Organizational culture is defined as the basic assumptions and beliefs shared by members of an organization. These are learned, operate unconsciously, and essentially define an organization’s view of itself and its environment.” MIT professor Emeritus, Edgar Shein. (Source 22).
Piglet: ‘How do you spell love?’. Pooh: You don’t spell it, you feel it. Winnie the Pooh.
Culture evolves from small actions that become habits at founding, and then becomes like the hardened personality of an organization, and very resistant to change. A-players, especially young male A-players also bring ego. We certainly did. Ego is a double edged sword — you can’t do anything big, try anything big — without a belief that you can pull it off. But, it can also lead to hubris and mistakes and team-level dysfunction. (See source 22).
As we grew, we had our own office with graffiti-style street art on the walls. We had our own basketball court with a locker room, and a showroom of our products.
Our top managers wore AND 1 clothing and footwear to work and to client meetings, and trash-talked with both each other and with clients.
People brought their dogs and babies to work, and we all worked in shorts. We had a corporate lawyer who never wore shoes (shout out to Jon Rosan). In short, we were a family and a tribe with a shared sense of purpose, our own language and slang and values, and artifacts from the evolution and history of our company that helped maintain shared meaning.
As importantly, or more importantly, we had a relentless focus on — and passion for — the product. That is key. As noted tech investor Ron Conway says:
They have to care absolutely about the product. That trait took him 10 years to figure out. Now it’s a HUGE ALARM. They have to be obsessed with the product.
What do young founders get wrong? Lying to yourself after you’ve prototyped product and it’s not getting traction. Must stop the train ASAP if the idea isn’t working BIG-time. Success is binary. You are successful or you’re not. If not getting huge traction, need to deal with it. Must not live in denial. Be honest.
Seth, our CEO, and Jay our co-CEO at times, were instrumental in recruiting the core founding team. They both got the importance of building a strong culture, and had the social networks through top colleges and strong social ties to do this well.
I was quieter, but led the highest revenue division in the company, and had been a big part of the heart and soul of the core culture from Day 1. I had created the trash-talking T-shirts that came to embody who we stood for. I had written the first version of our very first television commercial.
Our culture was a cocky, adolescent male competitor. A jock with swagger.
Our culture celebrated risk taking and creativity and swinging for the fences — around 1 big vision — to be the best basketball brand in the world. We wanted to pass $1 Billion in sales, we wanted to own an NBA team, run a television channel, own a magazine and have the best footwear, apparel (and cars) for basketball players.
We also, unwittingly perhaps, lived by the Japanese management principle of Kaizen — or continuous improvement. We would constantly plan, then do our best to execute, then do a ‘de-brief’ of lessons learned, things that went well and things we could do better. Whether it was the quarterly reviews we performed on each other, or planning for each sales call, then debriefing immediately after — we had thousands of small conversations where we were self-evaluating and looking to get better.
This commitment to being a ‘learning organization’ was a key to the success we found.
And then there were the shared values.
Collectively, we saw basketball as a lifestyle. A community and tribe and way of being. But we were also getting cocky. We were all so young and had succeeded to such a degree that we didn’t think we could fail.
But AND 1 was also very much about family, and about having each other’s backs — at least so long as you were part of that family. Our culture was complex. I will examine some more of this in the ‘Social value’ section. But another way to look at it, is with the OCAI framework, that looks at an organization as a combination of competing values.
AND 1, because of our size, was the fastest to adapt to market trends and conditions. We tried to maintain a blend between watching what was going on and doing what we needed to. Nike, as the dominant market leader, felt they could drive cool. The weakest competitive position was Reebok — trying to watch what others were doing and adapt, while also being a fairly large and fairly rigid organizational structure.
Laszlo Block in his excellent book, “Work Rules”, talks about the fact that one of the biggest lessons he learned while managing ‘talent’ at Google was that focusing on the ‘best’ and ‘worst’ performers was a much better use of the HR or people management department’s time, and the company’s collective efforts than focusing on the vast majority of the people in the middle.
