Ohad Hecht – CEO Emarsys
A few years ago, a company based in France was doing $90 million in revenue. They offered to buy out Emarsys, a marketing software provider, not once but twice. The Emarsys board refused the offer, focusing instead on building a unified culture and on scaling the business globally. They’re glad they did. The potential buyer, while initially successful, neglected their company culture and went on a downward spiral. That’s the power of culture, says Ohad Hecht, CEO of Emarsys. It has the power to make or break a company. Hecht should know. In his role as CEO, he has put culture on the agenda of everyone who works at Emarsys.
I had the privilege of interviewing Ohad about his perspectives on culture and how he has scaled the culture of the company to 16 offices on 3 continents.
In the conversation, we discuss:
- Why culture is an essential focus when scaling a business
- Why Ohad scrapped the company’s onboarding program – and what prompted him to reinstate it
- How the company narrowed 22 values down to six
- The difference between a value and a super value
- The challenges of building a unified culture across 16 different offices in three continents, and what to do when one of the offices doesn’t align with the rest of the company
- Why attempting to ‘change’ the culture can be dangerous, and what to do instead
Brett Putter: How did the culture develop at Emarsys.
Ohad Hecht: We worked remotely and when I joined, I was based out of Hong Kong. The UK branch started a couple of months before I joined, and there was another country manager based in France who started around the same time as me. In the beginning, there wasn’t such a cohesive culture. As individuals we were all subject matter experts and each office had a slightly different culture, which was based on who we were as individuals. Around 2012 we started to operate more as one company as opposed to different offices and started to think about creating a more cohesive culture.
Putter: You went from founding and running the Asian operation to becoming the COO and now CEO of the company. Take us through that journey.
Hecht: In early 2013, I pitched a shift in role to the founder of the company. I told him that I didn’t think he could continue to be the CEO, the head of finance, the head of product development, managing international roles and so on. At a certain point, it just doesn’t work for one person to manage everything. I suggested creating a COO role with responsibility for all international operations procurement, IT systems, and eventually also for existing customers and sales. I put myself forward as a candidate based on the job that I had done in Asia. I had managed to build a consistent and even a predictable business: we opened Hong Kong, then Beijing, Singapore and later Australia. Based on that, I thought I could do the COO job because I knew how the field operated and how to manage the magnitude of it. A year and a half later, I began to manage operations, taking care of things like client acquisition, services and existing customers across all the regions (at the time we didn’t operate in the US). I succeeded our founder and CEO in the summer of 2016 and I think there were around 550 people in the company at that point. I had read that when CEOs come in, the first thing they often do is to cut things and tell people how to do certain things. When I became CEO, the first thing I did was to reflect a lot about what I already knew. I knew the business well because I wasn’t coming in from outside. I knew what worked and what didn’t work and I already had personal relationships with many people across the company. I knew where we were stagnating conceptually and where we needed to facilitate a mental release from a certain point of view so people could perceive the world differently. The first thing I did wasn’t to change structures or processes but to look at culture.
Putter: How did you make sense of what the culture was, what you wanted to change, and how you approached changing it.
Hecht: To understand our DNA I looked at the people who have been with the company since the early days. Our founder has been in the business for 19 years. We have a sales person, Angelika, who has been with us for 17 or 18 years, and the first support engineer and the head of EMEA have both been with us for a similarly long time. These people are pillars in the company and they know about the company, its history and are core strands of the company’s DNA. So instead of thinking about changing the culture I approached it as an evolution of the culture. Instead of ‘changing’ or deleting it, we are making it a bit more relevant to the new situation and context.
One of the books that I was heavily influenced by was Delivering Happiness by Tony Hsieh, which was recommended to me by a guy in our London office who manages all of our services. He said it was his bible. What I like so much is how philosophically and methodologically he describes how he married learning about what is relevant with the objectives of the company, making sure the culture was something that belonged to everyone.
