Reflections on Management and Corporate Culture: An Infinite Game

While they might seem idealistic, their existence allows us to imagine possibilities beyond reality.

This year, I extended my thoughts on managers and management styles, and explored the role of corporate culture.

1. Managers

Last year, I discussed the example of Stephen Schwarzman in choosing a job, realizing that an interview is essentially an assessment by the candidate of the interviewer. Google, for instance, selects candidates who they would be comfortable spending five hours with during a delayed flight. Similarly, when choosing managers, we should adopt the same mindset.

However, in the entire process from interview screening to management assessment, companies provide comprehensive training and evaluation systems for interviewers. As interviewees or subordinates, our assessment of managers often comes from scattered experiences of ourselves or colleagues, highlighting an information asymmetry.

A key theme this year is understanding what constitutes good management from the perspectives of both companies and managers, then comparing it with the employee perspective.

i. The Focus of Managers: Building Teams Rather Than Doing Tasks

All companies, regardless of type, assess teams and individuals based on output. For team managers, the question is whether the focus should be on their personal output or leading the team to collective output. In other words, should managers be doers or leaders?

I once read an interview where a manager allocated 70% of their time to tasks and 30% to leading people. Contrarily, Intel’s former CEO, Andrew Grove, in his book “High Output Management,” discusses the concept of “leverage.” He believes managers can use positive leverage, such as inspiring their teams for greater output. This implies Grove’s advocacy for managers to spend more time leading rather than doing.

ii. Manager-Employee Interaction

Before discussing how to lead, the importance of interaction between managers and employees must be understood. From a company’s perspective, Bill Campbell, the “Trillion Dollar Coach” who advised CEOs of major tech companies like Apple and Google, emphasized the principle that “people are the most important.” From an employee’s perspective, Google’s “Project Oxygen” assesses managers because good management is deemed as vital as oxygen. Many examples show that managers significantly impact the work experience and can be a primary reason for employee turnover.

So, what should the interaction look like from both company and employee perspectives?

Let’s consider the approaches of Grove, Campbell, and Kim Scott, who taught management courses at Apple University:

• Grove’s positive leverage includes empowerment, motivation, and training. Empowerment means managing subordinates through one-on-one meetings or by providing guidance; motivation varies with job maturity, offering clear instructions to less mature employees and emotional support to more mature ones; training is essential for enhancing employee capabilities.
• Campbell emphasizes “support, respect, and trust” in employees. Support includes skill development, providing necessary tools, information, training, and guidance; respect involves understanding employees’ career goals and personal choices, finding alignment with the company’s needs; trust means believing in employees’ capabilities and intentions, allowing them autonomy in their work.
• Scott advocates for “radical candor,” combining personal care (understanding employees on an individual level) with direct challenges (guiding employees through direct and timely feedback). This approach is about respecting individuality, finding the right motivation, and providing support and trust. For example, how would you remind your colleague forgetting to zip up their trousers?

Returning to the initial question of the differences and similarities between good managers from the perspectives of the company and the employees, the answer seems to be that in a company valuing long-term development and individual worth, effective managers address both these aspects.

Interaction involves both parties; aside from manager-subordinate interaction, there’s also upward management (Manage Up) as often discussed in workplace experience posts. However, this perspective is less systematically explored. A vague idea, mentioned in Netflix’s book, suggests that while employees should manage their career paths, upward management is only a minor component, not the main focus.

iii. The Utility of Reflecting on Management

A podcast I listened to discussed the boss’s perspective, where employees should unconditionally obey decisions. If I had heard this as a recent graduate, I might have accepted it, assuming the boss knows more and thinks better. However, with more experience, I’d consider seeking more information to understand and communicate the manager’s reasoning. If a boss merely views employees as task executors, it might be worth reassessing the suitability of such a work environment for long-term development.

Having a look at these “idealisitc” management styles is crucial. While they might seem idealistic, their existence allows us to imagine possibilities beyond reality.

2. Corporate Culture

My awareness of the importance of corporate culture began with the “Netflix Culture Deck.” This year, as I followed the development of SaaS companies like Stripe and Shopify, I delved deeper into this theme.

i. The Importance of Corporate Culture

Before discussing what makes a good corporate culture, let’s consider why having one is crucial.

Focusing on the internet industry, the narrative of success in Silicon Valley’s previous generation revolved around all-nighters and rapid iteration. In contrast, the new generation of SaaS companies emphasizes “long-term patience.” For example, Salesforce, founded in 1999 with its SaaS software model, and Atlassian, established in 2002, focusing on office collaboration, both achieved solid product and market foundations over decades.

