When your culture problem is really a strategy problem (Transcript)

[00:00:00] Anne Morriss:
This is Fixable. I'm Anne Morriss. I'm a company builder and leadership coach.

[00:00:05] Frances Frei:
And I'm Frances Frei. I'm a professor at the Harvard Business School, and I'm Anne's wife.

[00:00:09] Anne Morriss:
And on this show, we believe that meaningful change happens fast, anything is fixable, and solutions are often just a single conversation away.

[00:00:18] Frances Frei:
Who do we have today, Anne?

[00:00:19] Anne Morriss:
Frances, today we're talking with startup founder and CEO, who we're going to be calling Luís. This is not his real name, but let's hear what's going on.

[00:00:29] Luís:
Hi, I am Luís Martín. I am the founder and CEO of a digital transformation company. We develop software solutions for the energy industry. I hire a lot of very young people. And I wanted to get your thoughts on what would be the ideal framework to actually deal with different generations while keeping things fair.

[00:00:55] Frances Frei:
Oh, I love this. Luís is speaking about generational divides. I love trying to fix a good old fashioned culture clash and really getting to the root of the problem.

[00:01:03] Anne Morriss:
Yes. How many times have we seen companies struggle with a culture issue that actually reveals a deeper strategy or structural issue?

[00:01:13] Frances Frei:
Oh, absolutely. And I can't wait to dig into the details here with Luís, but you're right. In so many cases, when you fix the strategy problem, you might also fix the culture problem.

[00:01:24] Anne Morriss:
Alright, let’s get into it, Francis.

[BREAK]

[00:01:41] Anne Morriss:
Luís, welcome to Fixable. We're so glad you're here.

[00:01:44] Luís:
Thank you for having me.

[00:01:46] Anne Morriss:
Let’s get a little bit more context on your company. So you’re the founder and CEO, is that correct?

[00:01:51] Luís:
That is correct. Yes.

[00:01:52] Anne Morriss:
Why did you start this business?

[00:01:54] Luís:
Well, uh, I worked for 15 years in the oil and gas in very big companies in Colombia. I ended up in the States, and I said, “I'm ready. I want to take a team, develop that team.” And I founded my company. We're developing software for sustainability, especially helping companies to transition to carbon neutrality. And we help them with the challenge of how to manage all the data around sustainability.

[00:02:22] Anne Morriss:
I love that. And how big is the team now?

[00:02:25] Luís:
The team is 20 people.

[00:02:27] Anne Morriss:
So you say you hire mostly young people. What's the generational breakdown right now?

[00:02:33] Luís:
We have pretty much 17 people that are from 20s to 30s. And then, uh, I only have like three people from 30s to 40s. I don't have anybody above 40. That's it.

[00:02:44] Anne Morriss:
Yeah. So tell us about the generational tensions that you're feeling now.

[00:02:49] Luís:
Yeah, so one of the things was these guys were always working like three things at the same time. So an example I was putting was I have this very wonderful programmer, but he has to be watching movies to be fluid, and he was annoying people. When I talked to him, I said. “Hey man, like, you need to slow down on these. I know that you're doing great job, great work. And I love what you're doing, but maybe you can be more efficient.”

And he said, “Okay, I'll do it.” And then this month was terrible for him. Like I talked to him and he was like, "Man, I can't focus. I really can't focus. I don't have this voice talking to me.” But I, I really could trust the guy because the guy was delivering the best software, he was doing everything that I wanted, but without that, he couldn't perform at the same level.

[00:03:41] Anne Morriss:
So the older people on the team were particularly frustrated, felt like a violation of work norms.

[00:03:47] Luís:
Exactly. Another clear example, the fact that even though they like to multitask, they don't really have a good understanding on why they have to contribute in several pieces for the company. So if they were developing software, they didn't understand why they have to make a presentation about something else. They are like, “Why do I need to do this again?” Like, and then the next one was continuous challenges of authority from the youngest to the older, like they will be like, “Hey guys, we need to finish this goal by this week.” And they're like, “Why?” So I found that in order for the team to flow successfully, you really needed to let them know why. In my generation, for example, you know, like you just —

[00:04:37] Anne Morriss:
Mm-hm. Because I said so!

