How to Build a Thriving Company Culture

The CEO has to be the good match for the CEO. Most of my COO alliance members would be horrible COOs for all the other members of the CEO alliance companies, the common skills that they have are they're good at situational leadership, they're good at building consensus, they're good at fostering debate, they're good at project planning and team building, they're often good at collaboration. But they need to be good at all of the functional areas that they're going to be reporting to them. And, and that's different on a CEO to CEO basis. I was given that moniker by the publisher of Forbes magazine. So Rich Karlgard has been the publisher of the physical print of Forbes and online for about 20 years now. He has seen me speak about four or five times and gave me the nickname the CEO Whisperer. Because I'm often behind the scenes talking to CEOs of these kind of 50 to 500 person companies. And I've worked behind the scenes with CEOs in 28 countries. Now I'm including at the highest level, I coach the CEO and the second in command of Sprint. I coached a monarchy, they own the country of Qatar. So I coached the royal family on running their groups of companies. So I've always worked behind the scenes teaching the CEO what has to happen and then often working with their COO on how to make it happen. It was Thomas Edison that said vision without execution is hallucination. And I think so often entrepreneurs have the kind of trendy visionary title, but the only ones who actually are visionary and can actually make it happen are the ones that can either execute or that they have that operations type person right beside them. The very first business that Elon Musk built was called Zip2. And in January of 1995 I got a phone call from his brother Kimball, who had just finished working for me for a summer running a house painting business. And the company that was going to invest in Zip2 would not invest in Elon Musk because he was too visionary. Too out of the box, had never done anything. They actually backed Kimbal Musk and put all the initial money into Zip2, which was what they sold for 350 million prior to selling PayPal. So their first company was funded based on the COO experience of Kimbal, not on the visionary. You really need to have both parts for anybody to believe in the company, quit their jobs come or to just even scale. Every good CEO has that second in command. Without it, it's really, really tough because the visionary role is so particular. It's almost like a homeowner who's building their dream home. I need to be able to visualize what my home's going to look like, how it's going to feel, what the cabinetry might be like, what the flooring is like. But I don't have to be good at making it happen. I shouldn't be a good electrician or a plumber, but I should know how to get a contractor, the COO who can hire all those people like the leadership team and frontline staff to make my vision come true. And I think that's where the beauty of the CEO COO relationship is. I run an organization called the COO Alliance. So I have second in command COOs that are members from countries all over the world. My job is working with them to help them balance and become that real yin and yang with their CEO. So even in my book called the Second in Command, I talked about how do you find the right person? How do you build a relationship with the person? And a lot of it starts with understanding yourself as the CEO first. Where most CEOs go awry in their first couple of hires and trying to hire that second in command, regardless of the title, they don't do a deep enough dive on themselves. What do I love? What do I hate? What am I really good at? Or what are my unique abilities? What do I suck at? Or what am I just okay at? What fills me with energy on a day to day and what drains me? And then how can I hire somebody who can do all the stuff that I hate, can do all the stuff that drains me of energy, can do all the stuff that I suck at and they match me in terms of core values. They match me in terms of the scale of the organization. Maybe they can bring in more strategic insider P and L responsibility or autonomy. It's a very different hire than hiring ahead of any other functional area that just has to be good at that area. This you're hiring your business spouse as well. I left the organization 1-800-got junk 17 years ago. I was the CEO of that business and it was the fourth business that I built. And in building those four companies, I noticed that there were lots of organizations that were there to grow and mentor and give skills and confidence and connections to entrepreneurs. Right? We had ypo, we've got Entrepreneurs Organization, Vistage, Genius Network, Baby Bathwater, Go Abundance. There's so many organizations for the entrepreneur to go and learn from each other. And then there's lots of organizations for marketers and engineers, in fact, like there's trade associations for virtually everything, but there was nowhere for that second in command to go. So what happened was we kept going to these entrepreneur events and we just didn't fit in. It's very similar to a husband that goes to a baby shower. It's like you're not supposed to be there. Even in this day and age, it's really there for the women. Like, so even if we're showing up, we just know that we're in the wrong space. COOs are not more operational lensed CEOs and men are not hairy versions of women. So I created the CEO alliance as a place for COOs to go without the entrepreneurs there, without the distraction of the visionary and a space where they can connect with themselves, connect and grow their skills, grow their connections and network of people they can rely on so they're not as alone. And then also work on shedding that imposter syndrome and the confidence that many CEOs and frankly many CEOs have