Episode 3: How to Create a Culture First Company (Interview with Didier Elzinga, CEO and Founder of Culture Amp)
The renowned management guru Peter Drucker conceived the immortal phrase “Culture eats strategy for breakfast” and any company disconnecting the two is putting their success at risk. Indeed, there is mounting evidence of the clear business benefits in having a healthy and inclusive culture.
But how do you create a Culture First company, and how do you measure your progress against a backdrop of greater employee expectations, rapid advances in technology and changing work models? Also, given the increasingly turbulent times in which we live, how do you adapt and evolve your company culture? That’s the topic of this week’s podcast. You can listen below or by visiting the podcast website here.
Our guest today is Didier Elzinga, Founder and CEO at Culture Amp, one of the success stories in HR Tech in recent years and a company that passionately believes the world should be a better place to work.
In this week's podcast, Didier and I discuss:
How staying true to the Culture First ethos has helped propel Culture Amp’s impressive growth
The key milestones in Culture Amp’s journey to date including the recent acquisition of Zugata and launch of its new predictive analytics features
The 50,000+ strong People Geeks community and the upcoming Culture First conference in SF at the end of July (go here for more info www.culturefirst.com/2019)
The challenges involved in being CEO of a fast-growing HR Tech company
Finally, we also look ahead and ponder what the role of HR will be in 2025
This episode is a must listen for senior HR leaders and anyone working in the fields of employee engagement and performance, diversity and inclusion, and people analytics. Didier is a very engaging and knowledgeable speaker, so I know listeners will enjoy this episode of the Digital HR Leaders podcast.
Support for this podcast is brought to you by Culture Amp - find out more at cultureamp.com.
INTERVIEW TRANSCRIPT
David Green: Welcome to the digital HR leaders show Didier, it's great to have you on. Please can you give an introduction to yourself and to Culture Amp.
Didier Elzinga: Thank you David, I'm happy to be here. So I'm the CEO and founder of Culture Amp, and Culture Amp is a people and culture platform. And the way we think about it is that we help our customers collect, understand but most importantly act on people data.
And we see that people in culture is the biggest level that organisations have to be successful today. And so we want to help them do that and we build software to do so.
David Green: And since you started the company back in 2011, you had a really clearly defined vision of building a new type of organisation, a company that truly puts culture first.
That's been a consistent message throughout the time. What do you actually mean by that?
Didier Elzinga: I get asked this question a lot and and there's two levels to answer. One is, it's a very simple version. It means what it is. Put culture first. And it comes from this idea that it is the biggest lever we have and if you want to be financially successful, you need to be customer centric, but if you want to be customer centric you actually have to put culture first. So culture is the lever or the driver of everything else and I think we're seeing that increasingly understood.
So there's a slide that I have which shows the S&P 500 for the last 80 years and tangible versus intangible assets. 80 years ago - 80% tangible assets: factories, equipment, inventory etc. Now it's 80% intangible. So the value in your business is in your people's heads and managing culture is about managing that. Working out how to get the most out of it, how to use it to make your business successful.
David Green: This is something you actually you live yourself within Culture Amp.
Didier Elzinga: Yeah, we talk about it all the time, which is like we want to build software to help our customers put culture first, but we have to be culture first too. And at some level I feel like the legacy that I want to leave, the thing that's most important to me, is not just, how many customers we have or how much revenue we have but were we capable or were we able to build a culture first company at scale.
We'll make as much difference in the world by people looking at how we built our company as we will by the software that they're using.
David Green: Exactly, and certainly, you've got a great reputation within the industry since you started back in 2011. Which actually is eight years ago, but it doesn't seem that long. What are some of the main things or milestones along that journey?
Didier Elzinga: It's been eight years it does actually in some ways feels longer than that. I think, what was really interesting is early on, people just thought it was crazy. It was one of those things where no one could really see why we were doing it.
So some of the first milestones were those people that believed in us, so Adobe's been a customer of ours almost the entire journey, and I know when we started working with them, their team working on the project was bigger than our company. And, you look back and at the time you're a startup and you're like yes, of course they're going to work with us, but I look back and think you know Ellie Gates and Donna Morris and the people there that believed in us that was a huge milestone, that they needed what we were building.