[00:04:39] Luís:
Yeah, it’s like, “Well, my boss is telling me that, right? I don't need to argue. Like if we have to do it, we have to do it.” End of the story. But this is a different, very different generation. And they really are concerned about why. And also, how am I going to grow my career with this experience? It's more, “I need to know if this is aligned with my priorities as a person, also as a professional.”

And, uh, that was very shocking for the other managers too. They are like, “Well, I don't, I don't need to be explaining these guys everything.” And I'm like, “Well, maybe we do have to do that. And that's going to help us.” So I started seeing these very different concepts of trust, right?

[00:05:29] Anne Morriss:
Yeah, no, those are all great examples. And really consistent with the trends we see and tensions we see in other organizations. How have you tried to resolve this tension to date?

[00:05:41] Luís:
So the first thing that I've been doing is actually a working on redefining trust for the organization. You know having some common pillars, but also having some flexibility. So I found that for the company, it's very useful to use the stories and cases studies instead of pointing the fingers inside the organization.

So I have a weekly meeting on trust and how to develop these good relationship. And also the second part is talking a lot about generation differences. I've been doing some exercises where I put them to compete. And in these competitions, I make the ones that are the boss now to be the employee.

So my day, how do I reverse, uh, structure of the organization in such a way that they understand that both sides are important? But it's still, you know, I think that something more solid in terms of developing a framework that we can follow when we scale, it's something that really concerns me right now as a CEO, right?

[00:06:46] Anne Morriss:
Wonderful. We're going to start working on that framework in a second. Before we jump in, I just, what’s the cost or the risk if you don't solve this problem? What are you most afraid of?

[00:06:59] Luís:
Oh, the, the cost is huge. So, if I take one year to develop a person, and they don't trust each other in the group, I'm going to lose that talent and I'm going to lose a huge amount of time that I put in there. But also I'm going to pretty much affect my, um, performance as a company.

[00:07:21] Anne Morriss:
Got it. Super clear. Alright, Frances, where are we?

[00:07:24] Frances Frei:
So I want to ask one diagnostic question, and then I'll give a summary. To clarify, what are your other revenue lines? What are the products that you are selling?

[00:07:34] Luís:
Yeah, we make money from the Perpetual Teacher, from the software, the Green Dragon, and we also have another line of revenue, which is we sell hardware, and we also have an, um, AI solution called Socrates.

[00:07:47] Frances Frei:
Okay. So you have four different products with a team of only 20 people. And how many people do you have working on the Perpetual Teacher?

[00:07:54] Luís:
Three. So I like threes. I like groups of three people.

[00:07:57] Frances Frei:
How many people are working on the sustainability? The Green Dragon?

[00:08:01] Luís:
Six, three on web, three on mobile.

[00:08:03] Frances Frei:
How many people are working on the hardware?

[00:08:07] Luís:
It’s just one person.

[00:08:08] Francis Frei:
And how many people are working on the AI Socrates?

[00:08:12] Luís:
Three.

[00:08:13] Frances Frei:
Okay. One of the challenges that you manifested is that people have a problem with authority.

[00:08:19] Luís:
Yes.

[00:08:19] Frances Frei:
And they have to know the why. Well, here's what I would say. People would understand the why if more people were working on the same thing. So you've set the conditions where it is far more likely that the, the why is going to come up as a regular question, whereas if you were only doing Perpetual Teacher, nobody would be asking the why. Do you see what I mean?

[00:08:44] Luís:
Yes, I totally see it.

[00:08:45] Frances Frei:
You have created a complicated organization that these things are going to come up. So even if you said to folks, “Look, we have five lines of business. It’s unusual. It's a perk for why you get to work here.” But here's the cost. And the cost is going to be that we have to learn how to manage the complexity.

And so I would just call it managing complexity as opposed to feelings. And then people will be delighted to talk about it. And then on the norms of the movies, I know lots of people who have ADHD, who have to have a soundtrack to ground them. And that makes perfect sense for other people with ADHD. It doesn't make any sense for people that don't have ADHD.

I'm not sure it's generational as much as I am, like, the beautiful neurodiversity, but either way it’s… Finding out what people need is one of the beautiful, beautiful parts of difference.

