Nearly every fast-growth company knows the power of company core values. The real question is, how do you lead with core values? The core values become guardrails to success and provide support for decision making inside our companies at all levels. Our guest today is Joe Payne, CEO and President at Code42. His company was ranked #3908 on the 2020 Inc 5000 list. Joe gives his approach to lead with core values. As the CEO of a fast-growth company, Joe has learned a few things about leadership and culture. We look at the keys to lead with core values in this interview.
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Disclaimer: This transcript was created using YouTube’s translator tool and that may mean that some of the words, grammar, and typos come from a misinterpretation of the video.
Being a good leader is all about people. And it’s all about the framework that you create for people to be successful. And sort of at the core of that is having a set of values that the company can embrace and can understand so that the company can move more quickly so that people can make decisions within that framework. And they know what’s right and wrong and what’s expected in here at our company. And also that they know that the values are actually believed in and acted upon.
Welcome to Growth Think Tank. This is the one and only place where you will get insight from the founders and the CEOs of the fastest-growing privately held companies. I am the host. My name is Gene Hammett, I hope leaders and their teams navigate the defining moments of their Are you ready to grow?
Gene Hammett [0:55]
How important are your core values? If you think they’re sort of important, then you’re going to really want to listen to this episode. If you already know that the core values of your company are very important to the successful growth of not only financial business but also the people inside the business, then you’re going to want to tune in here too, because we’re going to give you some unique extra ways to use those company core values to lead with your company core values means you really are putting them first and foremost inside the culture so that people know what’s expected of them. And today’s special guest is Joe Payne, he’s the CEO and president of Code 42, they run a little bit of a, an edgy company in that cybersecurity area where they really expect people to move fast, adapt quickly, and get it right the first time. Now, that’s a little clue because what I love about this interview is Joe and I talk about how he uses the company core values, and why he leads with core values in mind. And we talk about some unique elements behind this. What you will know after this interview is Joe takes this very seriously. He’s had six companies, he knows the importance of core values. He knows why these core values are so important, and why they must be lived, not just put on a wall. And I want to remind you that if you haven’t already downloaded the principles of fast-growth companies, you can get it absolutely free. Just go to genehammett.com/principles, you’ll get a three-page document going through the specific principles that these interviews that we’ve been doing over the last few years with fast growth leaders have in common and these 12 principles will help guide you to be a more intentional leader, be more influential, build a faster company and create great cultures go to genehammett.com/principles. Now here’s the interview with Joe.
Gene Hammett [2:49]
Hey, Joe, how are you?
Joe Payne [2:50]
I’m doing great today. Gene, nice to be here.
Gene Hammett [2:52]
Excited to have you on the podcast to talk about growth, leadership, and culture. Code42 is a remarkable company and the growth you’ve had. I’ve already let our audience know a little bit you on a personal level. But tell us about Code 42.
Joe Payne [3:06]
So Code 42 is a software company. We’re based in Minneapolis, Minnesota, but we have offices around the world, including in Colorado and in Washington, DC. We were founded about our almost 20 years ago to solve a specific tech problem around the backup and recovery of files. And over the last five years or so we’ve transformed ourselves into a cybersecurity company that really focuses on protecting data in this sort of new collaborative environment we live in where we all use slack or zoom, all this new technology. And so we’re sort of an emerging player, there were about 100 and $20 million in revenue. We serve companies, from as few as a couple of employees to some of our biggest customers are folks like IBM or Cisco or Oracle, so lots of big companies, our customers as well as small businesses as well.
Gene Hammett [4:05]
Fantastic. This space of cybersecurity is not new, but it has new challenges with people working from home and all of the things in collaboration right now.
Joe Payne [4:18]
It’s interesting, I’ve been I’ve run three cybersecurity companies in my career. And the last one was in 2006. And I remember saying to myself as I left it, you know, cyber security’s kind of done at this point, there’s really, it’s not that there’s not that much exciting left to do, I’m gonna go do something else. And I went and did something else. I worked in the marketing software space for a while. And I laugh at myself at my former self because the thing about cybersecurity is it’s constantly evolving, it has to because technology is evolving that we’re trying to protect and also, people are constantly defeating the previous types of cybersecurity. And so you’ve got to constantly remember new things. So it’s a pretty interesting business. It’s extraordinarily competitive. It’s probably one of those competitive businesses in the world today. Because there are about 6000 startups, we’re all trying to get this attention of five or 600, chief information security officers. So it’s, you have to wake up, and really put your hat on every day to go to work and work hard if you’re going to be successful in this space.
