The Culture Handoff

“Just don’t screw it up.”

That’s the attitude of most parents when they entrust the business to their kids. But what does this say about the culture those kids are inheriting?

Or for that matter….

• What is culture?
• Does it matter?
• What does it have to do with passing the business on from one generation to the next?

Culture is the environment created by the set of values at play in your company every day. This means that you have a culture, whether you like it or not. There’s no escaping it. Your employees, customers, vendors and family members are breathing it in every day.

When cultures are toxic they sap the energy and enthusiasm of your top performers. Toxic cultures color the experience of almost every customer interaction. They affect your relationships with trade partners and even the terms they will grant you on purchases and warranty claims.

By contrast, when cultures are healthy they spotlight bad attitudes, irresponsibility and unethical behavior. They generate better reviews from customers and more word of mouth referrals. They reduce attrition among employees and help recruit A players.

So, yes, culture does matter. Culture is one of the reasons two companies in the same industry, selling the same product have widely different results.

But most important for our discussion, culture is key in determining whether the second generation moves into leadership fighting a severe headwind or whether they enjoy the benefits of a cultural breeze at their backs.

Our experience is that very few companies think intentionally about their culture. It just sort of develops over time as an unsaid, unseen force that is, at best, little better than the status quo, and at worst, a contributing factor to low morale, low competitive performance and poor financial results.

How DO you work intentionally on your culture? It’s not complicated.

Articulate and define your values

Start by sitting down and thinking of the 3 to 5 words you want employees, customers, vendors, and family members to use to describe your business. Less than three values is too few to fully describe the picture and more than five is too many for people to remember.

Once you have the words it is time to define them. A friend just recently told me he made the mistake of pulling his definitions out of Websters dictionary. Later he realized those definitions failed to capture what HE wanted his values to mean. This is your job as the leader. It’s OK for you to define a particular value differently than everyone else. In fact, the definition is way more important than the word. The word just becomes a proxy for the definition. Over time it will be your definition of the value, consistently applied and repeated that comes to describe the culture. A value without a definition is about as useful as no value at all.

By way of example here are Axiom’s values:
Care - we love those we serve
Truth - we speak the truth even when it is hard to hear or difficult to say
Diligence - we bring the right amount of work to the task
Learning - we read every day and learn to ask better questions

Care may mean one thing to you, but it’s only my definition of care that matters at Axiom. The same goes for the other values. You must give everyone your definition before they can decide to sign up to participate in your culture. Don’t be ambiguous. Name and define your values. Stand up for what you want your company to represent.

Build a plan and start executing it

If all you ever do is come up with a great set of values you will be ahead of most small business owners…on paper. But it won’t mean a thing in the real world. Creating values without working them out in a plan is kind of like buying a monster truck and parking it in your driveway. You’ll never know whether your values mean anything because they will never be tested. People will never use them to do anything meaningful. If you don’t build a plan and work it to completion you are settling for status quo. Why worry about culture in the first place if all you care about is maintaining the status quo.

When you plan you put people on notice about the opportunities that lie ahead and the skills they will need to take advantage of them. As you start executing against the plan WHAT your people do will determine whether we make any progress. But HOW they do it will be governed by your values. That combination of achievement and values is what intentionally creates the culture you want.

As you execute and as your plan starts unfolding not everything can be charted on a scorecard. Values are the tool that allow you to “objectively” measure the difference between two star performers: one who makes you proud and represents the company well and another that keeps you up at night.

Stay consistent

Once you put your values up on the wall, once you write them into the plan, and once you start pulling them out to measure performance…expect resistance. A lot of people will wish those pesky values would go away. Some of your leaders will be uncomfortable talking about them with their teams. Some old timers will scoff and cynically dismiss your values as ivory tower BS. Some will try to coopt them as their own and change the definitions. Your most toxic employees will become even more passive aggressive as they try to undermine your efforts. Expect all of this. It’s actually a sign that you are doing something right.

Also, don’t play favorites. Everyone on your leadership team needs to be held accountable to the same set of values. Let’s say you have the following value and it's up on the conference room wall:

Optimism: we strive to see the good in situations and others.

But your sales manager is constantly griping about lazy employees, crooked customers and dishonest prospects and conspiratorial competition. Everyone on your team is going to know that Optimism as a value doesn’t mean squat. Not everyone on the payroll is going to be all-in on every value. But your leadership team needs to be on the same page. If you start making exceptions about which values are not really that important at the top you will wind up doing more harm than good.

Finally, consistency means acknowledging the value champions while also dealing with their lack of performance on the job. It’s not enough to sign up for the company culture if you can’t get the job done. We need both to make a difference and to accomplish the company’s mission. Exemplary values and lackluster performance are not consistent with each-other.