as well. And this is what's so hard about them is it's almost like saying what makes a great wife? What makes a great wife is a female woman who matches the husband that she's marrying. Because, you know, my wife would be a horrible wife for lots of other husbands and lots of their wives would be a horrible wife for me. So the COO has to be the good match for the CEO. Most of my COO alliance members would be horrible COOs for all the other members of the CEO alliance companies because the common skills that they have are they're good at situational leadership, they're good, they're good at building consensus, they're good at fostering debate, they're good at project planning and team building, they're often good at collaboration. But they need to be good at all of the functional areas that they're going to be reporting to them. And that's different on a CEO to CEO basis. When I was the COO for 1-800-got junk, I did not have finance or IT report to me. I had the product development team of IT report to me. I had sales and franchising and corporate operations and the call center and PR and marketing, all reporting to me. And then I have other members of the CEO alliance who don't have marketing and they have finance or they have legal, but they don't have it. Because whatever the CEO is great at, they're going to keep. And in some cases the COO is very outward facing. Like I was a lot of speaking pr, marketing, business development, and then in some cases they're very inward facing. Even the current COO at 1-800-GOT junk never talks to the media. Never, never does. Speaking is a very inward facing process, operations, culture and strategy coo. So there are these commonalities around leadership, but not around the functional areas they need to be strong at because that's the match to the CEO. COOs tend to be that level five leader that Jim Collins talks about in Good to Great. It's that drive to succeed, but the humility. There's no need for most of them to actually be forward facing. Now the only time that even I wanted to do it for one and Tender Got Junk was it was good for the brand because I had built other franchise organizations already. We were leveraging off of that credibility. Right when I had already built out Boyd Auto Body and what became Gerber Auto Collision in the US or College Pro Painters, we were relying on some of that as the reason to buy into or believe in what we were doing, right? So we were leveraging that. The current COO of Shopify as an example is a very outward facing coo. And then you take the past COO of Facebook, Sheryl Sandberg, she was a very inward facing coo. She never spoke to the media until post leaving Facebook. Harley Finkelstein from Shopify is always talking to the media because his CEO counterpart, Tobias Luque, is a very inward facing, engineering and process focused CEO. You know what tends to happen for the CEO, the visionary entrepreneur, is they're worried if I delegate all this stuff to a second in command, what's my job, what am I doing if I'm getting rid of all that stuff that used to report to me and they forget that their role is to be the caretaker of vision, of strategy, of culture, of people and really to be thinking about board and compliance and kind of the legal stuff as well. Like they really need to be thinking of the whole business more holistically. And if they don't have time to grow people, they don't have time to grow the confidence and skills and connections of their leadership team. They're really missing a huge opportunity. So getting that second in command that can take care of operations and the projects and the times and the people so the CEO can stay in their unique ability zone of genius frees up their time. But then they often need some coaching and ideas around. What does my day entail now? Right. How do I do otherwise? They start meddling or you know, seagull management, right? They fly in, they all overbody and they fly away. That's, that's often a board CEO, right? It's a CEO that doesn't know what their swim lanes are and where to focus their time. So they get distracted instead of realizing, point out the problem, let the CEO take care of that problem. But if the CEO wants to protect their brand and that cultural impact they have is that kind of cultural icon in the business, they can't be the one all over everybody, right? And the COO can often do it in a much better way. And then the CEO can make the CEO look good, while the COO is making the CEO look good. For most entrepreneurial CEOs, they've really never been trained on the pure leadership skills that they actually need to run a team of people. They can be very good at the functional area of their business. Maybe they're great as marketers, or they're great as salespeople, or they're great with their engineering of the specific product. But I'll ask you a couple questions as an entrepreneur. How much training have you had on running proper job interviews, like on interviewing and hiring people? If you're in a company of plus 250 people, you tend to start getting some training from the leadership team or the HR team, right? When you're in a company of less than 250, have you ever had training on how to run effective meetings? Or have you had training on situational leadership or on running one on one coaching meetings or running managing conflict or classroom teaching like time management, project management, delegation? And with, with running these businesses and not having those skills, the CEO needs to know this stuff has to be happening in our company. But I'm never going to be the one to teach it because I don't even know how to do it. I need a COO that can come in and plug in stuff. Like, I launched a course called Invest in your leaders, which covers all of those skills I just rattled off. But a COO has to be the one that's integrating and teaching that stuff inside