And we still work with them today. So from the early days, we actually bootstrapped the company. So through to 2015, we didn't take any funding, we built the company up to about a million dollars in revenue with 15 people and we had these customers all over the world, Airbnb's, Box and Pinterest all these sorts of companies.
And then since then what's been fascinating is we took VC money because we got to the point where we were growing quickly enough that we needed that to sustain it. But we also went beyond Tech so we now have two thousand customers globally in almost every industry you can possibly imagine and from 50 people at the bottom end to like a hundred thousand people at the top end.
So it's that whole spectrum and for me all these things are amazing, but it feels like today we're actually just at the point where it's starting, when I talked about collect, understand and act. Okay. Now people can collect the data. 10 years ago, they probably could, like we needed the technology to do this better.
Today. We can do amazing things from an analytical point of view in terms of understanding. We can help bring understanding to the data. We can help derive insight but the battle line now is. Okay, but how do you help people act? And for me, we're just at the beginning of that again. So it's almost like we're back to starting.
David Green: And it's been a year off firsts already. I know you just bought the whole company together in Australia.
Didier Elzinga: 350 people in the Yarra Valley. That was incredible. It was intense. It was amazing. It was very powerful and we learned a lot. We've been intentionally culture first since the beginning and that doesn't mean that we're perfect.
We're not, no one is, like a perfect culture is a cult. A lot of being culture first is actually being willing to hold up a mirror and be comfortable with what you see. And so, you know, we learned all these things having everybody come to Melbourne many of which were like, how can we do that differently again if we had to do it again? But having built a company over that time and we'll probably talk about this a little bit later.
We acquired a company in Zugata. And one of the amazing moments is there are two developers who work for them who live in Brazil and they came. We brought everybody over. It was the first time they’d actually met the people that they worked with at Zugata in person was at culture camp where we were all together. So it was pretty amazing.
David Green: And talk about the Zugata acquisition. Your first acquisition. Why Zugata and why now?
Didier Elzinga: Yeah, so for us it was a sort of natural thing. SK and I have talked on and off for the last couple of years. So I've always admired not only what they were doing, but why they were doing it. And when I started Culture Amp, the first product I built was actually a performance review tool because I was looking at going why is it that everybody has this, you know, universally loathed annual backwards looking thing.
When what they actually want is a forward-looking continuous coaching conversation. And at the time eight years ago, we couldn't get enough traction on our idea to really make it work. Three or four years later, SK and Philip started and built Zugata and they basically did what we set out to do. They just did it better and they took it much much further. So it was really exciting to see what they did with those ideas and what led to it for us was, we're working with all these customers all over the world helping them understand essentially their organisational feedback. How does everybody feel about the organisation? How do I connect all the different points in the employee life cycle?
And what we were finding was that as we're focusing on driving change a lot of that's at the individual level and so people started using our platform for individual feedback. And so we actually built a whole product around strengths-based 360s.
But that's a very narrow piece of performance. And so we started getting dragged more and more into people saying well we want to use your platform for performance. The truth of the matter is, Culture Amp as it was originally built was not built for measuring performance and one of the things that SK said that really stuck with me was he said “the point of Performance Management is not to measure performance. It's to improve it.”
And so how do we build software that actually drives that improvement? And so it was a natural fit that by bringing their product into our product. We could give people The Best of Both Worlds so we could give them this world class leading engagement product and we can give them this world class leading performance product and then we could connect the dots between the two and so that's kind of how we got there. And the why now is that I think that people are now getting to the point where all the basics are in place and they're starting to figure out, how do I leverage this data to make better decisions? And that intersection point is critical.
David Green: And it's interesting that lets think back when you started in 2011 that engagement market was very much a once-a-year thing, if you were lucky and Performance Management clearly was a once-a-year thing if you were lucky, once every six months. And effectively they’ve both moved to this much more of a continual process and feedback based and you've now brought those two things together.