Expect healthy turnover

If you do all of these things there is one guarantee I can make. You will have some turnover, and that is AWESOME! Turnover is a sign that toxic employees are leaving or are being asked to leave (usually it’s the former). It is also an opportunity to escort new A-players into the company who take your values for granted. You will never experience the push back on values or the passive aggressive behavior from new employees like you do from those with tenure.

These two factors, the elimination of toxic employees and the introduction of people who buy-in from day one will turbo charge your cultural growth. It will be hard for months. You will feel like giving up. But all of the sudden one or two toxic elements will leave, a couple of new seeds will be planted and things will take off like you never imaged. I have seen it happen over and over again.

One of the greatest gifts you can give the next generation in your business is the inheritance of a healthy culture. Start building it today and see what happens.

Your Family Business Needs Boundaries

Boundaries are important for parents and family members working together. Done well family business should draw families closer and enhance the personal relationships between generations. But too often a lack of intention about the direction of the business and the roles played by each family member leads to stress and strained relationships

Strategic planning can play a role in improving relationships by getting clear about boundaries in the following areas:

• What is important and what is not

• Where family members can contribute their best efforts

• When it is OK to talk about the business and when it is not

• What it looks like for EVERYONE to be accountable.

Boundaries start with being very intentional and the best way to do that is to build a plan that 

1. Articulates your values

2. Paints the picture of your vision

3. Shares why that vision is important

4. Succinctly identifies your company’s mission

5. Commits the company to one or two core strategies over the next few years

6. Establishes concrete 1-3 year goals

7. Sets 90 day priorities

8. Holds people accountable to weekly commitments

That is strategic planning and execution in a nutshell. If your family needs boundaries, start by taking a day off from working in the business and work on your strategic plan.

Two Ingredient Recipe for Growth

If I were to ask you what the two most important ingredients for growth in business are, what would you say? Think about it for a second.

You’re probably thinking about sales, efficient operations, better marketing, great customer service, or better employees.

Though these are often present alongside growth they are not the driving force behind growth. The two most important ingredients for growth are a compelling vision and clearly defined values. Although these are intangible, they are respectively, the destination you grow towards and the solid foundation that will support all that growth.

But what is vision? And what are values? Definitions for these vary depending on who is giving the answer. So here’s how we define them at Axiom, in a practical way that actually works to drive small business growth.

VISION

A statement of the projected future of the organization and its place in the world as defined by the leader.

In its simplest form, your vision is the picture you paint me of what your business will look like down the road. What are we trying to get to? The clearer the picture, the more practically useful your vision will be in your business.

What makes the vision statement important? It unites your organization around a common purpose. It provides a “north star” that every department in your business can use to evaluate decisions and performance.

For example, though sales growth is a great contributor to business growth, how much sales growth is necessary to meaningfully progress toward the vision? Is there a goal your team should aim for? Where [what geographic area] should they focus on growing? What products and services should they lead with? Where should the pricing be? With a clear vision the answers to these question come easier.

What qualities make up a good vision? We’ve written on vision before and you can read all about our thoughts on what makes a good vision, here. But if you want the summary version, a good vision statement must meet these criteria:

• A vision statement is a communication tool; the projected future should be clear.

• Some of the best vision statements contain a number or something that can be objectively measured. Numbers are the easiest way to provide clarity about what your future organization looks like. “We want to be philanthropic,” and “we want to be able to donate $150,000 a year to local charities” communicate the same thing, but one paints a much clearer picture.

• It is set by the leader. Rather than being set by committee, a good vision is set by the business owner and leader in chief.

• It must be aspirational. Your vision should describe a future context. It should give the employees working with you something to work towards.

In order to drive growth your vision statement must play a central role in all of your communication. If it just sits on a shelf it will not do anything. If you use it to set goals, to evaluate performance, to judge the fitness of new hires, to decide which partnerships to pursue and which customers to leave… if you actually use it every day it will make a big difference. When vision is recited by leaders in an organization it can unite your people by giving them a purpose to engage with, together.

VALUE(S)

Enduring and unchanging descriptors of a company’s culture.

With togetherness comes conflict and mess. Values are an important ingredient that direct how your people are to act in pursuit of the vision. Generally, values are unique to each organization and are also set by the leader. If Vision describes where you want the company to go, Values describe the company you are committed to being along the way.

There’s no formula for determining what your values are, but there are a few things to be mindful of when setting values.

• Values dictate your culture. Without values, a culture will still exist...it just may not be a culture you want.

• Values should be easy to remember. Choose a word, then briefly describe what it means. For example, one of Axiom’s values is truth, which means we speak the truth even when it’s difficult (to say, and hear).