It’s a common mistake to believe that culture is something that belongs to HR; I read somewhere that CEO really means Culture Executive Officer, not Chief Executive Officer. I believe in this, and so I had a sense of ownership about this evolution. The first thing I did was create a committee. In every company you have people who have so called ‘harder’, more technical skills, and people who have softer skills, people for whom relationships, EQ and culture are more important than the numbers, methodology or process. I pulled in different people who had high EQ and who genuinely wanted to help evolve the culture, telling them we needed to revisit and refine the culture. We had about ten committee members from across different seniority levels and departments – contributors, managers and leadership.
There was good support and a lot of excitement, but there was also some healthy skepticism too. Not everyone thought what we were doing was necessary, but I think as the leader that it’s important to push forward if you believe in something, and I did.
We created a culture survey and a presentation that demonstrated how the vision, mission and values are all interconnected and then circulated it to the 500 or so people around the company to get them to tell us what they think. I backed up the work we were doing in the committee by sending weekly emails to the local teams talking about the culture. I said the culture and values are not just what I believe in; they’re relevant to everyone in the company. I gave examples of why we need to look at our culture by explaining and giving examples of what we, as a company, believe to be right and our actual behavior, which showed that there was a gap. My emails put the company culture on people’s agenda and gave me an ongoing opportunity to communicate about what we believed in and were doing.
From the questionnaire we got clarity on what mattered to our people. We got about 78% of participation if I remember correctly, and about 22 different values were highlighted as important. We reviewed the values and started to narrow down on the core values. We realized that ten is probably too many – people wouldn’t remember them – but if we narrowed down too far, it might not represent what we believe in. We really thought about it. What is a value? What does it mean? How do we want people to make decisions and adopt specific behaviors for those values? We thought of examples of those values being lived in the company. We eventually decided on six core values and then came up with ideas and initiatives that would foster the culture so that people would start to behave and make decisions according to the values.
We used the weekly emails to describe one of the values, an example of the value being lived in the company and we shared how people could support the initiatives that we were launching to foster the value.
The Emarsys vision and values are:
WE ARE ONE
- We succeed together, and we work together as one team to solve challenges. We communicate openly and directly; we confront and overcome problems rather than ignoring them.
WE ARE PASSIONATE
- We believe in what we do, we take a firm opinion on what we believe is right, and we ensure that our passion is directed towards creating value for our customers.
WE NEVER SETTLE
- We do not settle for ok or good, we want great, we want the best. We do not cut corners, but work to guarantee great delivery of every product.
WE LOVE CUSTOMERS
- Customers are our lifeblood – the reason for our existence. There’s nothing better than having a happy customer, and nothing worse than a dissatisfied one.
WE ALWAYS INNOVATE
- We think outside the box. From products to processes, procedures to our physical space, and in all walks of life. This applies not only to management, but to every individual, to initiate, strive to innovate, and improve by developing creative ideas into revolutionary results.
WE EMBRACE TOMORROW
- We need to be faster, better, and change at a pace quicker than our industry. We cease to exist when we stop evolving and embracing change as the opportunity it is.
Putter: How do you promote the values and culture in different countries?
Hecht: When you look at different countries you must respect the local and national culture. America is very different for instance from Germany, whether we like it or not. Sometimes in America everything is very positive and upbeat while that communication is perceived as normal in the US, it is seen in Budapest and Germany and much of Europe as being ‘happy clappy’.
So, there is some adaptation not to the core values but to the delivery of them throughout the company. The outcome of this is that the offices in different countries have come up with their own ways to promote the living of the values.
In Budapest for example the engineers very much look at how development centers behave. They love creativity and they’re always looking at what’s happening in Silicon Valley, Google and Facebook. They are innovation-centric and that’s not something people are very passionate about in other countries. Over here in the US we have endorsement cards on the values that give examples of the specific behavior that is relevant and a positive fit to the values, and I’ll go and write on the card why I think you deserve recognition. I have a tick box of all the values, and I’ll give it to you so sort of a sticker right, and you deserve it.
In Austria, the interpretation of ‘We are one’ was around volunteering to help homeless people. There was a campaign about buying socks for all of the homeless people. In Vienna, people help out with animal shelters. Over here it was packing meals for hungry children. So, you have to allow a level of interpretation, otherwise the values are not organic.
