The Culture of Truth
It is often said that culture eats strategy for breakfast.
But what exactly is culture? Is it the glitzy mission statement and the laminated list of corporate values? Is it a system that rewards and punishes certain types of behavior? How prescriptive does it need to be? Who determines it? Who enforces it?
In working with a number of different clients — startups, large public companies as well as innovation incubators — over the last few years, I have come to believe that there is one cardinal consideration related to culture that trumps pretty much everything else. Getting this right or wrong has a disproportionate impact on the eventual outcome of the business and is at the very root of what drives success or failure.
It is whether you have a company wide commitment to pursuing the truth.
Is the culture of truth a moral issue?
Maybe, but more importantly, it is a smart business proposition. The truth sets everyone free. To focus on the right things for the customer and the company. And do each of these things right without getting distracted by spin.
Especially for startups and new business ventures that operate in an environment of high uncertainty and risk, a casual approach to truth can result in death.
So, what does a culture of truth actually mean?
It means every one in the company — from CEO to Janitor — is committed to seeking the truth, telling the truth, and dealing with things as they are. Not what they wish or want them to be. At all times. In all forms of internal and external communication. Including silent conversations with self.
Why is this hard? And why do people prefer to skirt around the truth?
The reasons are no different than what they were thousands of years ago in the royal courts of kings in medieval lands.
The Ego and its many variants. Fear. Pride. Self Will. Careerism.
Just consider the following.
A CEO inflates his company’s qualified sales pipeline with the board to make them believe that he has made significant progress in the marketplace.
The head of a new business unit is afraid to tell his CEO that product deadlines have slipped badly and tells him things are on track. He plans to inform him later once he figures out how best to spin the matter.
A Venture Capitalist uses older valuation numbers on his LP update to boost the total value to paid-in metric on his portfolio.
An entrepreneur tells his board and backers that he needs more money even though he is faced with conclusive evidence that there is no market for his product.
The CEO of a Unicorn encourages his top sales people to break the law to meet the aggressive growth targets set by the board.
A software company sells a $100 M deal to a large automotive company to replace a complex B2B e-commerce system. They know their software does not have the required capabilities yet, but sell the deal as an out of the box solution.
All these scenarios are so commonplace that we see them every day and we accept it as the normal course of how business is conducted.
But the spins and the mistruths add up surreptitiously, driving small and big wrong decisions, and corrupting the company from the inside. And it spreads until it rots the core. Eventually, the shit hits the fan. It always does.
This is why a total and uncompromising commitment to the truth is important. But it cannot and will not work in an environment of fear, pride, blame and shame.
History has shown us time and again that human beings in any group or society are fully capable of being their very best or their absolute worst. Depending on the people that surround and guide them. And the explicit and implicit norms of the culture that govern what is deemed acceptable and what attracts disapproval.
There are four essential components to building and establishing a culture of truth.
- It starts at the top with the Board and the CEO. A blustering or sly CEO who is under self-delusion can never carry this mantle. Neither can a board that is in conflict with itself and not willing to deal with reality. A commitment to truth can only be engendered by mutual trust and understanding between the Board and the CEO. Everything cascades from here.
- A healthy tolerance for debate and discussion across the company that allows all points of view to be aired without any fear of repercussions. Strong convictions loosely held and malleable to data beats rigid constructs every time.
- A spirit of constant learning where every piece of bad news is seen as an opportunity to fix something; and every failure or mistake an opportunity to learn more about the market, customer and what can be done better.
- Company-wide transparency on almost everything except personal HR data and company confidential information. When everyone is naked, veneers and masks have no place.
A culture of truth does not mean no salesmanship or marketing. It just means that you prioritize the needs of the customer and being trustworthy more than anything else.
A culture of truth does not reject ambition. It embraces and celebrates a high-performance culture motivated by the right reasons. It tries to establish a true meritocracy and minimizes careerist and self-serving behavior.
A culture of truth does not mean not setting stretch goals or not having world-changing missions. It means being completely cognizant of what is real now vs. what is aspirational, and knowing what needs to be done to move the ball forward one step at a time.
A culture of truth means diagnosing the customer problem right and figuring out what they actually need to succeed. Instead of pedaling simplistic and pandering solutions that are likely to fail. Even if it means you sell less now.
A culture of truth also means allowing people to express strong and controversial opinions that may seem politically incorrect but could be closer to the truth. Many bad situations have come about not because people lied, but because people failed to challenge prevailing wisdom, call the BS or raise red flags in time.
The truth can sometimes be hard to seek and accept. It is more convenient to interpret customer surveys with the meaning we want than what the respondent intended. It is easier to keep investing in a product than kill it, even when we have overwhelming evidence to the contrary. It is easier to sell something that may not work for a customer vs. dig deeper or walk away.
And in many cases, the truth is gray and unclear. But being straight about what we do know and what we do not puts us in a better position to ask the right questions and make difficult decisions.
Just as people who made daily exercise a habit would tell you, there is no other way to be, once you have made a complete commitment to the truth.
So, why is all this a big deal?
The pursuit of truth with freedom not compromised by politics or spin and fueled by a singular obsession to help the customer unleashes the full creativity and passion of your employees.
A truth seeking enterprise is less likely to be distracted by illusions and new shiny objects that detract from the main goal.
A truth seeking enterprise is also less disposed to fall victim to complacency, false pride, ego and all their varied manifestations.
A truth seeking enterprise will attract and retain the best employees, innovate better and faster than its competitors, and create substantial value for its users and customers.
Consequently, it will capture a significant part of that value for the benefit of its shareholders and deliver outsize financial returns. And most importantly, it would have the ability to sustain that excellence over the long term and know how to reinvent itself to meet the changing needs of its customers.
Do you have a culture of truth? Do you seek to create one?