Case 1 Time for Realignment: Developing a Culture of Transparency at MX Introduction Nate drew himself forward
Question:
Case 1 Time for Realignment: Developing a Culture of Transparency at MX Introduction Nate drew himself forward in his chair and surveyed the job candidate on the other end of the Zoom call: "Here at MX, we're trying to empower the world to be financially strong. What values does it take to empower the world to be financially strong?" Nate often includes this question when looking to hire new talent at MX. Creating a transparent and open culture where people are excited about their jobs means that everyone in the company must embody the values required to improve the financial lives of individuals. At least, this is what Nate Gardner believes. Nate Gardner is the chief customer officer (CCO) of MX. He started working for the company in this role in 2012, after working as the CEO of Costa Vida, where he helped build a restaurant brand that expanded to 25 branches and led to a multimillion-dollar exit. In his time at MX, Nate has been involved in both the contraction and expansion of MX. By 2016, he and other members of the executive team realized that the organically grown culture of MX had strayed from its foundation. Ryan Caldwell had founded the company in 2010 with the idea that people should be able to manage their finances through banks and other financial institutions more easily; that if they could see exactly where their money was going and be given some easier-to-use tools in managing their finances, perhaps they could avoid many of the financial problems he had seen his own friends and family makeproblems that sometimes led to unanticipated debt, unnecessary fees, and even financial ruin. Knowing that more than 80 percent of the U.S. population lives from paycheck to paycheck, Ryan decided that if he could simply create solutions for end users and their banks to more effectively visualize and track their finances, he could help those individuals become financially stronger. Today, MX helps financial institutions and fintechs utilize their data more effectively to outperform the competition in a rapidly evolving industry. The company provides software solutions to enable people and organizations to quickly and easily collect, enhance, analyze, present, and act on financial data. Using a method in which software tools are delivered and licensed online via subscription, rather than bought and installed on individual computers (Software as a Service), MX provides organizations with mobile banking apps, financial visualization for banking customers, analytics and marketing of internal data, and data aggregation for customers who want to focus more on their core business of banking and financial services and have someone else ensure the customers have a seamless experience dealing with their banking or financial transactions online. As one of the fastest growing fintech companies in the United States, MX has learned that sustainable growth comes from a focus on its people making good product with a purpose to make the world financially strong. Enlarge Image Alignment Problems By 2016, however, MX had started to become a victim of its own success. It started hiring experienced senior leaders who were more familiar with the financial sector. It looked first and foremost to a person's resumeyears of experience and technical competencieswith little acknowledgment of their fit with MX's foundation. It didn't take too long for Ryan, Nate, and other members of the executive team to realize that this was a mistake. The new senior hires were extremely good at what they did and quickly started to steer the culture more toward profits, processes, and privacy. But people were now losing a sense of why they were there. People were also being fired for mysterious reasons, and doubt started to set in. They started to doubt the organization: What was its purpose? They doubted the senior leadership team: Who are they going to fire next? How do I perform and show that I'm valuable to the company? What are the criteria? What once felt like a small, open company was now turning into a large, closed culture with no common vision or common way of working. If something wasn't done fast, MX stood to lose everything its employees had worked for. MX would be counted among the many tech startups that saw a surge in growth but was not able to adapt to that growth. Alignment Solutions From Nate's perspective, he saw two options. First, the company could acknowledge this shift in the culture and build in rigid processes to ensure that people were doing what they were supposed to be doing. In this case, MX would move to a more professionalized modelsomething that happens at a lot of companies when they start to grow and bring on new senior leaders who are familiar with large organizations. Second, the company could fight back against this shift and go back to its foundational roots. But going back to its roots didn't seem like an option for a maturing company. How could the firm maintain an open and transparent culture while also supporting major growth? One day Nate was reading Laszlo Block's Work Rules, which described how Google had developed a startup culture in a large organization. He realized that if Google could do it with thousands of employees, then MX could do it with just hundreds employees. Even before finishing the book, he called up Ryan: "You've got