Crafting Your Company Culture

In today’s episode we cover the importance of inculcating a strong and healthy culture in your company right from the early stages. Joining us to dicuss this is Ahana Gautam, ( Co Founder & CEO, Open Secret ), along withAvnish Bajaj, (Founder & MD, Matrix Partners ) and Rajinder Balaraman, (Director, Matrix Partners India)

Rajinder: Hi and welcome to Matrix Moments. My name is Rajinder and I am a Director with Matrix Partners. This is a very special podcast. We have Ahana and Avi here. And between the three of us, all three of us went to HBS. And just to set expectations for everyone, two-thirds of HBS is just BS. So, look forward to having a fun discussion with both of you.

Let me do quick introduction. Ahana, thank you so much for doing this. Many of our viewers may not know you. So, I’ll just run them through your background. You went to IIT Bombay first, if I recollect correctly. And then worked at P&G. Following which, you went to the HBS and then moved to Generals Mills thereafter, which is where I guess you discovered and grew your passion for food and organic food products. So, I guess we will come to the story of Open Secret soon.

Avi, Founder & Managing Director at Matrix Partners, thank you for doing this as well. The reason we are doing this podcast is a lot of people are very interested in culture. And culture is this fuzzy topic that founders struggle with early in their company’s journey. My first question to both of you actually is isn’t the first few years of every startup just do or die? Why does culture matter early in a startup’s journey.

Ahana: Right. I would say, firstly, thank you so much for having me here. It’s great to connect with Avnish and have a chat with Avnish, and to talk more about culture is actually even more special. So, going back to your question I would say culture for me very simple. Culture is what people do when no one is watching, as simple as that.

And is culture important at an early stage? Absolutely, yes, because in my opinion the biggest thing for a founder is is to scale things up. And I strongly believe that culture is the biggest enabler for that. You can have the right product. You can have the brightest mind. But if you don’t have the right culture, you will not be able to unlock the full potential of a company.

And just to give you an example, I think there are two kinds of culture. One kind of culture is when you can put notes on your desk. And the other kind of culture is when each and every person in the organization is living and breathing the culture. So at Open Secret, we are very very obsessed about the latter. I am not saying the former is not important, but we are very strongly focusing on building the latter. A very simple example would be you guys are parents. So, if you have a kid, if you want to teach your kids values, how will you do that? Let’s take an example if you want to teach kindness to your kid, you can put imposters about kindness in his or her room. But, the biggest learning for the kid is to see the parent and how that parent is reacting or behaving with other people around them. And that’s how the kid is going to learn the most. So, that’s the reason why it’s very important for us to live and breathe rather than just making bullet points about it.

So, Avnish, you have called me. But if you would have called anybody else from Open Secret, I am sure the words would might have been different but the essence would remain the same.

Avnish: And that’s why she is here. So I think just setting context, this culture podcast has been on my to-do list probably for a year. It was just not coming together. And, we have also realized that having – we are founders first. We would like to do lot more with founders. And we were doing that chat on last week. And from day one, Ahana has been talking about culture. It’s been a learning for me. And very early on culture at entry, looking for people with fit.

We actually interviewed some candidates together. And her line of questioning was very different from – so, I have never done it. Clearly, doesn’t rank very highly. We will come to that. But that line of questioning, I have not seen before. And it just suddenly came together that if we have to do a culture podcast, we should have one our entrepreneurs who is very culture focused as part of it.

I have struggled with it. I remember when I was starting Baazee that ChrysCapital which is our original investor had organized a session. I think he is a HBS guy, but he came and talked about the organization building pyramid. Vision, mission, strategy, org, and obviously culture kind of binds it all together. And I think she put it really well that what people do when people are not watching.

We did nothing about it. It was like he is talking about all this. This is all high funda stuff. We need to go hustle and get things done. And I think what I have realized – so, clearly culture is what it takes to scale is a given. There is no doubt about it.