Didier Elzinga: Yeah, and I think when I was trying to build a performance review product and apologies to the company, I'm about to talk about. One of the things that I did at the time was I had a Twitter feed, and it was inspiration. It was “SuccessFactors sucks”. And anybody that said that I would see the tweet and I would follow up and try and work out why. Over the coming years I actually got a lot more respect for SuccessFactors because I realised the things that they had to do to be successful and the way they’d built it and I was somewhat naive in my approach. But the realisation I had was that their genius was that they took an offline process and they took it online.
And when you're doing that nobody's asking whether the process is a good one. They’re just like, I don't want to do it on paper anymore, just bring it on into the cloud. And what I think we're seeing in the last four or five years is people have finally got to the point where well everything is in the cloud now, it still doesn't work.
So maybe we should go back and actually re-engineer the process and we're at the cutting edge of that now as people are trying to figure out how do we do performance? How do we do engagement? How do we do learning? How do we combine all of of these things?
David Green: And certainly the reaction from the analysts, you know, Josh Bersin, Stacia Garr and others seem to say it was a very smart move.
Didier Elzinga: Yeah. I was actually thrilled when we were looking at it and thinking about it and I chatted to both of them and they were like, yes, please, this is awesome because they've been talking to Zugata for a long time as well and they were really excited about not only what they were doing in the performance space, but also one of their entry points and one of the things that they really focused on they did some really great work, which we're now going to be leveraging too, was the use of ONA and thinking about in the modern world ofwork who you need to get feedback from is not your canonical org chart, you're working with all these different people you might end up having three managers in a dotted line or a matrix style reporting structure.
And so they'd come up with all these interesting ways of trying to understand what the modern world of work looks like and then how you use that to drive these processes. And so yeah, when we told the analysts what we were doing, they were like, this is fantastic. We couldn't think of two companies that would work so well together and we had the same response from customers.
So it's really nice, people that I really respect calling me up and going… Of course, you know, you're my favorite but second-favorite I have is SK. I'm so happy that the two of you come together. I’m sure they said the reverse to him.
David Green: Well it’s a great endorsement, it's something where we've got to go with HR. For too long we’ve operated in these silos. Actually some of the technology and some of the thinking now is bringing that across and why wouldn't you want to link engagement with performance and as you said, tap into ONA technology as well to understand who you need to get feedback from as well.
Didier Elzinga: And the great opportunity, I was actually talking to SK about this last week, is there's some obvious things you sit down and say okay, I want to see how engaged my highest performers are or I want to understand the attrition risk of people that are in our succession plan, whatever it might be. But beyond that there's actually much more interesting questions and there's things we can really start to explore in data and going in both directions and if we think about even where we’ve seen the engagement world going, it's not just about engagement anymore. It's about well-being. It's about belonging. It's about intersectionality. It's about what is the culture we're trying to build. What is working? Where is it not?
And I think what we're able to do now with having Zugata as part of the Culture Amp platform is we can do both ends of the spectrum so we can give people tools to collect, understand and act on organisational feedback and individual level feedback.
And so for me, that's the great promise which is now we can go to an individual and given the same sorts of tools that we were giving the organisation to try and make sense. But most importantly do something because for all the performance reviews people have been running for years. They haven't actually been improving performance much, That's our goal.
David Green: Okay. So that's the Zugata acquisition, very exciting stuff. But what's next on the road map as well for Culture Amp. I know there's a lot of product developments coming.
Didier Elzinga: Yeah. So obviously there's a lot of work going on bringing Zugata into the Culture Amp platform and then bringing our customers the benefit of both of those tools working not just alongside but together. But in addition to that there's a whole bunch of other really interesting things happening too. So we just announced our predictive analytic capability. I hate the term Predictive Analytics because I think it's just the most ridiculous concept, but what I'm really proud of and the reason I hate it is that it can be used in the wrong way. Where people say, we want you to predict this thing and the problem is, and you and I've actually talked about this before, which is the ethics of statistical learning and all of that sort of stuff. But what we are able to do which I'm so excited about is we can give people insight and more than just insight, foresight into what is coming. So we can use their data to help them understand, who are the people that are most likely to leave, where are the points, where are the bright spots, where are the challenging spots and what are the impacts. And one of the things that we've learned over time is that, and I was actually talking to Amit Mohindra who use to be at Apple, an incredible person in the People Analytics space, and he said something really profound to me which is:
For so long in people analytics, we've been focused on this idea that if we just have enough compelling data on the screen, people will be forced to take action. And the truth of the matter is most of the people that are having to make these decisions either don't want to or don't know how to make that decision. It doesn't matter how compelling the case is.
