So I just finished reading Boomerang by Michael Lewis (book review to follow) and I think the general thesis of the author (whether or not he meant to be this prescient) is: It’s All About Culture
What Did They Do?
Here’s the opening argument for each group: what would they do when locked in a dark room filled with endless amounts of money? Ireland bought and sold real estate to each other. Greece bought everything in sight – without paying taxes – and promised insane security and social benefits. Iceland went into a purchasing frenzy globally, in an attempt to prove themselves to the world.
What Would You Do?
Here’s a very insightful question: if your entire firm were locked in a dark room, with unlimited amounts of money, what would they do? What would they buy? What would happen to their drive, goals and ambition?
I think it would make a good discussion – what would happen to the team dynamic?
A lot of start up firms win in the marketplace because they are hungry – they want the success and fortune that their forerunners have experienced. However, in that rise to the top, success often breeds complacency, which in turn breeds failure. The question is, how do you instil a culture so that even if your team is locked in a dark room with endless amounts of money, they still stay true to the drive and focus that made them great.
It’s All About Culture
I think the key is that culture is the foundation – money will just make you more of whatever your group dynamic was prior to influx of wealth. Iceland was a alpha male culture that thrived off bumping into each other on the street – it’s no surprise that once extraordinary amounts of money were added to the equation, that alpha attitude caused them to become an uniformed purchaser in the global financial industry, which ultimately led to their failure.
That’s why it’s so important to build a strong culture when the group is still small and forming. Instil values that will scale well and adapt to market changes, but still stay fundamentally the same (I know that sounds paradoxical, but bear with me). If your group is competitive/alpha when it is small, it will be tyrannical when it is large and successful. If there is a lack of trust when you are small, there will be scheming and open hostility when you are large. Any negativities will be compounded and magnified.
Conversely, any strengths will also be compounded and magnified. If your group was creative problem solvers before the influx of wealth, with the new tools and resources available they will become ingenious. If they were strong communicators, they will become experts. An introduction of wealth only magnifies existing traits.
It becomes instantly apparent that building a sustainable and scalable culture is most important when the stakes are small and the organization is small. Once the ball gets rolling and growth starts to build, it can be very hard to change the direction or foundational values, so ask yourself this question – if unlimited wealth was introduced, what would happen to your culture?
Blair Livingston’s Blog