I think the other question is do you need culture to get to PMF? And I think most of the people including myself at that stage who undervalued culture is that culture gets in the way of hustle. Culture gets in the way of getting things done. I don’t think so. And that’s frankly a realization for me. I think one of the things – no, there are lot of practices I have observed that she does while at entry or how people are managed. But I think if you can have a glue like culture to bind hustle together, you might be able to hustle more as an org as opposed to individual. So that’s been the learning. And it’s been actually very interesting to see that the company – we didn’t introduce the company much, but better for you healthy eating company, Open Secret, for that to start off with that foundation, I think will hold them in very good stead going forward.

Rajinder: So Ahana, Avi mentioned something interesting which is that culture somewhere at Open Secret links back to the product and somewhere links to the people that you look to bring on board as well. Can you speak a little bit more about what that means?

Ahana: Absolutely. So firstly, I would say, Avnish, I completely agree with you that culture plays an integral role even at an early stage of a company. And the reason I say this because culture should tie back to the mission statement of the company. So even when you go out talking to other people for candidates as an organization you should be very clear about the culture that we want to build because culture should not be copied. Every founder is solving a unique problem in a unique way, so it has to be very very authentic to who you are and what your DNA is. And you can take inspiration from other companies. For example, you can learn the customer obsession from Amazon. You can learn about aspirational products from Apple. But again going to the mission statement that you have, how do you build that culture which can enable you to attain that mission.

So just to give you an example, for us, we are very clear that our mission is we want to create family’s most loved brand. And in order to do that, we understand the importance of interdependency. So a marketing person needs to ensure that consumers are loving the product and buying the product. But, they can’t do it without the support of the sales function which will ensure that the product is available. And sales can’t do anything without the supply chain which will ensure that the demand is the met by the supply. So for us, this interdependency has resulted in a very core value for us, which is care.

So care is extremely important for us. So when I am interviewing candidates, there have been instances when the person had the perfect domain expertise for the role, but we realized that the person didn’t have the right empathy and didn’t fit the culture. And culture is one piece where we don’t want to compromise on. And we have seen results where care has resulted in people bonding together and go out of their way to support each other.

And again, I would say that when you think about the care, the first thing you can say, okay, everyone talks about the product. You can care about the product. You will care about the consumer. When I say care, you should think about in every decision that you are making. So, for example, when Udit my co-founder and I, we were looking for a manufacturing location. So, we visited lot of places. We went to Bhiwandi. We went to Navi Mumbai. And we were running against time. And all the places had shabby toilets. And then we realized that we will ensure that we are providing proper working conditions to people who will be working on our assembly line.

So when the organization sees the decision that we are making that when we think about care, it’s not about consumers. It’s not only about product. It’s not only about employees. It’s also about the contractors who are making the product, then everyone starts living that culture and becomes part of the DNA. So if you think you are not a cultural fit to the organization irrespective of brilliant you are, it will be not a good place for the person to get fit in.

Avnish: I think that’s very interesting. Maybe we need to think about care and empathy as Matrix value also. But tell me something, give an example of, obviously without naming, the person, you said somebody was very brilliant and you didn’t hire them because they were not a cultural fit. Let’s take care and empathy, what question did you ask to figure that out?

Ahana: So you will give them a situation. Because if you ask someone do you care about the planet, everyone say, yes, I do. So you will give them a situation and you will see the response. So for example, there will be a situation, what will do. And if the person is very individualistic, when the person is only thinking about their won core responsibility without bringing the other functions, then you know that the team building won’t be there. So mostly it’s from a case situation. It’s never a direct question.

Rajinder: How do you institutionalize this? Because it’s one thing for you to be driving this line of questioning with candidates and to be on the shop floor in Bhiwandi. But as you scale, there is going to be other people. And you said at the start that culture is what you do when you are not watching. How do you institutionalize it and how do you get other people live it?

