Herb Kelleher, the founder and CEO of Southwest Airlines which is one of the most successful airline in the history of commercial aviation when asked to identify what he believed was the reason for the company’s success said:” It’s our patina of spirituality.” This evocative articulation reinforces an eternal truth of business; Culture is essential to success and a source of inimitable competitive differentiation. A question of vital importance for any organization is how to define and assimilate a winning culture. Over 2017 the saga of Uber brought to light the complexities inherent in that pursuit. I would like to share some of my insights on organizational culture that emerged from this fascinating story from a company that has become so much part of our consciousness and a poster child of the gig economy.

On February 19^th  2017, in a detailed blogpost , Susan Fowler a former engineer at Uber, blew the lid on Uber’s culture. The key charge that she made was that the human resource department refused to discipline her manager whom she accused of making sexual advances and instead told her to expect a poor performance review if she chose to remain on the team.

The HR manager allegedly told Fowler not to go after the manager since he was a high performer and nothing would come out of that endeavour. In the past when Susan Fowler raised the issue of sexism within the organization at an all hands meting she was told “the women of Uber just needed to step up and be better engineers.”

This Susan Fowler moment unleashed a withering scrutiny of the Uber culture and a USA TODAY headline said it all, “Uber’s Kalanick faces crises over ‘baller’ culture”. Baller incidentally is a slang for pro athlete living large ( a very significant term as I will discuss later in this piece).

All of a sudden we began to learn about what was really going on inside of Uber. A few of the critical incidents

• An Uber party held in Las Vegas in 2015 where Beyonce performed and featured variety of outrageous incidents
• Uber’s SVP of business proposes doing opposition research on critical reporters
• An email from 2013 leaks showing Kalanick advising employees on how to mingle and take drugs during a company retreat

With hindsight we can easily discern a pattern amongst these vignettes.

What prevented this culture from being noticed for so long? My hypothesis….it was noticed and was not seen as dysfunctional. As a matter of fact this very baller culture was viewed by Uber as the reason for its tremendous success(At the time the blog was written Uber was the world’s most successful start up company with a market cap of US$ 70 billion( about 15 billion more than GM)).

What is Organizational Culture

Culture to me is the sum total of values and derived behaviours and actions which the organization recognizes as vital for its current and long term success.

In its most elemental form here is one simple framework for identifying culture

If one had to put this model into words then it would look like; Our values shape behaviours which then drive the results that we aspire for. Key is to identify the behaviours which will lead to long term sustainable success as defined by all our stakeholders. That is the reason why culture is so critical for organizations, since it allows businesses to balance the pressure of the short term results with the need to enable the enterprise to deliver results beyond the short term horizon.

One of the oldest saw’s in the book is “ Culture eats Strategy for breakfast”. I would propose that we reframe this to “Strategy discovers and defines its culture to succeed”.

Where Does Culture Emerge From

This is the proverbial million dollar question. Here is my point of view and in two parts.

Any enterprise is created by entrepreneurs and founders who bring an idea they have discovered to life. Along with that idea they bring their world view and understanding of the ecosystem to which their idea belongs….. things that they know and believe to be true about what creates results in their world.

Successful entrepreneurs are driven to succeed and often accomplish what they want to notwithstanding their beliefs and values, but end up attributing their success to these values that they believe to be true.

Chris Argyris first articulated  the ladder of inference as a means to understand what connects are actions to our environment. Simplistically speaking what the ladder of inference model posits is that our observation of reality is shaped by our beliefs and assumptions which in turn inform our actions. If these actions lead to success then our beliefs get reinforced further leading to even more selective bias while discerning reality.

Let  us take an example: if you believe women are inferior engineers then a rising attrition amongst engineers would appear to be a problem of women engineers not being able to match the exacting performance standards of the company.

Let us get back to Uber. What started Uber was the Kalanick’s desire to help his friends find cool upscale rides.

As the idea gained momentum it ran into the tangled web of existing entrenched interests of regulators and taxi unions. To that extent Uber was born into conflict. It required someone to take them on and shape the laws and the environment for this disruptive idea to succeed. It required a take no prisoner approach and as the company scaled it did through attracting people who were not used to taking prisoners themselves.

The operating paradigm for success that emerged take on the world with everyone lined up against you. Kalanick’s first business that he started after dropping out of UCLA in 1998 was sued by the world’s biggest media companies. He had to learn to fight for survival, a belief he brought to Uber and which further got reinforced by the early experiences he and the company had in dealing with hostile regulators and pressure groups.

