Create an Ownership Culture

February 22, 2013 § 2 Comments

A few weeks ago after a great lunch meeting with some respected colleagues, our conversation turned to “the future of Silicon Valley”, the impending Bubble 2.0, and the worry of our regions sustainability in a modern world where most anything can be replicated most anywhere.

I listened carefully to their points and then disagreed (err…..provided and alternative viewpoint).  Ok, I went off a little bit.  My good friends know I can get passionate and energetic on certain topics and this was  a subject I’ve studied for quite some time.

My friends questioned:  What makes Silicon Valley so unique?  Can’t it be copied anywhere?

Many of us have heard this question posed over the years.  There’s been a consistent answer provided from several extremely respected sources that says “Yes, it can”, but wherever it’s created must contain the same core intellectual, cultural, and economic assets that make this place so unique (the “ecosystem of unique assets argument”).

In a nutshell, the argument always comes down to Silicon Valley having a unique ecosystem of assets driving its success:

  1.  Intellectual Assets:  A constant source of highly educated base (Stanford, Berkeley, UCSF, others).
  2.  Cultural Assets:   A high appetite for risk and innovation that we find literally in the DNA of generations of California entrepreneurs dating back to the 1848-1855 Gold Rush and the ensuing “Great Railroad Rush”  (1863-1873) led by Central Pacific Railroad and the Big Four (Stanford, Crocker, Huntington, and Hopkins).
  3. Large Financial Assets:  Abundant “risk capital” led by a core set of wealthy individuals and Venture Capitalists who are willing to bet 1-2% of a Limited Partners assets on the hopes of turning it into a 10x-100x return.

All three core assets have been cited over and over as the requiremrent to establish a sustainable “Silicon Valley” anywhere else in the world.

I believe a critical fourth requirement should be added to this list:    the creation of an OWNERSHIP CULTURE

We know this “ownership argument” when it relates to home ownership as a critical financial underpinning of America’s economy.   We witness “ownership culture” every time we walk into our favorite neighborhood family run business.  We see true ownership in small teams and very early stage startups.

There’s a powerful and passionate emotion created in the human spirit surrounding owning something meaningful.  When people feel connected, they act in a connected way.  There’s an above-and-beyond and never-give-up mentality we experience to ensure something we’ve put our blood, sweat, and tears into doesn’t fail.   We describe these people typically as entrepreneurs and founders but I believe that’s too limiting.  I think of this group of people as simply “owners”.  When done correctly, owners can and should be everyone in your company.

We’ve all heard the anecdotal stories of the best business ideas coming many times from the lowest level factory line workers.  All that was required was asking “them”, empowering “them”, and recognizing “them” for their impactful ideas.  We’ve also heard the corollary of the disconnect between most task workers in companies and the upper management nincompoops (think Dilbert).   Well, “They” are “Us”.  Great companies create an  “all-one-team” culture and recognize and reward everyone as owners of the company.

Startups in Silicon Valley naturally create the “we all own part of this”.  Anyone who has been early at such a startup knows the powerful effects this mentality has on getting stuff done and the direct link to a company’s success.    Then, many times, somewhere along the success curve, these same companies forget about ownership and instead start focusing on “market value”.   They begin protecting too much and degrade to short-term focus.

If this is you or your company, it’s time to get back to those roots and re-implement an ownership culture where everyone “owns a part of this”.  It’s easier than you think.  You did it early on.   Start holding those impromptu or regular Friday afternoon beer and information sharing sessions.   Communicate more.  Don’t assume everyone is getting the fidelity of information required to be an “owner”.    By doing so, you can create (or get back to) that unbelievably powerful connection between the people and the business.

An Ownership Culture is a Trust based culture which in turn creates an efficient decision-making culture.  Of course, an effective and efficient decision-making culture requires  information sharing with all the owners.  All owners need sufficient information in order to make proper daily decisions.   And that means more Transparency.  Trust + Transparency are the key ingredients to successful ownership.

Ownership means a passionate focus at all levels of constantly improving product quality, stamping out bugs, and satisfying the customer and/or the end-user.   The best owners focus on the complete life cycle of the customer experience from first impression, to creating pleasant and unexpected surprises, to passing on the customer to the next generation.

Ownership means “It’s your money” and to spend it like it was your bank account.   Making this connection is powerful as every dollar spent as if it were your own money results in tremendous savings that can be funneled back into the company (profit sharing, equity value, bonuses, or simply reinvesting)

Ownership means everyone at all levels is accountable and responsible for their respective activities.  The Accounts Payable person coding invoices to specific product lines which enables everyone to “see” where the company’s money is being spent can be just as passionate about her contribution to the overall success of the business.    Ownership means committing and connecting everyone’s heads and hearts to sharing in the success of the team.   It means being the CEO  of whatever your specific role is. (future post coming on this concept).

Oh yeah, and by the way, Ownership is the opposite of entitlement.

Starting with Transparency and Trust, share as much information as possible. Bring your employees in on the decision-making frameworks and ask them for their ideas..   Treat employees as if they are owners and they will likely live up to your expectations.  Loyalty will thrive.  Value will soar.

=========

p.s. – a new idea?: Total Ownership Statements

I’ve seen the best people-centric company cultures evolve from communicating Total Compensation Statements to Total Comp & Benefits Statements to a Total Rewards Statement.  The next logical evolution is to distribute  something I’d like to see called “Total Ownership Statements” to all employees – a personal quarterly and annual report connecting it all;   the company’s activities and success + each employees activities and success + the employees ownership.

At Mozilla we have semi-regular all hands sessions in which we do our best to share with everyone the current status of our products, projects, industry and market updates, our internal metrics, and our financials.  We share our complete board slide deck with all employees shortly after each board meeting.   We publish our financials publicly  even though we are not a public company (Mozilla is private, non-profit based).

And yet, no matter how much or how often we communicate such information, I get regular employees feedback that our communication is not nearly enough.  A consistent question I get from employees in Q&A sessions after each session  is “How are we doing,really?”  Even at Mozilla, employees are seeking more transparency which inspires more confidence and comfort for them.  I believe regular Total Ownership Statements may be the beginning of a better answer.

I started searching on this idea and found a very similar idea – the  Employee Annual Report

What is this document? Imagine your shareholder’s annual report, except this one emphasizes the interests of employees.

“Everything starts with the employees,” said Patrick Williams, senior Ragan consultant and author of The Employee Annual Report. “If you’re accountable annually to your shareholders, shouldn’t you be accountable annually to your employees?”

This report is an opportunity to educate employees on the company’s financial goals—to create business literacy among the work force.

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§ 2 Responses to Create an Ownership Culture

  • Hey Eric! Great to hear from you.

  • Eric Hanshew says:

    Jim, thank you for this insightful message. As a shareholder in an ESOP I entirely agree. Being a shareholder, and having compensation tied to EBIDTA, I totally get it. But the struggle is getting ALL employees on board. You raise a very interesting and insightful point. One that I am still trying to figure out how to nurture with others. Thank you for taking the time to write it up. – Eric Hanshew

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