This is not a simple, common sense insight. This finding (and the supporting data) says that focusing on just the 10–20% of the people at the extremes in performance can do more good in terms of driving the company forward, then focusing on the 80–90% in the middle.
Why is this the case, and when should it hold?
AND 1 failed in part because I failed to sufficiently hire enough stars to work with me in footwear to handle growth, and failed to sufficiently develop the stars I did hire. I was a young, immature manager and made the mistake of wanting to ‘own everything.’
If you as a leader — or any of your core leaders are indispensible -, that is a very, very bad sign.
AND 1 had our best success hiring really smart young people who shared our values, and letting them figure out how to both define and do their jobs. We had to hire these people, we couldn’t afford or attract ‘proven talent.’ But, it turned out to be both a blessing and curse.
We had so amazing aspects to our culture that are too be celebrated, but we were also, to my forty five year old eyes — too male, too aggressive and too competitive.
These value drove our persistence and early success, but also laid the groundwork for our inability to move from hi-growth start-up to middle market (and public market) grand slam.
We had partner arguments that led to yelling and real animosity. We had 360 degree reviews that were deeply personal.
According again to Laszlo Block, Google handles performance reviews by looking at ‘bottom workers’ and ‘top workers.’ Whereas past companies like GE were famous for cutting the bottom 5–10% every year in every department, Google believes it has already hired and screened for very good people — and it is its job to develop them.
So, they look at creating very specific ‘interventions’ to allow bottom performers to improve — these include interviews to understand why they are underperforming, moving them to other areas, finding top performers to act as mentors, and having skills training and classes to improve any skills gaps.
The result was that they are able to turn most ‘bottom’ performers into average Google employees and save significant costs in the process. It is very likely that they also created significant goodwill and loyalty in the process.
AND 1 did this as well, albeit informally. After launching our trash-talking T’s, I was a good, but not transformational performer in several roles early on in the company. But, when we needed a head of footwear to lead the biggest ‘bet’ in the company’s history (a bet our Board of Directors told us would likely bankrupt the business), they chose me.
LESSON: Be willing to move around ‘good to very good’ performers, who you feel can be transformational. It will keep them learning and engaged, and may result in a huge boost to the bottom line.
My partners stood by me when our largest customer said we needed someone more experienced. And the bet largely paid off.
THE CASE FOR DEVELOPING, AND NOT BUYING, STARS
“Mercenaries and auxiliaries are useless and dangerous.” Machiavelli, the Prince
“Help People Reach Their Full Potential. Catch Them Doing Something Right” Kenneth Blanchard, the One Minute Manager
Most of AND 1’s major talent — outside of our footwear designers, was home grown. We hired from great universities — like Upenn, Wharton, Villanova and Haverford. We hired mart young men and women (okay, mostly men — we didn’t do the best job of diversity early on in the company, mostly because we were young men and we hired who we knew).
We hired self-starters. People like Jon Rosan, Phin Barnes, Ryan Drew and Peter Kuschel were all instrumental in our ability to grow. We had a level of ‘mini-partners’ who were the second tier of management in, and all smart and talented enough to be C-level players at major companies.
We did this both because these were the only people we could afford, and because we believed in smart generalists — and their ability to see, define, then solve most problems.
It was only when we scaled into footwear that we needed some ‘domain experts’ (design and manufacturing).
But this was not likely just an accident.
Another very interesting book, “Chasing stars: the myth of talent and portability of performance”, examines ‘star Wall Street analysts’ and their performance after they move to a new firm. This extensive research shows that a large amount of the star’s ‘value’ and ‘performance’ is tied up in their environment, team and work context, and their work-related social networks.
Specifically, when star analysts move, performance often doesn’t follow. When it does follow, it tends to happen more when their teams move with them and/or they move to a higher ranked firm. So, it may not be that simple to ‘buy a star.’ It may in fact be better to buy an entire team (or start-up company), or to develop stars in house and create greater loyalty among top talent.