00:36 Marcin: Hi, my name is Marcin Kokott, and welcome to Product Odyssey, the series where we explore how to build digital products fundamentally better. Today we'll be talking about something that is never on top of the to-do list of a founder or CEO, which is organizational culture. Why is it important? Should I care about it? Should I think about it as my responsibility or a partner that I collaborate with, and how can it impact my business? Let's begin. Hi Mike. Hi. So let's start with something obvious.

01:07 Marcin: It's a buzzword in most situations that we discuss. Let's define it clearly. What is culture in your opinion?

01:14 Mike: Culture is not just those three or five values that you put on your website. Of course, they're important; they define what's important for you, how you define your company, and basically your values. But the important part is also how things happen in your company. This is something that culture very clearly defines. There are procedures that tell you how to do certain things. There are tools, but very often culture is a catchall and is really the driver of how things happen in your company.

01:48 Marcin: Right? So it's like the tip of the iceberg, right? We see the values, which are just a manifestation of a marketing thing that we use, but a manifestation of everything that is happening behind. What you're saying is it's the processes, the procedures that you have behind it, and the secret sauce of why and how people are doing things the way they do.

02:09 Mike: Yeah, exactly. It also changes with time because in order to have a good working culture, in the end you will have certain tools, certain things that are embedded in your company, certain mechanisms. With time, you need more and more of those mechanisms. With a growing team, at first it's mostly just you and how your culture looks.

02:32 Marcin: Right? Okay. So we are moving away from the buzzword and closer to understanding what is behind it, and it's something really concrete. Why should I care and what could be the impact of having a good or bad culture?

02:48 Mike: I would say that there's really no good or bad culture, but rather the one that is a better fit for a certain role. For example, if you have an application that has a huge technological debt and you cannot do anything about this, you need a certain culture. If your application is written in Cobol, you probably need a certain culture that is adjusted to this. On the other hand, if you are building an innovative product, you want to iterate quickly, you want to navigate the digital vortex and basically change things as you get answers from the market.

03:24 Mike: You need a different culture. I would gladly talk about the last case because here I feel that there are certain things that may be overlooked.

03:37 Marcin: Okay, but before jumping into that, you've mentioned something really concrete. The fact that there are different cultures for different use cases or situations. But before jumping into those types, is there any kind of short description or sentence that could justify what could be the bad impact of the culture I will select, or what could be the worst-case scenario if I overlook my culture?

04:04 Mike: I would say that culture is the one and almost only factor that is fully under your control and that can be your competitive advantage. In my experience, it helps you in two cases: one where you have a crisis, for example, and then procedures and tools stop working. This is when actually the culture starts to catch and really defines how things happen.

04:36 Mike: A good culture can really save you in this situation. One example that I can tell you is we worked with a client during the pandemic where we were building a tool for handling digitalizing the disco industry in Germany. When the pandemic hit, the whole market disappeared. That's when you are in chaos and you need to define quickly what to do.

05:07 Mike: I think that it's because of the culture that we were able to really iterate quickly, to really talk with the team, to come up with ideas to suggest to the client how we can go forward.

05:19 Mike: The whole team had a proper culture; business and technology got together and we were able to innovate quickly and come up with an idea. Let's service big events in Germany, big open-air events, which was a hit. If you don't have a culture that fosters innovation, fosters discussion, proactiveness, openness, then you wouldn't be able to do such a huge pivot in a short amount of time, for example. So that's where if you have a proper culture, you can handle the crisis.

05:54 Mike: Another aspect is you want to have good quality in innovation. If you have an innovative product and you want to go quickly change things quickly, then you also need high-skilled people that are proactive, that take ownership, they take accountability. Probably the best people in the market that want a high vector of growth. They want to develop themselves, they want to have an impact on the world, on your company.

06:28 Mike: That's also something that won't happen on its own. You can get a great person to join your team, but if you want this person to stay in your team and to really contribute, to really use their contribution to the fullest, you need a certain system and a certain culture that will allow this person to be efficient.

