On Thursday morning 1871 invited Mark Achler, Senior Vice President of New Business, Strategy and Innovation at Redbox, to speak about the importance of integrating value into the company culture of startups. Achler presented the audience with the following thesis: Value driven companies drive better shareholder results.
According to Achler, CEOs who create strong cultures and values from the get-go make better business decisions and have greater entrepreneurial success. For Achler, true success means overall employee happiness and a willingness to stay motivated when working on projects that are not part of their daily jobs or compensation plans.
He argues that the standard hierarchy of entrepreneurial needs—build a product, find customers and raise capital— is too simple: this hierarchy is missing an important conversation about values. To demonstrate this point he told stories from the Redbox archives that embody the companies six corporate values: integrity, respect, accountability, dedication, humility and communication.
Achler then shared insights on Redbox competitor Netflix and a time when its lack of communication had a negative impact, i.e. Netflix’s unexpected decision to change its pricing and split their business in 2011. He asked the audience a few important questions regarding this change: How did you learn about it? Did the company care about you and carry you through the logic of their decision?
It was clear from the audience’s visceral response that Netflix had made a mistake. They had a breakdown in communication, failing to leverage the great deal of consumer brand love they had at the time. This led to bad press and an explanation/apology letter on the Netflix blog that validates the points made by Achler. These negative effects are the reason that Achler considers communication to be one of the most important company values. He even goes as far as grouping good communication skills in with street smarts, initiative and problem solving skills during the hiring process.
Lack of communication can also be construed as lack of respect. According to Achler, having respect for your employees’ means taking the time to care about them and understand the challenges they face while getting to know the other departments in your company. Taking the time to clearly communicate what you are trying to accomplish and why builds coalitions of support and eliminates problems.
“When you are building something new there is always challenges [and] bumps in the road,” Achler said. “We are all moving so fast that sometimes we fail to communicate. Most problems come with failures to communicate, not poor performance.”
When poor performance does rear its ugly head it is often from lack of humility. To stay humble you need to stay grounded. This means “truly understanding the needs of your customers and key strategic partners while keeping up with the changes in technology,” said Achler. Failure to do this can lead to losing it all.
He used Blockbuster’s failure to create a culture of innovation as an example. He admits that when you have 90 percent market share, as Blockbuster did at the time, it is easy to totally dismiss smaller competitors.
“When you have a product and a model that is working everybody is focused on protecting what works. It is very hard to create a culture and a sense of urgency around innovation because you want to protect the cash cow,” said Achler. It is this lack of humility that prompted Blockbuster to turn down partnerships with Netflix and Redbox.
Achler ended his talk with an improved hierarchy of entrepreneurial needs: product and values first, capital and customers later. For these values to succeed and be fully integrated into company culture they must be simply worded with a straightforward purpose. Achler recommends looking at values every few years to ensure they are still in line with your evolving business and incorporating standardized values into the hiring process, a feature Redbox is currently in the process of enacting.