[00:09:49] Anne Morriss:
Yeah. And I mean, I think you're articulating something really interesting there. So one suspicion I have is that some of the frustration coming from the older members of the team is around the business itself is having trouble focusing. The business itself is multitasking aggressively, um, and we're going to talk about it through this lens of generational clash, but there's unresolved tension, and there's an issue at the heart of the business model and current strategy. And you are three years in with a relatively small team who's in order to sustain these lines, I imagine their own focus and energy has to be fairly fractured.

[00:10:41] Luís:
Okay. Yes.

[00:10:42] Anne Morriss:
There's this beautiful truism in our work that organizations are perfectly designed for the outcomes they're getting. And when you are an entrepreneur of an organization that is three years old with only 20 employees, the probability that the organization looks, acts, thinks, behaves in a way that is reflection of the founder is very, very high.

[00:11:13] Frances Frei:
100%?

[00:11:14] Anne Morriss:
It’s almost 100%. And so Luís, we have this type of conversation with entrepreneurs all the time. And our thesis is, at this point in the conversation, is that you don’t actually have a generational divide issue, that your challenge has nothing to do with the age of your employees. What your company is struggling with is an operational issue around focus. There are too many projects in production and not enough people to deliver what you're trying to deliver. The company is multitasking and doesn't know why.

[00:11:53] Luís:
And uh, what’s that solution?

[00:11:55] Anne Morriss:
That’s exactly what we're going to go after right after the break.

[BREAK]

[00:12:05] Anne Morriss:
Alright, Luís, let's talk about fixing things. I want a way to get everybody in the room and say, “Okay, here's what we're doing. Let me give everyone the why.” Because you know who else wants the why? It's not just Gen Z-ers. It's all five generations in the workplace right now.

We all want to know why. Here's what we're trying to achieve. Here's how I need us to collaborate in order to get to these three priorities in the next 12 months, and so here's what I want to talk about is how are we gonna work differently in order to get there?

[00:12:37] Frances Frei:
May I, may I?

[00:12:38] Anne Morriss:
I’m conceding.

[00:12:39] Frances Frei:
Okay, please concede. Luís, we’re gonna take a five minute strategic tangent. I only want to consider Perpetual Teacher, Green Dragon, hardware, and Socrates, okay, so those four things. Which one of those is going to be bringing in more revenue next year?

[00:12:59] Luís:
Green Dragon.

[00:13:00] Frances Frei:
Okay. You didn't even hesitate. Green Dragon. Okay. Which one's going to bring in the second most?

[00:13:07] Luís:
The second most, for sure hardware.

[00:13:10] Frances Frei:
Okay. Alright. And then, which is going to bring in the third most?

[00:13:15] Luís:
Let's say Perpetual Teacher, right now.

[00:13:17] Frances Frei:
Okay. And then, so then Socrates goes fourth. And then who sells it?

[00:13:22] Luís:
Ah. You’re going to not like this, but, uh, pretty much I sell it.

[00:13:27] Frances Frei:
So you're the bottleneck to revenue on Perpetual Teacher and sustainability. Is that a correct statement?

[00:13:35] Luís:
Yes. Yes. I will say yes.

[00:13:36] Frances Frei:
Okay. Do you have ambitions to make this a big company?

[00:13:41] Luís:
Yes.

[00:13:42] Frances Frei:
Okay.

[00:13:43] Anne Morriss:
So Luís, there's no chance that all four, are, of these products have equal potential, right? So my concern is that the best idea in this bunch is not getting the attention and resources that it deserves to take off at the trajectory of its true potential.

[00:14:12] Luís:
Perfect.

[00:14:14] Anne Morriss:
And so what would the business look like? But what about the rest of the ecosystem that is going to make this thing take off like a rocket ship?

[00:14:23] Luís:
Yes.

[00:14:24] Anne Morriss:
And then for now, what would a business that's really designed for optimizing those two ideas look like right now? Our suspicion in this conversation is that a number of these issues that we're coding as clash of generations are going to get resolved in a more focused organization that is really prioritizing ruthlessly around what are its best ideas at this phase of the business.

