Just recently, Uber’s Chief Executive Officer, Travis Kalanick, announced that he was resigning from the troubled company, due to pressure from investors. While he had been taking an indefinite leave of absence to improve his leadership skills, a “series of costly missteps” lead the Uber board to demand that he step down to give the company “room to fully embrace this new chapter in Uber’s history.”

At around the same time, Netflix published an update to it’s ‘Freedom and Responsibility’ slide deckwhich was published by the company in 2009 as a way to communicate its values to prospective and current employees – the same deck that had been shared over 13 million times on Slideshare and has been called “the most important document ever to come out of the Valley” by Sheryl Sandberg.

Here are two immensely successful, profitable companies, but with remarkably different cultures. Is it really true that organisational culture is key to business success? Can a toxic culture make for a successful and profitable company? Or is culture key to sustainable and long-term business success?

A quote in an article from the Australian Financial Review summed it up brilliantly – it read, “Uber is the best funded and most valuable start-up on the planet (it last raised money at a $US65 billion valuation). But that doesn’t mean it’s invincible”. And as I started to think more about this, I realised there were some critical lessons and reminders for us all.

1. Culture flourishes with meaningful values

Most tech companies tout their “company values” as a defining element of what makes their company culture unique”: values serve to guide behaviour in the workplace, and they drive organisational culture. As Netflix states, “Many companies have value statements, but often these written values are vague and ignored. The real values of a firm are shown by who gets rewarded or let go”.

For Uber, values were somewhat of an afterthought. The company was founded in 2009, but the values were created in 2015 and were seemingly retrofitted. Their 14 values represent what had happened over the six years while they were “busy dismantling the global taxi industry, brawling with regulators and politicians, fending off employment lawsuits, exploring self-driving car technologies and raising billions of dollars”. There is no wonder some of their values include “always be hustlin’, principled confrontation, making bold bets, and super pumped”.

Values need to carry weight– they can’t be meaningless words stuck on the office wall. Employees need to understand what they mean, and how to embody them in their day to day work. They need to represent what leaders expect of employees, and they need to guide the behaviour and decision making of all employees – leaders (and founders) included.

2. Culture is critical to strategy

As the age old saying goes, “Culture eats strategy for breakfast”. Culture is the environment in which your strategy thrives (or dies) – and your long-term success depends on your strategy.

Netflix states that their culture is “how we work together as employees to serve our members and grow”. They attribute their success to their culture – and they keep improving it, to ensure they attract and retain “stunning colleagues”, and make working at Netflix more satisfying to employees. Their focus is creating a ‘dream team’ to achieve their strategy, and they invest significantly in making this happen – “our version of the great workplace is a dream team in pursuit of ambitious common goals, for which we spend heavily”.

On the other hand, Uber has always been focused on product, growth and revenue targets, perhaps at the cost of neglecting their culture.  And when a company grows as fast as Uber and doesn’t focus on establishing a strong culture to support their strategy, the risk to their brand (like their customers, and their investors) and their people is significant and costly.

Culture is not just a word or a fluffy, consulting phenomenon – it is something is at the core of every organisation, and translates and manifests in different ways. Culture is something that needs to be defined, planned and acted on every day – it needs to be intentional.

3. Culture is fuelled by leaders

Leaders need to lead from the top: They need to set the tone and expectations for the organisation’s culture. Culture is shaped by their actions and their behaviour, and they must model the behaviours they want the organisation to emulate.

Sadly, reports have revealed that Uber’s “toxic, aggressive” and “Hobbesian” culture was “stoked, and even fostered by those at the top of the company”. However, it seems that Kalanick has made the important realisation that culture starts from the top, and has recognised the part he has played in the demise of Uber’s culture – in fact, he has apologised to employees for leading the company and culture to this point.

Who leaders are, what they stand for and the needs/values that drive their decision-making, significantly influence the culture of your organisation. Employees look to leaders to understand what the organisation believes in, what it will focus on, what it will reward and how it will respond to internal and external events and stimuli.

4. Culture is strengthened by recruitment

Identifying, attracting and recruiting talent is key to delivering your strategy and strengthening your culture. Netflix recruits strategically; they are repeating their long-standing commitment to not hire jerks – “On a dream team, there are no ‘brilliant jerks.’ The cost to teamwork is just too high. Our view is that brilliant people are also capable of decent human interactions, and we insist upon that”.

Inversely, Uber has sacked more than 20 employees after a sexual harassment investigation, and among these 20 employees were senior executives. At a recent All Hands Meeting, an Uber Board Member said that Uber will be making (another) change – there would be no more hiring of “brilliant jerks”, interestingly, quoting Netflix.

A rigorous recruitment process will provide the opportunity to really get to know your candidates. Psychometric assessments as an example, will provide valuable insight into psychological characteristics and attributes and allow you to identify high-risk candidates. Managing your culture at the attraction and recruitment stage will remove the reliance on performance management, and/or mitigate the risk of more serious events.

Finally, let us not forget that culture is an increasingly important component in business and strategic planning. Organisations, and start-ups alike should define what they want their culture to be – and they should plan, act and manage this daily, and hold everyone accountable to it!

About the Author

Kirsten Forgione | Senior Consulting Psychologist

Kirsten Forgione joined the Revelian team in Melbourne in 2014 on a one-year contract. She’s a registered psychologist with a Master of Psychology (Industrial and Organisational), who is deeply interested in the study of human behaviour at work.  She’s also committed to supporting organisations improve business performance and effectiveness through the assessment and development of organisations, individuals and teams.

We were thrilled when, in 2017, Kirsten returned to Revelian’s Melbourne team as a Consulting Psychologist, bringing her exceptional experience and commitment with her and helping our clients achieve excellent business outcomes.