And so now we're at this point where we have to understand. Well, how do we use people analytics? How do we use data to help people understand what's possible and to understand why they might need to do something? So the reason this is so important. The reason I'm so excited about Predictive Analytics, even though I hate the term, is because it helps people mount a case for change and the very first thing you need to do is understand what happens if we do nothing.
So before you leap into saying we've got our data back and this is what we should do. You say we've got our data back. And if we continue on the path we're on, half of the women in engineering are going to leave or, a third of the people in that new division we just hired won't be here in two years or whatever it is.
And you need to let people sit with that a little bit until they're uncomfortable and they're like, okay. Well, we don't want that. Great, if you don't want that, here's what we can do. And so that's what we're now able to do is we can help people peer around the corner. We can help them see the impact of doing nothing so that they can start to mount that case to actually do something and when you compare that with something else that we've got coming which is what we call Deep Benchmarking. It's this idea that not only do I want to compare myself to the new tech benchmark or to the industry benchmark,I think we're now up into over 70 different benchmarks of different industries and different segments. We can allow you to not only compare yourself to that company but you can say, going back to my earlier example, what's the experience of women at my company compared to women in the benchmark or Engineering in my company or Sales in my company compared to Sales in the benchmark?
And so combining that and combining tools like Predictive Analytics that can start to tell you what's going to happen or what's likely to happen start to get people much more powerful tools to create the case for change and then that leads to my third thing which I'm probably the most excited about, which is all the work that we're putting into tools to help people act.
So it's not just enough to give people the insight. We actually have to help people say okay if this is what you want to focus on, what are other people doing to move the needle on that thing? And what's working and what's not? And we're now at this wonderful point where much like Adam Grant and other people are doing in their labs, organisations can do this in their own companies. They can test things. What happens if we do this? Does it work or does it not work? And then let's feed that cycle back into the tool and share that out to the whole community and that's always been for us one of our most important things which is how do we bring the power of the community? How do we help you learn from all of the people out there in the world rather than just from one thought leader or one place.
David Green: So a few things. Firstly, Jason who's the Chief Scientist at Culture Amp, he actually walked me through the Predictive Analytics platform, and I was pretty excited when I saw it. I like the fact that as you said, it does reveal the tension and tells you what happens if you don't do anything.
And the way it works, or the way I saw it anyway when Jason showed me, was there were things down one side that actually tells you what you're doing well and there are things down the other side with things that you might want to look at, which you can deep dive into and as you said, it tells you what would happen if you don't do anything, so I think that's that's really good.
I also liked what you said about the granularity, so you can actually look….. With benchmarking, I think sometimes I don't know if you agree but it can be a little bit, well okay our engagement score is this, their engagement score is that. But you can actually go down to a much more granular level and I think that's great that technology can do that as well.
So that leads us on to the next question. Ever since you started, you've had the People Geeks Community, which I've been subscribing to for a few years now and I think the content on there is really good and interesting and isn't just Culture Amp material, which is really nice.
And of course last year you had your first Culture First conference and you’ve just come from the first one in the UK or in Europe as well. So tell us a little bit first about the People Geeks community.
Didier Elzinga: Yes. So as you say that that's been something from the beginning we made this conscious decision that we didn't just want to build a software company.
We wanted to be part of a larger group of people, many of which will be our customers but many of which won’t, that's okay. And it comes from this idea. We're obviously heavily rooted in science. And a lot of that is psychology and IO psychology, but I think one of the most profound changes in psychology has been this move away from: you’re broken, come sit on the couch tell me all your problems and then I'll diagnose you and tell you what to do, to: you're not broken, you're the expert on you. I have a box of tricks. Let me choose the one that might help you become a better version of yourself. And so Culture Amp is built in that image. We're not trying to go to people and say we're the smartest people in the world, we have the the only data that matters, we have magic questions that nobody else is allowed to use and you need to listen to us because we're right. Instead, what we're trying to say is every culture is different. There's a lot of commonality but you're struggling with your own issues. We want to help you access a world of knowledge and access the right thing and learn from people just like you and we want to use technology to mediate that and technology to drive that and leverage it.
