I once read a book that argued corporate culture cannot be created; it develops organically as a consequence of consistent behaviors. My immediate reaction was that this statement is dangerously naïve. Beware of statements that sound completely true merely because they include a fundamental truth within. It is true that culture is created by and sustained by consistent deeds. However, it is patently false that corporate culture cannot be created. Good cultures can develop on their own. Great cultures must be built and continuously nurtured.
Choose your focused cultural identity
Most companies have good corporate cultures. They have to almost by definition. If you consistently treat your customers, suppliers, shareholders, and employees poorly, then you will not have a company for very long. Yet many firms have only an ethereal identity. They espouse and generally do live by a credo of commitment to their various constituencies. However, the companies cannot be pinned down for focus on any one area. When a new and worthy value comes along, such as corporate social responsibility, good cultures add it as another ingredient to the brew.
Great companies choose their cultural identity with the same discipline that they use to build long term business strategy. The most successful business strategies employ focus that often involves tradeoffs. Truly well-constructed strategies rely on a unique strength of your organization, thereby providing some defense against the competition. Classic business strategy tradeoffs are things like speed versus accuracy, cost versus service, innovation versus consistency (I acknowledge there is an efficient frontier on these tradeoff dimensions; for example, for a given cost structure, companies need to choose the best level of service possible.)
Cultures with focus enjoy two benefits. First, a focused culture accelerates decision making. For example, if your environment has an employee-focused culture, then you will hold on to employees longer during tough economic times than if your environment were profit-focused. You would also add employee capacity more slowly during strong economic times. Second, a focused culture signals to your stakeholders why you make the decisions that you do. When you are cost focused, passengers on your low cost airline will understand why you have not yet replaced the green shag carpeting and the disco ball. They come to you with expectations of cheap and safe. Being focused will force you to remain consistent since your stakeholders will call you to the carpet on incompatible actions.
There are an infinite variety of focused cultures. The four most common include:
- Customer focus: mantra = delight your customers (examples: Zappos, Nordstrom)
- Employee focus: mantra = provide long term growth and security for your employees (examples: academic institutions of today and UPS of old)
- Innovation focus: mantra = wow! (examples: Apple, 3M)
- Profit (or cost) focus; mantra = money is what matters (examples: Southwest Airlines, most financial institutions)
- Social focus: mantra = promote the public interest (examples: not-for-profits and L3C’s – low-profit limited liability companies)
There is nothing inherently right or wrong about any of these cultures. Even profit focused cultures can consistently do great things for their employees, customers, suppliers, and shareholders. The point is that when they hire, when they fund innovation, when they define customer service processes, when they reupholster airplane seats, they make their decisions on the basis of profit maximization.
Drive total consistency of culture across your organization
To thrive, your focused cultural identity must be consistent across every business process. This consistency should exist first and foremost in deeds and only secondarily in words. Anyone can adopt noble words. Enron’s mission statement was “Respect, Integrity, Communication and Excellence.” Words without actions are empty.
If you are an innovation-focused company, for example, there are a million ways to drive consistency. Do you hire creative people and then provide insufficient incentives to reward them for their intellectual contributions? Do you launch innovative new software products while allowing portions of your portfolio to languish? Your innovation culture must be ingrained across operations, human resources, finance, new product development, and so on.
Build an ever expanding story library
The most effective way to develop and sustain your focused corporate culture is by building an ever expanding story library. Your employees will want to be the protagonists of these narratives and will endeavor to make that happen. Just think of the last time your CEO told a story of excellence at an all-company meeting. Part of you felt inspired while the other part felt jealous that the story was not about you. Compelling anecdotes that reinforce your culture are created every day. They are all around you; you just have to discover and retell them. Since stories are perhaps the most effective means of communication, once retold they have the potential to inspire both employees and customers.
Stories have a limited lifespan and are prone to distortion over time. To get the most out of them, you should reveal your best stories in a publically accessible format, thus extending their life and making them less prone to distortion. Be careful, though: an old story is just that – old. People invariably will ask “Yeah, but what you have done for me lately?” To keep your identity alive, continually expand your story library.
As you add to your story library, quality trumps quantity and focus trumps variety. You do not need a million anecdotes about employees rowing through flooded streets to deliver an overnight package before the 12 pm deadline. You need one resonant yarn. Additionally, take care that the stories you select unambiguously reinforce your focused identity. If your focus is customer service, then a story about an employee who saved $10 million dollars by centralizing purchasing is simply not on point.
Teach everyone to challenge ideas, not people
One of the most enlightening conversations that I ever had was with an entrepreneur who had recently sold his company to a much larger competitor. I had worked with him and with many of his employees and was immediately struck by their creativity and collaboration. So, I asked him what he did to build the culture at his company. His answer was “I taught everyone to challenge ideas, not people.” Imagine if your company operated that way.
Embedding this ideal within your culture begins, of course, with your own behavior. However, you do have more work to do. Subtle and not so subtle infighting is a natural, albeit degenerative, state for nearly every organization. If your company is to rise to this ideal, you must make it clear in actions that personal attacks are unacceptable. At minimum, you must call people out on such behavior when you observe it. If necessary, you may need to terminate an employee regardless of their performance if they do not share this ideal. Remember to reward and provide highly visible recognition for those that do.
Even if you do not invest any effort beyond operating legally and ethically, your organization will organically develop a good corporate culture. It will have elements of innovation, customer focus, employee focus, social responsibility, etc. However, if you want to create and sustain a truly great culture, here are the concepts you can immediately apply:
- Choose your focused cultural identity
- Drive total consistency of culture across your organization
- Build an ever expanding story library
- Teach everyone to challenge ideas, not people