The shared mental model that the founding team developed, as a result, was that to succeed in this world required intense focus on results and overcome barriers at any cost. A few of Uber’s stated cultural tenets ( behavioural norms) were, “ Always be hustlin’” ,  “Toe stepping”, “Principled confrontation” and “Being super pumped about solving big problems”.

Critically from 2013 to 2016 the valuation of the company went from US$ 3.8 Billion to about US$ 68 Billion. If behaviour drives results then the validation was complete.

The baller culture was instrumental in delivering results in this battlefield against the bad guys, or so the leadership team came to believe, and that became the de facto culture at Uber.

I would argue that the reason for Uber’s tremendous success was largely due to creating a value and experience for the client that was unique and despite the culture that had taken root in the company.

( In addition there was the famed Silicon Valley inspired stereotype of the nimble start up and the plodding large company. The holy grail was to have the soul of a start up in a large company. This restless , always breaking things, irreverent of status quo image of a start up also brought with it cultural underpinnings which influenced the entire tech ecosystem often explained as the Silicon Valley culture.)

What about companies that are not start ups and have existed for a period of time. What shapes their culture?

In many cases the founders values and beliefs survive over a long period of time and often become folklore propagated through stories, symbols and practices embedded in organizational systems and processes. It was said in Rolls Royce when decisions had reached an impasse the deadlock was often broken by looking up at the portrait of Henry Royce and asking what he would have done in the situation!

Culture is very rigid and organizations are very resistant to change on this dimension. The longer an organization has existed successfully the harder it is to help reinvent the culture. HP is a great example. Its famed HP Way a set of ideas propounded by Bill Hewlett and Dave Packard created a truly remarkable company. HP lost its way in the 90’s and the 2000’s and despite the hiring of Carly Fiorina struggled to succeed in a more competitive and brutal landscape then HP had ever confronted. Attempts to change the culture failed and it took the change of three CEO’s and an existential crises for the company to begin to question those deeply help beliefs.

Culture is a Choice

Shaping an organizational culture is a vital responsibility of the leader. How do we shape an organizational culture which sustains success in the long term?

• Redefine Success. Narrowly defined results, focussed only on the short term, will lead to toxic culture. This is so because the balancing forces and voice of other stakeholder loses relevance in the short term and the short term results themselves embed the toxic culture deeper in the organizational DNA. Emphasize the mission and the three dimensions of success, Results, Process and Relationships. In case of Uber the obsession with results, which by definition in case of a start up were of the short term nature, left no space for the other dimensions of success resulting in a self fulfilling prophecy( another reason why the board and investors could not see the challenge of the toxic workplace. They were happy with the meteoric rise of the metric that had primacy for them).
• Make the Case for Change: Enable culture dialogue at the top and across the organization. Overcoming complacence requires that the change is framed as both threats and opportunities. Threats if we did not change and opportunities if we did. These threats and opportunities need to be framed through the eyes of all our stakeholders. Facilitate a candid and brutal dialogue to help examine the assumptions and beliefs of the leadership team at the top as it relates to fulfilment of the agreed mission. Leaders need to examine the environment systemically and revisit the assumptions underlying the model of success.
• Shape Systems and Structures: Enabling culture is not just a matter of clearly articulating values or extensive dissemination. Sustainable culture is the outcome of carefully modifying the way you hire, develop, measure and reward people. These fundamental organizational systems are what drive the culture that we have defined, into the DNA of the organization.

It is astonishing that Eric Holder, who is a former Attorney General of the US, whose law firm was hired to look into the claims of harassment produced a 13 page report which included recommendations ranging from increasing the board oversight to changing the time of staff meals to accommodate employees with families. I only hope that that the report included recommendations to redesign relevant organizational element in addition to tinkering with antecedents and hygiene related issues.

• Hold the Leader Accountable for Organizational Culture. A simple calendar test will show the attention of the leader to defining and building culture. This is definitely not an HR agenda alone but a strategic priority. Transactional actions which impact only hygiene factors at the workplace don’t have the potential to shape culture.

Fast forward to the current. Uber has a new CEO, Dara Khosrowshahi. In a recent post he outlined the principles he believes will take the company forward beyond the recent turbulence to an era of responsible growth. It’s clear, Khosrowshahi wrote, that “the culture and approach that got Uber where it is today is not what will get us to the next level. As we move away from an era of growth at all costs to one of responsible growth, our culture needs to evolve.” In the new list of cultural tenets “ Always hustlin” is out and “Doing the right thing” and “Celebrating differences” is in.

Can we just rewrite out culture?