Building and rebuilding company culture: lessons from Schmidt, Ahrendts, and Khosrowshahi

Executive overview

Culture is not a project with an end date — the moment you declare it done, you are in trouble. Three executives who each reshaped major organisations share how they built trust, navigated turnarounds, and kept culture alive at scale.

The core tension is top-down versus bottom-up: leaders must earn the right to put their stamp on a culture, and that permission is rarely available on day one.

Authentic leadership — not polished performance — is the only lever that moves an organisation.

Authenticity as the foundation of trust

• Angela Ahrendts' first act at Apple Retail was to record a three-minute thank-you video on an iPhone, one take, in her office — rejecting the prepared 30-language email.
• Her daughter called mid-recording; she answered. Employees wrote in to say they felt she was human.
• The incident set a cultural tone: imperfection in service of genuine connection beats polish in service of image.
• Dara Khosrowshahi's equivalent moment: at a Weekly All Hands, he told employees "we don't have a PR problem — we have an us problem," publicly naming the root cause instead of managing optics.
• Both actions worked because they were unrehearsed and specific, not generic leadership messaging.
• The higher up you are, the less you know about what is really happening — and the more dependent you are on others being candid with you.
• Employees have a finely tuned BS detector. If a leader is not authentic, the organisation mirrors that inauthenticity straight back.

Turnarounds follow a different playbook

• Turnarounds require urgency that steady-state leadership does not. You must clarify goals fast and deal immediately with inherited people problems.
• Lou Gerstner's rule, passed from Eric Schmidt to Khosrowshahi: you have six to nine months to change a culture before you are stuck with it.
• Schmidt's early lesson at Novell: he scheduled 30-minute, no-agenda meetings with the ten smartest people in the company. Every one of them thought they were being fired — because that was the Novell protocol for termination.
• The blunder taught him that culture operates through invisible conventions you cannot see from the outside; you have to listen before you act.
• Expect roughly 80% management turnover in a genuine turnaround; the only variable is pace.
• Making one painful, visible change early signals to the organisation that you are serious — without it, people absorb the message and revert.

Bottom-up crowdsourcing has limits

• Khosrowshahi crowdsourced Uber's new cultural norms from employees — a fast way to signal openness and separate the company from its past.
• The result was useful for stating what Uber was no longer, but it converged on average opinion rather than sharp identity.
• Averaging 20,000 views produces safe culture, not differentiated culture.
• He later revised the norms once he had earned enough standing to impose a stronger point of view.
• Ahrendts ran a parallel exercise at Apple Retail: a six-month crowdsourcing exercise asking store employees what Apple should do more of in their communities. The output informed the in-store experience redesign, and because employees co-created it, adoption was fast.
• The distinction: crowdsourcing works for gathering ground-truth input and building ownership; it does not replace leadership judgment about what makes the organisation distinct.

Keeping the smartest people close

• Schmidt's accidental office-mate at Google turned out to be the company's chief revenue analytics engineer. When Schmidt was told the quarterly revenue target was $100M, his office-mate quietly informed him the real number was $142M.
• He formalised the lesson: place four physicists next to the CEO's office with one instruction — notice something strange and run in.
• The value is not information control; it is speed of signal. Proximity to people who pattern-match differently surfaces problems earlier.
• Hiring the smartest people possible and tolerating the friction they bring is the highest-return cultural investment for a startup.
• In established organisations, the smartest people carry disproportionate followership. If they are culturally misaligned, the damage compounds quietly and becomes dangerous.

Scaling culture without diluting it

• As headcount grows, culture cannot be transmitted through osmosis. At Burberry and Apple Retail, Ahrendts brought in a cultural anthropologist to document what had actually worked — embedding findings in onboarding and making expectations explicit.
• Apple Retail produced its first "human responsibility report" to make cultural commitments visible and measurable, alongside financial and supply chain reporting.
• Khosrowshahi found that early crowdsourcing needed to be revisited once he had tenure; the initial version lacked a strong enough point of view. Culture requires periodic re-tightening, not just initial setting.
• Culture is not owned by the founder or CEO — it takes on a life of its own and must be tended continuously.

What not to import wholesale

• Khosrowshahi tried "management by walking the halls" after reading about it, blocked time for it, and found it deeply unnatural. He stopped.
• The lesson: any technique, however well-evidenced, must fit the leader's genuine style. Performed authenticity is not authenticity.
• Take advice, then filter ruthlessly for fit. What works for someone else's personality and context may actively undermine yours.

Practical principles to act on

• Ask employees directly: "Are we at the state of the art? Are we using best practices?" Then listen. Employees are embedded in external networks and know more about the competitive landscape than most executives realise.
• Validate why people chose to join. Selection bias means your team already believes in something — find out what, and honour it before adding to it.
• Drive for excellence by treating every current answer as not yet good enough. Impatience about quality is a cultural signal, not a management style.
• Culture is the personality of the company — living, breathing, variable — and requires constant, consistent, authentic communication to stay coherent.