Gene Hammett [5:28]
Well, Joe, you and I have been talking about what does it take to grow a fast-growing company? And you, you mentioned the strategic core values are an important piece of that. So what are those strategic core values to you?
Joe Payne [5:42]
Well, first of all, so I this is maybe the sixth or seventh company I’ve run. And if you back up to my 34-year-old self, and like the first time I got a, a leadership job, I was, you know, keen to be successful young leader, and I was reading jack Welch’s book. And I remember jack welch said something to the effect that he spent 80% of his time on people issues. And, and I was like, what, like, I, as a young leader, I probably spent 10% of my time on, on people issues, it was all about sales and customers and product and marketing and all that kind of stuff. And I vividly remember thinking, boy, that chat box, I can’t believe he was successful, given what he was focused on. And then, of course, as I’ve grown, and I failed, and then, at times had success, I’ve learned that really, you know, being a good leader is all about people. And it’s all about this, the framework that you create for people to be successful.
Joe Payne [6:43]
And sort of at the core of that is having a set of values that the company can embrace, and can understand so that the company can move more quickly so that people can make decisions within that framework, and they know what’s right and wrong, and what’s expected in here at our company. And also that they know that the values are actually believed in and acted upon. And so the other thing that happened to me as a, as an early naive CEO, was, Enron was happening at exactly the same time that I was a young CEO. And I remember reading and Ron’s values. And Enron’s values were respect, integrity, communication, and excellence. And many of you listen to his podcast might not know the Enron story. But Enron literally was bringing prostitutes into the office to serve as executive assistants for their executives. So there is nothing about respect and integrity and excellence that goes with that kind of way of running a company. And all this came out when I was a young CEO.
Joe Payne [8:00]
And one of the things that I sort of promised myself is I never want to see my values on the wall, I never want to see them in a post, or I want the values to be known by everybody in the company, because they know them, and that they live them and that the actions that you take to sort of support your values are way more important than doing some exercise with some HR consultant to have a set value. So I’m sure we’re going to talk more about it as we go. But it’s ingrained in me deeply that anything I talk to you about today, if you know is something that if you said, well give me an example of that, that that’s what we focus on at code 42 is not only having a set of values but being able to point to them and say, we live them every day. And here’s how and so that’s super important for me, so you’re not gonna get a lot of platitudes from me, as much as you’re gonna get, hey, here’s what we do to support that kind of values.
Hold on for a second, Joe just said something that I want to make sure we put a spotlight on, you want your people to make decisions. Now, what that really means to me is you have removed yourself as the bottleneck of the company, you have allowed them and empower them in a way that you expect them to come up with ideas and make their own decisions. And it really is an important factor in the growth of a company. Because when you build a group of people that have the confidence and courage to make their own decisions, you really have something that will grow fast, hopefully adapt at the speed of the market or faster, and hopefully find new innovations, people making decisions is a really important piece to the culture of the company. Back to the interview with Jeff.
Gene Hammett [9:34]
Well, let’s dive into that. What are what is your favorite way to see when people are living the values I’m sure you have certain rituals and things that you’re doing but what’s your favorite?
Joe Payne [9:44]
He’s there’s probably no one favorite, but let me just give you some of the values then I’ll give you some examples of them and you’ll and you’ll see how they how they come to life. So probably our core one of our core ones is kind of it’s kind of trite and but and by the way, feel free to steal this. If you’re listening and you like it. We’ve So there’s a whole bunch of companies I know they’re using this, it’s called Get it done, do it right. It’s literally that simple. It’s six words, get it done, do it right. The important thing isn’t they get it done part because that’s part of all of our jobs.
Joe Payne [10:12]
The important thing is to do it right part and helping to define for your company. What do it right means is, is as hyper critical, and so things that we do, like, are you a positive source of energy for the team? Are you do you willing to share your expertise? with others? We define exactly for our team set of frameworks that show what do it right means and then, as to my point earlier about not just saying it, half of your annual review every year is just on the do it right part. So we basically look at how are you doing? against the do it right categories that we’ve created, and not about how you get your work done, but how are you doing about how you get your work done. And it’s impossible to be a top performer my company mathematically, because half of your grade if you’re if you don’t do it, right, I should say it’s impossible to be a top performer because mathematically, you can’t get there. Unless you get strong marks in both get it done and do it right. And as you’re thinking about this, think about that person you’ve worked with within your career.