06:49 Marcin: Great examples, the crisis example and the innovation. But somehow, I can challenge that a little bit because it sounds like if I have the right people who will talk to each other, that is the secret sauce. Is it so, or is there something behind that?

07:04 Mike: That's one important aspect. There are, of course, multiple tools that embed culture in your company. At first, I would say that very often it's about you, about how you feel you should work, what you value. The leader or founders of the company very often convey the culture at first and that's okay. Then you get the company that is adjusted to your culture, to how you want to operate at some point.

07:38 Mike: The important part is whom you hire because the first people that you hire, that's the important part. They will convey their culture as well. They will have a big impact on your company. Here very often you overlook this because you want to tackle certain problems and you have certain challenges. So we're searching for people that will help you with those challenges.

08:01 Mike: If you recruit people who have the wrong culture, this will really influence your business in the midterm, even in the short term. So the hiring is the second one. At some point it's also important how you build leadership in your company. If your team grows and you have not maybe seven people, but maybe 10, 15, then you need leaders. You won't be able to care for the culture on your own. So at that point, it's important how your leaders convey the culture, what's happening there.

08:35 Mike: Already at this beginning, at this first stage of the company, I feel that it's important to look into the culture because here you can make mistakes that will be hard to adjust to in the future. One thing you can do is talk with someone who knows how to build a culture. You can really understand what you should do. There are multiple mistakes that you can make. The important part is when you don't focus on building the culture, it still happens.

09:13 Mike: You build a culture that is invisible that you're not conscious of.

09:18 Marcin: You've mentioned lots of good points and even hints on how I can approach and think about it. The three that I've noted the most are the fact that hiring the right people is key for building the right environment and right reactions and that's a cornerstone. But you've also mentioned that you need to think about it at the start. That's something I don't get fully because naturally what you would think as a startup owner or as a CEO is I need to build a product, I need to make money, I need to select the architecture.

09:56 Marcin: It sounds like the culture would be something that I would think about if I have 50, 70 people and I will have an HR and pizza party. That doesn't fit here, right? Is it something that I think about already right now?

10:08 Mike: Yeah, I would say, you know, definitely you first need to know what you want, what you need to build a product. Here, you don't need culture, you need the outputs of the culture.

10:21 Marcin: Right.

10:21 Mike: One thing, you want great people, you need a certain culture. You want proactiveness, you need a certain culture. You want certain values because if you don't focus on this at first, you will not have this and this will come out of your culture. You may be not aware of this, but this may happen.

10:44 Marcin: Oh yeah. So there are two other things that are very important and I have in my head the picture connecting those. One thing you've mentioned is that we need to think about it from the beginning because if you don't think about it, the culture will build itself. You don't have control over that. This is something that if you set it up, it's hard to change. Like with architecture, if I set up the wrong architecture, I'll have limitations and it's very hard to change it after that.

11:13 Mike: I have one interesting example here. I know about one company where at some point when the company was already big, the owner of the company was surprised why certain decisions were made in a certain way. In the end, he hired a coach that introduced nonviolent communication to the company. At that time, he learned that the decision-making process in the company actually boiled down to meetings that were organized with him.

11:51 Mike: He had a tick in his eye and people interpreted it as whenever he had a tick, he was not happy with the decision. You can have an unconscious culture that is being built that you are not aware of. So it's good to really at least monitor this from time to time and at least know the basics.

12:13 Marcin: Oh, so I need to be aware of the culture at least. I don't need to build it specifically, but at least be aware of what kind of culture I have.

12:23 Mike: It's like planning everything in an IT product. You don't need to do everything at once, but at least be aware of when you need to do certain things so that they deliver you the value.

12:37 Marcin: You’ve mentioned that this CEO has this tick, and previously we discussed that you need to, as a founder, you need to think about it as you are the first person who is actually starting the culture. If I'm the leader, I'm creating the culture either through thinking about it or being unaware of it. Are there any hints on how I should build it or how I should start to think about it in the beginning?