• Values should be pre-eminent, not pretentious. It’s what we do that matters. This means two things: 1) Values should be public, so we can be held accountable when we fail. 2) Values should influence every company activity.

APPLICATION

Taking from the last bullet point, it’s what we do that matters; the information in this blog is only going to be helpful insofar as you apply it.

In the past, we’ve written largely to an audience of business owners and given practical advice to match. However, we’ve realized there are two groups that have a vested interest here: employees and employers.

To the Employee. The most practical way you can use this information is by “leading up the chain of command.” The phrase comes from authors Leif Babin and Jocko Willink in their book Extreme Ownership. Stated simply, leading up the chain of command means providing your leaders with valuable information they would otherwise not know so that they can support you with the proper tools and resources. In this case, leading up the chain of command means that if your boss hasn’t talked with you about vision or values that’s as much your fault as anyone’s.

Consider asking your boss questions like:

• How do you see our values influencing daily operating activities?

• What do you hope to accomplish with the company? Where are we going?

• What are the words you want vendors and customers to use when they describe their experience with us?

In every instance, these conversations benefit the organization. If your boss cannot articulate vision or values, you have the ability to stress how invaluable they are. If they have vision and values, and but few people know them, you have the ability to help them hone the message and  then rebroadcast it to the entire team.

To the Employer. Vision and values are foundational ingredients for your success. Without them, you handicap your company’s growth potential. Do you have a vision? Do you have clearly stated and defined values? If not, your homework is straightforward. Step one is to draft a vision statement and a short list of values.

If you have vision and values, step two is to ensure that your entire organization is acutely aware of them, even to the point of annoyance. There are many ways to do this.

• Make them public and visible. Put them on the walls and in the public spaces of your office.

• Make performance reviews an evaluation of both technical skills and adherence to values.

• Adjust operating activities to be reflective of your values.

• Build and execute strategic plans to accomplish your vision. It won’t happen on its own.

It takes a great deal of reflection and intention to define and set vision and values. It doesn’t get any easier when having to do this amidst the day to day hustle. Yet the right ingredients for growing your business are within your control. Focus and align your organization around a shared vision and values, then set your sites on growth.

What's the difference between Mission, Vision and Values?

This post was last edited November, 2, 2020

I was in a meeting the other day and the guy next to me, who runs a very successful company, said "you know, I've just never taken the time to do the mission statement. I know I should, but I don't quite know what to do."

Mission, vision and values are great tools for communicating what you are about and helping other people understand what you are trying to accomplish. Any business that struggles with communication should start here. It will make a big difference in how you talk with employees, customers, contractors and everyone else you do business with.

But first you need to understand the difference between all of these terms. There's a popular formula in the self help world that goes like this.

BE x DO = HAVE

When most people talk about success they talk about the HAVE. It's about having a bigger bank account, or having a successful business, or having a nicer house, or having a more successful relationship.

The problem is this. The HAVE is a product of BEing (what kind of person you are) and DOing (the disciplines and habits and ways you spend your time). If you are a kind, generous person who prioritizes time with those you love and makes an effort to do things to help them you are virtually guaranteed to have more fulfilling relationships. If you are others-focused and disciplined about finding and delivering the services that your customers value you are virtually guaranteed to thrive in business.

This same formula helps us differentiate between mission, vision and values. It goes like this:

VALUES x MISSION = VISION

Your vision is what you want to accomplish. It is aspirational. Axiom's VISION is to have 1,000 consultants caring for and serving businesses across the United States.

Our MISSION is to grow our client's businesses by teaching the art and science of growth through strategic planning, stewardship and leadership.

Our VALUES are Care (love those we serve), Truth (speak the truth even when difficult) and Diligence (bring the right amount of effort to the task).

Each of these areas is different. Our values are about the kind of company we want to BE. Our mission is about the things we DO every day with customers. And our vision describes what we would like to HAVE accomplished at some point in the future.

There's one more element.

WHY does any of this stuff matter to us?

Simon Sinek wrote a great book called "Start with Why" and this gets to the heart of the matter. What you DO will rarely inspire people, but WHY you do it is a different story. When you share your WHY you are sharing your heart of hearts. You are telling people what gets you out of bed every morning and what keeps you up late at night. Your WHY is hugely important when you communicate what you are about.

At Axiom we believe that there is no greater vehicle to change the world than small business. It has a power to transform and influence that is greater than any non-profit, church, social institution or government entity. Small business done well is world changing, and we live to help small business owners make an impact. That's our WHY.

If you've never thought seriously about your mission, vision, values and why I would encourage you to take an afternoon sabbatical and start working on it. It will rarely be a once and done exercise. You will come back to it, polish it, rewrite it, tweak it. Over time it will stabilize and become part of the fiber of your company. And it will be the most powerful communication tool you have.