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Scaling Culture with Jason Kilar | The Scaleup Offsite 2017



so my name is Jason I was asked to speak about culture and and I'm going to do it through two lenses my observations about culture and then really importantly for this day is my observations of how to efficiently scale culture and I wanted to share with you sort of the places that I have invested a lot of my professional time of the last 20 years and why that's influenced this talk today so so let's get right into that this is not changing but this is changing down here there we go so my career first gig was that Disney just for a couple of years after that spent nine years at Amazon Jeff Bezos was my manager I'll get into what I did when we get to that part was the founding CEO of Hulu for its first six years spent a lot of time on culture scaling culture etc and then founded and ran a company called vessel that we recently told to Verizon so let's talk about culture and I'll start with just a 15 second definition of what Webster considers culture this is the boring definition which is the pervasive values beliefs and attitudes that characterize a company and guides its practices I don't you know think about it in that way the way I think about culture is basically it's how we act when no one is looking in those late nights when you're working slogging through something and nobody's looking at you what are the decisions that you make what is your behavior and to be very very blunt for people in this crowd which are CEOs and founders it's really how you act when no one is looking you know is that the founding CEO of Hulu you know it was very you know clear to me that the culture of Hulu really was going to be how I acted a lot and when no one was looking because people model that over time and then it perpetuates and so it really is how you act when no one's looking and so so I'll leave it at that so I had a bit of an aha moment when I was a kid as to why what culture was and why the heck had actually mattered and could actually be very very important for companies that scale and scale successfully and so so here's just about 45 seconds of context I'm a Pittsburgh kid I was born and raised in Pittsburgh I'm one of six kid this is me when I was a kid and and and one of the things that was big for all Pittsburghers is this place called Kennywood Park and Kennywood Park is a local amusement park and this is the Jackrabbit this is sort of their iconic ride it's probably the center of the of the park it's not much to look at for those of you that have seen other theme parks or amusement parks but this was everything to me when I was seven eight nine years old and my family when I was about 10 years old actually went on its first vacation outside of the state of Pennsylvania and we hopped into our Chevy boville 12 passenger van which is what was needed to have six kids and two parents we drove all the way down to Orlando Florida and we went to the Magic Kingdom and I remember like it was yesterday that when we entered the Magic Kingdom this is what I saw and for those of you that have been to Orlando and have been in the Magic Kingdom you've seen this as well so this is the come out from under the train station and you see Cinderella's castle in this case looking beautiful and Main Street and it was life-changing for me and for a kid who had only had the context of Kennywood Park in the jackrabbit rollercoaster to see this and to see the design and to see the force perspective and to see the narrative and the storytelling it changed my world and again this was my context this is what I was used to and then to be able to see something so unbelievable at that quality it literally and this is no exaggeration it kind of for me set off a bit of an adventure to find out how is it possible that one company the Walt Disney Company could perform at a level that is so incredibly high relative to others like Kennywood Park in Cedar Point and all these other places that certainly had a business but nowhere near as amazing as multi-company so I did what most people would probably think is silly I did everything I possibly could to learn about Disney and then ultimately get a job at Disney so back then they did annual reports that you had to request through the mail and I would request in and reports all the time even though I wasn't a shareholder in college I did all I could to get an internship at Disney what finally landed me and internship at Disney was sending a comic-strip of myself to Michael Eisner in his direct reports and so this is the comic strip where back then there was a movie called Honey I Shrunk the kids and I basically used that as a narrative and I shrunk myself into the envelope and landed on Michael eisenerz desk and I used all the different instruments on his desk to demonstrate my unique capabilities and thankfully it got their attention and I got an internship and that led to my first job after school so but I mentioned all this just because I was so obsessed with how the hell this Disney do it how the heck do they create something at scale that is so much better than everybody else and there's a lot of reading answers to that question but I will say that a very very important part part of it in Disney's case was culture and and specifically you know there was three things and and this really is sort of what I hope to impart on you today during these 20 minutes which is Walt Disney was explicit about what he wanted the culture of the company to be he was very very precise about it it didn't happen by accident he was very very explicit the second is he