How Klarna's Leadership Principles work
Klarna is a multi-million dollar company and this has an exact reason. For years now the established Leadership Principles affect every part of the company and it shows its results. Klarna’s latest investment of over $460 million, especially focused on the US market, will make the company acting globally. Scale and Growth have been key indicators for the rapid development which also are described in the principles.
What are leadership principles?
Leadership principles are just a group of traits that can be applied to processes and people's behavior. For example, “Customer Obsession” can be a leadership principle and in detail describes how much a person cares about the customer. The customer, in this case, can be different people. For software engineers, this can be the direct user of the product but also other software engineers using a command-line interface that was provided. A different example could be a marketing specialist at some company. Of course, marketing specialists do not have a direct impact on the customer in most of the cases, but customer obsession could be linked to brand liking or how successful advertisements have been. These things can be tracked and analyzed. Bigger achievements like brand liking and presentations have a bigger impact on the company than for example a simple advertisement campaign, but in general, these things are visualized in a matrix. A matrix, in this case, is just a ladder of the leadership principle. For example, the creation of an advertising campaign is needed for junior levels but to be senior level in the position you are in you need to influence the whole brand recognition. So, in conclusion, this means that Customer Obsession is making the customer happier in a certain way. The direction of the action that will affect the outcome for a leadership principle can be variant. With this in mind, a lot of companies around the globe have a set of leadership principles they act on because it gives the employees guidance on what they actually should do and what they should act like. It gives the teams more productivity in general and brings unity to decisions.
How are these applying at Klarna?
After learning what leadership principles are we can continue with how these get applied. In the previous chapter, we had an example of “Customer Obsession” already and the different levels. At Klarna, there are a lot more of Leadership principles though, eight to be exact. But the definition of the leadership principles is not so important firstly. We need to understand how these principles are getting applied exactly and how this can be achieved by all employees.
Decision making
The first topic which will be covered here is decision making. Decisions must be taken daily at every company. Small and big ones. For example, should Klarna expand to South American countries like Mexico or Colombia or should Klarna expose the newest feature already next week or in the next month? These are all valid questions and can be tackled down by the different leadership principles.
- Question: Should Klarna release the newest feature next week instead of next month?
- Answer: It can be quite ambiguous. For example, Customer Obsession might be a problem here because Klarna is a bank that should provide high-quality products to its customers. But also the principle “Deliver Results” or “Start small and learn fast” means that sometimes a not perfect solution can be delivered if it is possible to change this process or the feature in the future. So these discussions can be still quite diverted and undecided but some principles might apply more to a situation than others.
As pointed out, one of the best use cases of the leadership principles to decision making is discussions. Discussions should be centered around these leadership principles and results and actions should be derived from them.
Different competences
Leadership principles do not just apply to Software Engineering or Marketing departments. Leadership principles are applied to the whole company. Every department or profession should have its skill ladder though. For example, an associate salesperson has different responsibilities than a junior software engineer. The level, junior and associate, might be the same throughout the company but responsibilities are defined differently. Different jobs require different skills and not everyone can be good at everything so splitting up responsibilities and actions per work excellence is a good idea. The higher-level people go the more impact these people should have on the company as a whole. For example, software engineers of higher-level should focus on contributions that will affect the company in the long-term and increase productivity or the product immensely. For example, this could be a contribution improving the productivity of the other software engineers by 5% or could be making a huge performance boost of some technical product that will save customers 50% of their workflow time. This will not be expected from Junior software engineers but also certainly not by sales associates. The sales department of Klarna might also have some processes that need to be improved but most of these changes are driven by senior members of the department. But this is also expected. We could see that the leadership principles can be applied to different parts of the companies in many ways, especially at Klarna this process is having an impact on the overall productivity of the employees.
Promotion Process
Every company has a promotion process. For most of the companies, these promotions heavily depend on the manager though. There are personal relationships involved and affecting the overall situation in the company and who is getting promoted. Leadership Principles formalize this process by giving the employee and their boss a common base on what to get rated on. In Klarna this process is implemented in a quite good way. Most bigger companies like Klarna have a promotion cycle wherein specific time frames promotions are held. At Klarna this process is followed twice per year and begins with writing a self-review on your own but also gathering feedback by other people. This process is called a 360-degree review. The process is different from every team but essentially everyone can write down the strong and weak leadership principles of a person. They give examples of their behavior where they demonstrated weaknesses or strengths regarding this leadership principle. These examples are normally structured within the Situation-Behavior-Impact methodology. A case for this would be for example:
Customer Obsession
- Situation: A customer reached out that the product was not working.
- Behavior: Person A stepped directly into first-person support and fixed their issue on the same day.
- Impact: Customer is happy and needs have been fulfilled directly.
A leadership principle can be shown throughout multiple Situation-Behavior-Impact sections. These sections are also quite important for the self-review.
What are the Leadership Principles?
