CEOs and the Company Cultures They Create

Over the past couple of weeks, the culture of one particular company has been almost permanently in the tech news. Uber has hit the headlines again and again since one of its former employees shared, in a blog post, her experience with harassment and discrimination as a female engineer. These stories highlight just how powerful a thing company culture can be, for better or worse, and the extent to which the tone and culture of a company is set by a CEO, whether actively or passively.

Uber’s CEO Travis Kalanick is in large measure responsible for the company culture at Uber and he’s set the tone for it from the beginning. As a single man, he’s boasted in the past about sexual conquests enabled by his role and has a reputation for being combative, aggressive, and impatient – qualities which have arguably served Uber well in its rapid growth and competition with players like Lyft. But those same qualities have also created some of the toxic culture that now exists at Uber and his personal combativeness got him in trouble this week when a video of him arguing with an Uber driver was released.

Kalanick has set the expectation that growth and ultimately “winning” is the single overriding goal at Uber. Everything else is secondary or even irrelevant. As such, even without ever explicitly stating women shouldn’t be treated with respect, that sexual harassment or discrimination reports should be ignored, or Uber shouldn’t hire more women, he has set expectations that have prioritized performance over employee welfare. He may never have even considered the impact his obsession with winning has had on these other aspects of Uber’s business but that’s precisely why such a CEO can be so dangerous for company culture. A good CEO needs to be aware of all facets of the business and to surround him or herself with other executives who will represent the interests of the various stakeholders in the company.

Even when not creating cultures toxic to women or other groups, CEOs have enormously powerful impacts on the companies they lead and the cultures they foster. That influence can be positive or negative (and sometimes both – Steve Jobs was legendary for his exacting standards for products but the way he communicated his dissatisfaction was often abrasive and upsetting to colleagues whose work was deemed inferior). Jeff Bezos at Amazon is arguably a strategic genius but both white and blue collar employees at his company have complained about unreasonable working conditions.

Culture can also be a tough thing to change – I’d argue Kalanick’s biggest challenge, once the semi-independent investigation concludes, is going to be making meaningful change to the corporate culture. That won’t work if he doesn’t begin modeling better behavior himself. All the official policies in the world don’t make a lick of difference if the people at the top don’t demonstrate, by their behavior, they will abide by them and expect others to do the same. It remains to be seen whether Kalanick is capable of the kind of personal change he seems to finally accept he needs to make following this week’s events.

However, it is possible to change company culture. I’ve already mentioned Steve Jobs and it’s worth looking at the subtle ways in which Apple’s company culture has changed. There are certainly far fewer stories about employees being berated or belittled, while the company has made a far greater commitment to being a force for good in the world beyond the role its products alone play. Tim Cook has weighed in on social issues, used Apple’s money to advocate for causes, massively increased the company’s environmental efforts, and more. But yes, there are occasional rumblings the company doesn’t innovate or has lost its focus somewhat over the last five years too.

Another example of perhaps more dramatic corporate cultural change is Microsoft, where Satya Nadella appears to have presided over a significant transformation in the last couple of years. Steve Ballmer’s Microsoft was legendarily a fairly cutthroat sort of place, with stack ranking an important part of employee evaluations, lots of empire building and working in silos, and little collaboration between major units. Under Nadella, a more collaborative culture has emerged and that new culture has already begun to bear fruit in the form of new products and services and something of a return to growth. Perhaps most importantly, Microsoft is now being perceived externally as a company once again capable of innovation and creating great products.

I’m conscious that all the CEOs I’ve mentioned are men and all but one are white men. The lack of diversity in Silicon Valley becomes more acute the further up the corporate echelons you go and, at the top of the largest consumer tech companies, there are very few women. Marissa Mayer is a rare exception but her tenure at Yahoo is coming to an end and Yahoo has certainly had its own cultural challenges under her leadership. But, at many of these companies, there are at least some female leaders in the upper ranks, from Sheryl Sandberg at Facebook to Amy Hood and Peggy Johnson at Microsoft, and Lisa Jackson and Angela Ahrendts at Apple. It’s probably no coincidence that some of the company cultures most hostile to women are those with the fewest women in senior roles.

Cultural change is possible, but the CEO has to be part of the change rather than part of the resistance and can’t merely pay lip service to that change either. If employees, contractors, and partners are to be treated well, that has to start at the top and the message has to be that each of these stakeholders is important in their own right and not merely as a means to an end or pawns to be sacrificed in the pursuit of some other objective. It is absolutely possible to build companies which put up huge numbers, especially in the short term, in spite of, rather than because of, how they treat their employees. But it’s rare to see a company that wins the ongoing support of both employees and investors with a lousy set of corporate values.

You might also want to listen to this week’s Podcast, where Ben and I discussed some of these same issues.

Published by

Jan Dawson

Jan Dawson is Founder and Chief Analyst at Jackdaw Research, a technology research and consulting firm focused on consumer technology. During his sixteen years as a technology analyst, Jan has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. As such, he brings a unique perspective to the consumer technology space, pulling together insights on communications and content services, device hardware and software, and online services to provide big-picture market analysis and strategic advice to his clients. Jan has worked with many of the world’s largest operators, device and infrastructure vendors, online service providers and others to shape their strategies and help them understand the market. Prior to founding Jackdaw, Jan worked at Ovum for a number of years, most recently as Chief Telecoms Analyst, responsible for Ovum’s telecoms research agenda globally.

9 thoughts on “CEOs and the Company Cultures They Create”

  1. Your two examples of changes in corporate culture, Apple and Microsoft, occurred when a new CEO took over. Not so subtle hint as to what really needs to happen at Uber for the toxicity to evaporate, eh? I happen to agree.

  2. The way you describe Kalanick – he is a strong, powerful man with an insatiable desire to win – a quintessential American. The stigma is Americans hate losing. I am watching a documentary now “An untold history of the United States” and it is about that. Numerous presidents since the World War II lost the chance to stop the cold war and bring better life to a middle class just because they wanted to win at all costs.

    Do you say Kalanick is single? May be he needs to get married and have children to expose his softer side.

  3. Poor company culture and business success need not be mutually exclusive.There are numerous companies where both prevail, including Salesforce, Facebook and Google. These are are all highly successful companies where the leadership and culture have contributed to their success. Kalanick’s poor leadership is really a dereliction of the responsibility that a CEO has to build a strong foundation for the company to grow upon. And, while he may not know better, his board and investors do, and they have to be faulted for tolerating such abhorrent behavior.

  4. Regardless of what the Citizens United ruling says, corporations are not people. People are bound (or not) to moral, religious, and other societal rules. Corporations suffer from no such restrictions. Which simply means we should not treat them (emotionally) as people.

    Removing the restrictive assumption that they are to be treated as “neighbors”, I just feel free to prejudge and consider all corporations jerks until proven differently. They owe me no moral obligation beyond the law. None have risen to the level of respect I reserve for actual people.

    If we are to discuss Company Culture, then let’s honestly set up the rules of engagement.

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