Building A Winning Corporate Culture
Too Hot? Too Cold? Success Means Having Values That Are Just Right

(Washington, DC -- February 7, 2002) Here’s a tip in case you ever find yourself interviewing for a job at webMethods -- don’t talk too much about stock options. Especially in the company’s early days, according to co-founder Caren DeWitt, if anyone dwelt on them too much in an interview, it told the webMethods crew that “they probably weren't for us. This was not about making a fast buck, it was about creating a company with long-term value.”

That principle was a key element of the company’s philosophy from the very beginning, when webMethods was just Caren and her co-founder (and husband) Phillip Merrick. Maintaining the kind of culture they wanted over a growth curve that went from two employees to 1000 in six years wasn’t an accident, and she provided insights into how they did it at this morning’s Netpreneur Coffee & DoughNets event. DeWitt represented the “big company” view of “Building A Winning Corporate Culture” on a panel of entrepreneurs that represented  the continuum of growth. She was joined by Andrew Hill, President and CEO of DevElements, a young IT consulting firm with a staff of 27; Matthew Pittinsky, Chairman and co-founder of Blackboard, a rapidly-growing eLearning company of some 400 employees; and moderator Jeremy Brosowsky, founder and CEO of Washington Business Forward magazine.

It turns out that corporate culture is like a reputation -- you have one, whether you like it or not.

It begins in the early days with the founders. DeWitt said that before there was even a real business called webMethods, “we spent as much time talking about what the company would be like as we did talking about who we would target for early investors and early customers, what the product would be like, and how we would solve customer problems.”

For DevElements, you could almost say that culture was the whole reason behind its formation. Hill explained it this way: “After years of being an employee and a consultant to various companies, I found myself consistently frustrated with the environment. Customer service and employee satisfaction seemed to be more like buzz words than part of the core values of the companies.” For Hill, employee retention means customer retention, and that requires putting a strong emphasis on inspiring shared culture and personal commitment for all employees.

According to Hill the people he hired were, “the people that we wanted to hang out with. They were not only excellent at what they were doing technically, but they were the people we were most likely to be seen hanging out with on the weekends.”

A company’s culture will either support its success or hamper it. Pittinsky likens it to branding. “We're always cognizant that what makes us interesting is not the products we sell today, but the client relationships and the trusted brand. It’s how we answer the phone, how we sell, how we describe ourselves to our neighbors. If we're able to describe ourselves in a way that shows investment in our clients’ success, we build that relationship, and it's going to have to be at the core of everything we do.”

For startups, intangibles like culture often take a back seat to more immediate survival issues like funding and customer acquisition. It shouldn’t. According to Hill, “In a small business the wrong personality can be poison. If you're a candidate coming into DevElements, you'll interview with four different people, and they're looking at a lot more than just your technical background, they're looking at whether or not your personality is the right fit.”

New managers, especially, must share the company’s culture. That will become more challenging as you begin looking at people who come from different industries (where values and strategies can be radically different), or people who come from large, bureaucratic organizations (that may have behavior patterns that are at odds with the entrepreneurial spirit). Acquisitions of other companies will also put strains on your organization and require willful efforts at cultural integration.

The panelists agreed that culture grows organically. It can’t be controlled, but it can be molded by the founders and executives if they execute on the principles they espouse. In his wrap-up to the session, Mario Morino, Chairman of the Morino Institute and a veteran tech entrepreneur, used the word “nurture” to describe the process of building a corporate culture. The way to nurture a culture, he said, is through “example and execution, by what you do day in, day out.”

That means you should reinforce behavior that supports the culture. For example, don’t tell people that your core value is customer service, then only give bonuses to the sales people with the highest sales numbers. Morino advised, “Also reward the sales team that created good will or exceptionally positive reaction or respect in the marketplace by how they dealt with the client. By recognizing it you're demonstrating your conviction and how important the culture is to you.”

Culture is sometimes best expressed in the little things that you do rather than in sweeping mission statements. For example, the simple acts of responding to phone calls and emails within 24 hours and always sending personal thank you notes are powerful representations of an organization’s operating principles.  The panelists offered many specific pointers for encouraging a culture of success in your organization, from communication techniques, to hiring practices, to organizational structures. Find them in the transcript or video of the session.

Regardless of techniques, consistency is the key. Every person in the company must clearly understand and be able to express the organization’s vision and values. There should be no confusion or mixed messages, and there should be no difference between the external culture and the internal one. That doesn’t mean, however, that culture is monolithic within an organization. Especially in mid- to large size firms, engineering or development teams, for example, will likely have different cultures than sales or marketing. That’s okay, as long as they all share the same core values. After all, would you really want a salesperson who sells like a developer?

According to Pittinsky, the greatest milestone -- and cultural challenge -- for Blackboard was when the company expanded to two floors (they are now much larger). Before that, he explained, they simply grew by annexing adjacent suites, with everyone still in close proximity. Split between two floors however, “You start running into people in different ways. All of a sudden, this is where the executives happen to be, so it becomes an ‘executive floor’ and there is a ‘development floor.’ There are different lounges on each of these floors. Suddenly, the way that people interact with each other changes.” For Blackboard, that meant the need to begin formalizing some of their organizational structures and communication flow.

At least those changes at Blackboard came amid good times and growth. The real test for a corporate culture is in the bad times. Will employees rally round and persevere when, as a startup, you can’t quite make the payroll until that big sale closes; or, as a medium-sized company, it’s taking longer than expected to nail down another round of VC money; or, as a public company, the stock drops from $45 to $25 overnight for no apparent reason? “Crises are opportunities,” said Morino, “And that is when you demonstrate the true culture and values of your organization.”

Those are the times when a strong corporate culture is most needed, and when you’ll learn how successful you’ve been at building it. As DeWitt put it, “What I've learned over the past six years is that the culture is the most important thing you have. You need a clear understanding from the outset of who you want to be and what your company is going to be like. It affects everything from the people you get involved in your company to the companies that you choose to accept venture capital from.”

Copyright 2002, Morino Institute. All rights reserved.