Why company culture matters
By Keith Sparkjoy on January 6, 2015
Recently, I was asked to invest in a company. As part of the pitch, I received a slew of numbers about the company's financials and how much I stood to gain from the investment in a relatively short period. But what I didn't get, and what I really felt was missing, was information about the company's culture. That said, I've put together a short list of questions to consider before investing in any company.
Things you should always learn about a company before investing:
1. Does it have constancy of purpose or is it driven purely by profits? Without constancy of purpose to stay in business for the long term, companies can be infected by cost-cutting measures that stifle growth, innovation and morale.
2. Does the company care about its customers? Without a strong customer focus, a company can alienate its customers and generate a bad reputation that is challenging to overcome.
3. Do the employees love the company? I loved Simon Sinek's recent remark on Twitter: "Customers will never love a company until the employees love it first." While there are some counterexamples out there, it's a sign of good health when morale is consistently high, even when times are tough.
4. Is the company committed to continual improvement? Companies that create a product customers love, then cut costs and milk the profits, are likely to be overtaken by a competitor committed to constantly delighting the customer with new innovations. I want to be in this for the long haul -- that's where the real profits are.
5. Are executives motivated by incentives for hitting targets set for their departments? If so, don't be surprised to see internal squabbles, competition and finger-pointing instead of everyone playing on the same team. The problem isn't that financial incentives like this don't work. The problem is that they work way too well. Trying to optimize each department is a sure recipe for sub-optimizing the overall organization. Sure, you can succeed this way, but I want to invest in companies that are going to be great, not just good.
6. Is the CEO a humble person? CEOs who focus on their own greatness are often limited by their own imaginations. A humble CEO will hire smart people and focus on helping them succeed. A humble CEO's goal is to make the company great rather than being self-serving. It'll be an exciting day when I get a pitch that includes not just financial details, but also details about the health of the company!