The myth of the silver bullet

For the last few weeks we've been talking about corporate culture: in particular, about whether you can build a company's culture deliberately, and about how far that culture is implicated when things go well or badly. So it was through a delightful synchronicity that I recently ran across two very different sources which spoke to this topic in rather different ways.

The Patagonia case study

Building a culture ...

The first was a talk given by Carlos Conejo, LSSMBB, under the auspices of ASQ, about "The Patagonia Ethos." Conejo reviewed the outdoor clothing company Patagonia, and explained how they built a corporate culture deliberately and systematically. Back in the old days, when Yvon Chouinard (the founder) first started to make climbing equipment, he told customers they shouldn't expect quick responses during climbing or skiing seasons. Then, as the company grew, they introduced:

• Flexible work arrangements
• Casual dress code
• Flat organization
• No private offices
• Health food in the offices
• On-site daycare
• Transparent communications to employees
• Classes for employees on how to get involved in local, grassroots environmental causes 

100% of the electricity used by the company is from renewable resources. 

98% of the raw materials used by the company are recycled. 

If you have old gear from Patagonia, you can send it in and they will repair it. 

These principles make Patagonia's gear more expensive than that from their competitors, but customers gladly pay the higher prices because they support the company's mission.

Then in 2022, Patagonia transferred all its paying (but nonvoting) stock to the Holdfast Collective, "a nonprofit dedicated to fighting the environmental crisis and defending nature." The voting (but non-paying) stock went to the Patagonia Purpose Trust, "created to protect the company’s values." Chouinard described these transfers by saying, "Earth is now our only shareholder." (Interestingly, Robert Bosch GmbH has a very similar ownership structure.)

All of these steps have contributed to a clear and embedded corporate culture.

... but not a silver bullet

But it's not all roses. Conejo explained that one of the consequences of the company's pervasive informality was that for many years they were very weak when it came to formal planning, budgeting, and performance management. Then when it finally became clear that these activities were needed, they created a home-grown solution that lurched too far in the other direction. For a while, the business planning process took three whole months to plan each year. Partly this is because—in the name of transparency—it engaged all employees at all levels clear across the organization. But many of these employees had no previous experience in (or even exposure to) business planning or the rudiments of project management. So the value of their input was compromised, or else they had to take the time out to learn the subjects they were contributing to. 

Ultimately, Patagonia grew past these problems. They scaled back the planning process while continuing to emphasize openness and the development of their employees. But two overall messages were inescapable. 

First, culture is important but it is not a silver bullet. You need systems too. 

Second, every culture has its own failure mode. There is no "perfect culture"; each one has some strengths and some weaknesses. Which ones predominate is partly a matter of which circumstances the company faces.     

Boeing, again

All of which brings us back to Boeing.

In recent posts* I've suggested that Harry Stonecipher (Boeing President 1997-2001 and 2003-2005) deserves a measure of criticism for deliberately dragging the Boeing culture away from a focus on solid engineering and toward a focus on the economic bottom line. But the second source that I ran across a few days ago was a blog post that provided important insight into that transition. (See "The Myth Of Old Boeing," by Bill Sweetman.) 

What Sweetman makes clear is that Boeing, back in the days before Stonecipher took over, may well have had a solid culture; and the engineers were surely very smart. But their configuration-control system dated from World War Two! By any normal standards, Boeing should have been totally incapable of building airplanes for multiple customers** in the modern day. The only thing that saved them—for a while—is that they had low-ranking employees on the production floor who understood the archaic configuration system backwards and forwards, and who worked around it with heroic effort in order to get the planes built. But these were individual human beings. One by one they got old and retired. And we all know that any system which relies on heroes to get the job done will fail sooner or later.

This was the challenge that Stonecipher faced when he took over the company. Yes, he insisted that Boeing start thinking about the economics of profit and loss. And yes, in the end, it's possible that he went too far. But part of his motivation at the time was to drag Boeing—kicking and screaming—away from a configuration-control system that made factory production pointlessly expensive and mind-numbingly inefficient.

In other words: if it hadn't been Stonecipher, it would have been someone else. The only other alternative would have been for Boeing to collapse under the weight of its own inefficiency.

To repeat the two points above:

1. Culture is important but it is not a silver bullet. You need systems too.
2. Every culture has its own failure mode, and there is no "perfect culture."

For those of us in the Quality business, none of this should be controversial. In a sense, culture is about making sure that all your people are approaching their work in the right way. But Deming taught us years ago that "A bad system will beat a good person every time." That's why you need both. 

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* See specifically here and here.    

** A configuration-control system manages how changes or alternatives are introduced into a design. If you sell a single basic product to several customers, each of whom insists on their own unique package of options, you need a sophisticated configuration-control system to keep track of all the variations so that (for example) United gets airplanes tailored for United and not for American. By the early 1990's, Boeing's system for handling these variations was woefully out of date.