And so last year, we had our Culture Fest Global event in San Francisco. And we had a thousand people across two days. We had Patty McCord, we had Adam Grant, we had Lindsay McGregor up on stage and it was such a phenomenal success. I mean it was a huge investment for us, but it was just incredible. And so this year we've doubled down even further and we're running the same event again at the end of July at San Francisco and that'll be probably more like 1,500 people and we're also doing these Culture Fest forums. So we've done one in Australia. I've literally just come from the one we did here in London and that's been bringing together a smaller group, more like 70 CHROS to come together and do exactly what I was just talking about. Share their learnings, share their understandings and work together and I'm endlessly humbled by that community it's incredible. Both what people are willing to share but also just how smart they are.
David Green: Did the success of Culture First last year surprise you?
Didier Elzinga: Yeah, not because I didn't think it was going to work but, I walked out just with this incredible sense of joy at seeing all these people come together. And I had my own kind of weird Silicon Valley moment. Where on the end of day two, there's a guy that runs Donut AI, which is another interesting company in the HR tech space. He also has a band, and he put together a song for the conference and all the words were taken from speeches that I'd given and so I'm sitting there on day two of the conference, we're up on our patio in San Francisco listening to the CEO of another Silicon Valley company singing a song with words from my presentations and I had to say, am I in a Silicon Valley skit moment right now? No, it was incredible.
David Green: So what can people look forward to at Culture First this year?
Didier Elzinga: Last year, we were a little concerned were we going to be able to hold people's attention for two days? We have too many people, and I think what we walked out with is we didn't have enough time. We wanted to do more and we could do more. So this year we're going to be announcing the speakers, but we're going to be continuing down a lot of the lines that we started last year, particularly a focus on diversity and intersectionality because we saw that last year and we're seeing it even more now, there's so much more will, but we're not yet seeing the results. So we're going to certainly explore that and then people analytics, culture, and all these different areas and there'll be some amazing speakers. We had phenomenal speakers last year and the first thing I said to JD when I walked off the stage is “alright, now you have to top that” and I have confidence we will.
David Green: Well, I wish I could get over, I can't this year, but I'm definitely going to get to the next one, that's for sure.
Turning to you Didier, obviously very successful organisation Culture Amp, growing very rapidly. What are some of the challenges involved in being CEO of a successful HR tech company?
Didier Elzinga: Well, what are the challenges of being a CEO of any fast growth company, but you know HR Tech has its challenges too. There's a couple of interesting things, one is historically HR Tech has not been seen as a promising industry. So if you talk to analysts, you talk to VCs, and they're all like “agh, it’s a horrible buyer and difficult environment” and I think I'm now starting to see people turning around going, “we were wrong”. This category is actually huge, the opportunity here is huge. But that is still a challenge that you're still having to convince people that what we're doing matters.
For me particularly, we're still doubling year on year. And one of the ways I think about culture is “culture is the way things are done around here”. And if you consider that you're doubling every year it means at least half the company has been here for less than 12 months. So the culture is constantly in this sort of formative state and because we are building culture first software, software to help people put culture first, the bar for us is very high and we want to hold that bar.
And so that's the thing I lose sleep over, which is are we doing enough to continue to deliver that culture first company at scale? And the answer is “never”. You can never get there. There’s always a little bit more that you can do. That's probably the thing that I struggle with the most.
David Green: And it's interesting you mentioned Culture Camp near the start of our conversation and you mentioned again you’re doubling every year. You always have to adjust the culture as you go as you become a bigger organisation and obviously you are in multiple countries now as well in terms of where people are located.
Didier Elzinga: Yeah. I mean, that's one of the things starting in Australia. We're a long way from everywhere. And so we made an intentional decision we kind of went global early. So, we've had London, Melbourne, New York, San Francisco and we were those four offices when we were a hundred and fifty people, so we created actually quite a lot of complexity. It's hard running a company across four offices of that size. And so now for us it’s actually building upon that, doubling down in each of those phases and working with it.
