Company Culture

How Your Leadership Skills Will Determine Your Company Culture

How Your Leadership Skills Will Determine Your Company Culture
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This story appears in the March 2016 issue of Entrepreneur. Subscribe »
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Build a culture of teamwork.

In 2012, chef Niki Nakayama was living her dream, preparing traditional Japanese kaiseki feasts at her Los Angeles restaurant, n/naka. Then her sous chef quit without notice. “I had been accustomed to splitting tasks with him,” she says, but now everything fell on her shoulders. She dove in, preparing exquisite, labor-intensive meals of nine or 13 courses -- but with less leadership available, her minimal staff suffered. 

What was going on? The problem may have been culture. In traditional Japanese kitchens -- not unlike some traditional American offices -- subordinates are expected to watch and learn, rarely ask questions and never debate the head chef’s ideas. “I am not a great teacher,” Nakayama admits. That’s why the loss of her sous chef was so acute: The staff had lost a certain kind of leader, someone who could “speak Niki,” bringing order to her creative chaos and translating her instructions for everyone else. Nakayama couldn’t fill the hole herself.

She came to a realization: Everyone should be aware of their weaknesses and overcome them as a team. Nakayama fixed her own problem by hiring Carole Iida, a fellow chef whom she was dating at the time. Where Nakayama was messy and spontaneous, working off the top of her head, Iida was organized and reliable, and could guide the staff. “She brought in her organizational abilities, and we were able to put everything together for other people to understand,” Nakayama says.

As a result, the 2016 Zagat guide has awarded n/naka the top spot for food among L.A. restaurants, a dramatic rise from eighth place the year before. Now Nakayama encourages all her workers to focus on their strengths -- “to pull out that best part of ourselves and just contribute that all the time, without spending too much time trying to fix the weaknesses that we have,” she says. “It’s far more productive in a team environment. It’s knowing and respecting each other’s strengths and weaknesses that makes a great team.”

Build a culture of rigor.

The Santa Fe Institute, an extremely well-regarded nonprofit research center, sets a high bar for scientific inquiry. The more than 250 researchers affiliated with SFI are investigating the fundamentals behind the world’s biggest problems -- cancer, fast-spreading viruses, global economies, you name it. And its president, accomplished scientist David Krakauer, knows one thing for sure: When working with all these great minds, he cannot always be the smartest one in the room. He sometimes thinks of himself “as a colonel leading an army of generals.”

So how does he lead them? “The authority of my position is not worth shit,” he says. “When I’m talking to someone who is more accomplished than I am, my opinion is not the most compelling argument. The most compelling argument is rigor. You have to speak the language of rigor.”

Speak the language of rigor. That means supporting every idea with observation, evidence and analysis -- and maybe even conducting experiments to determine the best course of action. It means trusting a clear, quantitative approach that everyone can understand. And it means not using language that’s limiting. Here’s a phrase Krakauer hates: “That’s not how we do things around here.” No. He is adamant on this point: Anyone caught uttering that phrase, he says, “should be put down.”

Like scientists, business leaders should wield evidence as a tool of persuasion, Krakauer believes. He quotes physicist Richard Feynman: “Science is the belief in the ignorance of experts.” It’s a hard lesson to learn, but a necessary one: Your gut instinct is not sufficient. If you want to persuade top talent to follow your lead, you’d better be able to back up your arguments with more than your job title.

Build a culture of inquiry.

Contently, a tech startup that helps Fortune 500 companies and other brands do content marketing, was founded by three guys in New York in 2010. That trio has since grown to a staff of about 100. And along the way, cofounder and chief creative officer Shane Snow feared a disturbing change: The energy driving that growth -- that scrappy, do-anything attitude -- could easily cool. Employees might become timid in large groups, afraid of earning the ire of the majority. “Most people and most companies reach a plateau at a certain point, and at many points,” says Snow. “It’s crazy how quickly even a disruptive, rebellious startup can get to the point where they say, ‘That’s not the way things are done here.’” (There it is, that phrase again.)

So Contently made sure not to let that happen.

For example, Snow limits meetings that involve problem solving -- where employees really need to speak up -- to three or four people. And challenges keep Contently’s big team feeling scrappy. For example, Snow often asks for “10X ideas” -- say, “How can we improve customer happiness by 10 times?” Employees are game, he says: They do want to keep things fresh. A leader’s role is to create the right opportunities.

Time for another forbidden phrase: “Don’t bring me problems; bring me solutions.” Leaders use that phrase because they think it inspires employees to take initiative, says Adam Grant, a professor at the University of Pennsylvania’s Wharton School and author of Originals: How Non-Conformists Move the World. But instead, it teaches employees not to speak up about a need unless they have a proposal for fixing it. “When you ask for solutions, you create a culture of advocacy rather than a culture of inquiry,” Grant says. “Most creativity, most innovation happens when somebody points out a problem that’s not yet been solved.”

Snow wants to hear it all. He and his cofounders set aside a few free hours every week so any employee who wants to chat (in or, preferably, outside the office) can do so. It’s an invitation to hear about those problems that are in search of solutions. “When someone brings in a perspective that hasn’t been heard yet,” Grant says, “it often forces you to reconsider your decision criteria, to bring in new information -- and that ultimately is good for your process.”

Build a culture of accountability.

Bridgewater Associates is the world’s largest hedge fund, managing $154 billion in assets for sovereign wealth funds, corporate and public pensions, foundations and university endowments. Its founder, Ray Dalio, is widely seen as a financial genius. And yet, after a meeting with a potential client one day, an employee several levels down on the org chart fired off a blistering email to Dalio. He accused the boss of being unprepared and disorganized, and gave him a grade -- D-minus! -- for his behavior. 

“I don’t know many organizations where you can send an email like that to the billionaire founder and keep your job,” says Grant, the Wharton professor who shared the incident in his book, Originals. But instead of lashing out, Grant says that Dalio asked others who had participated in the meeting to assess his performance. The email exchange was then forwarded to the entire staff, effectively turning Dalio’s misstep into a case study.

This is how Bridgewater’s culture works, according to Grant: Everyone is accountable to everyone. The staff is expected to routinely rate coworkers on a range of 77 qualities, including some -- like the willingness to touch a nerve -- that might not be prized at other companies. The firm’s 1,500 employees can even assess their bosses, and the more incisive the critique, the better. And all this data, including the name of each person who left feedback, is available to any employee.

It’s extreme. It wouldn’t work for most companies. Thirty-five percent of new hires don’t make it past 18 months. But consider what Bridgewater is going for: It wants employees to feel that hard work is recognized, and that the company values transparency. Find ways to bring those traits into your workplace -- because when an employee feels comfortable enough to challenge you, and you’re able to turn that into a lesson in leadership, then you’ve created a culture in which everyone can do their best work.  

Edition: December 2016

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