[00:14:54] Luís:
I love it. And I think that, that it, it makes all the sense in the world, but I think that the, the one idea that really sticks with me is, okay, there is a bottleneck. How do we take that bottleneck out? And, and it's kind of very, very good because like this past week, uh, a person that has 30 years of experience came to me and said, “Hey, I would like to, to help you with this.”

[00:15:21] Anne Morriss:
Yes!

[00:15:21] Luís:
And I'm like, you know, I'm like, okay, and now you guys are coming in here and saying, “Hey, if you want to scale this to the next level, you need to remove the bottleneck operationally.” And I think that's a really good decision. Um…

[00:15:35] Anne Morriss:
And then I want you to call us back, Luís, when you bring in those experienced people, and you have a real clash of generations. Because right now, I think you have one or two people over the age of 40 who are looking around and saying, “This doesn't totally make sense, the way we're behaving as an organization. We need to decide what, what kind of a business we're going to be.”

[00:15:56] Frances Frei:
Uh, Luís, I suspect that in your mind, you have somewhere between two and four additional ideas of new things you could do. Uh, don’t tell me them. Don't tell me them, but just, you can just yes or no. Do you have, do you have additional ideas for…?
[00:16:13] Luís:
Yes. Give me one more sentence.

[00:16:15] Frances Frei:
Okay, alright.

[00:16:15] Luís:
Yes, and we have been developing those also.

[00:16:18] Frances Frei:
Of course you have.

[00:16:19] Anne Morriss:
Oh yeah. Shockingly.

[00:16:20] Frances Frei:
Oh really? So, and, and I'd like to know how the 20 people are doing that, but anyway, so here's what I would say. I… You will never turn that off, but I think you have to earn the right to look at new things by hitting revenue multiples of your existing business. So when you're, when you sell enough Perpetual Teacher, you get to start dabbling in something else. So I think you want to put… like you have to exercise enough before you can have dessert?

That's what I think you want to do, because otherwise you see problems everywhere, but you can't do it in one little company or else you're going to end up with lots and lots of problems. Now you can do it in a bigger company and that's why I like sales as the gate for why you're earned the right to do something else.

[00:17:14] Luís:
That’s awesome. I got it. I got it.

[00:17:14] Frances Frei:
There you go. I’m just going to stop there. Yeah, you got it. Okay. Alright.

[00:17:17] Anne Morriss:
But, but Luís, I want to know the next step you're taking to prioritize and focus the company too.

[00:17:25] Luís:
So… Yes. So if three action items that I have on my agenda is a managing complexity is the first term, term that really stuck in my mind. And I think that we need to simplify the organization in terms of let's manage this complexity. And I really like the example of working out on the candy.

[00:17:47] Anne Morriss:
Yeah.

[00:17:47] Frances Frei:
And now I'm thinking, well, 'cause I have the red dragon, the orange dragon. I have all these things already mapping my book, you know, like what I want to do. But you earn the right to do it.

[00:17:57] Anne Morriss:
Ah, the m—oh yeah.

[00:17:57] Frances Frei:
You gotta earn the right to do it. You gotta earn the right to do it,

[00:18:00] Luís:
But the right to do it, and, uh, it's not going to stop, but at least I can manage when. And the third one is I'm going to be more clear in, in simple terms, you know, map it out. And have everything be able to look at that strategy in the year so they know, oh, we’re doing this because this is happening, but, uh, working on the bottleneck.

[00:18:22] Frances Frei:
Yeah.

[00:18:22] Luís:
I think the bottleneck, you just opened my mind on that, and I'm going to put that in practice. I think that and not taking the focus on generational differences.

[00:18:32] Anne Morriss:
I love it. And Luís, will you call this 30 year veteran back?

[00:18:38] Luís:
Yes.

[00:18:39] Anne Morriss:
And dwell in possibility about how he, she, they could be useful to you in some way?

[00:18:45] Luís:
Yes, absolutely.

[00:18:46] Frances Frei:
Yeah.

[00:18:46] Luís:
N-now I'm convinced that I need that.

[00:18:48] Frances Frei:
You have every single ingredient, and that you have the intelligence and humility and curiosity to call in to get help. I'm sure you do this in every aspect of your life, which is just furthering how confident we are that you're going to be successful. And we are so glad to now be in your orbit. So, thank you.