13:10 Mike: I would say that it's good to start with defining values. In my opinion, you don't need to do the workshop approach and standard approach of defining values, but rather think on your own about what you want to get. For every value that you get, it's not just advantages, there are also disadvantages. Just like culture isn't good or bad. You want to adjust the values to how you want to operate and also how you want to build your company.

13:43 Mike: A good example is you may think that, for example, the value of growth, giving people growth options to grow their career, to grow their expertise, to grow the business they're in, is just positive. But it also has some negatives.

14:01 Mike: For example, if you give this growth promise to people, if you get people that want to grow, and in the end, you will end up building some product that is plain boring, doing just the things that were done before, maybe in boring technology and without options to change things because maybe you have some constraints put on you from outside, then people will start leaving your company or maybe you won't use their potential.

14:33 Mike: It's always advantages and disadvantages with every value.

14:40 Marcin: Right. You've actually made the circle to the starting point that we've discussed that there are different cultures that I should implement based on the different situations or businesses that I'm in. That's actually interesting. Can you elaborate a little bit more about how I should decide about the culture and its connection with the business that I'm in?

15:01 Mike: There are so many options, needs, and goals that it's hard to have one answer. What I would advise is there are multiple great networks of people that focus on culture. If you are not sure about what to choose, it's good to talk. That's also what we did at the start of the company. That's also something we discuss with people from time to time. I would really advise doing this because you can get great tips that are adjusted to you. If you don't have a network like this or if you want to focus on this more, you can use consulting.

15:36 Mike: There are people that can advise you, and you don't need to buy a huge onboarding process of culture into your company. You can buy a few hours to talk.

15:50 Marcin: Right? And especially you don't need to go in the direction that it's a soft thing, right? Like the nonviolent communication training or let's train for culture and marketing and values. It's also concrete things like procedures that you can implement or ways of how you do certain things.

16:07 Mike: That's more and more important when your team grows. At first, it's just you and a few people, and you can handle things most of the time. But when your team grows, it's good to look at culture in a more conscious way. At some point in your company, you will get culture that is embedded into your procedures, into your tools, into other aspects of your company that will enforce the culture.

16:39 Mike: There's one great thing that a good culture is hard to describe, but culture is easy to describe, but then it doesn't work very often. Some things in your company, if you define the culture well at first, will just start appearing. The things that are fairly easy to pinpoint, like first thing, you need to have a reputation promise that is in line with your culture, that is unique and actually describes you and your company.

17:11 Mike: Then you can get people who believe in this. You get people who are driven by your culture. They're more engaged, they really feel that they're in a good place. That's important. But just the reputation promise is not enough because at some point you also need to make sure that this promise is fulfilled. You need to monitor this. You need to make sure that whenever, for example, someone breaks the culture for some reason because your team grows, maybe you have a few people and then something happens and you recruited someone who doesn't operate according to the culture.

17:46 Mike: What do you do then? You need processes that give feedback to people that verify if they're working according to the culture. At some point, you need processes to make sure that your leadership, and leadership is used in a very loose term.

18:06 Mike: It's not about some director but leadership that you build within your company. Ideally, everyone could have some leadership within them, but how you consciously build this is another process that you need to take care of. There are other tools that appear with time. For example, you want to have a knowledge exchange process. Maybe you want to have a culture where you have a few teams and you want to make sure that those teams exchange knowledge between each other, that you have this innovation, that you don't have silos of information. That's another process and another mechanism that you need to set up in place. There are multiple things like this that you omit at first and then at some point when the company grows, you need more and more.

18:57 Marcin: That's fascinating because what you're saying right now is that we've moved from talking about culture as something as a soft thing to actually building processes. We talk about processes a lot because it seems that culture is a result of conscious processes that we implement. Like you mentioned the recruitment promise. So you work on recruitment in a specific way to implement that. You also work on the process of knowledge transfer or the building of leadership, which is a concrete process that you need to build and think about and define. It sounds like it's not only a soft training, it's about hard work to build.

