The Quest for Organizational Health

A Small Nonprofits Journey from Startup to Sustainable
Part 2: Designing Culture

By Esther Mendlowitz

In my all-time favorite management book The Hard Thing About Hard Things, venture capitalist Ben Horowitz writes, “Ask ten founders about company culture and what it means and you’ll get ten different answers.”

Some say culture is about perks, recognition programs and office space. Others say it’s about values and behaviors. One thing is certain: It’s not fluff. As Daniel Coyle, author of The Culture Code, says, “Culture is performance.” And it seriously impacts results.

Dave Gray, co-founder of XPlane and creator of Gamestorming, defines culture as “a company’s operating system. It’s the values, beliefs and behaviors practiced in an organization, formed over time because they are rewarded or punished.”

When seen through the lens of an operating system, it becomes clear that creating a strong culture is about more than just weeding out toxic behaviors like bullying and disparaging the boss at the water cooler. It’s about identifying the more insidious dysfunctions that wreak real havoc on an organization’s growth potential. I’m referring to operational norms like lack of accountability, unclear role responsibilities, broken or nonexistent processes, micromanagement, siloes, and opacity, to name a few. When organizations ignore or reward these behaviors, as Gray points out, what’s left is a culture that prevents large-scale growth.

As a flourishing “Go-Go” organization, Jerusalem U was not immune to these cultural pitfalls. Like many successful, fast-growing startups, we valued over all else entrepreneurism and production – the very things that start and grow a business. Until entering Adolescence two years ago, we said yes fast to attractive opportunities without thinking too long about resource capacity. Depending on where one sat on the org chart, our culture could be described as either entrepreneurial or chaotic.

While there’s debate as to exactly how much “Culture eats strategy for breakfast,” we knew we needed a cultural revamp if we were to take ourselves from startup to sustainable. So parallel to embarking on an intensive strategic planning process (which I’ll cover in the next part of this series), we set out to design the culture we believed would maximize our entrepreneurism and production while enabling us to operate smarter.

Our first step was to revisit our core values and pinpoint the behaviors and norms needed to uphold them. We then surveyed the staff, asking them to articulate the values with which they approach their work, to gauge the level of alignment between our core values and our staff’s values.

The data uncovered an interesting find. The two primary overlapping themes between our founding core values and the staff’s values related to innovation and trust – cultural foundations that we soon learned were the most critical components required for a successful and sustainable business in today’s world.

With innovation and trust clearly articulated, we took a deep dive into learning about the behaviors and norms that were required to design a culture that achieved on both fronts.

Innovation Culture and the Ambidextrous Org

As an educational film and media company whose long-term success relies on a strategic shift to becoming digital-first, we quickly realized that our culture needed to drive two different business models: an execution model and an innovation model.

According to Alexander Osterwalder, cofounder of Strategyzer and inventor of the widely used Business Model Canvas, “One of the biggest challenges we see companies face [is] to create two parallel cultures of world-class execution and world-class innovation that collaborate harmoniously.” It’s such a challenge, he explains, because both models operate with different logic.

In his article, “Why Execution and Innovation are Fundamentally Different,” Osterwalder describes how in an execution model, the goal is to improve what you currently do. For us, that related to our offline strategy of distributing our feature-length documentaries to secondary target audiences. In this execution model, the focus is on efficiency and linear process, and failure is not an option.

In an innovation model, however, the focus is on growth, experimentation and learning from failure. This model relates to our new online strategy of engaging our primary target audience with shorter films and through digital distribution platforms.

Different skill sets are needed to drive both models. To succeed at execution, we empowered our best process- and detail-oriented people to lead the work; for innovation, we created teams of creative, bigger-picture thinkers who can conduct and learn from experiments.

An organization that can successfully drive both cultures is what Osterwalder terms “ambidextrous.” In the case of a growing nonprofit like Jerusalem U, this dynamic is akin to flying the plane while building it. But despite the inherent challenges of driving a dual-plane culture, we’ve embraced it for its ability to keep us on the cutting edge in our marketplace and keep pace in today’s digital world.