But I think the interesting thing is this whole idea of you know, eat your own dog food and so on. As we're rapidly growing we're suffering all the same things that we talk to our customers about. Having an opportunity to explore all those spaces and so in some ways we're our own petri dish for the people that we serve.
David Green: We’ve looked a bit at what are the challenges like being a CEO, now with a look at the broader perspective on HR. I'm going to ask you to look into your crystal ball a little bit. So this is a question that we are asking everyone who comes on the show. Where do you see HR in 2025?
Didier Elzinga: 2025 is interesting because it's close enough to be real and far enough out that things will have changed. I hope that we’d continue down the path we've gone which is that people and culture is taking a bigger and bigger seat. That people are looking at it going look, this is the biggest lever that we have. We need to make this matter. We need to make this count. I worry that we're not going to well enough grab that opportunity and answer some of the difficult questions that have come with it. And you and I have exchanged blog posts on ethics in people analytics. I think that's a huge issue.
And so who in an organisation is going to help educate people on how to use data not just in an abstract sense, but when we've got people's careers on the line and we've got people's livelihoods on the line and that stuff is just really really hard and so in 2025 that's going to be right square in the face. And I think when you zoom right back out, 250 years ago running a company as a CEO or as a board or whatever was relatively easy - make money. That was it. You could destroy the environment, you could do horrible things to people and nobody cared as long as you mad money. As time has gone on, we've realised that we have to meet a broader and broader set of needs as we should and as we need to.
People and culture is the one that is now having to help companies understand their obligations around diversity, around inclusion, around mental well-being. So in 2025, that's going to be right smack bang in the middle and I'm hoping that that means that people and culture as an area is more relevant than ever.
David Green: And actually, talking about ethics, I love that blog post you wrote, I think it was nine month’s ago, something like that. What were some of the things that you mentioned in there? Just so listeners can (we’ll dig a link to it so we can send listeners over there as well) but what were some of the highlights from from your article.
Didier Elzinga: There's obviously a whole bunch of stuff coming off the back of GDPR and so on where people have to be very careful with how they use data, but the bigger thing for me is helping people understand the misuse of data too. Particularly statistical learning and so the example that I always give is that my dad has prostate cancer and he's had it for a decade and he's a PhD in Psychology, he reads research, and he said to me I can tell you with a great deal of certainty what will happen to 10,000 men like me, but I can't tell you anything about what my experience is going to be. And the way we see that play out in software is I can tell you that women are more likely to leave your engineering team, five times more likely to leave than men in your engineering team.
And that's true, but then what people want is they want a tool that will go to a manager and the manager has five people in his team. And one of them is a woman and then the tool will tell him she is more likely to leave than those four. Maybe not, statistically that actually may be a poor conclusion, an incorrect conclusion. 50 of her are more likely to leave, but her, no. And yet that's a really slippery slope and I'm really worried that we're going to give people tools that get people to make decisions based on faulty data.
David Green: It's back to what you said earlier. It's about, let’s actually carry out some controlled experiments. Let's test, let's learn, let's validate, and improve.
Didier Elzinga: Exactly and let's understand what's a one-way decision? What's a two-way decision? What can we try? What is safe to try? And what are the consequences if we're wrong? And how do we think about this? And so I think there's a lot for us, people and culture, to learn from medicine, to learn from all these other fields that have had to struggle with these questions for a long time.
David Green: Didier, I think we could probably carry on talking for the rest of the day, but unfortunately we have to end the show now.
Firstly thank you for being on the show and how can people stay in touch with you and with Culture Amp?
Didier Elzinga: Thank you for having me here. This is so much fun having an opportunity to talk to people in this forum. Obviously the website’s an easy place to find us - www.cultureamp.com and then we have a very active Twitter community and also our People Geek community which you can sign up for - so peoplegeeks.com is a community of over 50,000 people now who all care about this problem.
So that would be my thing if you've enjoyed anything that I've said, join that People Geek community and come and help us change the world because that's why I built the company.
David Green: Didier, thank you very much for being on the show.
Didier Elzinga: Thank you, David.