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1 May

Creating culture that sticks

“Back in 2001, Starbucks brought in a new chief marketing officer (CMO) with loads of experience — Quaker Oats, General Foods, Sunbeam, and so on — but very little understanding of Starbucks’ unique culture or trust in those she was brought in to lead.

She immediately began to ruffle the feathers of the people who had been successfully building one of the most successful brands in the world. Instead of trying harder to catch their passion, she dismissed the people working under her as inexperienced and naïve.

Refusing to listen to others that she felt knew less than she did, the CMO barked orders, exerted more control, and brought in highly paid outside consultants to do the creative marketing work that was “beyond” the capabilities of her own internal team.

Of course, the outside consultants weren’t passionate about coffee or the Starbucks experience. The new CMO was doing things the way she was used to doing them. She wasn’t going to tolerate new ideas that might not work, as mistakes were not something she was going to stand for.

Of course, the mistakes were often what taught us more about the brand than the successes.

But sometimes, people with an abundance of experience have a dearth of humility, and they honestly feel that they have nothing left to learn.”

This is an account from the book Tribal Truths.

But I am sure you have encountered a similar incident (a new manager making changes without context) at some point in your professional life. It's usually a pain in the derriere if you are the one reporting to such an individual and concerning if the new manager and their team report to you.

I call them “Rebels without a cause.”

Here are some more widely documented examples of hiring decisions going wrong.

In 2011, JC Penney hired Ron Johnson, who had previously led Apple's retail division, as CEO. Johnson attempted to implement a new pricing strategy and store layout, which ultimately failed and led to a steep decline in sales. One of the main issues was that Johnson did not consider the existing culture and loyal customer base of JC Penney, which relied heavily on coupons and discounts.

In 2016, Cyrus Mistry was appointed as the Chairman of Tata Sons, the holding company of the Tata Group. Mistry was a successful businessman with experience in various industries, but he faced challenges at Tata due to his leadership style and cultural differences. He clashed with the Tata family, who have significant influence over the company, and he struggled to gain support from other executives. Mistry was eventually ousted from his position in a controversial manner, which led to legal battles and further controversies.

In 2014, Vishal Sikka was appointed as the CEO of Infosys, one of India's largest IT services companies. Sikka was a respected technologist and had previously worked at SAP, but he faced challenges at Infosys due to cultural differences and his inability to adapt to the company's conservative culture. He also faced criticism for his high compensation package and lack of progress in improving the company's financial performance. Sikka resigned in 2017, citing personal attacks and distractions.

Hiring right seems to be a problem that doesn’t go away, regardless of how successful your business is.

As businesses expand and scale, they often need to hire more staff to handle the growing workload. This inevitably leads to the challenge of integrating the perspectives and skills of long-time employees with those of new hires, like in the case of Starbucks or JC Penney.

But in order to realize its future, a company must work from a deep understanding of its past.

Old-timers, or “dinosaurs” — as they are called derogatorily by the young — are crucial in maintaining the company's connection to its roots. They play a valuable role in helping to familiarise new hires with the company's mission and culture, along with its rich history of successes and failures with various experiments and decision-making.

It's also important for older employees to avoid dismissing the ideas of newer colleagues simply because they lack experience within the company. It can be easy to discredit the input of someone who hasn't yet “earned their stripes” but this mindset can ultimately limit the company's growth and progress.

So, to hire better, you, as a founder or hiring manager, have to weigh the scales between past experience and fresh skills constantly. This is especially true of startups that are hiring for the role of a chief decision-maker who is responsible for a crucial KPI.

Hiring is tough, but to reduce your collateral damage, you have to create an environment where integration can feel smooth. The exchange between the old and new employees can’t be too drastic, and it can’t be too slow.

For it to be just right, your understanding of people and how they get along plays a major role.

If you feel like I am stating the obvious, check if you have the answer to these questions.

  • What qualities that you currently lack in the organization are you looking to make up for and screen for in the hiring process?
  • Will the quality this new hire will place at the table gel well with the existing systems and how they function within the organization?
  • How do you plan on integrating these much-needed new values, perspectives, and ways of doing this with the existing culture?
  • How well was the most recent new employee welcomed into the company? Would you like this person’s experience duplicated with the next new hire?
  • What are some necessary rites and onboarding rituals you have to set up so that both new and old employees can benefit from each other?

The old can benefit from a fresh input of perspectives and energy, and the new, from wheels already invented and lessons already learned the hard way.

If you don’t have clarity on these questions, you might want to understand what the experience and learning of your old-time employees has been, and then go out looking for someone who can adapt to the culture while bringing along their individuality as a new team member.

I think this is an important aspect to think about, because if you are not an established business yet, every new hire you make and every old timer that leaves can add or subtract significantly from the chances of your survival.

How to propagate culture, values, and know-how across a mix of churn and growth is a problem I often contend with.

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