Watch the culture before you change it

New CEOs tend to change a company's culture before they truly understand it. And most of the time, they aren't even aware of what they are doing.

This is a mistake I've made myself. My first PE-backed company had a warm culture. Every meeting opened with fifteen minutes of banter before anyone got to business. People talked about their personal lives, and there were inside jokes that I didn't understand.

Small talk isn't my strength, and I felt the pressure to move the company forward quickly, so my meetings started with an agenda. It felt efficient. It felt like respect for everyone's time.

Months later, a VP came to me in confidence. People were reading my meetings as a signal that I didn't want to be with them. In my mind, I was being neutral and observing the culture. From their view, I had been undermining the way things worked.

It's hard to understand a new culture. A values statement won't tell you much. Neither will a happy hour or a lunch conversation. The real culture reveals itself when the organization is under pressure. How people solve a problem. What they avoid. What behaviors get tolerated. Who gets protected. Who gets promoted. Who gets cast aside.

In my case, the culture valued personal connection. When things got hard, they fell back on their personal relationships. It was a pillar that I didn't even see.

In a new CEO role, first acknowledge that every one of your actions will have an impact. The organization is watching closely. Every habit is a signal, including the small ones. The time you arrive on calls. Who you talk to. When you smile. So tread lightly. And choose every action with intention.

Then be patient. Assessing the true culture takes months of observation. You will not learn it by asking. So be quiet and watch.

After you have observed for six months, and understood what the organization stands for, you have earned the right to make change. Even then, change less than you think you should. Most private equity theses need less culture change than a new CEO assumes. The culture exists because it solved a problem at one point. It may be load-bearing. Only make a change if the business truly requires it. And when you do, say what stays as clearly as what changes. The organization will fight to preserve aspects you haven't protected.

Choose your behavior consciously. Observe the real culture quietly. Then make change sparingly.