Elon Musk: A Culture Risk Assessment of the moves at Twittter

It seems that everyone has a hot take on whether Elon Musk’s moves with the Twitter culture will burn the house down or whether he is crazy like a fox, moving quickly to revive innovation in a company which had seemed to stagnate for years.?

Let’s zoom out a bit, and instead of another opinion based on a few selected anecdotes, let’s look at what Musk is doing through the Culture Risk framework. The Culture Risk framework consists of 5 key elements, and Levers that need to be put in place to manage Culture Risk effectively when a company is changing or transforming.?

The Culture Risk Elements include: Scaling Risk, Fragmentation Risk, Attrition Risk, Conformity Risk, and Stagnation Risk.

Let’s start with Scaling Risk. Twitter has grown headcount massively in recent years – the company went from 4900 people in 2019 to 7500 in 2021. This massive scaling was done at a time when the company went from being almost an entirely in-office culture (I worked in the Twitter HQ building in 2019 and the elevators were constantly packed) to an all-remote literally overnight. The challenge of scaling in a healthy way would have been astounding for any leadership team, let alone one with a part-time CEO. Scaling back the company in 2022 makes a lot of sense in the context of the massive growth surge that happened in 2019-2021.

Then there's Fragmentation Risk. This is the risk that there will be different cultures and subcultures that will fight with each other (either overtly or passive aggressively). This shows up most often in M&A scenarios when there is an acquisition of one company of another, or when a new department is hired (like a new sales team when a startup was previously all engineers). This can also happen when new management takes over, and a part of the company supports the new management vision and leadership style, and a part hopes that the new leaders fail. Elon Musk may have decided to just ‘rip off the band-aid’ to get the employees who were part of the company that was not on board with his leadership in order to not allow Fragmentation Risk to fester. Fragmentation is very corrosive to an organization as it is often very hard to uncover, especially when employees tell leaders they are on board with the culture that leadership wants to create, but are doubting the decisions and new direction behind the scenes. So cutting out the part of the company that was not on board may have been a good idea.?

Number 3 is Attrition Risk, and this is the one most commentators are seeing as the Musk’’s big mistake. Encouraging so much attrition at the company all at once seems like a very unwise move in traditional management. However, as I’ve noted many times before, there is nothing wrong with waves of attrition at a company, as long as the leaders are planning for it in advance and have a strong bench to replace the people who leave with the talent they want. It is still not clear if Musk had a plan to manage the attrition that his moves engendered, but if he did, that is the most manageable type of culture risk to work through – and much easier to resolve than Fragmentation Risk. He may (or may not be) well prepared and well positioned to manage the attrition well, and he might have consciously decided to lose a lot of people by allowing them to self-select out if they were going to create cultural fragmentation within the company. He said he needed “everyone on board” – that is, he might have consciously decided that a smaller but unified culture was better than a larger but fragmented culture.?

Let's move on to Conformity Risk, which is when the perspectives and viewpoints of a company are conformist and there is not enough diversity of ideas or healthy debate to deliver on great strategy. This is where Musk may be taking on the most risk, as reports have come out that he may be only keeping and hiring “yes men” into Twitter. And the use of the word “men” was not accidental, as the photo of the engineering review that Musk tweeted had almost no women (I counted 2 out of a sea of faces after looking really hard). Study after study has shown that having gender and racial diversity in the workplace, as well as a diversity of backgrounds and opinions, leads to better business results. On this one, so far it seems like Musk’s new organization may be taking on too much Conformity Risk.?

Lastly, how will Musk handle Stagnation Risk? Many commentators have noted how innovation at Twitter had stalled and how the product had not progressed significantly in the last few years. Musk has claimed that he will take on this product stagnation head on with a more “hardcore” culture in which people will be working together on site to advance the product. Indeed, this was probably the biggest opportunity for Twitter to make a culture change, and taking on the product stagnation by changing the culture quickly might turn out to be a very wise move.?

Overall, when assessing Musk’s moves to change the culture at Twitter, it appears that what he is doing is addressing 3 of the Culture Risks (Stagnation, Scaling, and Fragmentation) head on, while adding more risk to the company through Conformity Risk. And with Attrition, it is still unclear whether he is addressing that risk through a strategic turnover of staff and a plan to bring in new people, or whether the attrition will be too much to handle in the end.?

My assessment after looking at his moves through the lens of this framework is that he is not being as reckless and many commentators say. However, the way in which he made many of the changes to the culture might have been too off the mark, even if overall his strategy for making them was sound.?

What do you think? Was this Culture Risk analysis helpful for making sense of why Elon Musk might be doing what he’s doing at Twitter? Do you think his efforts to change the culture at Twitter are fundamentally sound, or do you think he is being reckless?