of the organization. Otherwise, it's just, you know, you're herding cats. You're constantly trying to hold people accountable. Instead of hiring accountable people, you're trying to clean up messes. You're always frustrated with stuff not being delivered. That's usually an operational sign that the CEO really needs to free up and then work, you know, in their unique ability. The first part is creating a mindset that the leader's core job is to grow people. So if you're a CEO and you've got five people working for you. If you're an entrepreneurial company, you got 30 people for you, whatever it is, Our job as leaders, whether we're managers, directors, VPs, or C level, is to grow people, to grow their skills, to grow their confidence, to grow their connections. Very similar to being a parent. Our job as a parent, yes, it's to show love to our kids, yes, it's to be there for them, but it's to give them the skills and the confidence so that they can do all the that they need so they can move out of the house one day and become adults. And if you don't teach them how to do laundry and do cooking and do some painting and do some basic car repairs, they're not going to have the confidence to get out of the house. At 19 and 20. Our great grandparents were running companies at 14 years old because they had the confidence and the skill set. So our job is to grow the skills and confidence and connections of our people. So one way to do that is create that mindset in your company. A second way is to put a budget in place. I suggest a minimum of 1% of their annual compensation or $1,000, whatever is greater. So if somebody's getting 120 grand a year, put $1200 into a budget to grow them. You could have one person come in and do a speaking event to 15 people. So you got the one person's fee covering over 15. You could have a book club on a monthly basis. You could send out videos for them. You could put people through my invest in your leaders course, which is only $740 a person. You can do it in lots of ways. The key is to create that mindset and the budget and then remember that if you're always trying to grow their skills and confidence and connections, they're going to be able to take on more, which means you can continue to delegate. And that actually buys back your time, scales up the entire organization. Well, you know, a big one is that it's a remembrance that none of this actually matters. Right. I had a very, very close friend of 17 years pass away two days ago. So it was John Rulin. John passed away. Super close friend. We met in the entrepreneurs organization back in 2007. And when I watch a friend at 45 years old, a father of four little girls drop dead without having any prior illnesses, you know, losing a couple family, friends, both my parents passing away in the last 20 years, my dad dying 18 months ago, you realize that this is just what we're doing to make money. This isn't our reason for being as a human. So it's about having hobbies and having bucket list items and spending time with friends and family and spending time with kids and spending time with ourselves and remembering that we got to enjoy the journey. But I think so often people, especially North Americans, one thing I've known or noticed by traveling, my wife and I again sold everything three years ago. We've been in 54 countries in the last 36 months. When we spend so much time in other parts of the world, you recognize that no other parts of the world spend their entire focus on work. Nobody in Italy says, work is my hobby. You know, nobody in Thailand says, oh well, you know, I love what I do for work. Like they have freaking hobbies and they take more than six weeks vacation every year. And I think that's been very reinforced to me right now is that I can still grow a successful business by delegating more, by growing people more, by getting stuff off my plate. So my team is doing it and then I give them five weeks paid vacation and I take vacation. Two years ago I took 11 weeks vacation. I think that's really becoming more and more reinforced in the last few years is you can actually build a much more successful company by taking time off, by having hobbies, by saying no more, by delegating everything except genius. Instead of getting caught up in the busy work all the time that we tend to get caught up in, I think we often take everything so seriously and stay so focused on it for no reason. So. And again, this isn't in the absence of building great companies. We have to remember our employees are showing up with problems and struggles and real life. And if we care more about them and the humanity of what they're going through, they'll care about our business. When you become that truly empathetic leader and care about people, they work way harder than holding them accountable and managing them and telling them what to do. There's definitely the clients who come in that typically the mid sized companies, the 5 million to 50 million or 5 to 100 million that put their second in command into the CEO alliance. They sign up for my group coaching. They sign up for one on one coaching. One of my clients has 59 of his management team going through my invest in your leaders course. He signed up 59 people at 740 bucks a person because he wants to grow them. So there's that group and then there's definitely the group that are, you know, inspired and learning and they're trying to ping me for information. So I just, I try to send them over to the YouTube channel where everything's free and to Instagram where everything's free. And I try to put a lot of content out there. And then my books, right, I've written six books now, so I've got a lot. And then now I'm dealing with speaker. I don't know what's happened again. Somehow all these groups are starting to hire speakers in person. I guess Covid, they went on siesta for a little bit. But