Continuing our Leader With Courage conversation with Michael Small, President and CEO of Gogo, the in-flight Internet and entertainment services company, we stumbled upon an age-old question that’s not easy for CEOs to answer:
When you are building or re-building a company, which do you attempt to fix first: The strategy or the culture?
Value Drivers: Michael, in one of my recent chats with Bryan Schwartz of Levenfeld Pearlstein (another Leading With Courage conversation), we talked about culture versus strategy and I said that before we do strategy work, we have to understand and work on the culture. Otherwise, the strategy just sits on the shelf. He surprised me by saying, "No, I think you have to have the strategy first, and the culture can then follow from that, or support it."
Michael Small: Ah. You’ve got a chicken and egg situation.
Exactly. He was a big believer that strategy came first and I was the one who said that culture came first. Any thoughts on that?
Culture is definitely important. I think you have to know where you're headed, what you're trying to accomplish. At Gogo, we're connecting planes. You need a strategy to do that. We have to develop world-class network technology and figure out how to get it on the planes. Then we figured out how to make it useful on the planes, to an airline or an aircraft operator. We have strategies on how to execute that.
Then you have to figure out who needs to come along for that ride. If I don't have the employees, the investors, the airlines and the vendors all participating in that, I’m thinking, "Investors are a problem for me these days. They're not too thrilled about our plan. I’ve got to figure out a way to change that."
Once you figure out who needs to be in the car on this ride, then you got to prevent them from fighting in the car. I think that pertains to culture, values, ethics and how you actually work. Culture is very hard to change and manage. If it's screwed up, it'll undermine everything, but I still think the culture is highly dependent on what you're trying to do and who needs to be doing it.
How does that question play out at Gogo?
Ultimately, you have a culture by default. You can argue it's good or bad, whether it fits or it doesn't fit. When we try to optimize the culture, I hear half the employees saying, "Move it this way," and the other half saying, "Move it that way." Guess what? From their perspectives, they're both right.
I think culture is hard to change, but ultimately it's a choice of how you manage it. It has to interrelate with the nature of your business. It just can't be because you like the culture because that's just the CEO's preference.
In my book, Being A Leader With Courage, there's an exercise that I use when I interview people. It isn't "tell me about the culture." It's "tell me what's not tolerated here." That's an easier question for most people to answer.
Actually, people challenge me on that. We do have a whole bunch of individual contributors at Gogo who are inventing great things as individuals, but we also have extraordinary harmony. Our core values are to be mission-minded.
You're signing up here because you want to do something hard and you want to connect aircraft. You're not doing it because you want a comfortable work environment or predictable hours. You're a bold problem solver, where it's not obvious how you fix this problem and you've got to solve this problem. You're performance obsessed. You're not going to quit until you win.
What ultimately isn't tolerated around here are people who just don't have the raw talent. It's too dynamic and difficult. You could argue whether that's a culture issue or not. It would be like putting me on the NBA floor. It doesn't matter what the circumstances are – with my lack of talent for that environment, it’s just not going to happen.
You need people at a minimum who are dynamic and equipped to work in a sometimes chaotic environment, willing to work flexibly and well with their colleagues. At the same time, each individual is asked to be a bold problem-solver. It's a real tension. Some people fail because they can't produce the winning shots, the bold problem-solving and some people fail because while they're doing that, they're doing it in a way that's causing too much carnage with their teammates.
I think I know what you mean by “carnage.” If you're a professional services firm, it's a rainmaker or brilliant individual who doesn't get along with others. The carnage in their wake is just amazing. There's this tension between “do I keep the high performer” on one end of the spectrum and “what's it doing to the rest of my team?” on the other. To win for the long-term, they ultimately decide in favor of the team and the culture.
Yes. When you’re so concerned with team chemistry, one person can take it south really easily, not just the CEO.
My first experience with this was a job running a cable TV operation down in Texas. The attitude of the whole place was terrible. There were 50 - 60 people in the whole organization but maybe 20 of them were in the office every day. One day, a customer service rep just announced she was leaving.
The next day, everybody was happier.
This was a front line employee in an office of 20. I don't even know how that happened, but the “one bad apple theory” is definitely true. I've seen that multiple times in my career. You’ve got to be careful of selection bias and hindsight to prove your point. A lot of times you make the change and it helps you. You tend to pat yourself in the back for the ones that worked. I think I'm constantly dealing with that issue every day, just like in the NFL Draft or something.
It's only in hindsight whether you know whether you got it right.
It sounds like you too err on the side of strategy first, culture second.
Slightly. However, you have to know, fundamentally, what you want to accomplish even before you have a strategy. We want to connect the world's aircraft with broadband connectivity. I think sometimes that's not as crystal clear. We've even had the question of, "Besides aircraft, do we do anything that moves? Do we do the cars, trains and boats, as well? Yes or no?"
I view the strategy as how to get there. You absolutely need a plausible plan on how to get there, that everybody believes in.
Are you talking about a vision and mission under which the strategy is then supporting it?
Correct. You need to know where you want to go before you decide how you're going to get there. If you're going to Grandma's, you can drive or fly or walk. But nonetheless, you still know you're going to Grandma's. I do think some companies literally have trouble getting the strategy right because it's not obvious what you really want to accomplish and put big boundaries around.
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