[00:19:11] Anne Morriss:
I appreciate it.

[00:19:11] Luís:
Thank you very much for the opportunity.

[00:19:22] Anne Morriss:
This conversation made me miss early stage startups, uh, because it, that energy is so infectious.

[00:19:31] Frances Frei:
Oh. I would last five minutes in that environment and I would turn movies on, oh my gosh. I would do so many things, and if anybody asked me to do things, I'd be like, “What? Yeah. I could—”

[00:19:44] Anne Morriss:
“Fuck you, Boomer.” Yeah.

[00:19:46] Frances Frei:
Or “Fuck you, Junior.”

[00:19:48] Anne Morriss:
I know.

[00:19:48] Frances Frei:
I don't think he's got a single generational problem. But to your point, he will.

[00:19:53] Anne Morriss:
But he will, and it will be a high quality problem when it does.

[00:19:55] Frances Frei:
It'll be a high quality problem. I, and here's what I loved about it. You know, it's a little different than the shiny object syndrome that we've seen in the past where people just get distracted by the newness. Like, I think he can come up with 10, 20, 30, 40 legitimate lines of business. So it's not a temporary shiny object, but he's got to pace it, or he's got to be in charge of R&D at a very large company. But if he's going to do it at a startup, to your point, when you were pushing him to pace it, that's exactly right. It's exactly right.

[00:20:26] Anne Morriss:
The question he will get to confront is, how does he build an organization that just lets Luís be Luís?

[00:20:33] Frances Frei:
Yeah. And who knew? Maybe I did. That operations was such, so let's just review some of the operational lessons.

[00:20:40] Anne Morriss:
I know. I, you know, operations, it was not the highlight of my management training, but I did marry an operations professor. So I, I betrayed some respect and affection for the discipline.

[00:20:53] Frances Frei:
Oh, and I see your beautiful operations mind at work all the time.

[00:20:55] Anne Morriss:
I deny it, but you, you are right. Frances, so for people listening who want to get this right in their organization of any stage, where, where do you begin on the strategy front?

[00:21:10] Frances Frei:
Yeah. So. I'll say two things. One is we want to be as clear as possible with strategy because then culture has to do everything else.

[00:21:19] Anne Morriss:
Right. Right.

[00:21:19] Frances Frei:
And so what my ambition for strategy is to lighten the load of culture. Um, but the place where I begin is trying to understand what are the set of things that we can prudently do? And for startups… Oh my goodness, we just have shiny object syndrome, and we want to do, “Oh, I could be helpful here and I could be helpful here and I could be helpful here,” and it's strategic discipline. It's not “Where could I be helpful?”, it’s “Where should I prudently be helpful?” So what are the, what's the small set of things that I can reasonably do with excellence?

[00:21:58] Anne Morriss:
And what is the truism, I think, from your strategy colleagues about strategy being what you don't do, or strategy is what you say no to, or what's like a mantra that I can walk away from this with?

[00:22:10] Frances Frei:
Oh yeah. Yeah, that strategy is best defined by what you won't do.

[00:22:15] Anne Morriss:
Love it. I think I'm going to put that on a little pillow, a little needlepoint pillow for Luís.

Thanks for listening everyone. We want to hear from you too. If you want to figure out your workplace problem together, please give us a call, send us a message, email us at fixable@ted.com or call us at 234-FIXABLE. That's 234-349-2253.

[00:22:40] Frances Frei:
And if you need to watch a movie while listening to the podcast episode, we are totally supportive. Fixable is brought to you by the TED Audio Collective. It's hosted by me, Frances Frei.

[00:22:53] Anne Morriss:
And me, Anne Morriss. Our team includes Isabel Carter, Constanza Gallardo, Sarah Nics, Michelle Quint, Corey Hajim, Alejandra Salazar, Banban Cheng, Grace Rubenstein, and Rox Hai Lash.

[00:23:09] Frances Frei:
We'll be bringing you new episodes of Fixable every week, so please make sure to subscribe wherever you get your podcasts and leave us a review. We love reading your reviews.