Seven Key Takeaways to Build a Profitable Culture

Seven Key Takeaways to Build a Profitable Culture

In an earnings call in 2018, Tan shared a list of company achievements that were all possible because of the culture he and Cadence have built. A great culture, especially one that is recognized as a best workplace, not only inspires its employees, but also acts as a talent magnet, which is essential to the long-term success of technology companies, especially when employees are in Silicon Valley, India and China, three of the hottest talent markets in the world.

But Cadence is looking to recruit and retain excellent employees in ways that buck industry norms. While Cadence offers competitive compensation and employee perks and benefits, Tan is skeptical of these as being the reason for employees giving their best. He thinks a better approach involves intrinsic motivators such as fairness and equal pay and the opportunity to invent, contribute ideas, and engage in meaningful work.

Great Place to Work research backs up his view. At Cadence, 96 percent of employees who report they have a lot of chances to innovate also say they want to work at the company a long time. What’s more, 95 percent of the employees who feel very included in innovation activities say they would strongly endorse Cadence as a great place to work to friends and family.

In general, there is a close link between participating in innovation and being happy on the job. Great Place to Work has found that when people are excluded from innovating, fewer than half call their workplace great. But when employees have a lot of opportunities to be creative, nearly 100 percent say their company culture is great.

The bright future at Cadence is a far cry from the dark day the company weathered in Oct. 2008. The recovery is even better than some imagined possible. Long-time employee Ananthram reflects, “What surprises me is Cadence’s resilience and adaptability. We’ve come a long way since 2008. I believed in the work that we were doing, but I also did not expect we could reach this level and have such major opportunities in the future.”

Indeed, the company’s progress is remarkable. Cadence is a case study in the power of For All Leadership, an Innovation By All culture and the kind of customer-focus that can come from engaged, inspired employees. Customer, investors, and other observers are no longer wondering if Cadence will survive. Instead, they know that the company is a leader when it comes to both technology and tapping employees’ full potential. Tan is clear that culture cured Cadence. And, as he told investors last year, he plans to keep taking that people-first medicine.

He says, “Since I joined the company, one of my top priorities has been building a culture that differentiates Cadence. We can be proud of what we have accomplished. I am encouraged by the progress we are making, and we will continue to make our culture central to our business strategy.” 

Seven Key Takeaways from Cadence's Journey

Culture is a Business Strategy

Culture is a competitive advantage. Even in crises. Even in very numbers driven, publicly held organizations.

Turnaround Leadership Takes Risks

For All leaders’ vulnerability can be an advantage. Lip-Bu Tan turned Cadence around primarily with existing employees. Performance issues weren’t due to the workforce itself and didn’t require a clean sweep.

Cultural Drivers of Innovation are a Critical Health Metric

Organizations with an inclusive approach to innovation see 5.5x revenue outperformance. In addition, there is a virtuous cycle. More innovation means more committed employees who are advocates for talent in their network, which means better talent, and in turn more innovation.

For All Leadership

For All Leadership is based on a willingness to listen to employees, focusing on value, connecting people throughout the organization, instilling a sense of purpose, and acting out of a sense of service. By leading with transparency and vulnerability, Lip-Bu Tan encouraged a turnaround based on a people-first culture for both employees and customers.

The Only Way Out is Through

Cadence employees persisted through layoffs and radical industry shifts under an accomplished, but unlikely leader. Cadence management took pay cuts, courted harsh but necessary feedback and held up under fire and public ridicule from multiple directions.

Chose Culture and Cash Flow

The emphasis on cultural change was backstopped by Cadence’s return to organic growth and internal innovation. The ‘Customer First’ ethos was backed up by deep reciprocal engagement and honesty in customer relationships.

The Long Term is a Really Long Time

Despite its success, Cadence continues on its Innovation By All journey as it considers the next set of industry challenges. Cadence spent a decade refreshing its culture and relationships and only began to reap exponential gains after eight years in. Lip-Bu Tan’s personal yardstick is a 15-year time horizon. 

For the full story, read Cadence and The Culture Cure today.


Christopher Tkaczyk