19:37 Marcin: It's like you define architecture and an agile way of working. You also build processes based on what we call a culture as a buzzword, but focusing on the result of what you want to get.

19:50 Mike: Yeah. I feel that for us, for example, it took probably two years to really get to the mechanisms of culture that we wanted. That took some time, that took a lot of discussions. Then after that time, it's also a continuous process where you improve things, but you usually improve things where this gives you the value where you feel like, okay, I'll introduce this process in order to get this result. Then it's a constant approach.

20:22 Mike: With a growing team, your needs change and you get more and more challenges.

20:29 Marcin: So you can fine-tune it, you can actually make it better. It sounds like you have a service or a tool, so it's culture as a service, right? Almost, or culture as a tool that we use.

20:39 Mike: Yeah. It needs to pay back, it needs to give you value. You can get this: great people, engagement, understanding of business. When you get people that really understand the business of the project they're working on and they can give you insights that change your business, that's when it pays back. We had one situation where a developer felt a little bit burned out on the project because there was a lot of repetitive work. This was a really great architect with a lot of skills, and we thought about what to do with this.

21:27 Mike: After talking with the client that we were cooperating with, we decided, okay, maybe let's give him some breathing room, something that would allow him to feel a little bit better.

21:39 Mike: We told him, okay, maybe let's not focus on things that you're focusing on. Tell us what you like, what you feel would be important, what you would like to do. He decided, okay, and that was in 2020. He said, okay, maybe I'll focus on the AI algorithm for optimizing reservations on the system. It was his pet project that basically came out of his need for having an impact and really changing things.

22:15 Mike: In the end, it turned out to be a critical feature that really transformed the business. That was an example of the culture that first didn't work because we didn't fully use the potential of this expert. In the end, it also changed how we did things that really built this impact.

22:37 Marcin: That was not the gut feeling, right? That was the process or the system that actually led you to asking even that question and thinking about that.

22:45 Mike: That was the feedback process, and that needs to be regular because maybe we could have caught this by chance, but maybe he would just decide, okay, I want to leave the company, I'm burned out.

23:00 Marcin: Okay. So it's not only the process, but it's like you think about the results of the business. We want to foster innovation, we want to be prepared for the future. Therefore, if you want to have that, you need to have people who will actually think about the future and have time to do that. Again, to have that, you need to have the right processes and allow that. From the results, you define the mechanics or the engines that make it happen, right?

23:25 Mike: You need to build those mechanisms in a way that they don't customize, that they don't

23:31 Marcin: to optimize it, right? Yeah. You're mentioning 2012, 2010, 2020. If you move back, most of the companies have lots of time to build it. They would fine-tune it and they would actually be better. But it seems that it takes lots of effort, and especially you need to have experience to build it. Not only have a trainer that will come in and do a training, but you need to build it, fine-tune it, and have experience. If that's so expensive, if I'm a CEO or a startup owner, how can I think about that?

24:04 Marcin: Can I use a different company to help me in building that kind of cultural engine of growth, or can I outsource that even?

24:12 Mike: Yeah, definitely. I would say there are a few approaches you could take. Maybe you have amazing people that know how to build culture already in your team. You can handle this on your own. If not, you can think about getting a person like this, planning the time for this person to really build processes, discuss how it should be done in time. If you don't have this or don't want to invest in this at first, you can also use networking, you can communicate, and then you will tackle some aspects of culture. You will avoid the biggest mistakes if you talk with other people, and there are multiple communities that are great for this.

24:50 Mike: Another approach is you can get a consultant to talk to, to really help build culture. You can also have someone who will actually do the introduction of the cultural mechanism to your company.

25:05 Mike: It'll take time. It's also expensive. Another approach is to use another company that already has a culture set up. That's something that is sometimes overlooked. You can get a company that will share their culture with you and their mechanisms so that you don't have to build everything from the ground up. You can start already running with the culture, using the mechanisms, for example, onboarding their team first and then introducing your people and then transferring their mechanisms to your company more and more over time.

