How Box A/B tested its culture

Aaron Levie started Box, an enterprise content management platform, in 2005. The company has since scaled the company from employing a few people to almost 2000 employees in addition to its now 41 million users and 85,000 businesses. He recently sat down with Jack at the Box headquarters in Redwood City, CA, to talk about Box's culture, how he built it through A/B testing, and the huge opportunity that he thinks big companies are missing out on. His advice and more, below.

For strong culture, set honest goals.

Box is not interested in setting goals low in order to built a false "culture of winning." Instead, Levie emphasizes strong, honest, and reachable goals, which he says can only be done with a "healthy sense of vulnerability in an organization." When it comes to goals, it's important to balance between short term visions and long term ones. For cash flow and key performance indicators, Levie wants to be clear that deviation from the final goal should only be a couple percent. 

Don't punish for failure. Figure out what went wrong.

To build a strong culture that's open to vulnerability, it's important to focus on diagnosing why you didn't reach that goal. "If you look at the history of management science, in a lot of other organizations, there was a lot of risk when you failed to reach a goal," points out Levie. You would get fired, or made to take a lower assignment.

But this causes employees to be less transparent and to have less ambitious goals. They operate out of a sense of shame and want to hide their failures. "Your job is to hide any of the risk and any of the failure and not sign up for any goals that could cause you to have that failure [again]," says Levie.

Instead, Levie is all about the scientific method to test and try new ideas to build a culture that actually encourages risk, not one that shies away from it.

To keep iterating on culture, run experiments.

Levie is all about using scientific methods, A/B testing, and experiments in organizational behavior to understand how best to scale and develop your culture. It's a way for them to take risks with open eyes.

"I have a low tolerance for risk in certain places," says Levie. When it comes to product, he says he brings "a certain conservatism." But he knows his word isn't God. "You want really healthy debate," says Levie. It's important to always ask yourself: Could we be taking risks more?

This is where Levie's idea of A/B testing comes from. "Modern A/B testing is based on constantly iterating on products — we're going to test it with one particular audience and then we'll scale it out if it works."

But doing it with people in a company gives you the ability to take risks because you know you can try new things but it's not necessarily going to scale if it's not successful." 

The bigger the company, the more effective your experiments can be.

This is something Levie thinks big companies should do more, simply because as you scale you get more opportunities to A/B test culture more effectively. "We couldn't do these tests with fifty or 100 people because your tests would be ineffective on 10 people. As long as you can think about it methodically, like you are actually running can actually have a really exciting way to continue to evolve your culture," says Levie. It's something I unfortunately don't see enough from large organizations. I think as we move more into this new era of work, we'll see more in terms of new experimentation happening." 

It's good to learn from other companies when it comes to culture — but it's likely your company has a lot of potential you might not be tapping into.

Levie is always trying to learn more about other company's cultures in order to fortify Box's, whether it's through books, YouTube, or our very own Resources For Humans — he's always able to find content about a company's best practices. "We have aspirational targets," he says with Box. "We look at another company who's doing well in one aspect and we try to learn from them, try to bring that into our culture."

But he's certain that simply examining your own company's default culture will give you a wealth of information.

"Within your company, there is 100%, unequivocally all the lessons you will likely need in order to scale the perfect organization. And your job is just to find out where those lessons are, and then figure out the way to actually do the change management to get those lessons to everybody else," he says. This usually means taking a survey of the organization and seeing what's working.

Remember the benefits of culture add as well as culture fit.

Lots of people suggest culture add is more important than culture fit when it comes to hiring, which Levie heartily agrees with. He notes that simply relying on tenured employees for culture is "incredibly important" but at the same time, "if that is your only way of maintaining and scaling your culture, then you're doomed to fail."

Levie does a presentation every two weeks during new hire orientation. He wants Box's culture and values to propagate amongst the new class — but he wants that to go both ways. "[We're] hopefully evolving and improving with every new hiring class. You want to be learning from new employees as well as more tenured ones."

Being a public company means balancing short term and long term measures of success.

When it comes to being a public company, Levie says, "Wall Street only cares about your last quarter's performance and what you're going to be doing in the future. It's very very near-term oriented," he says. "[But] that quarterly cadence actually tends to align closely to my own impatience of how I like to see progress in the business. I think I'm uniquely suited for that kind of operating rhythm. It makes your team really think about what we're going to execute, what is the progress we're going to execute in the near term. How do you do that without compromising in a way that's not detrimental at all to the longterm goals of the business? And the moment you veer so much into the quarterly performance you will absolutely make sure 1-2 years from now you won't have the product strategy, the growth rate you want to have."

"Conversely if you only focus on the long term you won't actually achieve your quarterly performance. It's a really good rhythm to be in as a company which is to be able to balance that near and long term focus as an organization."

Finally, Levie says, he hopes Box becomes more itself as time goes on.

When asked what he wanted to stay the same versus what he wanted to be different, Levie said he wanted Box's core values to stay the same — but he also wanted Box to fulfill certain values even more. "I'd like our organization to get more vast and more diverse over time," he said. It's important to him that this value be one where the company walked the walk, not just talked the talk, when it came to job and hiring pipelines. Levie said he wanted Box to be a company where a variety of people can be themselves — and flourish because of it.