Transcript of the live chat session that took place Thursday, May 11, 2000. These sessions are normally scheduled for 12 noon-1 PM US Eastern Daylight Time (GMT -4) every Thursday.
To connect to the chat room, go to www.samizdat.com/chat-intro.html
Since the chat itself happens at a rapid pace, it's often difficult to note interesting facts in particular URLs as they appear on-line. Here's a place to take a more leisurely look. I've rearranged some of the pieces to try to capture the various threads of discussion (which sometimes get lost in the rush of live chat).
Please send email with your follow-on questions and comments, and suggestions for topics we should focus on in future sessions. So long as the volume of email responses is manageable, I'll post the most pertinent ones here for all to see.
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This is one of the longest-running chat programs on the Web. (Please let us know if you know of ones that are older.) We've been doing this for over three years -- since June 1996.
For transcripts of previous sessions and a list of future topics, www.samizdat.com/chat.html.
For an article on how to make "business chat" work (based on this experience), www.samizdat.com/events.html.
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Terry -- Good Morning!...or afternoon. This is terry pearce
Richard Seltzer -- Welcome, Terry. Glad you could make me. Enjoyed the book.
Terry -- I appreciate that. What kind of trafic will we have this morning?
Richard Seltzer -- Terry -- It's hard to predict how many people may show up live. Those who do will likely just dive into the discussion. It's peer-to-peer, free-for-all style. You can check every once and a while by clicking on "view occupants." We might get anywhere from 3 to 3 dozen. But the main value comes from the edited transcript, which I'll post at my site. The average transcripts gets over 1000 page views over the course of a year and often generates interesting followup conversations by email.
Bob@CottageMicro.Com -- Hello everyone. Bob Zwick in Dallas here.
Richard Seltzer -- WElcome Linda and Andrea, please introduce yourselves and dive into the discussion.
TheForth -- Hi all, I am late, it's been awhile, and I may only lurk today. Cheers.
Richard Seltzer -- Berthold -- Come on, don't just lurk. I'm sure you have a few cents worth to throw into the discussion. Any words of wisdom from your experience at Digital? Or dare you say anything about Avid? Or might you want to say something about country culture and how that affects corporate culture?
Terry -- Bob: The main point of the book is that as the world is changing so fast, the ultimate competitive advantage is to institutionalize the ability to change. This is done by building commitment from people, by building a culture based on values that does not change. This is primarily the responsibilty of leaders, and it requires a new standard of leadership...one that inspires commitment rather than merely requiring compliance. The entire organization has to be aligned behind this idea..and the busienss practices, from measurement to compensation to marketing, have to be consistent with that culture.
Richard Seltzer -- Welcome, Bob. My quick take -- for large companies to make the business decisions they need to make and to move as quickly as they need to move must focus attention on their "corporate culture." If they haven't done so already, they need to go through a self-examination to figure out who they are and who they want to be and how to motivate their people with goals that everyone can believe in and want to help achieve. You only have one life and you want it to mean something. If the company you work for is striving to accomplish goals that you believe in, that's more important as a motivator than cash and perks.
Terry -- I should also say that you can get a good synopsis of the book from the Amazon page, and you can read the preface and the foreward, written by Lou Platt, at terrypearce.com, under books...clicks and mortar.
Terry -- that' interesting, we feel it is traditional companies that are trying to make the integration that are in most need of big changes. There is, however, a heavy interest in the book from start-ups now that the valuations have corrected. they seem to be looking much more at values and value as a way of driving valuation.
Richard Seltzer -- Small Internet startups face the problem that they must build a "culture" extremely quickly, from scratch, and motivate a team that is probably geographically dispersed and that consists of people who have been recently thrown away by big companies or are coming for other startups where they stayed for less than a year. Tough stuff.
Richard Seltzer -- Terry -- Do you have some quick advice for startups? What can they/should they do in the first few months to lay the groundwork for a viable motivating culture?
Terry -- With regard to start-ups...it is an easy case if the entreprenuer starts with the right stuff. Then he or she draws people to the company that share the values in the first place...they don't have the problem of dealing with incumbancy or "not here." The geographic dispersement is real...and the leader has to deploy himself personally in the first instance.
