Tobi Lutke, Shopify’s founder and CEO, is one of my favorite business leaders and thinkers. The following story (which I’m paraphrasing from his interview on the Knowledge Project podcast in 2018), is incredibly timely given Shopify’s announcement today. These instances illustrate the relationship between leadership and core values. And, they help to explain how Shopify has performed amazingly well despite the challenges caused by Covid-19.

Several years ago, when Shopify was getting ready to move its headquarters and its 600-700 employees (at the time) to a new office space, their landlord—unhappy to be losing them as a tenant—did not let the company extend its lease month-to-month while navigating the move. 

There was an increasing possibility that the new office wouldn’t be ready in time for the company to move into, so Tobi and the leadership team needed to come up with a backup plan. If the timing didn’t work out, they’d have to ask everyone who worked in the headquarters to work from home temporarily.

The backup plan didn’t sound so scary to Tobi. “Over the course of the next week, I increasingly fell in love with plan B,” Tobi shared. In fact, he liked the backup plan so much that he was actually disappointed when it became clear that the new office would actually be ready in time for a smooth transition.

Tobi decided to go with the backup plan anyway, even though he didn’t need to resort to it. Leadership deprogrammed everyone’s key fob and announced that the company would be “homeless” for a month before moving into the new office.

Leading with empathy

“I think a company that wants to work well across different offices, especially with some people working remotely as well, needs to have a lot of empathy for those people,” he said. 

Lutke recognized that the people who have never not worked in the headquarters don’t know what it’s like for those folks who don’t get to see everyone on a daily basis and hear the conversations that happen at the office. The experiment would help build that empathy and support remote teams.

Building adaptability into the company

“We learned so much about which tools didn’t work anymore and where we were relying on physical proximity,” Tobi shared. “Physical proximity is an incredibly powerful force, but you need to appreciate it and know when you’re using it as a crutch, because if you add a remote person into the team, suddenly you’re going to have to change behavior.”

“If you want to be an organization that lasts, you need to be okay with bad things happening,” Tobi said. “In fact, I think the quality of an organization is not how good it is at preventing bad things from happening—although it’s a useful skill—but how quickly it reacts to bad things happening.”

Operationalizing core values

Even prior to the headquarter-less month, Tobi and the leadership team had tried to shape the culture so that the company viewed things going wrong as ordinary rather than rare. For example, Tobi would occasionally log into Shopify’s server farms and turn random servers off (production servers, no less!) to make sure the company could withstand a server going down. According to the podcast host, these became known as “Tobi Tests.”

“I really really like changing something just so that everyone has to adapt,” he said. “Thriving on Change is actually one of our core values.”

By shifting Shopify to a distributed workforce for a month with very short notice, and with his earlier Tobi Tests, Tobi operationalized the Thriving on Change core value. 

Helping candidates self-select out of the application process

Shopify makes sure that candidates really understand what the Thriving on Change core value means. “Shopify is absolutely not a company for everyone,” Tobi said. “Things change a lot, and Shopify does not pretend that we live in a static world of unchanging requirements.” 

Candidates who cringe at the idea of a Tobi Test will remove themselves from the application process, making room for candidates who would thrive in that environment to step up.

Lessons learned

After reading that story (which happened several years ago!), it should be no surprise that Shopify has performed as well as it has in the face of a global pandemic that has forced people everywhere to work from home. The company has released important products ahead of schedule and its stock price is at all-time highs.

And though they have invested in building a new office building in Toronto, the pandemic has changed the role of that structure. Tobi has publicly stated that Shopify’s offices will remain closed through the year, and after that its workforce will remain largely remote.

As of today, Shopify is a digital by default company. We will keep our offices closed until 2021 so that we can rework them for this new reality. And after that, most will permanently work remotely. Office centricity is over.

— Tobi Lutke 🌳🌲🛒🕹 (@tobi) May 21, 2020