Reading notes by Yan Tougas
Organizations reach four (4) crossroads in each of their life cycles. These crossroads create uncertainty and, in search of predictability, many leaders inadvertently adopt practices that limit their adaptability.
Crossroad 1 – The foundation. Focus entirely on building a product, or focus on building a product and a culture?
Crossroad 2 – The scale-up. As the organization grows and becomes desperate for talent, do you opt for skills and warm bodies over cultural fit?
Crossroad 3 – Institutionalizing. When the organization is too large for informal HR processes, it must choose between implementing indirect motivators to manage the growth or scale the existing ToMo culture.
Crossroad 4 – Renewal. Eventually, every organization hits a plateau. Leaders can either ratchet up indirect motivators with rigid performance management systems, incentive compensation, cost reductions, etc., or choose a high ToMo path of renewal. The urgency of everyday challenges usually leads to indirect motivators, which decrease total motivation, and with it adaptive performance, and eventually total performance as well. It’s a death spiral. The mortality of companies is less than human beings. Just like humans, companies must adapt to survive.
The Medallia case study:
At Medallia, culture is not secondary to the mission. It’s the only way to achieve the mission. The two founders, Hald and Pressman, brought their own high ToMo to the company. During the 10-year startup phase, “we were very focussed on getting food on the table,” Pressman recalled. “So when I talked about culture, people’s eyes glazed over.” [Editorial note: We can easily replace the first sentence with “While publicly traded, we were very focussed on meeting quarterly earnings…]
But they remained true to the vision. They personally hired new candidates, looking for the right culture fit. When they got too big, they hired a psychology doctoral student to find out why candidates were applying (because why you work drives how well you work). Eventually, they created a culture interview team and they now have one culture leader for every 250 employees. They learned that you need people who are not afraid of not being perfect, because trying to be perfect is counterproductive to learning, growth, and reaching full potential. Trying to be perfect increases emotional pressure and reduces play, thus limiting the organization’s ability to adapt. They understand that “winning” means having a winning record, not winning 100% of the time.
Their goal is to prime people’s why from their very first moment in the company. Medallia’s week-long onboarding program is designed to reduce emotional pressure and create a sense of play. It starts with a welcome letter explaining the culture. Then, the very first task of an employee is to do something to make the company a better place to work. Finally, employees are asked to be vulnerable, which often leads to a tearful room. The program ends with each new hire reading a paragraph written by his or her hiring manager, describing the special spark that led Medallia to extend a job offer.
Leaders are then taught to actively combat the blame bias, to sustain the high ToMo that was created during onboarding. Performance reviews are designed to reduce indirect motivation. Career ladders help employees understand the skills they need to build. Medallia’s Associate General Counsel is clear about the culture: “We assume good intent. We assume competence. We work collaboratively to solve problems.” Not the typical adversarial relationship that legal teams face in most organizations. Looking at the cost per hire, the culture programs more than pay for themselves.
The objective of a high-performance culture is to maximize adaptability. Adaptive organizations require adaptive individuals. Individuals adapt when they have high ToMo. Organizations create high ToMo with direct motivators.
Research has found no relationship between ToMo and size of the organization.