In this chapter, we will describe the leadership principles in detail to give you an overview of how these are viewed at Klarna.
Customer Obsession
Every work that is done has some customers. Indirectly or directly. The satisfaction of these customers is important and can be measured quite easily to get feedback. This principle is about making the customer happy. In higher levels of this leadership principle employees are a step ahead of making sure the customer is happy before delivering the work and when going on a higher level position your influence and demonstration of work will impact the customer.
Deliver Results
At Klarna results matter. Every employee is delivering some results in some form. Some are inactive and support others in actually delivering results or even the whole company. But the lower-level employees are mostly producing results in their domain or even more specific to their product. So results can be quite various and also depend on the department the employee is in.
Let the team shine
This leadership principle is about empowering the team. Empowering the team can be achieved in quite different ways. For example, employees could just be present in the office and saying good things about the team in meetings or at company parties. Achieving this can be by increasing the prestige of the team inside the company. This can be not just done by in-person contributions but also by more widespread contributions in the company, like process definition because of learnings from the team, blog posts by what the team achieved, or just simple newsletter of the team from achievements to nice findings. Finding some value of the team and bringing it to colleagues in the same company or even outside the company is the key here.
Challenge the status quo
Every company has some bad processes or weird decision making. "Challenge the status" quo is challenging mainly these traits. It is there to encourage employees to take unconventional approaches for problems in any way. This could be to challenge a bad process that should be instantiated or a bad software design pattern. For higher levels, it is expected that processes are challenged on a company-wide perspective to ensure that the company might have more efficient processes.
Start small and learn fast
Klarna works in Squads. These are small teams that are cross-functional, which means that teams have a team that can cover the full life cycle of a product. For example, a simple software portal might have a designer, software engineers, a product owner, and an engineering manager if there are enough software engineers. But also Finance or Marketing employees are added when needed. Because of this, a product is most often defined as its own startup which means that the product should stay agile. One of the key concepts of agile development is to create a minimum viable product first of some kind of version and then reiterate on this version. This can be of course applied to the whole product as a whole but can be also applied to smaller processes like who is giving technical support for internal employees inside the company this week. Starting somewhere is the most important. Then the next process can be started which is reiterating on the first approaches. For technical support, this could be starting technical documentation and publishing it somewhere so people can access it. All the improvements afterward can be applied later of course. Seeing if it is used is the important part now.
Courage
Courage means owning the decisions that are made by a person. People make decisions all the time, good ones, and bad ones. But owning the mistakes is the hard part. Speaking up in these situations shows leadership in some kind. But owning a mistake and admitting an employee has made this mistake is the golden part. It shows the colleagues the person has some kind of self-reflection and is aware of how decisions and opinions might affect others. Higher levels show a lot of self-reflection and are aware of the mistakes they have made in the past and also encourage other people to let them fail and learn from their mistakes.
Hire and develop exceptional talent
This principle is applied throughout the whole company even though someone could think that this mostly applies to HR and recruiting. Talent can be also trained inside the company through mentorship or simple explanations of systems, processes, software, marketing strategies, and so on. Sharing knowledge is the main part of this leadership principle. Higher levels try to share their knowledge on a company-wide level to influence as many people as possible.
Detailed thinkers
Everything an employee does at Klarna must be thought through. A lot of mistakes can happen when a marketing campaign was started that has a wrong limit on some keyword bidding and a lot of money can be lost. Detailed thinkers know in these situations how to stop the process from happening. It is expected by higher-level employees that processes on the company level are thought through in detail to spot bottlenecks, edge cases, and find viable alternatives but even supporting detailed thinking in all areas of work.
How these principles are integrated into getworkrecognized
At getworkrecognized we focus on creating the perfect self-reviews for employees. Self-Reviews are a big part of Klarna's promotion process and are the first step to the next level. Keeping a consistent track of what an employee does is hard. Normally around the promotion period, every employee tries to remember what they did in the past six months and write it down as we learned before with the Situation-Behavior-Impact methodology. All these Situation-Behavior-Impact sections are grouped to Leadership Principles individually. A big problem with this is consistent tracking. Getworkrecognized helps with this as a tracking platform where you can individually assign notes to the leadership principles. For this just select the Klarna Leadership Principle template in the application and start tracking. We recommend finding a common routine to track your achievements, like a daily 5-minute block where you reflect on the day and write things down about what you have achieved. After tracking these notes for some time you might have enough notes taken to create a self-review with our application. The process consists of grouping the notes to different groups and every group can be described with the Situation-Behavior-Impact methodology. Afterward, you might have a condensed view of what you have achieved and can share this Self-Review with the share functionality of the application.
Conclusion
As you can see the Leadership Principles at Klarna are deeply integrated into several processes of the company. Decision making and promotions are depending on how well an employee lives by the standard of the leadership principles. Tracking your work achievements is quite hard though and most of the employee struggles with that, but you can use getworkrecognized to fix exactly this problem.