Joe Payne [11:25]
That was what that was, you know, they got all the deals, and they’re a salesperson, they got all the deals in, but they had terms attached to them that were substandard, they created new products, they created a lot of drama in the sales operations organization. Those people that do get it done, but don’t do it, right, they don’t survive in my company, we give them one quarter to fix that part of the problem. And we’re very direct with them about, hey, if you don’t do it, I don’t care what you’re getting done in your job, you’re gonna have to leave. If you’re one of those people that did get that does it right but doesn’t get it done, we give you two quarters to solve that problem. Because good things happen to good people. And usually, in that scenario, we’ve probably put the person in the wrong job, or we haven’t given them the right training. So they have all the right work behaviors. And there and they’re trying hard if the organism with the organization, they’re just not being successful in their job, we own that part of the problem.
Joe Payne [12:21]
So that’s an example of probably my favorite, or maybe one of our most core values, and sort of how we how we bring that to light, I’ll close with the story of the first time I fired our number one salesperson in the company. And it was one of those things where he came to our sales meeting, and he hadn’t done the prep, before the sales meeting, and, and that involve like being ready to pitch the new products and understanding what the new products mean, etc. So we told him at that meeting look, um, you know, you need to show up next time prepared. And his response was, I’m your top sales rep buy some more than anyone else. Like, obviously, I learned the product, you don’t need to worry about me, he showed up this next meeting, and hadn’t been hadn’t prepared also, and also scored poorly. And so the sales leader and I just looked at each other and said, let’s do it. We fired him. And then what we didn’t expect, which I now appreciate much better, is that it changed the entire way we interact with the Salesforce because guess what, every salesperson after that was like, wait a minute, that was the top salesperson, and they fired him for not being prepared, you know, so I’m not the top salesperson, so I better be prepared. And so everybody understood after that. They had to live the values that we were talking about. And it wasn’t just words, for us, it actually was meaningful. And of course, by the way, that salesperson, as soon as we unwound his territory, what do we find? We found malfeasance with customers where he was getting some benefits from them and things like that, that were just we couldn’t believe that we found but of course, if you have people that don’t do it right in one area, they often don’t do it right. And many. So anyway, that was good learning for us.
Now, hold on for a second here. Joe just talked about firing the number one salesperson. Did you think it was crazy? Well, what he shared inside this, hopefully, you have not had to experience yourself because you’ve made the right decisions. But what people got you here won’t get you there. When I talked to Joe about, you know why that’s so important. He shared with us about really removing something that might not be the perfect fit, they might be not living the values of the organization, even though they’re really a high performer. And the result behind that was fantastic. When you think about your job as a leadership is not just to go along with the status quo, is to look for those areas where people aren’t completely aligned and find places where you can improve and firing the number one sales rep sometimes is necessary for you to continue to grow your business, removing someone that might be toxic, or may not be demonstrating the values that you want to in the organization is your job as a leader, back to the interview with Joe.
Gene Hammett [15:13]
Joe, I appreciate all of that. And you’re the first company I’ve talked to you, I know you have a core set of values, how many do you have?
Joe Payne [15:21]
We have five.
Gene Hammett [15:23]
So to have five, is is a good number. I’ve seen people that have a lot more. And I don’t understand why they have like so many. But you have singled out one as the kind of the granddaddy of them all. Have you? Did you learn that in a previous business? Or was that something that you brought to Code 42.
Joe Payne [15:42]
That’s one I learned at a previous business. In working with another CEO, friend of mine, who used to work for me, he brought that idea that concept, and it’s so encapsulated what we were trying to do that we took it and ran with it. And I think there’s a now was that we were all this little company called Eloqua. And and that company was bought by Oracle in 2013. And we all spread to the four winds. And now get it done. Do it right, you will see associated with dozens of companies, because we’ve always encouraged everybody take these values with you, and you go. So you’ll see in lots of places. Now we’ve you know, at code 42, we’ve added some and we’ve changed some overtime to reflect who we are. Another one that I’ll share with you that I think is a important one that’s we’ve been really helpful for us is this concept called assume positive intent. And assume positive intent is exactly what it sounds like is before you jump down your colleagues throat about the mistake that they made, or the disaster that we had, or the bad performance, start by acknowledging what they were trying to do, and what their intentions were, and actually do that verbally whenever possible.
Joe Payne [16:56]
And it changes the complete dynamics between our back and forth, you know, because what I say, look, okay, so what you were trying to do here was improve the customer experience so that they could get to them where they needed to in fewer clicks of their mouse. Yes, that’s what we’re trying to do.
