No one debates the importance of culture to an organization’s success. Then why do so many struggle to get it right?
Let’s start by busting some myths about culture:
- It’s a squishy concept
- It can’t be measured
- It takes a long time to change
In my experience, none of these is true.
Myth 1: It’s a squishy concept
It’s squishy only if the chief executive treats it that way. Culture is largely a grown-up game of follow the leader, which lends a certain hard math to it:
Culture = Values + Behaviors
If the chief executive and other senior leaders say one thing but do another, that’s when culture gets squishy (or worse). But that doesn’t mean words don’t matter; they matter a lot. A company’s belief system – it’s espoused values – is codified in words, signs, and symbols; what Edgar Schein refers to as the “artifacts” of culture. The fewer, more meaningful, and more precise the words, the better they are at creating the common language so crucial to transmitting culture.
But the words have to mean something – they have to be backed by action. Otherwise culture can become something worse than just squishy. When the way things really are – Schein’s “underlying assumptions” – are at odds with the organization’s espoused values, the culture can become toxic. Obvious signs of an unhealthy culture include intolerance for dissent and tolerance for top performers who flout the organization’s stated beliefs. Because they’re so nakedly observable, behaviors matter more than values in the culture equation, at least at the beginning of a desired change.
Culture manifests itself tangibly in many other ways too, both small and large, from the way meetings are run to how culture is explicitly linked to the organization’s strategy.
Myth 2: It can’t be measured
Wrong again.
The quantifiable link between culture and performance was established in the 1992 book, Corporate Culture and Performance. In it, my emeritus b-school professor Jim Heskett and his Harvard Business School colleague John Kotter empirically demonstrated the undeniable relationship between corporate culture and long-term economic performance. Over an eleven-year period studied, firms that exhibited cultural traits deemed healthy outperformed those that did not by a huge margin. On average:
- Revenue growth of 682% vs. 166%
- Workforce expansion of 282% vs. 36%
- Net income growth of 756% vs. 1%
- Stock price appreciation of 901% vs. 74%
Over twenty years later, Heskett wrote another book covering similar ground based on new research. In it he found that up to half of the difference in operating profit between organizations can be attributed to an effective culture.
Myth 3: It takes a long time to change
Yes and no. And in my experience, it’s not as hard as people think. While it’s never easy, and doesn’t happen overnight, meaningful cultural change can be measured in months, not years. That’s because culture is largely a grown-up game of follow the leader. And it’s why, at least in the beginning, behaviors matter much more than stated values in turning the cultural tide.
We learned in Psych 101 that “internalization” is the integration of the values and standards of others into our own identity. While it’s a concept most closely associated with early childhood development, as adults we retain the ability to quickly change behaviors, especially when an authority figure – like a chief executive – unfailingly models them and makes them non-negotiable throughout the organization.
Certain employees may be skeptical of the chief executive, even dismissive, but they also know that to openly act against her or him could threaten their job. Normatively changed behaviors, even if begrudging, are the quickest way to jump start a culture change.
Longer term, shared values are the more powerful and enduring factor in the culture equation. And like modeled behaviors, in my experience otherwise fully-formed adults can learn, act upon, and internalize new values in the face of leadership’s consistently inspiring example. But for these espoused values to become a potent behavior modifier, they must also be a) authentically rooted in the organization’s strategy and business context b) relatively few in number, and c) always non-negotiable from top to bottom.
Other valuable lessons I’ve learned about culture building
It pays to start with a formal assessment of the current culture. Perform a quantifiable culture audit to establish a baseline. The tools exist, or you can create your own. Augment it with a qualitative assessment based on both structured and informal conversations with employees at all levels of the organization. Together they create a way to measure cultural advancement.
Be explicit with everyone about where you want to take the culture. In my experience, employees find the simple logic of the culture equation appealing. And while there will always be those who want things to remain the same, I’ve discovered that most employees find the transparent discussion around current and desired future state culture energizing.
Be equally explicit about how the organization’s culture supports its strategy. Just as form follows function, culture is a by-product of the organization’s strategy. At its best, culture is the world’s greatest alignment tool, instilling in each employee a sense of shared purpose and providing them a clear line of sight from their everyday job to how the customer is satisfied and the organization succeeds.
Jump start culture change by changing the meeting culture. It’s amazing how potent a change agent this seemingly small thing can be. Meetings are the predominant way that work gets done in many if not most businesses, with each one a litmus test and proving ground for the organization’s culture.
Time is the enemy in culture building, as it is for most things in business. Humanely but swiftly remove cultural impediments, especially human ones. Talent can never trump toxicity for a strong, healthy culture to take root and flourish.
The culture formula works regardless the size of the organization, and with pretty much the same speed if done right.
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