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.

Responsible Service Part 2

In part one we talked about the importance of personal responsibility in driving customer satisfaction. This week is about building a culture of personal responsibility, and how that culture creates opportunities for highly personal relationships.

THE IMPORTANCE OF CULTURE

Culture is the average of every individual’s values in your organization. This means that if the majority of individuals in your company desire to make a name for themselves, the culture will reflect that “dog eat dog” mentality. Likewise, if your employees value unity, conflict resolution is a skill many of them use on a daily basis. No matter what, culture exists. And though cultures vary, two broad types of culture separate every organization: transactional or relational.

TRANSACTIONAL BUSINESS

Like a vending machine each input variable results in a specific output. With a vending machine, humans put in money, we punch in our request, and the machine distributes the item. When the transaction goes smoothly we feel satisfied. When the machine doesn’t deliver, we can call the 1-800 number but what we really do is bang on the machine to get our snack to break loose or concede the battle and pay again.

RELATIONAL BUSINESS

Here, inputs and outputs still exist, but the delivery process gives us a sense of connection. The best example of this in our world is the relational vending machine, Amazon. Inputs and outputs still exist; however, Amazon also offers recommendations or “frequently purchased together” suggestions that create a shopping experience more tailored to our needs and wants. They also send updates including shipment and delivery notifications. When the transaction goes smoothly, items arrive in a couple of days. When Amazon doesn’t deliver, a short phone call, email or live chat result in a quick refund.

I’m not saying transactional businesses are inherently bad, it’s just that businesses with relational cultures have higher levels of trust and commitment from their customers. And building a relational culture and a culture of personal responsibility go hand in hand. In fact, there is one question that can help us do both at the same time.

THE QUESTION: HOW ARE YOU DOING?

It’s a question we hear every day. Unfortunately, we use it so much we’ve become numb to its meaning. Yes, we can use it to show concern for someone we care about it, but most of the time it’ is just a responsive greeting. We use it when talking with complete strangers without any expectation of an honest response. Yet, despite its commonality, if we are intentional and genuine, this question prevents us from remaining passive. By asking it, we assume the burden of hearing and replying to the answer.

And leaders must be the first to ask, “How are you doing?” and listen. For when leadership asks and is intentional about listening, they model care and responsibility for their team. Over time, this will encourage other team members to ask the question and assume the burden to listen and act. In so doing trust, commitment, and regard for others will be reciprocated beyond the four walls of your business.

How do you get started? What does asking this question look like in different business activities? To help answer these questions, here are three ideas you can use today.

ASK TEAM MEMBERS IN THE DAILY HUDDLE

This is a discipline we recommend to all of our clients so that the team begins each day on the same page. The focus of these 5-10 minute meetings is for leaders to support their employees by asking three questions.

• What is on your list for today?

• Did you get yesterday’s list done?

• How are you doing? Are you stuck?

The beauty of the huddle is that there isn’t enough time to get into operational weeds, and the focus is on hearing and responding to the needs of your employees.

ASK CUSTOMERS WHEN WE TALK TO THEM

You should directly ask your customers the question with phone scripts or surveys. You may think it’s a no-brainer, but your receptionist should ask this question to every customer. Not only does it provide valuable intel about the customer, but if the receptionist passes that info along to the next department who speaks with the customer, it immediately becomes an opportunity to communicate that your company listens and cares.

ASK OUR PROCESSES WHEN WE MAKE CHANGES

Weekly operations meetings are a time to address issues and troubleshoot. In these meetings someone in the room should always play “customer advocate” when discussing changes. The assigned individual’s role is to get everyone in the room to ask, “Is the customer going to be better off after this change?” In this indirect way we are trying to ask our customer “How are you doing?” after a change is made. The answer should always be better, and it is the advocates job to articulate exactly how the customer will be better off after the change.

Cultures don’t change overnight and creating a culture of personal responsibility will take time. By asking “How are you doing?” and intentionally listening to the response you will start to see individuals not only accept, but assume personal responsibility in the business. Always start from the inside out. Your team needs to know that you feel a responsibility toward them before they can ever pass that along to customers and the business at large.

Before You HIRE Your Next Customer, Ask These Three Questions

A few weeks ago I had lunch with the owner of a creative agency. We talked about the difficulties of work related to managing customer expectations. He shared the story of a customer who came to him wanting a complete re-brand for a community district. The project required designing unique street signs, facilities signs, park benches, trash cans, etc. All to create a distinct atmosphere for the district.

This was a huge opportunity for his company; the district received a ton of foot traffic and the community recognition alone would have been sure to bring new business to the firm. There was only one catch, the customer wanted the plan complete and ready for implementation in just two weeks. 

I love this story because I think it represents a dilemma that business owners face more often than they admit — the question of "Should I, or shouldn’t I?" Often times the knee-jerk reaction is to accept the opportunity and then struggle to meet the customer’s expectations. This is haphazard. There is a better process that incorporates strategy when deciding to work for customers and their expectations. That process involves three questions.

Question 1: Do we have the resources to execute?

This question is the logical starting point. It requires that you clarify the constraints that are rooted in the customer’s expectations. Resource constraints come in many forms. Time, personnel, materials, cash, and technology are the minimum constraints that should be considered before you decide whether or not you can serve the customer. Ask clarifying questions like:

• Do we have the personnel to deliver/perform our product/service?

• Will we have to hire to get the job done?

• Can we deliver on time?

• Will we have to move current deadlines to make the customer happy?

• Do we have the materials, inventory, or technology required to deliver?

Depending on your answer, it may be wise to consider declining the work. Even if the new agreement will provide all the cash you need to go out and buy resources you should consider that you are reacting to the situation, and that the firm that will be delivering the finished product is not the firm you have now. Being able to become the firm that can deliver is not the same as being the firm that can deliver. Which leads to our next question.

Question 2: Are we changing who we are to serve this customer?

Deciding if you can satisfy a customer depends on more than the availability of resources. This is because a company’s identity is not simply its products and services, but also why and how it delivers those products and services. Said another way, a company’s identity is in the values and culture that shape every interaction within the organization. The last thing you want to do to meet a customer’s expectation is undermine the current culture. 

This is why making the decision based upon the availability of resources alone, although prudent, is incomplete. For example, say you’re short the personnel capacity to do the work, but the customer provides and advance that pays for workers. How quickly are you going to be able to recruit and hire? Do you plan on retaining them? If you don’t plan to retain them, how likely is it that they will adopt your culture and values?

Cutting corners to satisfy a customer’s expectations could harm current customer relationships, establish new, undesirable norms, and worse, erode your company’s culture and identity. Depending on your answer to this question, it may be wise to consider referring the customer elsewhere. But if you are still thinking about saying yes there's one more question.

Question 3: Do we really want to do the work?

This question is probably the toughest, because it requires that you temper your own expectations. It requires honest reflection on your own motivation. Yes, you have the resources and you are staying true to your values, but is this job likely to get you out of bed? Are you doing it for the next dollar? There are plenty of other ways to make money.  Is the association with this customer one you will be proud of? Do they stand for the things you stand for? Is this work, all things considered, that we are going to stand behind and be proud of? Only after this last question are you ready to make the call. But rest assured you’ve carefully considered whether or not the next steps are worth taking and you are managing customer expectations strategically.

So, what did the business owner I had lunch with do? He gracefully declined. He explained it wasn’t a lack of resources, or that it was contrary to the DNA of his company. It was that he couldn’t answer the last question with a confident, yes. His desire was to lead the project, but the expectation from the customer was too idealistic. He knew that he couldn’t stand proudly behind his work under a demand that it had to be done in two-weeks. So he said "no" without any regrets.