I have a group that today was booking me to go over to India to do two speaking events in India, another group looking to have me speak in South Carolina, and another one booking me in Australia. So yeah, I'm dealing with having to say no to some speaking events I don't want to go to and trying to move some over. Zoom. I'm actually very well known globally for having built world class company cultures. So I've coached companies that have gone on to rank number one in their country to work for number one in their state. Multiple countries, two companies that went on to rank number one year after year in Australia, I coached both of them. Culture is not all of the free massages and free lunches, those are perks. Okay, perks are fine. But that's not where culture comes from. Culture comes from an alignment with four things. The first is your core values. It's a deeply ingrained system around four or five core values that you're willing to fire people if they break them. You hire people based on them, they're easy to understand, they don't need any explanation. And again, and like the CEO lives by the core values, right? That's culture permeates off core values is number one. Number two is that focus on core purpose. It's the why we exist. It's like Simon Sinek talked about in his book Start with why. Simon was on our board of advisors five years before he wrote that book. So we were indoctrinated in this core purpose idea by him. And then you go into your bhag, that Jim Collins term, that big hairy, audacious goal. It's that long term driving stretch at 1-800-God junk. Ours was building a globally admired brand. My VHAG today is to replace vision statements with vivid visions worldwide. So that that driving bhag is culture permeates from that. And then the fourth is all the people systems. And that's the recruiting, the interviewing, the hiring, the onboarding, the leadership development of people. Because when you obsess about happy people that are Connected that are growing your high employee net promoter score drives, customer engagement drives, how much more you can charge drives, profitability drives, product, you know, everything. So it's really an obsession with those four things. Culture comes from that because the CEO knows they can describe it. The like, I can describe what it is. I don't know how to make it happen. And my whole world has been because I've played the entrepreneur since my entire life or the CEO of these entrepreneurial companies my entire life. I always see the vision and I reverse engineer that. When you can describe to me what your culture looks like, what your core values look like, what your bhag is, I can help you reverse engineer that. Right? That's the core of all of my work. In fact, my core purpose that Simon Sinek helped me write in my kitchen of my home in Vancouver back in 27 or 8 was to help entrepreneurs make their visions come true. That's why I do what I do is to help entrepreneurs make their visions come true. My co alliance helps them, my speaking helps them, my books help them, my group coaching. Everything I do is aligned with helping them make their vision come true. Let me give you a failure story. So I'm going to talk about when we almost bankrupted 1,800got junk as it was approaching 100 million in revenue. So I had coached the company, been the COO from 14 employees to 3100 employees in six years, from 2 million to 106 million in six and a half years. As we were approaching the six year mark, we were kind of coming into the 100, 106 million in revenue. We had just hired a new head of finance, a cfo. And Trish basically pulled the fire alarm and said, holy, the company's running out of money. And we said, well, let's go to the bank and ask for a credit line. So we did. And she came back and she goes, yeah, they're not going to give you a credit line. They're not going to give you a loan because you don't have any cash. Well, that's stupid. We were just the number two company to work for in Canada. We've had massive profitability six years in a row, 100% revenue growth six consecutive years in a row. We're just on Oprah like we're the and and we were cash flow positive. We just spent 5 million bucks on our office renovation and our office move. And we spent 800 grand in cash and bonuses and 600 grand in taxes. Like show them. We just spent 5 million of our money so that we don't have any debt. She goes, that's the problem. Because you spent 5 million of your money, they won't loan you any money. If you'd gone to them with 5 million, they would have loaned you 5 million. We're like, we didn't need it. She goes, no, what you need is to understand how to run a company that's not small anymore. You need to understand the financial acumen. And we didn't know that. The big lesson that we got because our head of finance, prior to her, had been warning us for a year, do you think we're going too quickly? Do you think we're opening up too many corporate locations? Are you worried that we're going to drain our cash flow? And we just kept saying, no, no, we got this. Yeah, we're good. And he was so quiet and so kind of diminutive to very aggressive, dominant type. You know, Colby, quick starts like Brian and I were, and I was a 98i on disc like 100 miles an hour. We didn't listen to him. And the big lesson that we got, or I got from this was, if you're not willing to listen to the people that reporting to you, if you're not willing to listen to the senior team, replace them with people you're willing to listen to or learn how to listen to them. He was giving us the signals to be careful and to be cautious, and we weren't listening. And we almost lost the company. Brian had to go out and borrow $420,000 from his mom to meet payroll, and we had to do a round of layoffs of 20 people. We started calling anyway. Brutal, but we had all the signs. We just weren't listening.