25:46 Mike: There are companies that are happy to actually do this, to really transfer their systems, their engines into your company.

25:57 Marcin: That's interesting because if we take partners, in most cases we are taking care of how they work, what kind of process they have, if they are agile, if they're lean, or what kind of architecture they use. Sometimes we think about how they hire because we need to have the right people, but then in the end, we rarely think about what kind of engines for a culture they have and if I should even care. What you're saying is that I can actually focus on that and even learn from it or copy it or be influenced.

26:28 Mike: Yeah, exactly. It's hard to copy things just by taking the output, but when you have someone who first introduces this in your company and shows you how we do things, and then explains to you why we do this this way, then it's much easier to copy this into your company, to modify it to your needs, and to have something that is really working.

26:55 Marcin: There is one question on that because we have talked about the thing that there is no good or bad culture, but definitely you need to find a culture fit and also you need to verify if what I'm saying is my culture, is in reality. Is there any way I can verify the culture of the partner that I'm working with?

27:15 Mike: I would say that it's really important because whenever you start cooperating with someone, the culture they have can really help your business or in some cases really hamper your business. One thing is you can check their website, you can check their values that they put there, you can talk with the people that are in front of the company, like the owner or maybe salespeople, but then another thing you should do is talk with people that will be on your project.

27:51 Mike: If you ask the owner of the company, he'll of course describe the culture beautifully. That'll already give you an overview of whether it aligns with you. In the end, what you want to do is talk with people that will be joining your project.

28:09 Mike: Especially those, for example, that will be responsible for transferring some culture knowledge to you, but also the team. If you ask a developer, for example, how does your culture in the company look, you'll probably get an honest answer of the operational culture. Maybe he wants to know how all the mechanisms work, but you can verify the output of those mechanisms. Another thing I would say is test, because talking is one thing, but then you get the theory of the culture.

28:46 Mike: If you have a few companies that you're considering, just test how working with them looks and whether they transfer the knowledge fully, whether they are really true partners. That's a broad topic.

29:06 Marcin: Right. So I can test the culture, I can make sure that what they are saying is really there, or I can ask the question, how are you making that kind of value a reality? If you are saying you are innovative, you are thinking long term, what kind of processes inside, what kind of mechanics do you have that are making that happen?

29:26 Mike: Maybe an important part is that when you're talking with a potential partner, you should check whether they're conscious about their mechanisms, because they may even have mechanisms in place, but if they're not conscious about them, it'll be hard to transfer them to you. But if they know why things work this way, it's much easier.

29:49 Marcin: Yeah. You cannot improve something that you cannot see and you don't measure in one way. So also if we're talking about culture, I need to be aware. It's not a slogan, it's every engine that is behind it that is actually producing that. Either you're aware of it or not.

30:23 Marcin: There is one last thing that I had as an interesting area to actually focus on, and this is the case of you've mentioned the culture fit and that I need to have the same culture or a culture fit, which means either the same or a similar culture to work.

30:23 Mike: Not always.

30:23 Marcin: Yeah, exactly. This is probably the area that we want to experiment. When I want to intentionally have a different culture between me and a partner or a subcontractor that I'm working with.

30:35 Mike: I could imagine a few cases, and that's also something that we do. Maybe you have this one aspect of a project where you have old code you cannot change, and you need someone who will be okay with working on this code. Then it's good to find a company that is really good with this and that their reputation promise is in line with this. If you do it yourself or get a wrong partner, people get burned out. But there are companies that are perfectly okay with this.

31:06 Mike: On the other hand, maybe you need a specific culture to achieve a specific goal. For example, you may want to promote your product through open-sourcing or in the open-source community, or maybe you want to use certain open-source solutions. There are better cultures for this to make sure that people in your company will also be active in the community. That's hard to build, for example. It's also hard to build a team that could create great content. There are certain aspects where you can get a culture and have this in a small part of your company that will actually help you achieve a certain goal.