Joe Payne [17:14]
Now what happened was, you created a massive bug in the product that basically ruin the lives of all of our customers. Yeah, that’s what happened. Okay. So that’s a different conversation. And how in the world could you do this? You know, why did you let this happen? Are you the biggest moron and on the planet, it changes the dialogue in a way that what people do is that it allows people to be vulnerable, and admit that they made a mistake. And it shows it also tells them to like, you know, they weren’t trying to be a bad person. And so what I’ve talked to my teams about a lot is that assume positive intent not only works well at the office, it’s one of those values that also works really well at home. Because I think all of us at times find ourselves in our relationships, questioning how the hell somebody could have done something like that. And, and so we’re constantly sort of whispering in our each other’s ears assume positive intent, obviously, I didn’t do that on purpose.
Joe Payne [18:11]
You know, I wasn’t trying to be the jerk that I look like I was, you know, and and listen, in this in this, you know, difficult year 2020. It’s never been more important. And so that’s a value that we all hold dear. And you will hear us, you will hear people say that in meetings, they will say it, when they’re writing to each other, they’ll say it on slack at times. And so it’s something that I know that we’ve that we’ve really braced.
Gene Hammett [18:36]
I love this. And I I see a lot of organizations that are growing fast, and they don’t have the focus of core values. And they wonder why they’re having, you know, communication issues and an issues with psychological safety inside their leadership and culture. You’ve learned, I guess, probably the hard way, what are some of the things that may be a story that you can think of is when you weren’t focused on the values the way you are today? That you had to? Had to correct?
Joe Payne [19:07]
Well, I think look, there’s, you know, I had a lot of experience as an early CEO, not all of it, much of it not successful on in many different ways to try to create change mean, what I kind of somehow ended up specializing in in my career is being a CEO that comes in after the founder is founded the company and has sort of hit the plateau of where they can get and they’ve either stumbled themselves, maybe they’ve called in asking for help.
Joe Payne [19:34]
Oftentimes, it’s their investors that are saying, okay, you know, she’s reached her peak and she needs some help and then they would bring me in and so I see a lot of the of the mistakes that you can make from not being as thoughtful about your values. I think that the number one thing that I’ve seen is the CEO often with with positive intent, with all the right intent, believes that everyone understands in the company what is right and wrong and what is acceptable and not acceptable. And because the CEO probably knows, in their mind, where are our boundaries? You know, what are we willing to do to get this deal? What are we not willing to do to get this deal? How, you know, if I’ll give you a very tactical example, which is a lot of companies will say, to close a deal at the end of the quarter, they’ll tell the customer, look, if you don’t close this deal, now, we are gonna not give you this pricing next quarter, you know, you have to do it this quarter, you know, and that’s called exploding pricing, you know, and it’s a classic sales technique, right?
Joe Payne [20:44]
Well, that’s kind of against our values, like our first value is put the customer first. And so if you’re going to have a value called put the customer first like, Okay, what does that actually mean? So it means things like no exploding pricing, it means things like, money back guarantee. So if the product doesn’t work, we’ll actually give you your money back. And we’ll put that in writing upfront. And that creates a level of accountability and responsibility. For us. It means that when we make decisions to upgrade customers in certain ways, we always have to think first. Okay, is this benefiting the customer? Or is this just about us? And so, coming back to your question, I think when companies go astray, is I think the CEO believes that they know that he or she knows what the values are. But people on the front lines, if you have an ingredient, if you don’t have an ingrained set of values that we share, people on the front lines don’t know how to respond in in stressful situations, and they make mistakes, and then you’re mad at them, because they didn’t live up to your values, but they’re like, but I didn’t know that was our value, and you’re not consistent on it, etc.
Joe Payne [21:52]
So I think that’s, that’s the biggest thing, I also think, you know, I’ve been worked with a lot of leaders who talk values, and then in the next breath, they don’t live them themselves. And so the person that has to live up to their values the most in my company is me, like, I have to live up to my values the most, I have to hold myself accountable, I have to, I have to assume positive intent, I have to be vulnerable, I have to learn, I have to, you know, leave the world a better place. And I have to show that in my actions. And and I have to do things that, that tell everyone, this is how we operate, we admit our mistakes, we own our mistakes, we learn from our mistakes. And, and, and and we move on. And I think that’s when we talk about creating a strong culture. A lot of CEOs view that, oh, that’s just that’s just New Age thinking. And you don’t need all that stuff. That’s my HR person’s job. And what I would tell CEOs when I’m mentoring them as, look, culture is just you, the CEO imparting on everyone else your values, and making sure that everyone else understands how your values are to drive this business.