walked the talk so not only did he talk about the values and principles of the Walt Disney Company he backed it up each and every day when people were looking and when people were not looking and then finally and this is probably the most important element for today's conversation given the the theme of the day is Disney God mechanisms and I'll explain what I mean by that just a second so what do I mean by saying that Disney was explicit he said this kind of thing probably 10,000 different ways again and again and again and again and this is as Reid was saying just now the repetitive nature of of communication is so bloody important as an operator as a CEO as a founder and he got this and so basically a thousand different ways to say attention to detail and quality matters so he was very very explicit about that second thing is boy did this guy walk the walk I'm sorry I walked the talk so it was legend that Walt Disney would pick up you know pieces of paper in the theme park anytime you saw it and it didn't take long for everybody in the company realized wow it sounds like cleanliness is really important for the Walt Disney theme parks and understanding that attention to detail is a big part of that so he walked the talk and then finally Disney got mechanisms and I want to stop guy by helping people understand what mechanisms are which is you know the way that I define it is good processes that can be repeated and deliver for and at scale because when you're as Sam and Reid were saying when you're a team of 30 good intentions are good enough but when you're a team of a thousand or 10,000 or 300 plus styles in is the cases with Amazon right now good intentions are a recipe for disaster and certainly failure you'd need to have mechanisms and so I'm going to just mention one mechanism that Walt Disney created which is Disney University and Disney University is dedicated real real estate you know both on the east and west coast Ford for Disney and in fact in all the theme parks around the world where anybody who works in the company goes to Disney University to learn the values and principles of the Walt Disney Company there's a whole lot of lore about Walt there's a whole lot of things about quality and attention to detail but it's just one of many mechanisms that scale whether Disney was a 5,000 person company or several hundred thousand person company as it is today that that is and will remain I believe a very very important mechanism for culture for Disney I thought I'd talk about something that's probably a little bit more relevant to everybody in this room today which is Amazon so I was in Amazon for nine years I joined when it was in practice when it was a private company for a period of time I mean the books music and video businesses and then ran what was called worldwide application software so did a lot of interesting things like the marketplace business there was incredibly smart engineers inside the shopping cart the organization that created and launched Amazon Prime fulfillment by Amazon just a whole lot of fun stuff but in 1997 Amazon was quite small relatively speaking and it was just a bookstore and this is a picture from 1997 of Jeff at that stage so I wanted to talk about the explicit nature that Jeff took to be very clear as to what were the values and principles of Amazon and so so he took the lead on writing 14 leadership principles and if you haven't had a chance to read the 14 leadership principles of Amazon is I encourage everybody to do so I think it's quite inspirational and it's a very good exercise in very precise writing and very economical writing Jeff is an incredible writer and he's very very good at you know kind of kind of communicating just enough but not too much and I think those fourteen leadership principles are probably the best example you'll find now the 14 leadership principles are very explicit they talk about what Amazon cares about what they don't care about they're not easy it's not motherhood and apple pie but it's very very explicit and as Reed and Sam were saying earlier a lot of companies do this they write wonderful documents they put them up on the wall in the lobby but the challenge is you have to live up to them each and every day and you have to figure out how to scale that across an organization and then Amazon from ninety seven through two obviously today a tremendous challenge has been scaling which is how do you go from a situation where good intentions is good enough to knowing that you're going to hit a wall because there's no way good intentions are going to scale to tens of thousands hundreds of thousands of people not this is just one of well over a hundred fulfillment centers and these are filled with team members just imagine those all over the world and needing to have a common sense of values common principles how do you do that but the short answer is you can't do it with good intentions and you absolutely need to invent and leverage mechanisms to do it and so I thought I would just share with you one that was particularly effective for Amazon for for many many years which is the just do it award now this might sound a little silly and to be very clear what the just do it award was is at a very kind of kind of big event which is the All Hands meetings people were given old smelly Nikes that that was the that was the sort of the the extent of the physical aspect of this award it was called the just do it award and you were given an old smelly Nike typically a former basketball players shoe to make it nice and big you know everybody in amazon wanted desperately to have this old an old smelly shoe in there you