This is characteristic of B2B companies, different from the explosive growth strategies of consumer-oriented businesses like short video platforms. The moat for SaaS companies lies in addressing genuine user pain points with conviction for long-term investment. However, resisting short-term thinking and fostering long-term development require a company culture where all employees have the vision and belief to invest in the same direction.

Ben Horowitz, co-founder of a16z, mentioned in “What You Do Is Who You Are” that company culture permeates every aspect of an employee’s work, providing guidance in the absence of management. This ranges from small decisions like when to go home, to larger issues such as speaking up about significant company problems. Shopify’s CEO Tobi repeatedly emphasizes building a company that employees would want to work for in the next decade, the importance of clear context for innovation, and hiring employees for long-term collaboration. Such advocacy from the company and the embodiment of these principles by management subtly influence employees’ daily work behaviors.

Some might argue that setting annual targets for market value, sales, or user growth suffices as guidance for action. However, Simon Sinek in “The Infinite Game” argues that these quantitative metrics fail to address the fundamental purpose of a company’s existence. For example, if you ask someone where are you going for vacation, the answer is I plan to drive for xx miles per day. Focusing solely on growth for growth’s sake is insufficient for sustaining long-term development and prosperity.

ii. What Constitutes a Good Corporate Culture

From the abstract discussions in “The Infinite Game” and “What You Do Is Who You Are,” to specific company cultures in books like “The Surfboard Company,” “Netflix Culture Deck,” and “Tsutaya’s Business Philosophy,” a good corporate culture seems to be one that meets user needs, values employees, and partners.

1. Meeting Genuine User Needs

Companies might set profitability as a goal, but it should not be the ultimate objective. Ideally, a company should satisfy user needs and solve pain points through its products, finding a sustainable business model for continued existence and growth. For instance, Patagonia was founded to meet the founder’s climbing needs, producing functional and attractive climbing gear. From its inception as a climbing equipment company to its current status as an outdoor sports giant, Patagonia has always hoped its employees would establish a direct connection with the products, thinking from the user’s perspective. Therefore, it continues to recruit employees who are actual customers of Patagonia.

Another approach is creating a work environment where everyone thinks like a user, collectively advancing product development to meet user needs. For instance, marketing teams delve into the root of user needs, synchronizing this information with product development teams and sharing user issues. Product development teams should learn basic customer service knowledge, innovatively proposing solutions that originate from user needs. As Netflix has pointed out, the greatest long-term threat is not making mistakes but a lack of innovation and failure to satisfy customer entertainment needs, which could lead to market elimination.

Additionally, service teams directly related to user needs are equally important. Customer service teams are often considered secondary within companies and outsourced to save on labor costs. However, Netflix believes that business success is closely linked to frontline teams interacting with users. “Every interaction with a customer influences whether they will recommend our product or service to others,” Netflix teaches its customer service teams to understand the company’s financial reports, operations, critical business issues, and their contribution to the company’s profits, fostering a highly professional customer service team.

2. Free Flow of Information, Empowering Employees

In many corporate environments, the flow of information is typically restricted by various barriers, such as hierarchical layers. Strategic changes and organizational adjustments are often discussed at higher levels and communicated to employees at the last minute. Inside teams, salary levels are closely guarded secrets, and limited information is shared between competing teams. However, companies like Netflix, Patagonia, and Tsutaya emphasize the importance of free information flow.

Why stress the free flow of information? The “Netflix Culture Handbook” mentions, “Employees need to view things from the perspective of top management to genuinely connect with the problems that must be solved at all levels and in all departments. Only then can the company identify issues and opportunities at each stage and take effective action.” In “Tsutaya’s Business Philosophy,” Masao Tsutaya discusses nurturing employee self-awareness and keeping the company abreast of changes. Since its inception, he has strived to create an organization that operates spontaneously through comprehensive information sharing and collective conscious thought.

This can be understood as a shift from traditional top-down, centralized management to a decentralized decision-making system facilitated by the free flow of information and empowerment. Specifically, it involves recruiting suitable employees, allowing free information flow, and empowering them to make decisions and bear responsibility.

To what extent is information shared? These companies mention that, aside from personal privacy and trade secrets, employees can access all information related to the company’s development, from customer feedback to financial status.

“Reinventing Organizations” discusses scenarios of whether financial reports should be disclosed to employees beforehand. If committed to transparent information sharing, a company would inform its employees before releasing financial data to Wall Street. However, premature leaks could lead to insider trading or stock crashes. Netflix’s approach is to regularly synchronize important operational and financial data with its employees before public disclosure, making them aware of their work’s connection to company development, while also emphasizing the risks of information leakage. To date, there have been no leaks of Netflix’s financial information, and operational information continues to be shared with employees even after isolated leak incidents.

