This week on the podcast, Andy and Brian talk through the 6 characteristics of a great culture and how to implement them in your company…

1) Build your culture based on real-world dilemmas

2) Move your culture from abstraction to action

3) Pain your culture in full color

4) Hire the right people, and they will build the right culture

5) Make sure the culture drives the strategy

6) Don’t be a purist

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Brian Beck: Welcome to the Friday 15 with Master B2B. My name is Brian Beck. I’m here with Andy Hoar, my partner in this thought leadership effort around B2B eCommerce. Andy, happy Friday.

Andy Hoar: Glad to be here with you.

Brian: Yeah, this is a warm day in the summer, which is a lot better than a cold day in the winter. Well, it depends if you like to ski or not. There’s my advice. I kind of like cold better than warm, man. 95 and humid is not fun. So welcome, everyone. We’ve got a great session today. We’re going to talk about a topic around culture, which is kind of a soft topic. It doesn’t get as much attention in the community here where we talk a lot about technology and marketing and other things. But we’re going to take on the culture question today and talk about some of the impediments to building a great culture. But before we do that, Andy, as usual, we want to talk a little bit about some breaking news. So let’s get to that. And you found this article on Global Industrial. Tell us about it. What’s going on?

Andy: It just happened yesterday. It’s going to be interesting to watch. But Barry Litwin, who is the CEO of Global Industrial, stepped down to pursue other ventures, which sounds like private equity to me, but we’ll see. But he was there for about seven years. And I think the reason why this is interesting is because Global Industrial is sort of a standard setter when it comes to customer experience for B2B pure-plays. It’s about a billion, 1.2, 1.3 billion dollar company. It’s been kind of up and down for the last several years – more up than down – but it really is a strong pure play B2B. It’s kind of like Amazon Business but for industrial stuff, specifically, so it’ll be interesting to see who becomes the new CEO. And, you know, we use them as an example. They participated in quite a few of our events over the past couple of years. It’ll be interesting to see how that evolves. But it also speaks to our culture question today.

Brian: So, Andy, I saw this this week. An article just came out with some data from eMarketer that says Google will remain a top destination for ad spend in the GenAI era. This is fascinating – there’s some data showing that Google remained the top place where marketers are spending money – 70 plus percent are going to be spending money on Google. You recall, Andy, we had a year, or a year and a half ago when ChatGPT came out and everyone called it the death of Google and saying Google was falling behind. Now we see in Google the AI overview is built right into the search engine. One of the things that that is clear to me from this is that this is kind of a bubble in the sense that this data only talks about the search engines. YOU saw some data in here that spoke to how Gen Z were using AI.

Andy: Google’s dominating this market, but this is no longer the only market when it comes to funding things. So 61% of Gen Zers in the same article by eMarketer said that 61% of Gen Zers are using AI tools instead of search. And think about it. This doesn’t include Alexa, Siri, my wearable watch. All these voice-activated interactions with companies and the AI, like ChatGPT, et cetera, these are alternative search engines. And so I think we need to redefine this market. But within search, yes, Google is dominating, but search may not be the only market for searching anymore.

Brian: This also leaves out Amazon. Amazon is the number one product search engine. If you’re selling products and you’re not on Amazon, you’re missing out on a huge chunk of search activity. So, again, this is kind of a limited view of the marketplace. But it was interesting to see here – Do marketers need to wake up to what’s happening? Do they realize what’s going on with these AI tools and Amazon and everything else? Maybe not. So at least based on this data. So we’ll see. All right, let’s get into our topic today, which is what’s the greatest impediment to building a great culture in B2B e-commerce? And, you know, Andy, this is not just the culture. It’s also about a digital culture, one that understands the importance of digital as a part of this. But really, we asked the question because this is such a foundational element of being successful with e-commerce and with digital. You need to have a culture that embraces the willingness to change. So we wanted to dive into this this week. And we, in fact, did some research around this in terms of digital maturity. Andy, do you want to speak to that a little bit?