In fact, for any organization, there’s much to be gained by studying the cultures of digital-first companies like Google, Amazon, Netflix, Buffer and Spotify. I’m particularly inspired by Spotify, whose innovative engineering culture is the topic of many articles, case studies and videos – although their culture is so innovative that experts recommend companies don’t copy the model verbatim but rather adopt certain principles and mold them to their individual needs. A Harvard Business Review article by Michael Mankins and Eric Garton articulates the operational values that Spotify uses and which we’ve adopted to engage and enable our workforce to fly two planes:

  • Simultaneous innovation and scale
  • Autonomy without sacrificing accountability
  • Alignment without excessive control

Driving our new innovation culture and turning these values into workable norms is our leadership team’s ongoing challenge. It has required us to redefine roles, experiment with new processes, and continually recommit to upholding the principles when we fall back into old behaviors.

Our most difficult work revolves around embracing experimentation and failure. As a nonprofit, we must carefully balance the riskiness of our innovation engine with our obligation to spend money prudently, and this is not an easy act.

The Trust Factor

Because experimentation is intrinsic to innovation, our team has had to work on building relationships that stand the test of critique, debate and failure. For our innovation culture to thrive, it required designing a parallel culture of trust.

According to Stephen M. R. Covey, author of The Speed of Trust, trust is a function of two equal parts: character and competence. Developing trust begins with oneself, with behaviors like integrity, commitment, capability and results-orientation. It then “ripples outward” to the relationship level, which is driven by transparency, consistency and respect. Rippling further outward to the organization level, trust manifests as alignment.

Covey came up with a formula to describe the theory: High trust = high speed, low cost; and conversely, low trust = low speed, high cost. The end-product of an organization with a culture of high trust is a high-speed, low-cost operation.

It’s easy to see this principle in action. Think about how the 9/11 terror attack created a low-trust global culture that turned air travel into a low-speed, high-cost affair. Conversely, Covey describes the merger between Warren Buffet and Wal-Mart, a deal made with a handshake and without expensive due diligence. Because Buffet trusted Wal-Mart implicitly, a multi-billion dollar deal was completed in under a month.

For Jerusalem U to build a culture of trust, where our speed is high and our cost is low, we had to articulate the behaviors we felt would get us there, and then commit as a team to living them. What began as a simple survey to uncover our staff’s values resulted in a set of inspiring culture values, which we now use to guide our behaviors and measure our performance.

At a staff retreat aimed at aligning our team with our newly designed culture, we led an exercise using a visual tool called the Culture Map, created by Strategyzer’s Osterwalder and XPlane’s Dave Gray. The Culture Map enabled us to identify our various behaviors that support and undermine each of the new culture values. It was an enlightening exercise that enabled us to create solutions for overcoming undermining behaviors and to identify new norms that support the culture we’re striving to develop.

Because we had done the work of involving the staff from the beginning of this process, the majority of our team were bought in quickly and have excitedly embraced our new culture of innovation and trust. We don’t yet boast a 100% engagement score, but results of formal and informal pulse surveys show a happier, higher-performance team more committed to our mission. Our ongoing culture work revolves around broadening and deepening the engagement and trust.

Intentionality is Key

As we found out at Jerusalem U, when an organization finds itself on the cusp of breakthrough change but realizes it needs an operational overhaul to execute it, leaders should look no further than culture design.

“As your company grows, culture can help you preserve your key values, make your company a better place to work and help it perform better in the future. Perhaps most importantly, after you and your people go through the inhuman amount of work that it will take to build a successful company, it will be an epic tragedy if your company culture is such that even you don’t want to work there,” writes Ben Horowitz.

Best-selling author and unofficial Jerusalem U culture guru Seth Godin seems to agree: “Build a team of people who work together, who care and who learn and you’ll end up with the organization you deserve.”

In the next installment of this series, I’ll cover the next step in our quest: strategic planning and priming for big growth.

Esther Mendlowitz is COO of Jerusalem U, a digital media company that connects young Jews to Israel and Judaism through media and film. Before joining Jerusalem U, Esther spent 12 years in the magazine publishing industry, serving as Editor-in-Chief of several national industry magazines and peer-reviewed journals, as well as editor of a dozen books on Jewish subjects. She led business development, strategic partnerships and editorial direction of her various publications, representing each title in national and international spheres. After moving to Israel, she served as a teacher of Jewish Studies and school administrator. Esther holds a BA in English and Education from the University of Florida.