Leaders have tremendous power to guide the actions of others. At the core of that power is what leaders value and how they act to reinforce those values.
Growth comes from leaders who pick the right values and reinforce them through their own behavior; their choices of whom to hire, promote, and fire; how they set goals and encourage people to achieve them; and what they learn from success and failure.
A case in point is Nutanix, a San Jose, Calif.-based maker of data storage technology, that has grown at an average rate of 186% in the last four years and went public in October 2016 -- valuing its $445 million in 2016 sales at $4.5 billion on November 23.
Nutanix CEO Dheeraj Pandey has created a culture that blends humility in the face of its customers with bravado towards rivals. As Pandey explained in a December 2014 interview, empathy for employees, customers, and partners is the key to the company's phenomenal success. Said Pandey, "Empathy for individuals can lead to great things. First is employees. They are fully in the company, they signed on. Second is customers--they signed on as well. Third is partners who can benefit from network effects."
Nutanix creates a sense of camaraderie among its employees. According to Pandey, "We use Yammer as a way to keep our organization flat. We operate in 28 or 29 countries and our people can communicate with others at almost any time of day. Even though they don't see each other in person, they feel close."
It's not all sweetness and light -- Pandey seeks to give customers more value than competitors do. As he said, unlike in the past, customers have 50 competitors from which to choose so Nutanix must "have empathy for customers, and give to them before it can expect to get." There is a kind of schizophrenia at Nutanix. "We are humble in the presence of our customers and aggressive with the competition," Pandey explained.
Culture can also sabotage a company's efforts to grow. Consider IBM -- which has suffered 18 consecutive quarters of declining revenues. IBM's greatest CEO, Thomas Watson, Sr., set three IBM values: respect for the individual, the best customer service in the world, and excellence.
Sadly, IBM has acted in ways that are inconsistent with those values -- pushing out employees to meet quarterly profit targets, clamping down on employee pay and benefits; outsourcing customer service to lower-wage countries -- thus forcing customers to struggle to solve their problems, and developing products based on internal IBM requirements yielding delayed products that lag rivals' in creating value for customers.
Here are four ways to make culture work for your company's growth.
1. Pick the right values
Values are mere words -- but they have the potential to shape actions. Yet it's not obvious which values will help a company sustain above-average revenue growth.
The right values are different for every company. But Nutanix's values reveal three tests that can help any company pick the right ones -- simply find the intersection of three sets of values:
- Values in which the CEO believes passionately
- Values that current and potential employees find inspiring
- Values that motivate employees to deliver better products and service to customers
Given Nutanix's rapid growth, you should check whether your company's values pass these three tests.
2. Walk the talk
It was not obvious to Enron CEO Jeff Skilling that he and his people needed to follow all of its wonderful-sounding values. As I wrote in Value Leadership, Skilling had read that companies with flowery sounding mission statements had higher price/earnings ratios. And Enron people behaved in ways that were in diametric opposition to those values.
If you want to sow cynicism in your employees, tell them you value individuals, great customer services and excellent products -- then do the opposite. If you want to inspire employees -- demonstrate by your actions and by the stories you tell employees that you believe in those values.
If you don't act this way, you are endangering your company's future -- or you need to change your company's values.
3. Attract and reward talent that fits the culture
One of the most fundamental ways to put meaning in your company's values is to use them in hiring, rewarding, and managing people out of your company.
One CEO who does that is Justin Moore -- CEO of infrastructure as a service provider Axcient. As he told me about five years ago, he has interviewed "thousands" of people and hired about 80 at Axcient. And he starts off the interview by asking potential employees to tell him the values they would like to see in the company where they work. Moore then discusses Axcient's values. If there's a good match there, the candidate is likely to proceed. If not, Axcient is likely not to pursue the process.
If you don't use values to attract and reward talent, you are likely to produce an organization that will not outgrow your industry.
4. Use process to reinforce culture
As an organization grows, it adds new people who only dimly understand its culture. To make sure that new employees understand and act in ways that align with culture, leaders must create processes -- and spend 20% of their time following those processes believes Moore.
What Pandey said about using Yammer to keep people connected across 28 or 29 countries is essential to sustaining Nutanix's culture.
Another example is Gradifi, a service that helps employees pay down their student loans. Its CEO Tim DeMello accommodates work-to-live Millennial employees by focusing them on outputs -- weekly accomplishments, rather than inputs -- the number of hours people spend in the office.
Follow these four principles and your company's growth should accelerate.