know on their door desk it was one of those prized possessions and and here's why the just do it award was given to anyone in the company it could be a new team member a long tenured team member senior person somebody right out of a college and it was given to somebody who basically had an idea that could move the company forward in a way that was consistent with the values and principles of Amazon and they did not ask permission and they just did it it did not have to be a successful effort but it had to exhibit good judgment values and principles that were consistent with Amazon and the notion of just doing it now there's a lot that goes into this this reinforces a bias for action which is one of the more you know very important leadership principles of Amazon it's a public celebration of people who are living up to the to the principles and the values of Amazon each and every day it might sound silly when you look at this old ugly shoe one of the most effective mechanisms to grow and nourish the culture of Amazon I'll give you one example of you know kind of you know two examples of the awards that were given out so one was given out to somebody in a fulfillment center I think it was in Campbellsville Kentucky and there was a woman who had an idea – in the spirit of frugality all the fulfillment centers always had coca-cola machines so during break you could go and get a coke she basically opened up the the vending machines in Campbellsville Kentucky and basically turned the fluorescent light bulbs just a little bit so they were out and because by her way of thinking we don't really need to have lighted coca-cola signs it's just fine if they're not lit because it's still going to be cold and so if we do that we can save some money every year on electricity and we can use that savings to maybe lower prices for consumers and this was rolled out across the world and she was given an old shoe and and it was like a really important moment for the company and when you go through something like that it is the stuff of legend Here I am talking about it ten years later that's how important something like that was so and there was another fun award that was given out to somebody who basically said listen I don't think we should allow you know at headquarters we were leasing a big hospital called a pack Med building and and having dogs in the office was very important but somebody who is well intentioned started a process of having the dog sign in not the dogs but the owners of the dog had to sign in when the dogs came in and and this person basically said this is ridiculous we have to abolish this etc and and I raise this one because this was as important because it elevated great action to basically fight bureaucracy and when you're scaling a company bureaucracy which is bad process creeps in each and every day and to be able to have mechanisms that celebrate the destruction of bureaucracy that's just as important as things that celebrate frugality and so just do it award was something that was incredibly effective for Amazon and I just bring it up perhaps to spur some ideas in your companies for how to think about scaling culture I want to mention Hulu as well Lisa and I actually spend time at Hulu together and and one of the first things that we did at Hulu was to sit down and actually be explicit about our culture and so so I sat down and wrote a document called what defines Hulu and you can actually search for this online there's an original version it's since changed but but there's an original version that's posted on the internet if you search for this title and this is the document this is a Hulu's version of the cultural document and I mention it because it's one of those things where this is a narrative that's not very easy for most people to fall in love with most people read this document and have read this document and basically say good for you not for me and that's exactly what we wanted to do with this document and with our culture which is if a culture is motherhood and apple pie it really isn't it really is an effective I'd argue this is basically a very challenging narrative a very challenging document and it act as a magnet for the people that we wanted and just as importantly it act as a appellant to make sure that people who would not be a good fit for our values and principles never even bother knocking on our door and Reed and Sam talked about the things that you need to do through interviewing which we absolutely did it Hulu as well in terms of thing probably for the first 500 team members I interviewed everybody as well is you obviously need to interview for values and principles in terms of alignment with with who you are but it's very very important when you think about your cultures to make sure that they're repellent as much as they are a magnet because then you know you about you actually stand for something and you're actually probably going to be effective so long as you you marry it with mechanisms and you walk to talk this is something I do want to highlight about Amazon there's one other thing I want to mention before I get to Q&A which is Amazon took a bit of a hit in the New York Times about a year ago maybe a year and a half ago about its culture or its workplace conditions and I feel very very strongly about this that and Sam mentioned this about how do you build a company where people want to be there for a long period of time so I was at Amazon for nine years of my life and by the way I easily could have been there my entire career I had a lot of desires and goals about starting my own things but but it is an incredibly special place my