THE BLOG
07/10/2013 03:53 pm ET Updated Sep 09, 2013

Today It's Zynga, Tomorrow It's You: Why 'Cool' Isn't Enough

Online gaming company Zynga has been in the news a lot lately, but most of this reporting and analysis neglects a fundamental point: Now that it has rebooted its leadership, its success hinges not on how it executes business, but how it integrates culture. Zynga's journey presents a rich reminder to all companies -- of what organizational culture is, what it is not, and how culture can and should be a strategic asset that informs and inspires everything our companies do.

I can imagine that Zynga's journey has been difficult as of late. While I don't personally know founder and now-former CEO Mark Pincus, the process of laying off nearly 20 percent of his staff must have been intensely painful, especially since it came not long after the company shed roughly 38 million users of its social gaming applications. Most recently, Pincus relinquished power as CEO -- a decision rooted in the best interests of a company that he surely loves as its founder -- by turning over his CEO position to former Microsoft executive Don Mattrick. Some pundits have been quick to frame these developments in fall-from-grace terms. My sense is that this rush to (frequently) negative judgment may stem in part from the fawning press Zynga and Pincus received in the recent past regarding their alluring Silicon-Valley, high-growth vibe -- evident in their cool digs and hip policies.

Bashing Zynga or Pincus misses the larger point that the company is hardly unique among startups and NASDAQ companies. Many of these enterprises apply a laser-focus on growth, but view corporate culture -- the one organizational system that acts as the most sustainable driver of long-term growth, innovation and "user loyalty" -- in the wrong way.

In a recent blog post Pincus wrote, "so much of Zynga's culture has been about growth." Admirable intentions aside, I'm afraid to say there is no such thing as a culture of growth. After all, you can't do growth; you can only get growth as a byproduct of a vibrant culture inspired by values, which fosters loyalty and innovation. Today, as a market leader, Zynga has a chance to transform its culture so that it is about something more sustainable: the company's unique ideas, set of passions, and purpose. It has a good start: Zynga's own workplace certainly is unique in many respects. How many other companies can say that every day is "Bring Your Dog to Work Day"? Zynga -- named after its founder's bullhorn terrier -- can, and the company offers other innovative benefits and workplace perks that I would greatly appreciate as an employee (and, actually, would consider adopting as a CEO).

Focusing on growth isn't the only mistake we make when we look to work on culture. Another mistake is to focus solely on the "cool factor." One sliver of culture is creating a physical environment where people want to be. Look at Google, Etsy or almost any other recent business success story and you'll likely see Architectural Digest-worthy photo spreads featuring cozy nap nooks, "time tunnels," on-site masseuses, and yes, even indoor tree houses. These perks and premiums are great; the problem is, they're often presented as outcomes of a "cool culture." And that's a category mistake. A nap nook won't give people a deep sense of inspiration or commitment. Cool is not equivalent to loyal, and this arms race of out-"cool"-ing the competition isn't an enduring answer. A treehouse is a great place to retreat to, but it doesn't inspire people.

Embarking on a journey that manages and measures all elements of culture requires courage. I recently witnessed this type of nerve from a highly successful CEO. His board was pressuring him to hire an external executive coach in order to strengthen the company's culture. But the CEO balked, saying his culture needed something whose impact far exceeded the results of a coaching program. "I need a lot more than to work on my active listening skills," he told me. "What I need is a whole new framework for managing our culture."

Other leaders who exhibit similar courage recognize that most of us face a crucial opportunity -- actually, a pressing need -- to transform our cultures. "The way I think about culture is that modern humans have radically changed the way that they work and the way that they live," HubSpot CEO Brian Halligan recently told Business Insider. "Companies need to change the way they manage and lead to match the way that modern humans actually work and live. We're trying to re-craft culture in a way that really matches that. I think that 99 percent of companies are kind of stuck in the '90s when it comes to their culture." That includes some of today's startups.

We've made this kind of systems error before at the onset of the Total Quality Management (TQM) movement. In the 1980s, U.S. companies were nudged into a philosophical debate about quality by their Japanese competitors. Of course, domestic manufacturers cared deeply about quality. Although many U.S. companies embraced the need to intensify their quality inspections at the end of the assembly line, they held onto a longstanding view that quality was more of an aesthetic that could never be measured or broken down into root enablers. As Japanese automakers gained market share while demonstrating that quality could indeed be systematized, measured and deeply integrated into their governance, leadership and culture, their U.S. counterparts rethought their beliefs; they declared quality was "Job #1" and set out on a long, difficult and fruitful journey to systematize quality.

A similar clash of ideas is currently occurring around culture. We see this philosophical debate in action when CEOs like IBM's Ginni Rometty points to culture as Big Blue's most valuable asset. When asked to describe her company's strategy, she offers, "Ask me what I believe first, that's a way more enduring answer." Booz & Company senior partners Jon Katzenbach and DeAnne Aguirre have written an article highlighting how Rometty and other chief executives are beginning to embrace their role as leaders of their company's behaviors.

Truly undertaking this role requires significant change, not only in how we manage, but also in what we measure. Never has the adage that "you can't manage what you don't measure" been more valid. Yet, when it comes to culture, we're measuring the wrong things.

Eating nutritional food, having access to on-site childcare, and spending long hours in buildings designed to inspire healthy living represent truly meaningful benefits, but these are the wrong measures of organizational culture. The best annual surveys, like that of the Great Place to Work Institute, assess culture with statements like, "new ideas are encouraged" and, "I am well informed about my company."

To build cultures that generate strategic value, we need to measure different things including values, principles, behaviors and trust. Research indicates that companies that measure and manage culture systematically -- organizations inspired by purpose, guided by values and embedded with trust -- experience significant advantages over the competition related to business outcomes such as innovation, risk-taking, employee loyalty and more. In their article on IBM, Katzenbach and Aguirre also point to Harvard Business School research that finds a consistent correlation between robust, engaged cultures and high-performance business results.

Rallying around shared beliefs and generating consistent -- yet also unique and human -- behaviors that flow from those beliefs requires much more than a programmatic approach. It involves ongoing, strategic work that requires leaders to get their hands on all of the levers and forces that guide organizational leadership and individual behaviors.

Today, thanks in part to the hard-earned $1.67 billion on its balance sheet, Zynga is in an enviable position to get its culture in order. One place to start would be to go deeper. I love that every day is "Bring Your Dog To Work Day" at Zynga. But every day should also be -- must be -- "Bring Your Values, Principles and Behaviors to Work Day," too. In fact, a day is too big of a unit. Better yet, bring your values to every interaction, every communication, and every single moment.