Putter: Can you give an example of an initiative you’ve created to help promote one of the values?
Hecht: To promote the ‘We are one’ value I give everyone across the company two half days and one full day every quarter to do something for the community or something that is unrelated to the company, but which will foster a sense of oneness. People can do whatever they want and they don’t have to report to us about what they are doing. If they find an issue that is relevant to the company that they want to work on they are invited to come back to us, tell us what they think, whether they need money for a project and tell us whether they want to communicate anything to the rest of the company.
Putter: How do you recognize when people live the values at Emarsys?
Hecht: Status and recognition are one of the most important incentives for us when looking at culture. We promote one of the values every quarter through our HR team in each country. We request submissions and reasons as to why people deserve recognition around that value. We then look at every country as to why people should be rewarded and recognized and then we select on a regional level. Insider, our monthly newsletter, goes to all employees. In it we highlight certain employees, their personal stories and why they are being recognized. Every employee who is highlighted receives a framed and signed certificate. It’s easy to underestimate what this means to people, easy to think this sort of thing must be bullshit, but it’s not. We see people sharing on LinkedIn and other social media about their certificates and that reminds us how important it is for them. Recognition goes a longer way than a cash bonus. Recognition stays with a person forever, it’s something to put on their resumé and it’s something their colleagues can see versus a bonus that just fades away and is short-lived.
Putter: Can people nominate themselves?
Hecht: No, they have to be nominated by someone else. You must have someone else who recognizes you and says, “Wow, you did a fantastic job. You’re a great example of this value.” So for example, nominating someone under ‘We are passionate’ would mean finding a colleague who is genuinely passionate about how they conduct their work. Or for ‘We love our customers’, someone who went above and beyond to fight for the customer’s success could be nominated. Maybe you didn’t sleep at night because you were making phone calls and got help from people all over the world just to make sure that the customer’s problem got solved.
We have two super values: “We are one,” which is about team work, and “We never settle.” There is a challenging mission to be achieved, so if you’re being nominated for one of these values, it might be because you broke through a lot of barriers and achieved your targets – despite all the obstacles in your way. It’s also a super value to love our customers: everything we do has to create value for our customers.
Putter: Some values can have a positive and a negative connotation. With “We never settle,” have you ever got to a stage where somebody leans more towards being a perfectionist and they never stop trying to achieve perfection – someone for whom good is not good enough?
Hecht: That’s a great question. In a funny way, talking about myself now, I never feel that I am satisfied with what I achieve. Never. In the American culture we always look at the positive talking about a ‘good job’ done, but from the European perspective, there’s always something more to do or uncover. I think the balance to strike is between always pushing for the best and not cutting corners, and recognizing that 90 per cent is really, good on the other hand. I lean more towards this approach rather than perfectionism.
Putter: Do you have any examples of employee feedback impacting the culture of the company?
Hecht: Every quarter we sit down together and look at the feedback from the employees specifically about the culture – I’ll give you an example. We used to have our elite circle, which generally exists in a lot of companies. The group would consist of the top sales contributors – the sales guys, the solution consultants and so on – and those who achieved their targets would go to a fancy location to celebrate their success with our senior execs. This then goes out on LinkedIn. Everybody wanted to be part of this group. It’s a bit like Richard Branson taking people to Necker Island. A lot of other people in the company – engineers, HR and finance people, service people working with customers – fed back that they were really upset and said, “Well, doesn’t my contribution count to the bottom line, even if I’m not directly in sales?” They wondered why they were automatically excluded from this club and how it could be more inclusive. They pointed out the contradiction in our value “We are one.” We say we are, but are we really one, people asked. There was a gap between the value and the execution of the value. They asked for change. Now, every quarter, we think closely about whether we are closing this gap and how we can consider the whole company.
It’s interesting that in our quarterly reviews, no one has stood up and said, “This value is not relevant anymore.” People have said, for example, “This value is not lived well enough.” They have pointed out conflict between the values and certain initiatives, projects, functional behavior or leader behavior. That’s a really good thing because it shows the values mean something to people. They are not just hashtags that people quote. If someone sees behavior and says, “There is a conflict over here,” it shows the value has been internalized and that they are actually living it. It matters more that people care than that the value is being lived perfectly.
