What 30 years of Stanford research tells us about company culture

Robert Sutton, company culture expert

Robert Sutton knows company culture. Throughout his 30-year career as Professor of Management Science at the Stanford Engineering School, he’s interviewed business leaders and studied the ins and outs of corporate culture like few others. His books include Good Boss, Bad Boss: How to Be the Best…and Survive the WorstThe Asshole Survival Guide, and Scaling Up Excellence, which he co-authored with Huggy Rao.

As part of our Culture Changers series on what makes great company cultures we talked with Sutton about what he’s learned from watching organizations succeed and fail in crafting successful company culture.

How do you think about company culture? What makes great culture?

There’s an old saying in organizational literature: “Defining culture is like nailing Jello to a wall.” That said, the thing I like to focus on is what people do, not what they say. I focus on behaviors people agree on—what’s sacred and what’s taboo.

I gave a talk at Amazon and asked, “What’s sacred and what’s taboo?” At Amazon, the customer is sacred. Wasting money is taboo. They really are cheap. When they bring in authors like me to speak, they don’t buy books; they insist the publisher send them.

Can you qualify culture?


What makes a bad culture?

A bad culture is when destructive behavior is the norm. Bad behaviors can be many things—screwing the customers, doing shoddy work, and/or treating people like dirt.

At my high school job, we had a social agreement that we’d all smoke dope and do a bad job making pizzas. That’s a bad culture for the customer.

Basically, “bad culture” is when people are nasty and it’s viewed as acceptable.

Related: How to craft team chat guidelines and why they matter.

Why should people care about company culture? Why should leadership think about culture building?

Culture has to shift—what got you here won’t get you there.

Culture is the engine that drives the strategy. Coming up with good products and services for customers—those are behaviors. How you treat people—those are behaviors. That’s all culture.

When people have agreements about how they should behave, it makes decision making faster.

I just gave a talk at Netflix, a company that disrupted itself in two ways: DVDs to streaming to production. But, they’ve maintained a similar culture. One thing they keep from the early days is this idea that “We’re a professional sports team and we have fully formed adults.” You’re either a top performer or you get let go. That’s the sports team agreement.

For example, once they switched from being a tech company to being a production company, Patty McCord was fired as the chief talent officer because she didn’t have the right skills for the job. She helped build the company’s culture and in the end, had to leave because of it.

“Fully-formed adults,” means they don’t do what Google or Facebook often do, where they hire young people and develop them. That might not work for every organization—but since there are clear and widely-shared agreements at Netflix about who they hire and who they don’t, it helps them make such decisions faster. And because job candidates are told what to expect (and often learn about Netflix before even deciding to apply), people who don’t fit the culture often screen themselves out.

What are some key things managers can do to promote healthy open workplaces?

The first thing is don’t be a hypocrite. You can’t tell people not to be jerks and treat them like jerks. Behaviors have to match what you espouse. We’ll count how many questions leaders ask and how many statements they make. If they say they lead from the back and then don’t—they’re in trouble.

Ray Kroc, the founder of the McDonald’s franchise system, really believed in cleanliness. When Kroc visited stores, before he’d go into the store, he’d go around and pick up all the trash in the parking lot.

Another area is with hire and firing. If you have norms that are supposedly sacred and people keep violating them and you put up with it, you are giving people permission to break the most sacred norms.

What are some common traits among companies with healthy cultures?

They give people enough power to feel they can make reasonable decisions on their own. Look at the difference between a JetBlue flight attendant and a United flight attendant. One of the problems with United is people live in fear of breaking rules. They’re both very constrained environments, but JetBlue employees have more autonomy to handle an upset passenger.

I have consulted to McKinsey now and then. They have two strong cultural norms: client discretion and obligation to dissent. No matter who you are in the pecking order you are obligated to say when something’s wrong. At least that is what I saw and experienced; the culture may be slipping based on the recent scandal associated with work they did for the South African government.

However, if I was going to pick one hallmark across all good, functional company cultures, I’d have to say: relentless restlessness. It’s the idea that I can always do better, and there’s always a little bit of dissatisfaction.

What workplace tools do successful companies use to promote open culture?

I’ve been in chat groups that are really functional, as long as it doesn’t become information overload. The more interdependence there is among the work the more the more necessary it is to have transparency—tools help with that. When there’s a lot of secrecy it breeds paranoia.

If we’re all designing the same transmission together, it’s important for me to know what you’re doing so our parts fit together. When one group doesn’t know what another group is doing you have a hard time integrating the software because there’s not enough transparency, collaboration, and trust.

What’s an example of a major culture shift you’ve seen in your work? A company that was going one way, made some changes, and then culture moved in a different direction?

Lou Gerstner’s change at IBM. I interviewed him about three years ago—I think that’s the most famous change in history.

His thing was to move toward one idea and one IBM, which created consistent and coordinated interactions within the company and customers. Instead of fighting with them and trying to fire all the branding agencies, Gerstner just locked them all in the room with every IBM product and asked, “Who are we?”

Should people try to be themselves at work? Should companies promote expression and personality at work?

Yes, but I do believe in individuality and strengths. When you bring people and put them in roles that play to their strengths, you’ll have the best company. But there are some things that require conformity and some elements of our authentic selves that aren’t great.

If I brought my full self to work it would be terrible, I’d cuss too much and have a drink a lunch.

At Google, they say, “It’s not efficient to be an asshole here.” I asked a group of Googlers if that’s really true, and they all nodded and said it’s true. Someone came up to me afterward and said, “I’m not a very nice person. In the past, I haven’t had to be very nice, but here I have to be nice to get stuff done.”

She had to leave her authentic self at home—we don’t want that at work.

What is one of the more surprising findings you’ve come across in your research?

There are good and bad cultures. In my old age, the thing I’ve come to appreciate is the first order of business—as long as it’s not nasty or destructive—is everyone knowing the game. It helps people know if they want to join the company and helps managers know how to hire.

What behaviors are sacred in your workplace?
What behaviors are taboo?

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Also posted in the Atlassian Blog.