Andy: So we’ve been around this digital culture and team culture issue for a while. We released a report two years ago that was kind of foundational around this question of how you assess your own digital maturity. And then just about a month or so ago we released part two (Accelerating Your Digital Vision) in a three-part series about how do you take your digital maturity to the next level. In both of those reports we have some really interesting insights about what develops culture. When we talk about team culture, we’ve actually put some thinking around it. So we did a webcast recently, and this is kind of fun because you and I were debating what do we think is the most important dimension of digital maturity? And I swore up and down it’s customer experience. I still believe that. So the four options, digital tools, team culture, customer experience, and data and insights. And while customer experience got 27%, team culture, your choice, resonates more with the audience. So 41%. The most important dimension of digital maturity. So we’ve been talking about this one for a while. In fact, two years ago when we released our digital maturity report, we gave you a way to benchmark yourself. You can actually score where you stand on various dimensions of team culture. And so there were really seven or eight different areas. We’re not going to go into each one, but just to give you an overview: How sophisticated is your senior digital leader? Is this a person who is a “one man band” who was the head of IT and had to build a website? That’s a stage one digital leader. Or is it a more mature, highest level stage four digital leader who’s been doing this for 15 years, and brings a team of experience, has implemented, failed, re-implemented, over many, many years. So again, it’s the senior most digital leader. It’s the team too. Are we talking about people who are new to this kind of thing? Are they B2B people who don’t know e-commerce or e-commerce people who don’t know B2B? There’s all sorts of different ways of looking at that. But generally, if you have a smaller team, that’s indicative of being an early stage company versus some of these stage four companies with digital teams of 40, 50, a hundred, 200, a thousand people in house. Another area we’ve looked at is senior team, digital mindset. So this is really the C-suite. And we define the early stage digitally immature company as “digitally indifferent,” meaning we’re for digital, I guess, if it’s there on a Tuesday and it’s easy versus the more mature companies who had to fight through this. They’re ones who are fully embracing digital. It’s a part of the way they think. When they make a decision about any part of the business, digital is right near the top in terms of what impact it’s going to have.

Brian: Think about companies like a Granger or others that have a lot of digital experience at the top of the organization.

Andy: And of course, a very important dimension of any B2B digital culture is the sales team, because they’re often the ones who feel threatened by digital, don’t fully understand how it’s going to help them versus why it wouldn’t be an existential threat. So early stage companies, they don’t engage. Sales teams don’t engage. In fact, they’re antagonistic to the idea of digital versus very mature teams that are fully aligned and integrated. And they realize they can make a lot more money by leveraging digital than fighting it. And then the last one that we talk about here is organizational design. And what we’ve seen here is early stage companies, digitally immature companies tend to have generalists. There are people who do multiple things. The later stage, more digitally mature companies, not only are they larger, but they’re more specialized. You have somebody who focuses on SEO. You have somebody who’s a platform expert versus the early stage ones. And we’ve both known these kinds of scenarios where the man or woman who is running the website is also making the platform decisions, is also doing all the hiring, et cetera, et cetera, et cetera. That’s great early on, but you have to get more specialized later.

Brian: So this is about maturity, which is a portion of culture, of course. We did a poll. We asked our LinkedIn community, what’s the biggest impediment to building a great culture in B2B that recognizes the importance of digital? Number one answer out of four choices was overcoming old thinking, 50%. Followed closely by breaking down silos, 41%. Less important – people thought – were a dispersed, remote workforce or inexperienced talent. They didn’t see those two as really impediments only six and three percent respectively. So Andy it really is about building this mindset on one of the elements here and across the organization so you know what we found was this really interesting article.

Andy: In the poll that you just showed, I think we saw two things popped out. One was psychological, which is old thinking. And the other one is structural, which is how do you put that into action? Well, And Erin Meyer, who’s a professor at INSEAD and the author of a book called The Culture Map, Breaking Through the Invisible Boundaries of Global Business, as well as many other books, has really thought a lot about this. And she’s identified, like you said, six key areas. We’ll just run through all six quickly, but we want to double click on two of them that really stood out to us as relevant in particular to B2B. Okay. number one, not in a particular order, but the first one was “build a culture based on real world dilemmas.” You can’t use abstract terms. I always joke about this, that airlines say safety is our number one priority. I’m like, really? I mean, you know, safety is important, but isn’t making money your number one priority or having happy customers be your number one priority? But things like that don’t wash because how do you implement that if you’re an employee. If you’re making decisions about where to put flights, you’re thinking, well, let’s start with safety. What’s the safest way to get this flight from point A to point B?

Brian: And her point about dilemmas, Andy, was an interesting one because it really is the practical application of what you’re saying your culture is about. It’s actually putting it into a decision, a dilemma where an employee has a decision to make, and reflecting back on or understanding what that culture is as a guiding principle to making the decision. So general abstract statements don’t give you that ability, essentially, is what she’s saying. Doesn’t give the ability for that employee to make a decision based on some ethos or some principle. So I thought that was really interesting because it makes it practical.

Andy: Which leads to the second one, which is “move your culture from abstraction to action.” And they said, avoid terms like – there was one example they gave in there. I think it was a healthcare company and said, “it’s simple. We care.” What do you do with that? I mean, what does an employee do with “we care?” The better way to do this is the way Amazon approached it, which is their value statement is have a backbone, “disagree and commit.” Now, that’s something that you can put into action, because if you’re in a meeting and you don’t agree with what somebody is doing, you can channel that and say, you know, I’m going to raise my hand here and say, look, I think this is a mistake. We need to go in a different direction. Here’s why. I’ve worked in high tech. That’s a really critical area. And that’s something you can actually sink your teeth into.