The free flow of information fosters a sense of ownership among employees and encourages them to take on corresponding responsibilities. This demands the recruitment of individuals who respect this freedom and responsibility, which is why Netflix emphasizes hiring adults capable of judgment and decision-making.

Effective implementation of a good corporate culture goes beyond slogans; it requires embodiment by management. For example, in a company that values punctuality, if the CEO is consistently late to meetings, the cultural message loses credibility. Conversely, in a company advocating work-life balance and efficiency over long hours, if the CEO leads by example in leaving on time, this cultural aspect is more likely to be embraced and implemented—just as CEOs of companies like Slack and Shopify have demonstrated.

3. The Impact of Company Size and Industry on Culture

As companies grow, maintaining culture becomes challenging. Large companies risk becoming mediocre without a culture that values transparency, openness, authenticity, and real value. Small companies focused on user needs can outpace larger ones that deviate from their core culture.

In conclusion, good corporate cultures across industries and sizes share traits like prioritizing user needs, ensuring information flow, and empowering employees. These cultures are essential for sustainable growth and innovation, playing an infinite game where participants are encouraged to continue playing together.

iii.Company Organizational Forms and Culture

Of course, the organizational forms of companies vary across industries and sizes, which in turn affects the philosophy and implementation of corporate culture. However, there are some commonalities.

1. Different Industries: Free Flow of Information

The corporate cultures of companies like Intel, Google, and Apple, which seem to stem from relatively innovative tech industries, underscore this point. The founder and CEO of Orange Dental, in a podcast, expressed respect for Netflix’s talent management approach but noted its specific applicability to certain industries and periods.

Indeed, there is no one-size-fits-all management approach, but some fundamental principles, such as empowering employees through free information flow and appropriate decentralization, transcend time and industries. For instance, in the American retail industry of the last century, Sam Walton mentioned in “Made in America” that even part-time Walmart employees were aware of the store’s profits, inventory, sales, and discounts because “sharing information and responsibilities is at the heart of any partnership. It engenders a sense of responsibility and participation.”

2. Different Sizes: Transparent, Open, and Authentic Product Culture and User-Centric Focus

When a company is small, its culture is easier to implement due to a manageable workforce. However, as a company grows, organizational rigidity and mismatches between culture and product development can occur. Chamath Palihapitiya, an early investor in Facebook and founder of Social Capital, mentioned in a conversation that large companies inevitably regress to mediocrity. The senior management team can prevent this only by valuing and promoting a culture of transparency, openness, authenticity, and genuine value over perception.

And my realization was every company gets there eventually. and what matters is the last word. The challenge of a senior executive team is to prevent that regression to the mean, and culture is the only thing that does that. A culture that values transparency, openness, authenticity, and value over perception. It’s not about politicking, it’s not about managing up, it’s about doing good stuff.

Ben Horowitz in “What You Do Is Who You Are” stated that for a company to develop well, the product comes first, followed by corporate culture. However, the culture ultimately reflects on the product. A YouTube blogger mentioned that small companies can surpass internet giants like FANG because, after reaching a certain scale, large companies stop creating value for users and focus more on corporate maneuvers—a deviation from culture. In contrast, small companies, focusing on one area and driven by user needs, can carve out a niche for themselves.

3. Different Organizational Forms: Empowering Employees

On a higher level, the essence of a company is a human innovation in collaborative organizational forms, enabling large-scale endeavors. In the future, collaboration may not only occur within companies but also through other forms like Decentralized Autonomous Organizations (DAOs).

3. Conclusions

Reflecting on the diverse landscape of today’s business world - from the dynamic energy of internet startups to the established might of retail giants, and the innovative structures of Decentralized Autonomous Organizations (DAOs) - one compelling truth emerges consistently. Our exploration, from the insights of Google’s ‘Project Oxygen’ to the transformative culture at Netflix, reveals universal pillars of enduring success: a profound respect for user needs, the unbridled flow of information, and the empowerment of employees.

These elements transcend mere industry trends or organizational structures; they are the bedrock of businesses equipped to thrive in the ‘infinite game.’ They echo the philosophies of visionary leaders and companies we’ve discussed, illustrating that, regardless of scale or sector, these principles are instrumental in shaping sustainable, adaptable, and forward-thinking enterprises.

In my own journey of understanding and application, these insights have not only illuminated the ideal work environment but also inspired a deeper reflection on my previous professional setting. As I continue to navigate the complexities of the business world, these principles serve as a guiding light, reminding me of what truly fosters long-term success and innovation.

The original article was written in Chinese in 2021. The translation was performed by ChatGPT with my revisions.