customer service. Their mantra is to WOW customers and for shoe aficionados they do – 24 hour turnaround, you can return your shoes for a full refund up to one year after purchase, and women with big feet like size 11 can get variety and speed, two things that used to be nearly impossible with larger sizes. Zappos sold last year to Amazon for just under $1Billion.

Zappos’ CEO, Tony Hsieh, attributes its wild success to a strong culture and paying attention to hiring employees that are a great culture fit. Creating a strong culture is so much of a priority that Zappos’ employees produce and sell The Zappos Culture Book each year., was started with the vision of being the very best at customer service and at creating “the best customer experience” possible.  With that intention, Zappos went on to hire customer focused people that have displayed its top value.

Values are your guiding principles that can’t be compromised for financial gain. Values are your code of ethics and need to be taken seriously. An example of a value might be “integrity” and could be defined as “doing the right thing.” Left to interpretation, this definition can be displayed in a variety of ways, some that you are comfortable with and others that you’re not. Many entrepreneurs assume that because the values are written down, everyone will embrace them and know exactly what they mean.

So if you haven’t developed your values, now is the time to do so. Getting input from across the company is essential. The question that I like to ask organizations that we work with is: “What is the one value that is so much a part of this company that without it, you wouldn’t be the same organization?” Once you’ve developed your values, it’s time to have a dialogue about which behaviors align with the values and which don’t.  The best company cultures are clear on the behaviors that support the values and which do not. Inconsistent communication of the values and displaying confusing behaviors that contradict them are not acceptable.

The CEO plays a large role in strengthening or weakening the company’s culture. The best ones model the values themselves, have no tolerance for value violations, reward and recognize all those who display the values, communicate the values often, and hire only those whose values are a culture fit.

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Image Credit: Wikimedia Commons