31:46 Marcin: You're mentioning the fact that different cultures for different endeavors or different goals, and I can imagine at least two examples of very down-to-earth examples of what will be the difference in this case. If I want to enter a new area, like a very specific AI area or a research area, probably I want to focus on learning. So it's not decision-making, not strict processes, but encouraging learning, starting from the low bar and going up.

32:21 Marcin: I can imagine the second case where the experience and elite level would be the culture that I'm after. Like if I'm in the legal area, I need to have the best and the best, and then there will be different processes that are supporting that. Any examples or any areas from your side?

32:40 Mike: It can work both ways. It's a good case with a compliance-heavy environment. You need a certain culture to handle this well and it can work in a way that you want to stay innovative, but you want to have this one part where you focus on de-risking things. Maybe that's not compliance-heavy, but that's risk-heavy when you are operating on blockchain and cryptocurrencies and smart contracts. You want to have a certain culture that's really focused on making sure that you don't mess up and it's really hard to build this in your company while staying innovative.

33:25 Mike: That's one good example. Another one is maybe you are a larger company that has a lot of compliance already and you feel like your teams are not innovative enough, that maybe you go slow. Then it's sometimes worth it for innovative products or even to test things for kind of an R&D approach to get a team from outside that will at first maybe do the research project for you or do the innovative project for you and in the end will allow you to transfer your own team into this small team.

34:02 Mike: Then you can have a more innovative team within your own company.

34:07 Marcin: I have a feeling that we have moved pretty well from the buzzword to actually point out specifics of what culture is, why I should care about it, and how I can even test it if I'm working with a partner or with another contractor. Let's try to summarize the most important things from your side. If you have three hints for a CEO, CTO, or founder, if they are thinking about culture, what would that be?

34:43 Mike: First, you need to know what you want to get from the culture. If you want to get great innovative people, great experts that have an impact on your project, that's actually an output of the culture. Know what you want to get and what environment you are in. Second, prepare a plan. At first, you can focus on certain things that are important, but know when it's worth it to invest more so that you get actually important output out of the culture.

35:14 Mike: Third, it's good to use the network, it's good to use the knowledge of others. You can go quicker and it's not necessary to already use an external team to implement your culture, but at least build a network, talk with people, know how to do this well, what works, what doesn't, and how the culture can impact your business.

35:37 Marcin: Amazing, very concrete points that I can think about. From my side, I would add that think about the culture as a spider if you can say so. With fear, if I don't know where the spider is, it's where we are fearing the most. Know how actually your culture is built right now. Be aware of that, don't ignore it because it'll be built even if you know it or not, and not knowing how it is built is the worst thing that can happen. The thing that you have mentioned also, and I'm building on top of that, is the fact that I need to define the culture differently for different goals in my business.

36:17 Marcin: The last thing is the fact that it's very hard to do, but it can be a competitive edge, a competitive advantage for you, especially in times of uncertainty and dynamic movement. It can be your safety net. If I'm building processes, values there, the culture there, people will react in a way that you would expect even if you are not there or you are moving extremely fast. That's a case for me why culture would be or should be on top of my agenda even though I'm starting with a business.

36:50 Mike: At some point, you can actually use culture as a tool that also has a good return on investment.

36:57 Marcin: Something concrete, right? Culture as a service as we have mentioned, or culture as a tool that should be somewhere as a service that should be sold on the market. But yeah, exactly, this is a concrete thing, not a buzzword and has a real result on your business and on your revenue. Great. I think that this is all in our episode right now. We'll be talking more about different things coming from it, but for today I guess it's covered from the topic perspective. Thank you very much for watching this episode.

37:30 Marcin: I hope you enjoyed it. If you have any comments, feedback, feel free to find us on the channels, YouTube, Spotify, or Apple Podcast. Feel free to drop us a note. For now, thank you and see you in the next episode.