Ahana: I think that’s a brilliant question because I think I would say that we are doing it at this stage, but I also think about continuously because now we also growing at a rapid pace. As we are bringing more and more people to the organization, one of the biggest challenges is how to ensure that we are living this culture

So, couple of things that we do. I think I was talking to someone and they mentioned about - in order to build a culture there is offsite. There are foos tables and all of that. I think these are table stakes. So when I say that I am building a culture, it’s not about through offsites. These are important. I will not deny.

Avnish: They are rituals.

Ahana: They are rituals which you will do it. But, you need to build a muscle. So for example, just to give another core value for us is learning. So if I really need to ensure that learning is an important part of our culture, as a ritual what we do every Saturday we have this leadership connect where for couple of hours we do the start, stop, continue where everyone questions everything that we do.

Avnish: That’s your P&G roots coming out.

Ahana: Actually that is true.

Avnish: We do that at Matrix also.

Ahana: Yes. So if I just do it on a Saturday basis and expect people that learning become a muscle, then I am not doing my job. What we ensure that that questioning, that challenging the status quo happens in each and every meeting. So some of the things that we have done is there is absolutely no hierarchy in the organization. Everyone is empowered to I would say list down their points, and ideas are weighed based on merit and not based on the position of the person who is sharing the idea. So that is like one example I would say.

Second, we really celebrate when people are challenging and even people are asking why whether it’s a sales meeting, whether it’s a marketing meeting. And you really see good ideas coming out because all of us we come from consumer goods background. So we have a huge baggage. And I remember in one of the sales meeting we were discussing, okay, should we get a small distributor at this level or should we get a big distributor at this level. And someone who had absolutely no sales background asked a simple question why do we need a distributor.

And then we realized actually that’s a great point because if we can eliminate that middle man at an early stage, we have direct access to the store. We are getting the feedback from the consumer. We would never have been able to arrive at this situation if we were not empowering people to just ask the question why. So it’s in every single meeting that they do. And culture is something which you can’t articulate. You have to spend the time with the company. You see how they are operating, how they are breathing in those learning things, and that’s how you realize it.

So these are some of tricks that we leverage and we do in order to ensure that we are building the core values.

Avnish: Very good. So I know you have - very early you articulated brand values. And you said this is kind of North Star or what we will measure every move we make for the brand again. Is there an equivalent for that internally? And how tightly aligned are they? And maybe you might want to give out 2-3 of those values.

Ahana: Absolutely. So I think four core values. And I am sure this might evolve. But today the four core values, first is care that I already spoke about. The second is learning. And why? I think I have spoken about why care is important because the interdependency. Why learning is important for us is because we want to reimagine the value chain of FMCG.

So, every core value you will see has a business outcome. So these core values are not just because we want to tell people that we are building our culture. It’s because it’s contributing to the business. So that’s why learning is extremely important. We can challenge the status quo only when we are doing it.

The two other values, I would say the third is purpose. Purpose is extremely important. It’s also very personal to me. So that’s the reason whenever you will hear about Open Secret, we will keep talking about the purpose of enabling mothers to make winning choices.

Mothers every single day and I am sure you guys would know that they live with a guilt. Guilt of giving junk to their kids. Guilt of not spending time with their kids. With a product, we are trying to solve that junk guilt. With a packaging we have a place where you can write a small note which a kid can open and see. So we are trying in our small baby steps way to ensure that we are fighting against the guilt.

But I would say purpose goes beyond that. For example, the purpose is this – the purpose of enabling women is also very personal to me because in my own personal journey I have seen lot of times where women didn’t get the equal opportunity. So when we are doing hire especially for our manufacturing, every other contractor is a woman. And that’s a conscious call that we have made because we strongly believe and actually I personal believe that if you want to empower a woman make her financially independent. So again, it’s based on the brand that we are doing. It’s also the hiring that we doing. It ties back to the purpose.

And the fourth thing, I would say which is extremely important is integrity. That especially at an early stage, we really want to ensure that we are doing right thing. And I don’t know if you guys remember Clay Christensen. He is my favorite professor. And he said something which is so powerful. He said it’s easy to do things right 100% of the time than doing it right 98% of the time because it’s a slippery slope. You allow yourself that flexibility of 2%. Two percent will become 10 and then 10 become 50. We don’t want to reach that stage. So, we really want to ensure that we have a very high integrity.

