23 May 2014

Note from the CEO: It’s the culture, stupid

A colleague sent me the link to an article: “Don’t Fuck Up the Culture.” It’s the single most important piece of advice that an investor imparted on Brian Chesky, CEO of fast growth company, AirBnB.

In Scott Berkun’s critique of this article, he comments that “it’s the CEO’s actual behavior…that defines what the culture is.” CEOs are the ones that hire, fire, reward and punish.

My two cents of CEO wisdom? It’s the culture, stupid! And culture is complicated, alive, and adaptive. Tyro, like many other fast growth companies, has grown from the intimacy of the founding buddies to an organization of 130 people. It’s a positive change, but maintaining our soul has been a daunting challenge.

In today’s business landscape, the role of the CEO is changing dramatically – especially when it comes to company culture. Tyro’s culture is a living entity amalgamating the beliefs and behaviours of the founders, new leaders, new colleagues, and the environment in which we live and work.

As CEO, I’m an important influencer and, most importantly, the face and voice of this shared living and breathing culture.

Clearly there’s a lot to learn when it comes to fostering culture. Despite the best intentions and fantastic ideas, not every company has the fairy-tale story of Apple. A sobering April 2013 Google-PricewaterhouseCoopers report found that only a tiny percentage of the 1,500 Australian technology startups in 2001 have survived to the present day. The ones that have lasted have great products and services, sure. But that’s not what keeps companies thriving. Culture does. And what keeps culture thriving? People do.

The traditional people management approach in many of the world’s most valuable companies has been to leave it to the omnipresent HR department. The term “HR” is revealing: treating humans as a resource. This is the team that only seems to appear when there’s a hiring decision, an office dispute, or a discussion around performance improvement. That’s the problem with this traditional approach – the processes are established, immutable, and hiring is based on the idea that it’s a privilege to work for the company, no matter what your personal ideals might be.

But with start-up culture flourishing and tech companies growing faster than ever, a different approach to people management is emerging. The common denominator seems to be valuing people and realizing that high growth and innovation can only occur if people are genuinely motivated.

At Tyro, we have a simple process. No HR. Instead, our leaders are in charge of the growth, support and encouragement of their teams. After all, it’s the leaders of any team, be it engineering or sales, who will do the hiring and coaching. We listen to each other and experiment with ways to accelerate growth while nurturing our culture – an interrupt, speak-up, try-fail-learn-win culture. And, like all growth companies, we’ve got an insatiable thirst for talent. It’s always about the people. We need people who are excited to be here and can respond quickly to change – not those who are only slogging it out for their monthly paycheck.

Delving into the culture of different fast-growth companies is fascinating – culture is the heart of any business. Here are some examples of some companies and their approach to people. Who knows? If you implement some of these ideas, perhaps your business could be the next technology empire.

1.    Google – Using analytics to understand people

Google employed what it is best at – data and analytics – to figure out their ideal employee blueprint. What they want is what all growth companies want: enthusiasm, contribution, and productivity (especially in times of change). While Google certainly attracts candidates with their glossy workplace image of free lunches and company playrooms, it’s their innovative people management approach that has created an environment of longevity. They’ve done away with the traditional HR functionality and instead use a complex data-driven hiring process and constant analysis of their people. They even have a separate people analytics team who have crafted algorithms and models that predict who the best hires are and how they can keep them happy. And clearly, it works.

2.    Tyro Payments – A trusting peer culture instead of hierarchy

From a start-up of three founders in 2003 to a thriving company of 130 people – Tyro has expanded in the past ten years and has become the fastest growing EFTPOS provider in Australia – and the only competitor to the big banks. The low turnover can be attributed to a lack of hierarchies and a ‘knowledge environment.’ Sharing ideas is encouraged and each individual develops their skills because they are trusted to operate autonomously. What we’ve seen is that this freedom boosts creativity and innovation. There aren’t perks like free breakfasts, indoor slides, or massages, but there is heavy investment in developing people, technology and tools. And while the phrase ‘work-life balance,’ sounds hackneyed, it’s the reality of being a Tyro employee. Now in accelerated growth mode, Tyro refuses to stifle this environment with management layers and bureaucracy. We prefer to rely on the model of trust. It’s embedded in our cultural DNA and it works.

3.    Netflix – Growth should not affect talent density

During 2013 alone, Netflix’s stock has more than tripled, it won three Emmy awards, and its U.S. subscriber base grew to nearly 29 million. Their secret is a large talent pool that consistently drives out quality products. The talent pool keeps growing because Netflix hasn’t given in to the temptation of process – something that many growing companies find hard to do. Chaos is scary and as organisations grow, management often turns to process to retain control. But what this does is dilute the talent pool through fast, hunch-based hiring decisions. With this comes a lack of analysis on whether people will be a good cultural fit, which compounds the inability of process-driven companies to adopt good ideas quickly. When this happens, existing high performers become frustrated. Before you know it, they’ve left, and the talent pool becomes murky. Netflix has combatted this problem by keeping their workplace informal, dynamic and free of bureaucracy.

4.    IDEO – Create a culture of helping

While IDEO is older and more established than other companies and is more a design than a tech company, it’s incredibly high performance is lauded all over the world for innovation in business, government, and health care. They deal with complex design ideas and solutions and have managed this by creating a culture of helping. Generally, workplaces incite a desire to compete, but IDEO employees understand that complex problems can rarely be solved by one person. Help is always sought from all areas and everyone is encouraged to assume they’ll need input from others with whatever they’re doing. Because of this expectation, it’s easy to access help across all abilities and seniority levels. This leads to people feeling supported to do their best work possible and produce quality results. Quality results have meant greater job satisfaction for people at IDEO and in turn, lower attrition and greater company growth.

5.    Atlassian – Embrace the value of values

Atlassian, one of the Australia’s most successful software companies, was founded in 2002 with $10,000 in funding from a credit card. They’ve made a name for themselves by mixing a culture of fun with interesting work and innovative human resources practices. Amongst the Atlassian core values are tenets such as “Open Company, No Bullshit,” and “Play, as a Team.” While the company was growing, ‘play’ was important. Now that they’re a fully-fledged organisation, it’s difficult recreate the early intimacy of their regular poker nights. But their values are being kept alive with communication channels like blogs, regular social events, and even notes on the wall. In terms of keeping in line with the “Open Company” tenet, they’ve created a democracy of information through blogs and wikis. All staff are encouraged to contribute and the CEOs are a leading example that information should not be hoarded. With staff at Atlassian happier than most, and the company going from strength to strength, it’s obvious that having strong values is the lifeblood of a successful company.

Better business banking

Better payment solutions

Find out how Tyro payment solutions can help your business thrive.

Find out more