What is that supposed to mean? I think of myself as a strategy guy so why is culture so threatening? Peter Drucker made the statement so maybe I had better find out what he meant by it.
It seems that business guru, Drucker, says that the culture of a company may be more important than strategy. He is aiming at the human factor – the people of the company – and how they work together implementing the plan. It may make all the difference.
Simply put, culture is the way of life in a company at its core; it is the way the company operates toward fulfilling the goals and includes the core values and behavior of each employee. It is the habitat in which strategy lives, the way things are done. Many experts affirm that “…any strategy that doesn’t take into account the culture of the organization is likely to fail. Leaders in organizations tend to focus more on strategy. The strategy is relatively easy to understand and create. Culture is complex and intangible, and hence, tends to get less attention from top leaders. But ignoring culture leads to underperformance and may even lead to the organization going out of business.”1
A definition like this infers that there can be good and bad cultures; there can be healthy and unhealthy corporate cultures; positive and negative cultures; helpful and unhelpful.
It is common for managers and boards to focus on the financial, legal, strategic, and political metrics, but more often than not, it may be that the more subtle components of the HR world make all the difference. On the international scene, many M&A failures can be attributed to cultural factors – AOL/Time Warner, Daimler/Chrysler, Columbia Pictures/Sony, and Microsoft/Nokia to name a few. The cultures simply did not merge.
Since no manager wants a culture that eats away at the strategy, it is important to work hard to develop a healthy culture. Here are some tips:
1. Every employee needs to understand clear and compelling reasons for company raison d’être as well as for every major initiative. Simon Sinek insists that people don’t care what you do or how you do it. The major issue is why you do it – your purpose.
If you have not heard Sinek’s talk about the Golden circle, watch this TED talk: https://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action
2. Healthy cultures have members who share everything and are places of truth, constant and open communication, and of marked transparency. Managers share even the hard truths with their employees as soon as they can, and they encourage debate even if it rattles harmony. Trust is built as employees know that their managers will be truthful and direct.
Scott told me the story of how management terminates people in a shame culture in his BAM company in India. When they must split ways with an employee, they take the person to dinner and work hard to explain the situation, offer some training for the person, and provide a positive way to move on. The departing worker knows that he or she has dignity as a person and that management is acting in his best interest, preparing him for his next employment.
3. The company culture must provide a voice for everyone. The leader will realize she is not the only person capable and authorized to make a decision, and she will listen honestly to other people’s points of view. All employees will know that they can provide dissent and will still be validated for their opinions.
Dignity Coconuts in the Philippines started this way, so it was in their cultural DNA from the beginning. They first asked community leaders what their needs were, then they asked what resources existed in the community that they could develop. A couple of decades later more than 2000 people are benefiting from a Quadruple Bottom Line company – never with a “we know best” philosophy but with a perspective that all voices matter. www.dignitycoconuts.com
Similarly, Eurofragance Philippines demonstrates this among its 50 employees. Owner Catherine Tan affirms that “every person who is part of the EPI team is uniquely valued as management models the message that the success of one is the success of all.”
4. Leaders must create a culture by role modeling the desired behaviors themselves – by coaching leaders at all levels, providing for growth and development of all employees and by demonstrating adherence to the stated company values. The founder of the ServiceMaster Company, Marion Wade, made every effort to make sure that the company values were an integral part of his own personal life and experience. Because Wade believed the company belonged to God, he sought to incorporate faith into all aspects of work. It made a difference for more than seventy years.2
An IBEC coach took on a client in West Africa, thinking the needs were related to technical and engineering issues, something he was well qualified to handle. Upon arrival many of the employees complained that the company needed better values. He soon learned that it was not technical and not the values. The problem was a fragmented staff who were not rallying around the stated values and some members of the management team were the cause. He set about to coach the company toward the preferred culture, which meant the departure of some of the leadership team who were not willing to change.
5. Healthy cultures are ones that have developed agility because the world around them is rapidly changing. Employees and customers must be able to deal with change. These cultures realize that their company is no longer in the industrial age but must survive and thrive in the information age. The culture of command and control of three to five decades ago no longer flies in the face of rapid changes and value is best delivered as one develops a learning, innovative, growing and change-oriented culture. Millennials and younger employees are well aware of the importance of such a culture.
For companies with an agile culture, the COVID epidemic turned out to be a blessing. One such company was PhotoUp, a photo editing company in the Philippines. The company was able to pivot their business, which is seasonally based on the real estate industry’s summer boom and winter lull, to a more flexible model which now includes 70 socially distanced employees in-office, 100 employees reporting from home, and over 100 new flexible freelancers. “The idea to build a freelancer program was born out of necessity, we typically run three shifts per day to meet tight industry deadlines but when work-from-home was required, we didn’t have enough workstations. Amazingly, we built and launched a freelancer editing program within a matter of days and now we don’t know how we ever operated without it. It was the missing key for how to tackle our seasonality problem,” said Kristian, the owner. www.photoup.com
6. A healthy culture will have a pro-customer focus. When customers and clients are satisfied and loyal, it will give direction and initiative for employees.
Snowman Labs in Brazil is an example of company whose business model is built upon customers’ need to move into a mobile world and their inability to do so themselves. Snowman’s key deliverable is a digital solution which keeps their cost down and maximizes their outcome. All the while they focus on transformed lives while impacting the business. www.snowmanlabs.com
7. Each staff member must see themselves as integral to the entire team. Working together is of high value as it contributes to each other’s success. The idea is modeled by championship sports teams who inevitably talk about their team togetherness.
Some of us saw how a flourishing team brought success in a For-Profit English school in a large East Asia country. Sixty trained national teachers of English served in a school with about 700 students. They were largely unified around the culture which was unlike anything in their experience – love demonstrated by the leadership, opportunities for advancement, and a caring atmosphere for reproof and encouragement. The teachers wanted to stay in the company despite pressure from the community and parents to study for more prestigious careers such as law, medicine, and engineering.
1 https://newageleadership.com/culture-eats-strategy-for-breakfast/
2 Erisman, Albert M. The ServiceMaster Story, Hendrickson, 2020, 27.
Larry W. Sharp, BAM Support Specialist, IBEC Ventures
Larry.Sharp@ibecventures.com