Putter: How do you use your culture to help you drive strategy at the company?
Hecht: We started to execute on our strategy of verticalization at the end of last year. One of our most important values, but also the hardest one, is “We embrace tomorrow.” We launched a new product, we changed the way we go to market, the marketing department and customer organization are both changing (creating additional roles, new customer segmentation, and defining the service delivery to every customer). On top of that we are also running a new sales system called value selling, which involves sales training for all the commercial teams. Change is present throughout the organization most of the time, but we have a lot going on now. As human beings, everyone says that they like change but no one actually likes it that much! So when change comes, people usually sit back and wait to see what happens. They don’t lean into it or embrace it. So, the question is how do we make sure that our people are leaning in, moving forwards and opening their hands to the opportunities rather than closing them? One of the ways we started to address this and promote the “we embrace tomorrow” value is to have weekly meetings in every country where we are extremely transparent about the current state of the business and the changes that will be, or are, taking place. We tell employees everything that is happening in the company, we don’t hide anything, and in terms of the changes we tell people what we believe in and why, what answers we have and which ones we don’t, what we are doing and what will happen if we don’t, and so on. This has been very effective in getting our people to understand where we are, why we need to make the changes we are making and how they can embrace those changes.
Putter: What mistakes have you made with the culture and what did you change as a result of that mistake?
Hecht: One of the challenges is the fact that we have 16 offices around the globe. Back in the early days in Asia, I would do two full days of onboarding with every single new employee, which I did until the day that I left the region. Then in Europe, we would bring every new joiner to Vienna for two days of onboarding. There would be a group of 30 people, including the entire management team. After a while I didn’t think getting everybody together for two days was working. The issue wasn’t just that the senior management team were spending two precious days away from their day-to-day work – the problem was that we would see some of the new employees quitting their jobs soon after the induction. Going to Vienna for some people was a reason to come and have fun and not everyone was committed and came with the right intentions. They would enjoy the dinner, party and come in the following morning tired and not fully engaged. I found myself wondering why we were investing so many of our resources when it looked as if there was no reward back and eventually stopped that onboarding process altogether. About a year later I realized that I had made a mistake. I realized that people remember the day they joined the company and many people are still very good friends with the people they met during those onboarding days. People formed deep connections with colleagues from different offices, different cultures, different nationalities – and they’re still friends today. I decided to bring the onboarding program back but, in a way, that we can scale.
We run the onboarding program every six weeks on each continent, and we switch up which office it is held at, so for example in EMEA it rotates from London to Vienna to Berlin to Budapest. It allows people from elsewhere to absorb the local office culture and gives local employees the opportunity to mingle and mix with people who are being onboarded, giving them a chance to get to know them and share their local culture and knowledge of the business.
We now use a combination of videos about our culture, about what’s going on in the broader market in conjunction with local market information, as well as what’s going on in our office. We also use training software that teaches the new joiners about the history, values, culture and who we are. There is also a specific employee handbook tailored for each office. It’s not always possible but anytime I can be there and get involved in person, I will. I really do believe in the value of our onboarding process.
Putter: What’s the impact for you of a strong company culture?
Hecht: Being a straight shooter, I believe that culture is the difference between success and a failure. I can give you countless examples of companies in our industry that were much bigger than we were but have weak cultures and are now, a few years later, much smaller than we are. There was a European competitor that moved their HQ to the UK. They were doing 90 million Euros in revenue and were always bigger than us. They tried to buy us twice and now, they are desperate for someone to buy them – and it’s because they didn’t get the culture right. I know another company like this that was established in the U.S. They didn’t get the culture right either and they were sold a few weeks ago for pennies on the dollar. That was a company where management didn’t support one another, kept on changing and didn’t invest in creating an environment of psychological safety for the employees. If the culture is weak and there is no commitment or belief, it trickles down into the company and the employees go, then customers go, investors come and go, and management comes and goes. It’s a downward spiral. For me culture is the difference between achieving success, growth and scale, and failure. It’s that radical.