to read this book. I think it's the key to our alignment problem." Desperate for a solution, Ryan read the book and quickly agreed. Ryan then distributed copies of the book throughout the organization. "We need to get everyone thinking like founders," Ryan said. "Having a founder's mindset means that regardless of title, we are empowered to act on our ideas to compose world-changing solutions to our customers and our MX team." This triggered something inside of Nate. He thought, "We need to start with the problem, not with the solutionwhat problem are we trying to solve and what kinds of values are needed to solve this problem." "Someone interested in climbing to the top of Mt. Everest only has to go online and look at some pictures of Mt. Everest to get a sense of what kinds of values will be needed to make it to the top," says Nate. "Looking at Mt. Everest, you see that this is going to take some real grit and preparation. It will attract a certain type of individual. Climbing Mt. Everest is not for everyone." Nate started by calling the executive team together to discuss the "mountain" they were all trying to climbto empower the world to be financially strong. Once they agreed on the challenge, they were then able to focus on what should be most valuable in the company. These values would act as guidelines for the company's aspirations. Through multiple iterations and after talking with key stakeholders in the organization, the team put together a rough list of seven core values for the company. These values were then presented in a town hall meeting to everyone in the company as a rough draft of what the company values should be. The executive team asked everyone in the company to give feedback on the core values and to help make changes to those values. Many changes were made, and a final set of values was constructed. But this was just the beginning. Once the mission and values were created, the team laid out a plan to realign the culture. The next step was to embed these values in everything they did. They started by transforming the hiring process. Up to this point, hiring was random and done by managers alone. They quickly developed a hiring process that democratized hiring using behavioral science. They turned to behavior-based interviews, in which key questions asked about the job candidate's commitment to the core values. Moreover, the manager was only one piece of the hiring puzzle. All team members had an equal vote in the hiring process as well, and all were involved in interviewing. This was the first point of changing the culture because it acted as a gatekeeper to what kind of people were let into the organization in the first place. The next area for change was the performance management system. Up to this point, there was no transparency in how employees were evaluated and developed. To ensure MX stayed true to its roots of meritocracy, the company leaders provided consistency in how people were given feedback and how promotions and salary decisions were made. They also made everyone's performance (including the executive team) in the organization completely transparent and contingent on the company values. Next, they hired Brandon Woolf, who had worked at Google for nine years, as the "Chief People Officer." Brandon helped put together a transparent OKR (objectives and key results) system that aligned with the MX values. OKRs represent a framework for defining and tracking objectives and their outcomes. They were first popularized at Google, where this approach to management and goal setting became central to the company's culture. In fact, Larry Page, cofounder of Google, credited OKRs with helping Google achieve its 10-times growth rate. Brandon worked with the executive team to develop unique OKRs for MX that fit and are aligned with the company's core values. Brandon also teamed up with a business intelligence company to create a dashboard that allowed for ongoing monitoring of these objectives and key results throughout the company, ensuring the values were embedded in everything people do at MX. Even with all of this, the lasting power of this cultural shift would be put to the test soon. Going Forward In 2021, MX was at about 700 employees and was continuing to grow at exponential rates. Could the more organic structure that relied on its core values to govern how people were hired, developed, and managed maintain the strong culture amidst this rapid growth? Moreover, due to the COVID-19 pandemic of 2020-2021 many of its employees continued to work much of their time remotely. Nate was a bit worried. "I think the strength of our realigned culture will be put to a true test in the next year few years as we continue to grow in the virtual workspace," he commented. "I wonder what else we need to do to make sure this culture will stick?"
Questions:
How can hiring people with lots of experience be dangerous to a company? How would a virtual work culture be different from a culture established for employees in an office or facility? Consider the development of MX's new performance management system. Does it seem like an effective system?
Questions:
How can hiring people with lots of experience be dangerous to a company?
How would a virtual work culture be different from a culture established for employees in an office or facility?
Consider the development of MX's new performance management system. Does it seem like an effective system?