Yes...very tough stuff...but so is the whole environment...and it is worth it in the long haul. There is nothing quite like a group of people pulling together to do something bigger than themselves.
Richard Seltzer -- Terry -- I believe that the problem is particular difficult for startups. Typically the founder has not run another company before. Sometimes the founder has not even been a manager before. Hence this person does not understand or value the concept of "culture," having considered it "fluff" when on the receiving end of corporate propaganda. You have to experience the problem of motivating employees before you can appreciate how difficult it can be. Do you know of any way to jumpstart this process?
Richard Seltzer -- Terry -- Another part of the problem for today's Internet startups is that they can't cherry-pick their employees. IT's a very tight labor market today. And it's extremely rare that the founder will be able to recruit significant numbers of people who he/she has worked with before and understands and trusts. It is also unlikely that in this fast-paced world the founder will have time to do the recruiting beyond the core team, and whoever is hired to do that task probably has only known the founder for a very short time and has not seen how that person acts and reacts in crisis. Not and easy matter...
Terry -- Richard: Actually, most start-ups in my experience, start with an MBA or equivalent, who has some business experience, and most VCs are aware of the necessity for gaining loyalty. Beyond that, any startup that will make it will have a board of experienced people who have some clue about this. I teach at the University of California at Berkeley in the graduate school of business...one of the incubators for silicon valley entreprenuers....and we do indeed have electives on culture building and leadership. Business schools/boards/vcs can jump start it. As can books like clicks and mortar.
Richard Seltzer -- Terry -- Startups that I know and work with in this area do not fit this model. They have great business ideas. And the founder(s) have passion, and they may well make the millions/billions they are dreaming of. But they have little or no practical business experience. They are more likely to have almost-MBAs -- people on their staff who left school to grab this opportunity and who didn't have significant experience prior to business school. They are starting not with VCs, but rather with angels (who are good for up to about $3 million in startup money) and who do not provide the same level of guidance that VCs do. These folks are moving very fast, and have no time for courses on culture building and leadership. Typically, they have 6-9 months from when they get the first few million in angel money to recruit dozens of skilled people, develop product, and find early customers, so they'll be in the right position for the first VC round. They typically work 30 hours a day.
Terry -- We have different experience. I think this last shakeout will have the desired effect, even on angels. I know several who ask tough questions about values/value before writing checks. And even angels don't throw money without good plans and prospects. Obviously, consultants like yourself can have a great impact.
Richard Seltzer -- Terry -- One could probably make a case that rapid growth is probably the biggest risk to culture -- when a good one is in place. And, of course, Internet startup require rapid growth to survive.
Richard Seltzer -- Terry -- In terms of tools, what I'm thinking of is SiteScape Forum. That was originally developed at Digital, and grew out of the old VAXnotes culture there, trying to translate it to the Web. VAXnotes was an essential part of the very strong culture that held Digital together and helped it grow to be the number two computer company, before its tumble.
Richard Seltzer -- Terry -- My sense is that the business plans and prospects get close scrutiny, but that corporate culture gets short shrift. Basically, I believe that most very small companies (under 100 employees) (and Internet startups inevitably start very very small) give little thought to culture. When the founder knows everyone by name, the value of culture may not be evident. But when the founder gets totally wrapped up in making customer and partner contacts and trying to raise the next round of money and doesn't meet face to face with the team for months; or when much of the team is dispersed; or when critical elements of the team are not "employees" but rather are contractors and consultants and partners -- the culture bit is extremely important. Is there any mechanism for helping develop and maintain a teamwork culture at such a stage? (Once again, I'm a great fan of forums and chats and email, when used right.)
Terry -- Richard. I know you are a big fan of chat rooms/email, and these are great forums for continuing what has been started in person. If the leader who knows everyone's name continues to learn the names, continues to deploy himself personally, then he can use these electronic tools well. But if he does not, then they can create all kinds of ambiguity. My own clients use them extensively, but only after they have established their trustworthiness/voice/competence eyeball to eyeball.
Bob@CottageMicro.Com -- Co-opitition between disperse companies, big and small, with similar interests, values and objectives is a growing culture on the Internet that will have to be reckoned with soon.
