June 25, 2015
The Difference Between Culture and Values
This topic has been bugging me for a while, so I am going to use the writing of this post as a means of working through it. We have a great set of core values here at Return Path. And we also have a great corporate culture, as evidenced by our winning multiple employer of choice awards, including being Fortune Magazine’s #2 best medium-sized workplace in America.
But the two things are different, and they’re often confused. I hear statements all the time, both here and at other companies, like “you can’t do that — it’s not part of our culture,” “I like working there, because the culture is so great,” and “I hope our culture never changes.” And those statements reveal the disconnect.
Here’s my stab at a definition. Values guide decision-making and a sense of what’s important and what’s right. Culture is the collection of business practices, processes, and interactions that make up the work environment.
A company’s values should never really change. They are the bedrock underneath the surface that will be there 10 or 100 years from now. They are the uncompromising core principles that the company is willing to live and die by, the rules of the game. To pick one value, if you believe in Transparency one day, there’s no way the next day you decide that being Transparent is unimportant. Can a value be changed? I guess, either a very little bit at a time, slowly like tectonic plates move, or in a sharp blow as if you deliberately took a jackhammer to stone and destroyed something permanently. One example that comes to mind is that we added a value a couple years back called Think Global, Act Local, when we opened our first couple of international offices. Or a startup that quickly becomes a huge company might need to modify a value around Scrappiness to make it about Efficiency. Value changes are few and far between.
If a company’s values are its bedrock, then a company’s culture is the shifting landscape on top of it. Culture is the current embodiment of the values as the needs of the business dictate. Landscapes change over time — sometimes temporarily due to a change in seasons, sometimes permanently due to a storm or a landslide, sometimes even due to human events like commercial development or at the hand of a good gardener.
So what does it mean that culture is the current embodiment of the values as the needs of the business dictate? Let’s go back to the value of Transparency. When you are 10 people in a room, Transparency means you as CEO may feel compelled to share that you’re thinking about pivoting the product, collect everyone’s point of view on the subject, and make a decision together. When you are 100 people, you probably wouldn’t want to share that thinking with ALL until it’s more baked, you have more of a concrete direction in mind, and you’ve stress tested it with a smaller group, or you risk sending people off in a bunch of different directions without intending to do so. When you are 1,000 employees and public, you might not make that announcement to ALL until it’s orchestrated with your earnings call, but there may be hundreds of employees who know by then. A commitment to Transparency doesn’t mean always sharing everything in your head with everyone the minute it appears as a protean thought. At 10 people, you can tell everyone why you had to fire Pat – they probably all know, anyway. At 100 people, that’s unkind to Pat. At 1,000, it invites a lawsuit.
Or here’s another example. Take Collaboration as a value. I think most people would agree that collaboration managed well means that the right people in the organization are involved in producing a piece of work or making a decision, but that collaboration managed poorly means you’re constantly trying to seek consensus. The culture needs to shift over time in order to make sure the proper safeguards are in place to prevent collaboration from turning into a big pot of consensus goo – and the safeguards required change as organizations scale. In a small, founder-driven company, it often doesn’t matter as much if the boss makes the decisions. The value of collaboration can feel like consensus, as they get to air their views and feel like they’re shaping a decision, even though in reality they might not be. In a larger organization with a wider range of functional specialists managing their own pieces of the organization, the boss doesn’t usually make every major decision, though guys like Ellison, Benioff, Jobs, etc. would disagree with that. But in order for collaboration to be effective, decisions need to be delegated and appropriate working groups need to be established to be clear on WHO is best equipped to collaborate, and to what extent. Making these pronouncements could come as feeling very counter-cultural to someone used to having input, when in fact they’re just a new expression of the same value.
I believe that a business whose culture never evolves slowly dies. Many companies are very dynamic by virtue of growth or scaling, or by being in very dynamic markets even if the company itself is stable in people or product. Even a stable company — think the local hardware store or barber shop — will die if it doesn’t adapt its way of doing business to match the changing norms and consumption patterns in society.
This doesn’t mean that a company’s culture can’t evolve to a point where some employees won’t feel comfortable there any longer. We lost our first employee on the grounds that we had “become too corporate” when we reached the robust size of 25 employees. I think we were the same company in principles that day as we had been when we were 10 people (and today when we are approaching 500), but I understood what that person meant.
My advice to leaders: Don’t cling to every aspect of the way your business works as you scale up. Stick to your core values, but recognize that you need to lead (or at least be ok with) the evolution of your culture, just as you would lead (or be ok with) the evolution of your product. But be sure you’re sticking to your values, and not compromising them just because the organization scales and work patterns need to change. A leader’s job is to embody the values. That impacts/produces/guides culture. But only the foolhardy leaders think they can control culture.
My advice to employees: Distinguish between values and culture if you don’t like something you see going on at work. If it’s a breach of values, you should feel very free to wave your arms and cry foul. But if it’s a shifting of the way work gets done within the company’s values system, give a second thought to how you complain about it before you do so, though note that people can always interpret the same value in different ways. If you believe in your company’s values, that may be a harder fit to find and therefore more important than getting comfortable with the way those values show up.
Note: I started writing this by talking about the foundation of a house vs. the house itself, or the house itself vs. the furniture inside it. That may be a more useful analogy for you. But hopefully you get the idea.