peers three of my peers who are there today they are there 19 years 19 years and 20 years in terms of other direct reports of Jeff that's the kind of place Amazon is you do not get that kind of tenure unless you have a very special culture that works for the people that are there and I want to highlight this one element because this is a good example of the right kinds of cultures being both magnets and repellents so I'm going to read this out loud this is one of the leadership principles of Amazon it says have backbone disagree and commit leaders are obligated to respectfully challenge decisions when they disagree even when doing so is uncomfortable or exhausting leaders have conviction and are tenacious they do not compromise for the sake of social cohesion once a decision is determined they commit wholly so I want to highlight one sentence which i think is very unpopular in Silicon Valley they do not compromise for the sake of social cohesion I have been sort of you know kind of able to interact with a lot of companies both down in Los Angeles with Hollywood and Hulu both here in terms of founding and starting a company here in the valley and also in Seattle of course not many companies insist that there be healthy debate even when it's awkward in terms of not seeking social cohesion that's something that is hard this is not motherhood and apple pie it's something that I bet 90% of humans out on the sidewalk would absolutely not be comfortable doing and therefore they should never apply and go work at a place like Amazon but I will say that having lived it for nine years this is one of the you know can reasons why Amazon is such a successful enterprise and and in such a special culture and I think will continue to be a special cultural and enterprise which is you know taking those hard hard moments to say this is what we stand for and it might not be for 90% of the people out there but it is for the right type types of people that want to be innovators and pioneers at a place like Amazon so the last thing I'm going to say before Q&A is that one of the other challenges with great cultures is that you have to live up to them every day and I'll mention that because Elise's here at Hulu there wasn't probably a week that went by during the first six years of Hulu's life where it obviously started at zero and went to a billion dollars in revenue in the first six years of its life where we were not tested in terms of how we behaved and the decisions we made and in making sure that they were consistent with the values and principles of who we aspired to be and that's hard because there's a lot of times where you feel like oh I just did this it'd be a whole lot easier but it turns out taking that moment to to let someone who is beloved and a high performer you know exit the company because they don't have the values and principles that you hold dear those are tough moments as a leadership team to be able to you know fight for something that is incredibly important for your values and principles but but maybe members of your board or members of the ecosystem aren't in favor of those are really tough moments too but you know I do think the prize is worth it which is when you have a great culture your chances of creating a company at scale go up so much and but it is a real challenge and I wanted to be very very honest about it so the takeaway for me in terms of my observations of culture and I hope they're helpful for you before we get to Q&A is to be explicit and I think a lot of companies in the valley and founders and CEOs are explicit they take the time to write down what their cultures are and what and who they want to be walk the talk it sounds simple but really really hard and then finally embrace the mechanisms it means inventing mechanisms that work for your companies they have to be authentic and genuine in terms of the types of personalities that your companies are but our experience and on this one I'm specifically referring to Amazon there was a funny quote that Michael Dell gave us where it was 1997 1998 and we sought counsel from Michael Dell who had scaled Dell back in the day and said what advice would you have for us and he said well the only advice I give you is that there's a brick wall in front of you and you can't see it and I was like what do you mean by that like just trust me there's a brick wall and you're going to hit hit it and it's going to hurt and so I would start thinking now about what you're going to do after you hit that brick wall and and and they got a lot of us thinking about what we needed to do to prepare for scaling that's really what he was referring to and so thinking about mechanisms and going from you know kind of a well operating company with good intentions which can be done under 50 people and thinking about what you have to do to become an incredible company operating with 5000 people 50 thousand five hundred thousand people that's what mechanisms are all about and so thank you very much and I think we have a couple of minutes for some questions if they're already yes when it comes to disagree in commit something probably I personally kind of struggle with with regards to how do you balance empowering kind of the folks you hire within yourself stepping in and disagreeing with the decisions they've made or stopping those decision so my I'll go back to the Amazon one because that's where that principle can you know originally came from is that one of the other principles which I didn't highlight here is you know great leaders are right a lot that that's one of the principles and so and the reason why I mention is that you know I think