Joe Payne [22:58]
And so you are the only one that can create culture, and everyone can contribute to the culture, but the culture starts at the top. Because if the CEO operates one way, and everybody else operates a different way, then you can’t be successful, and you won’t, you won’t have consistency. And so I encourage all your listeners if you’re a CEO out there, it isn’t Bs, this culture stuff, it’s actually it’s imperative in order for you to really reach your potential as a company. The last thing I’ll say on that is I have a phrase that I love, and it’s been attributed to a number of different folks. And it’s not clear who said it, but its culture eats strategy for breakfast. And I’m, and I love it because it’s just a reminder to everyone, look, we’re clever, we have good strategies, you know, but the truth is strategies change.
Joe Payne [23:50]
And Code 42 is a great example of that we have completely redesigned this business in the last five years, we used to sell to it now we sell the security, we used to sell back up, now we sell insider threat technology, our strategy has complained as when our strategy has changed completely, we have completely changed our strategy, but our culture is what keeps us who we are, you know, we’re the same company, you know, we’re consistent, etc. So, so we work really hard on that. And we work really hard. And we talk about it a lot to which, you know, a lot of companies that’s uncomfortable, we try not to make it uncomfortable, you want to talk about our culture. And lastly, we always think about how we can make it better.
Joe Payne [24:31]
So one of the things that’s interesting is we just added a new value, we dropped a value that wasn’t working, and then we actually added value because it didn’t feel right for us. And and and we sort of call those probationary values like is this our culture is an aspirational value for us like this one we want to be, in fact, with assuming positive intent. It started as an aspirational value, meaning we wanted to assume a positive 10 but we weren’t actually doing it and so by May At a value, we started to live it. And now none of us considered aspirational. But our latest one is one I took from another CEO. And it’s just don’t wait. And don’t wait is a really important value for our company because we’re in a fast-moving industry. And it gives everyone permission to just go. And when I was talking to my head of HR, my head of people about rolling this value out, we were like, should we wait for them until the next, you know, annual kickoff meeting where we kind of talk about all these things. And then we looked at each other and started laughing, but don’t wait. And so we rolled it out, like right then and so it’s really been a great value for us in the last year.
Joe Payne [25:43]
So where we’re trying to make a lot of change in our company, and we’re encouraging everyone in the company, just do it. Go do it yourself. Don’t wait. Don’t ask for permission. You know, don’t run it up the flagpole just go do it. And you We won’t punish you for making the decision yourself. You know, and are we there yet on that? No. I mean, we still there are times when we still have to tell ourselves why did this take so long? How come? Nobody just did the don’t wait for the thing? And everyone’s like, well, what if I got in trouble? Or what if this? Or what if that? What if it? What if it conflicted with our first value has always put the customer first and like Yeah, that’s true. It’s always complicated because some of these times these values bump up against each other. And but we’re, I guess that’s a long way of saying we’re always thinking about how to get better here at Code 42.
Gene Hammett [26:32]
Joe, thank you so much for being here and sharing the richness around you how you use the core values and live them. I love the stories I love the depth that you’ve gone and the focus that you have on it. And it shows and building you know, hundred million-plus company.
Joe Payne [26:46]
I was glad to be here and always excited to talk to great thinkers on leadership, and I appreciate your time.
Gene Hammett [26:53]
Now Joe’s a talker, right? He loves to talk about company core values, your core values are so important to the success of the company. They guide your people to do the right things do it right the first time and all of the other expectation to have inside the culture. When you lead with core values, you really are making an intentional part of how we will work together, Joe talked about a lot of things that you can actually do inside your business, you can decide how much emphasis to put on your company core values, you can decide if you’re going to make one of those values, super seed all the others, and are you going to put a bonus structure around people adhering to it. I really love that little detail. And today’s interview. Hopefully you took some notes. I took notes here. And if you have any challenges moving forward your business I’d love to get to know you.
Gene Hammett [27:42]
My job has been studying founders, CEOs, fast-growth companies. I’ve been putting a lot of focus on companies that are closer to 100 million and beyond because I want to understand what they know differently than those that haven’t quite reached that milestone. But what I do know is that any journey that it takes to be the leader, you have to continue to evolve. You have to take the defining moments and level up yourself. That’s my job. I’m an executive coach on leadership and culture to activate growth. If you have any questions about your company, your own leadership, what’s next to make sure you reach out to me, [email protected]. If you enjoyed today’s episode, make sure you share it with a friend. As always lead with courage. We’ll see you next time.
Disclaimer: This transcript was created using YouTube’s translator tool and that may mean that some of the words, grammar, and typos come from a misinterpretation of the video.
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