Richard Seltzer -- It is extremely difficult to change the culture of a traditional company. If it can be done at all by inspired concerted effort (and with people at the top who inspire others to emulate them), it is likely to take years -- not quick enough in the Internet age.
Terry -- Richard: Of course it's hard. But many traditional companies already have values-based cultures...they just need to redefine them in the new context. Those companies that did not have them need to start now, and you're right, it will take concerted effort by an exceptional leader...I give you Jack Welch or Lou Gerstner. Other traditional companies that have strong cultures are spinning off the new players (Hewlett Packard/Agilent) and these new companies are taking the best of the old culture (the values basis) and putting it into this new context.
Richard Seltzer -- Terry -- from my perspective, the biggest challenge for traditional companies is motivating employees to share information, when all the corporate rewards and promotions have been going to the people who hold onto information and build personal power based on what they know that others don't.
Terry -- With regard to your comment about Digital...it's true, people at the top should worry about the culture, but in this freeforall movement, loyalty becomes a competitive advantage for talent as well as customers...so I think it has to become much more important.
Richard Seltzer -- Terry -- For an example of the importance of corporate culture and how it can deteriorate as a company grows large and loses its original focus, you might want to take a look at my article "DEC, not Digital" and the dozens of responses to it at www.samizdat.com/dec.html
Terry -- Richard: DEC is an interesting case. I was on the fringe of it, doing some consulting in the company as it went south. I'll look at the article...must have been difficult to watch.
Richard Seltzer -- Bob -- I'd suggest that Compaq may have that problem today. They started as a low-cost maker of IBM clone PCs, with little or no customer contact -- selling all through channels. With the margins in that business declining rapidly, they acquired Tandem and Digital, to expand into service business and enterprise solutions. But the companies they acquired had totally different and incompatible cultures -- with values that it was important for Compaq to embrace to be successful in the new markets it wanted to enter. But the old Compaq culture led to the layoff of tens of thousands of people with the very skills they would need to succeed in those new markets -- because they had to make cost-cutting decisions before they had time to absorb and understand and change. The battle isn't over yet. I hear that Compaq is in some ways becoming more like DEC was. But I suspect for it to all come together and cohere as a massive team, they'll need a new kind of leadership.
Terry -- Compaq is desparately seeking a leader who can create some foundation to rally the company. Mattel is another.
Bob@CottageMicro.com -- Looking at the list of aquisitions by AVID there must have been some corporate culture shock that had to be refocused.
Terry -- Bob: I don't know AVID, but a "list of acquisitions" tells me that you are probably right. The highest profile company that is vulnerable is Citi. Read has already admitted that "the cultural issues/bring people together is harder than I could have ever imagined." He is aware of the need for alignment...and he is the one leaving. This does not bode well for Citi when the financial engineering dust settles.
Richard Seltzer -- Terry -- I'd think that the larger the merger, the more important the cultural issues. (Unless it's a holding company situation, with the operating companies running independently). It's hard to imagine mixing AOL and Netscape; and even harder to imagine AOL and Time/Warner. Actually, it's hard for me to remember a major merger that actually turned out well for the employees and for the long-term viability of the company (though stockholders and the managers who maneuvered the deal may have made some quick money).
Terry -- Richard: I agree with your scale comment. I can't remember a successful one either. Even holding companies, while they might do well as individual units, can miss the adantages of culture by not having incentive to share best practices or cross/sell, promote. Spin-offs, on the other hand, tend to do well if they are led well.
Richard Seltzer -- Bob -- before you became an independent consultant, did you work for a large company? If so, was it one with a coherent and positive culture?
Bob@CottageMicro.Com -- I worked for 3 large corporations, each gobbled up by aquisitions. There were cultures, but they were definitely not consistant with my values and loyalties. That's why no coercion or compensation could make me be locked in to a single corporate culture henceforth.
Terry -- Thanks to all...it was a pleasure.
Richard Seltzer -- All -- please join us again next week, when we'll be talking about the book "Differentiate and Die" with author Jack Trout.
Previous transcripts and schedule of upcoming chats -- www.samizdat.com/chat.html
To connect to the chat room, go to www.samizdat.com/chat-intro.html
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