So to summarize, I think care, purpose, integrity, and learning. These are the four core values of Open Secret. And I am hoping if you talk to anyone from Open Secret, they will give you the same answer.

Avnish: I am sure. They are listening to you. Just on this purpose thing in the context of some of the other conservations we have had on Matrix Moments, I think she really exemplifies the passion skill set opportunity. Skill set was really there with all the training given outside of HBS. The passion and purpose, I think it’s very critical.

And to your last Ahana and to the comment you made, I think the difference between leaders and managers, and I don’t know if this comment also came up in HBS, is that leaders always do the right things. Managers do things right, right? Because one could argue integrity table stakes, but actually shockingly sometimes that black and white view of the world is not.

Ahana: Yes, absolutely.

Rajinder: Avi, you have actually done a podcast Org 3.0 which for founders who have actually started thinking through different stages of their journey. Once a company scales up and when new people come in for every successive stage, how does the culture kind of get managed? You have seen many company scale, how do they maintain some of the culture with new processes? Doesn’t culture kind of just go through a reset and it sounds…

Avnish: I like how you are cross-promoting your other podcast. I don’t have the answer yet. I have the question very clear in my mind. And I mentioned this in other podcast of ours. I was reading a book which was taking – we have talked about 0 t 1, 1 to 10, 10 to infinity as different phases of building a business. And therefore, Org 1, Org 2, Org 3. Because net net, 0 to 1 is doer; 1 to 10 is doers plus thinkers; and 10 to infinity is thinkers who manager doers. This is actually in some way or form the reality. Sounds hard to believe that the same culture will survive. And we have had this discussion by the way internally at Matrix about a wartime culture versus a peacetime culture. And, we as Matrix are more of a wartime organization. But I think people like her, who think very early about it, I think it’s a tough one to navigate by the way.

If you get a good combination of wartime and peacetime culture going right at the start, you can probably do it. Changing wartime to peacetime is very hard. Changing peacetime to wartime is very hard. And I don’t have the answer, but I think binding the values, being cognizant of it along the way, and in some ways having culture carriers like he mini Ahanas, picking out 4-5 people who you know are doing both because they are driven by both early on will set things up well.

Most organizations if we take the most famous examples, you take Facebook, Google, Apple. Steve Jobs came back, complete wartime culture. But by the time, he passed away sadly, Tim Cook had been given – he is a complete peacetime CEO, yet the company has become a trillion dollar market cap under him. Mark Zuckerberg bought in Instagram. He is a wartime guy. And then she brought in that whole piece.

So, I think the advice to founders to recognize that these are different phases. They are hard to navigate. Figure out where you are more naturally inclined. Entrepreneurs tend to be more naturally inclined towards hustling. She seems like a very interesting very early mix where you are thinking long term. But otherwise, complement yourself early on. Again I can give the Google story. Same thing, right? And all of them went through this journey with one different cut on the management team for some period of time.

Ahana: Got it. Is there any insight behind this peace where companies which focus a lot on culture that their retention was higher? Maybe the long-term results were better?

Avnish: Oh, yeah, yeah. So, I was with they will get plug in this – I was with Spence Stuart guys this morning. They are very focused around this culture and they call it the engagement metric. And if you were to take a customer level view of it, it is the NPS score.

A lot of organizations including Matrix in the top quartile top 20% are in the 55 to 60%. So if you think of 55 – 60% NPS, it’s outstanding. The greatest ones, the best ones are 70% plus which is again your Amazon, Apple type, but I am saying equivalent of NPS.

They say there is a lot data and correlation that shows that the greatest companies with those they out execute their peers. So it’s very clearly the case. The challenge is to get from negative to 20 is easy – very easy. To get from 20 to 60, little bit harder, but still enough tangible stuff. I think 60 to go that requires a very different level of leadership from top as well as potentially even change management. But I think you are on a good track because you are starting with that thinking. To bring that in later is just much harder. Then you have to do all this change management stuff.

