Michael Trafton – How to build company culture in three easy steps

This is a summary of Mikey Trafton’s Business of Software 2012 presentation.

Company Culture

Company culture can have a real impact on your bottom line. Mikey shared two stories that demonstrate this.

Story 1: Mikey stayed at a Four Seasons hotel, and ordered room service with ice cream for dessert. When the food was brought up to his room, the hotel employee asked him about how long it would take him to eat his dinner. Mikey told him it would take him about 15 minutes, and asked why. The hotel employee explained that he wanted to wait to bring his ice cream up so that it wouldn’t melt while he was eating. During a later stay at another Four Seasons, Mikey ordered ice cream again from room service to confirm that it wasn’t simply a hotel policy, but an employee going out of his way to provide good service. And sure enough, the second time the ice cream was brought up with the meal.

Story 2: An IBM executive visited a bank to make a transaction. The bank teller told the exec that he had to come back another day to make the transaction, because the one person that could help him with it was not working that day. The exec said fine, and asked the teller to validate his parking ticket. The teller refused to validate the ticket, because she said that she could only validate tickets for those that have done business with the bank. The exec said, “I tried to, but you told me to come back.” The teller wouldn’t budge on validating the ticket, so the exec said, “Fine, I’ll make a transaction.”, and withdrew all $1.5 million he had in the bank! The bank teller was never fired for this incident, so it was pretty clear that this was the company culture and not a bad employee.

Allow employees to take the initiative to go above and beyond for your customers.

Culture is the personality of your company. Most companies have a split personality – one person is helpful, the next is mean. This results from the company not caring about the culture.

If you have a great culture, by definition you have a great place to work…but only for people who fit with your culture. A company culture attracts the right people and repels the wrong ones. An excellent example of this is the US Army. The US Army does a great job at attracting those that will fit in nicely into its culture, and does an equally good job at repelling those that won’t.

Culture attracts better employees who stay with you longer, stick with you through hard times, and work for less money. Culture trumps money.

Make sure your staff fits your culture. Mikey shared a story of his early days as an entrepreneur. He started a company and hired seven people over lunch who said they all worked well together. After some time, people started missing deadlines and pointing fingers. It turned out that these seven people came from a telecommunications background, where they always missed deadlines and liked to telecommute. Mikey liked people to work at the office so that they could collaborate more easily. And because of his consulting background, Mikey didn’t miss deadlines. This was obviously not a good culture fit. In the end all seven of them quit on the same day – one right after the other.

3 steps to a great company culture

There are three steps to a great company culture:

1. Decide what you care about.
2. Hire people that care about the same things you do.
3. Pay attention to the things you care about.

Step 1: Decide what you care about

This is the one time in your business that you get to act like a king. When it comes to culture, you’re the decision maker. In every other instance you have to win people over – customers might vote for someone else, vendors might vote for someone else, etc.

Think about the place you want to work at and think about the place people you want to work with want to work at.

Think about what it is that you stand for. At Blue Fish, they strive for customer elation, not customer satisfaction. When you go to a restaurant you want to be elated after eating your meal, not just simply satisfied. So why do we set such a low bar for our companies?

Define your core values.

• Think about your strengths. Think about why people admire you. This could be food for thought for your core values. Make the core values a reflection of the best aspects of yourself.
• Think about what you admire in other people. What makes them so special? Make those the aspirational core values of your company. Hire to compensate for your personal weaknesses that are still aspirational core values.
• Write them down.

For inspiration, here are Blue Fish’s core values:

• Client focus
• Teamwork
• Accountability
• Excellence
• Communication

Mikey said he is strong on all but one of those core values. He said that accountability is not a strength of his. If he tells you he is going to do something he will definitely start it, but odds are he won’t complete it all the way through. He means well; he just has a hard time following through. However, accountability is important to him, so he included it in Blue Fish’s core values to drive the team to make up for his weakness.

Make it real. Think about what your culture would be if it were true that the only thing that can get someone fired is if they violate your culture.

Make a list of those values that could serve as a checklist for hiring.

For Blue Fish you are a culture fit if:

• People like having you around.
• You do more for others than you do for yourself.
• You love your job and are really freaking good at it.
• You’re not scared of a little hard work.

(Blue Fish has a total of 13 of these.)

Step 2: Hire people that care about the same things you do

Fire everyone who’s not a culture fit, and hire those who are.

Use culture fit questions in your interview.

• Describe the culture at your last job. Did you struggle? Thrive?
• What do you expect from other team members?
• What behaviors are you unwilling to tolerate?
• What does [core value] mean to you?
• Use weed out questions to narrow the field. For example, ask “Tell me about a project that failed.” Then no matter what the answer is, respond with something like “It sounds like the customer didn’t know what they wanted.” or “It sounds like your boss really dropped the ball.” If the interviewee takes the bait and blames the failure on someone else instead of taking some responsibility, they may not be a good fit for your company.

Step 3: Pay attention to the things you care about

This is where you make sure that you and the team deliver on what you want.

You will get the behaviors that you tolerate from others. You don’t need to fire someone, just say it. For example, at Blue Fish being late to a meeting is a no-no, so they implemented the “feed the fish” program. If you are late to a meeting, you have to take the smallest bill out of your wallet and drop it in the fish bowl sitting on the conference table – feeding the fish. At the end of the year, Blue Fish matches the contributions and donates the entire sum to charity. This is an example of how you can inform everyone about what you will tolerate without being a jerk about it.

Reinforce the things you care about, and recognize results you like. Some ways to accomplish this:

• Ring the good news bell. Whenever one of a small list of positive actions that align with your company culture is accomplished, ring a bell in the office and make an announcement.
• Use hero stories. A hero story is a story of an employee who has been heroic in aligning with your company culture in some way. Southwest Airlines does hero stories. One example is of a Southwest employee who drove about 100 miles on his own time to get a customer a piece of luggage that Southwest had lost. The idea is to set the bar high for the rest of the team.

At Blue Fish they ring the good news bell when:

• They close a deal.
• They deploy for a customer.
• Someone accepts a job offer with them.

At Blue Fish they don’t use hero stories, but they do something similar that they call “round of praise.” Round of praise is like a hero story but using a lower threshold. For example, John spent all day Friday helping me solve a problem, so he was unable to finish his tasks and had to come in on the weekend to finish his work.

Does it work?

The best way to find out if this actually works is to turn your company over to the team to see what happens. Mikey ran an experiment by firing himself from Blue Fish and turning over the company to the team. The result: the team doubled revenue over the past year!

[I’d like to thank Bill Horvath, founder of DoX Systems, for sharing his notes with me.]