Brian: And it sets the parameter for how a company it’s okay to disagree. We see this in B2B all the time, Andy, where people are afraid to disagree. They don’t want to disagree with the boss. They don’t want to say, Hey, you know, I don’t agree with that, but if it’s stated by the company, this is the way we do things. That creates a culture where it’s okay to do that. In the case of Amazon, it’s a foundational component of what’s led to their success. Test and learn. It’s okay to fail. Those sorts of things. So I thought that was a really important one.

Andy: The third one they mentioned is one we’ll spend very little time, which is paint your culture in full color. And what they meant by that is sometimes a logo and image can speak to how you think about things. They give example like a pineapple, which I guess in Eastern culture signifies hope. But that is one abstract thing on top of another abstract thing I can see where it might appeal to people because it gets people behind an idea but I think you and I both agree that’s probably not as important as the next one which is “hire the right people and they will build the right culture.” I think you and I both thought this one really made a lot of sense.

Brian: They even gave an example like of Patagonia for example in the article where they’ll take a chance and hire someone who’s an outdoor enthusiast who may not have all the skill sets and train them versus hiring someone who has all the skill sets but is clueless in terms of the use of their product. I’ve seen this in our in our own company here, Andy, and in other companies in my Enciba business: You hire the right people that fit with what you want to build as a culture, and it will materialize. This is the most important one by far, in my opinion.

Andy: Well, I love that they cited one company in here, and there’s another one I know about that has a similar approach. They cited Shopify. And Shopify said, “we’re not a family.” You always hear those companies talk about we’re a family. It’s like, we’re not a family. You’re born into a family. And they said, you can’t unfamily. They can’t unfamily you. The danger of family thinking is it becomes incredibly hard to let poor performers go. Shopify is a team. And this is the same approach that Netflix famously takes. Reed Hastings has talked about this, and I think he says it really well. He says, think about Netflix as an elite pro team. And he said the same thing. You can’t fire your sister. If you think about his family, what are you going to do? Put mom on a performance improvement plan? But… He said, if you think about it like a pro team where everybody has to earn their job every year, and if you hire the right people and they play really well together, he said you can do things like make no-look passes. Like having basketball or soccer, for example. You can’t do that unless you have really talented people. And so let’s just dispense with this idea of being a family. Let’s think about it being like a professional team. And you’ve got to earn your spot. If you do, you’ll be well compensated. And the reason you want to do this is because you want to play with the best. And so I think that’s the right approach.

Brian: The next one is “make sure your culture drives strategy.” You know, I think it was, it was a Drucker that said culture eats strategy for breakfast or something like that. Emphasizing that your culture is really the thing that allows you to realize a strategy.

Andy: They have to modify one another, but you can’t let your strategy drive your culture. Because if your strategy is to win every deal, then your culture is going to be win at all costs, right? Versus if you think, hey, we’re going to perform at the highest level and we want to win every deal, and that’s your culture, that can drive your strategy to win every deal. It seems subtle, but there’s a difference there. I think your approach has to drive your strategy and not necessarily the opposite. But I think the last one, It was surprising, but I think informative. And it’s this idea of “don’t be a purist.” And the example they cited here was Netflix. In fact, this woman, Erin Meyer, actually wrote a book about Netflix, which is why there’s a lot of Netflix citations in here. But she said they took transparency too far. One example they gave was they wanted everybody to know everything. So they started revealing everybody above the director level in the company, all of their total compensation. And I think the idea was because it’s a publicly traded company, everybody knows that about the C-suite. Reed Hastings’ salary and compensation was published in public documents. So they said, well, let’s just take it down a level. And they said the problem was after one year of doing that, I think it was 80% of the people in the company said, get rid of it, because they started reducing people to their salary. They’d be walking in the hallway thinking, oh, that’s Bobby makes three hundred and forty seven thousand dollars or that’s Sally – She makes one hundred and fifty five thousand dollars. So there is a point where you can go too far. So transparency is really important, but there’s a limit to that. And I think that’s the point here.

Brian: So six criteria here for building a successful culture, it really resonated with us. And I think it plays into what we found from our community, Andy. The right people is really the most important part of this, if you got the wrong people in there, you know, a brilliant jerk, right? Who’s just gonna spread negativity through the organization, they may be really smart and great at their job from an individual contributor standpoint, but don’t create that doesn’t create the culture of that person that you want to create your business.