Ahana: Yes because I think unlike strategy which is more top down, culture is a shared phenomenon. So it’s not that okay, now I have decided from tomorrow onward, this is the culture of Open Secret. It can’t be. You need to ensure that everyone is on boarded on that journey. It will be super expensive. It will be super time consuming. So that’s the reason why we are focused on culture from day one.

Avnish: And actually to this point, if you have to make a change, it has to be co-creation. It cannot be the leadership has decided and by definition it doesn’t work like that. So, you have to setup a co-creation, re-culture and be patient. It will take, depending on the scale of the organization, between a few quarters to several quarters.

Rajinder: There are lots of startups today where people praise the culture out there in the startup ecosystem in India today. And there are some which haven’t earn that praise as yet. Are there companies that you have looked up to and said, hey, these are companies I would like to kind of model some of what we are building at Open Secret around? And similarly, Avi, question to you are there cultures that you look to and say within the startup ecosystem in India, hey, these guys have done something unique?

Ahana: I will say one example which comes to my mind is Procter & Gamble. And I would say I am also very fortunate that my training happened there. And it’s surprises when you say that you have to change the culture and there will be change management. I am very amazed the Procter & Gamble has ensured that the culture is pretty much the same. The company is what? More than 180 years old. Across different countries, across the globe and you can visit any office, you will get the same vibe. And I think the reason why because they have managed the culture from the very beginning. And even from their hiring process is also very different.

When you think about the hiring process of P&G, for technical roles also they will not be asking technical roles. It’s very very much about your culture fit. So they ensure that they are getting the right people in. And hiring is just a first step. They also ensure that they providing the right environment so that the people who are coming in can flourish, can ensure that they are doing well. So lot of people say that once you get in you are procterized because of the great culture that they have. And I think that has been a big inspiration to me.

Avnish: I don’t have any particular examples for India. I would say at entry, selecting the right people. Sometimes if they are not – I was just listening this morning in the same meeting and the advice was if somebody is not fitting you have to let them go also very early because even with your hiring filters, you may get it wrong and then embodying day to day

I think there are lots of examples of companies that are - you have to be multi-decade old to have seen every side of it. I think just one contra view on some of this is in the fast pace mode, sometimes that can also become a liability because it is conforming to a certain set by definition. So I think that’s going to be some of these organizations are getting challenged also

I look at all these companies we spoke about, now, Amazon I know there was an article that the culture is not that great. From the outside, it felt like really strong. I mean they are all so tight and there is this Amazon way and customer obsession. So that is a company I have always looked up to in addition to Apple which has navigated it really well because I think that’s the harder thing to do.

Rajinder: And my final question. Who do you talk to when you are thinking about culture? Like is this something that you do openly at work? Is this something that is discussion every other week? Like who do you talk to when there is things that you are thinking through about culture and whether it needs to change?

Ahana: I think as I said like culture is a shared phenomenon. So, it’s not that I will have a monthly check-in with everyone. It’s on a daily basis. In a meeting are we actually staying true to our core values? And this is something that you have to live and breathe. It’s not a question that I am going to ask you, hey, Avnish, do you think I am caring enough? No. So, you have to experience it.

So, for us, there have been instances when there have been meetings where we were not living up our core values. And I had personally interacted with the individuals and clarified like what has been the issue. There will be moments. It’s not that it is all perfect. But I think as the CEO of the company my most important job is to ensure that we are living up to the values that we have created.

Avnish: Very well said. I think that’s the best last word on this. Ahana, it’s been great listening to you and learning from you on this front. I think, like I said, you are on to something which is a very strong foundation which is sometimes not valued early enough. So, keep it up.

Ahana: Thank you again for having me here.

Rajinder: Thank you.

Salonie: Thank you for tuning in.You can find more information on Open Secret here.You can also follow us on Twitter and LinkedIn for more updates.