To succeed in business, strong teams are essential. There is no recipe for building a common culture and shared sense of purpose. Companies try all kinds of strategies. When running a company or team it’s worth studying other examples, especially more radical organizational philosophies, from time to time for inspiration.
Netflix is an example of organization with a radical strategy. They’re famous for their extreme transparency — letting “truth” cut through interpersonal niceties to so that the company can accomplish more. They use frequent and unsparing criticism to foster cultures of constant improvement. And, with more visibility into the big picture strategy, they hope employees can make better decisions more quickly.
It’s hard to argue with the success of Netflix, so they must be doing something right. But radical approaches have major costs. Too much harsh criticism takes a toll on morale. These companies may be high performing, but they’re also known for their ruthlessness and high turnover. That might work in some businesses, but definitely not all of them. At Alliance, I have spent years investing in my people, with the hope that they will be high performers for the company for many years to come. Given our overall strategy, gaining a performance boost in exchange for higher turnover would be penny-wise and pound-foolish.
Culture is particularly hard to define and measure, so I also think a lot about creating the right structures. Getting the structural pieces right is not easy. You have to find, hire, and retain quality people. Reward the right things in the right ways. Decide how much authority to delegate downward and how much senior-level supervision is appropriate, etc. Putting all these elements together is the central, never-ending challenge of running a company.
Organizational structures and tools are a lot like other investments in productive capital, with their own costs and benefits, risks and returns. For example, many companies use the Key Performance Indicator (KPI), to create clear performance expectations. Every employee has specific metrics that plainly distinguish success and failure. The payoff is clear: when everybody knows exactly what they will be judged on, that can unleash their entrepreneurial spirit to go find ways to get the job done. But there is downside risk here too. A badly chosen (or badly managed) KPI can backfire, causing workers to focus too narrowly on their metric, to the detriment of the broader business strategy.
Whether it’s a structure, tool, or cultural norm, the most important thing I’m looking for is this — does it help orient everybody toward the future? The best organizations stay hungry and never rest on their laurels. Past success breeds future complacency, so keeping an organization focused on innovating, executing, and moving forward is a long-term challenge for any business leader.
There’s no perfect organizational model, but my strategic approach is to never stop learning and improving. Yesterday’s success is gone — tomorrow is what counts. That applies equally to me and to my company. Whatever works is always worth considering.