when a company's operating well a lot of the best decisions are already made and never get to you and so there isn't a lot of stepping in and basically kind of overturning or vetoing etc because you've invested so much time and energy hiring people of great judgment and obviously the other values and principles that you stand for that my experience at Amazon was that there were relatively few situations where I was really having to go and completely turn something upside down because it was a 180 versus what the group thought versus what I thought or quite frankly I think Jeff would say the same about how often you know he would come in and completely eviscerate you know kind of a lot of work that a team had done on certain things now when it happens it's for a really good reason and and you know one public one that has been covered already in the press is the echo team you know was working so hard and was so excited about the technology that they had invented and they thought that a certain response time was good enough and Jeff you know kind of somewhat famous they came in and said I'm going to give you the bad news right now and it's best to have the medicine but the response times have to be sub 750 milliseconds or something like that and and yeah everybody was dejected and it was incredibly painful meeting but it turned out that was a very important moment and that judgment obviously carried the day but the short answer to your question is that I don't think it should happen a lot and if it's happening a lot I would ask if you've got the right person in the role is there's a certain person you're constantly disagreeing with that's my experience at least to talk about the Amazon values and I worked in zone for a while too and pretty familiar with them when you went to who were there any values or any sort of let's say iterations or did you kind of look at the values for Amazon and say here's one was missing or here's the one I want to add or kind of build upon yeah there was it's funny I took more from Disney than I took from Amazon when it came to hello and by the way I think this has been written about publicly as well Jeff I think has taken a lot of inspiration from Walt Disney as well I think it's it's there's so much that leaders can take from Walt Disney I'd say that you know I tried to start with a clean sheet of paper and and like like a sponge you want to basically do everything you tend to be inspired by all the things that you've been exposed to an Amazon clearly has had a massive influence on me and how I think but I also look back at Disney and brought things there I'm probably one of the manifestations of that just to kind of give you sort of an output I think that a lot of people would look at Hulu just from the service and say wow that there's a design there there's an appreciation for aesthetics that is unusual and I think that was quite different from Amazon for example where I think Amazon's more of a utilitarian design as opposed to an aesthetic design and so we did think quite a bit about what we wanted people to say about us when we weren't in the room and how that would be different from Amazon and so uh so their nuances probably longer than is allowed given the time but but I very much was careful not to do a cut and paste because I thought that given the mission of Hulu it really deserved its own culture and different things which were not going to be identical to Amazon um so in a lot of aspects of well-run startups today there are themes like on the business model you test things and see if they're right and you change if the turnout has to be right similarly with engineering are there ways in terms of culture development where maybe a concise version the question would be are there cases where you've had to you've tried something with culture and actually hasn't worked that well and you've changed it based on on the experiments for sure so I think that you know make no mistake we just talked about mechanisms you know I've seen a lot of mechanisms that actually are quite horrible and they end up being bureaucratic and because bad processes bureaucracy good processes a mechanism and I you know it's like an ad campaign you know you're you're thinking you're creating you try something and sometimes it works fantastic and other times it doesn't you know probably a mechanism that all of you use is a weekly meeting or a monthly meeting with everybody in the company that's a mechanism and I've seen those executed really really well and I've seen them horrible and so I think that you should absolutely be I'd say thoughtfully stubborn which is you know kind of stick with the things that are working and scale them and keep doing them again and again and again make them fresh but but keep doing them again and again but be flexible and drop the stuff that isn't working so what I probably the biggest council I could give is spend a lot of time about what the values and principles are because you really want to make sure those are great and so the good news is I think once you do it initially you're probably just standing around the edges as opposed to doing a heart transplant because at the end of the day the values and principles of a company are really the values and principles of all of you that really is what it what I found it to be it's so reflective of the founder and the CEO and then the second thing is just you know be very experimental with regards to mechanisms because they're not all going to work thank you very much Lisa thank you everybody thank you [Applause]

Author Since: Mar 11, 2019

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