For 15 years two Stanford Professors, James Baron and Michael Hannan, collected data and studied high tech start ups in Silicon Valley. They were intrigued to discover the five distinct cultures that were represented by the start ups and also to observe the performance of these distinct cultures over time.
Here are the 5 Cultures
- STAR CULTURE:These companies hired people from the elite universities like Harvard etc. or high performance employees from successful companies. These companies had employee autonomy believing that the high skill/intelligence factor would turn into high performance for the company.
- ENGINEERING CULTURE: These companies hired predominantly problem solvers people who could find ways to do things.
- BUREAUCRATIC CULTURE: These companies ended up with lots of middle managers, long job descriptions, employee handbooks, lots of meetings, company handbooks, huge policies and procedures manuals. Things in these cultures were done ‘by the book’.
- AUTOCRATIC CULTURE: These companies established clear ways of working but it was all to please the boss. ‘Do what I say and you get paid.”
- COMMITMENT CULTURE: These companies established a set of values that employees owned. Often in these cultures growth was initially slow. These companies were hesitant to lay people off, had a high value of people and high value in respect of training and development. This became a culture of mutual trust.
How did these companies perform?
Star culture companies were some of the biggest winners however, unexpectantly, these companies also failed in record numbers.
The only culture that was a consistent winner was the commitment culture
- Not one of these firms failed
- They consistently out performed every other type of culture in all meaningful ways. They were the fastest to go public. They were leaner (fewer middle managers). They knew their customers better.
- The sense of Trust between workers was high. This meant that people actually worked together and stood together when they faced set backs.
- They experienced a much higher level of psychological safety which meant greater agility. (Openness to change, willingness to experiment etc.)
The Agile method, as this culture became known, pushed decision making to whoever was closest to the problem. Successful companies that have done this and found great success include: GM & Toyota partnership at the NUMMI car plant, Pixar, The FBI in their sentinel programme, Hospitals that adopt ‘lean healthcare’ methods.
LESSONS: The 5 Big Wins from a Culture of Trust
- People are willing to swing for the fences more (experiment) when they know that they wont be punished for missing the ball.
- Potential is unlocked in people who are given authority and ownership.
- People follow instincts more when they feel empowered.
- People generate more ideas when they know that their ideas are welcomed and will not be ignored, even if they are not implemented.
- People thrive when they have a real sense that others have their backs.
All of these 5 big wins are related to people (employees), perhaps it’s true that a company’s greatest assets are the people.