Every day I talk with prospects and clients who are interested in maintaining or improving their company culture. When I ask why culture matters, I often hear responses such as:
- Having a great culture is important to our ability to attract and retain top talent.
- With COVID forcing everyone to work from home, we’ve had to pay extra attention to our culture – making sure people feel connected and part of the team.
- We’ve always had a family feel to our culture and it’s important to our CEO that we retain that even as we grow rapidly.
While it’s encouraging to see a growing interest in culture, these interpretations of culture are incomplete. The comments above all focus on what we would call the environment of an organization. A fun place to work or great work environment tells you: Do people enjoy coming to work? Are there perks and benefits that make work fun? Do they feel part of a team, or even part of a family?
Unfortunately, many popular publications use the term culture as a catch-all to describe whether a company is perceived as a great place to work. Articles tend to talk about companies with “great cultures” meaning lots of perks and a positive atmosphere, perpetuating the misconception culture is synonymous with environment.
Having a positive work environment does indeed matter, but culture is far more than that. At CultureIQ, we know that an organization can be “a great place to work” and still end up with a culture that is an impediment to success.
What is Culture?
Culture refers to the system of shared beliefs and behaviors that develops over time to shape how people work together and how work gets done in an organization. CultureIQ’s informal definition of culture is “the way we do things here.”
Culture is more than creating a great place to work. As Karen Jaw-Madson writes, culture determines what is encouraged, discouraged, and acceptable. Your company’s culture includes elements such as adaptiveness, innovation, risk tolerance, decision-making, efficiency, customer focus, etc. Cultural norms in all these areas can either work in your favor or they can become a significant barrier to progress.
Picture an airplane mid-flight. Tailwinds push the plane forward – getting it to its destination ahead of schedule. Strong headwinds slow the plane down. Culture works much the same. A culture that is aligned with your strategy can be a powerful source of competitive advantage, whereas a culture that is misaligned with your strategy can work against you.
The Connection Between Strategy & Culture
When management experts say, “culture eats strategy for breakfast” they aren’t referring to a positive work environment. They are describing what happens when the behaviors and beliefs that have been encouraged and rewarded for years or decades are no longer aligned with how the company intends to operate. When this happens, the dominant culture of a company can thwart changes needed for its strategy to succeed.
Consider a company looking to grow business through innovation. For innovation seekers, behaviors such as risk taking, curiosity and ideation will be critical to their success. However, if past leadership practices punished people for taking risks on new ideas that didn’t work out, chances are that a risk-averse culture exists. It will require Intentional effort to transform the culture into one where employees will be likely to test or even to share new ideas.
Culture is like the wind. It is invisible, yet its effect can be seen and felt. When it is blowing in your direction, it makes for smooth sailing. When it is blowing against you, everything is more difficult.[i]
– Bryan Walker, Partner and Managing Director at IDEO
The Business Case for Culture
Organizations that cultivate purposeful culture align “the way we do things here” with their business strategy.
There have been scores of studies the past decade showing that purposeful, aligned cultures can promote innovation; improve efficiency and employee performance; accelerate and enhance change management; and improve firm value and profitability. For example, a 2021 report from McKinsey & Company shows companies with strong cultures achieve up to three-times higher total returns to shareholders than companies without them.[ii] According to Deloitte, companies that proactively manage culture report 30% higher levels of innovation and 40% higher levels of retention than those who do not.[iii]
Don’t underestimate how much your strategy’s effectiveness depends on your culture. As Jon Katzenbach, Managing Director with PwC Strategy& Inc, writes, “When a company’s strategy, imposed from above, is at odds with the ingrained practices and attitudes of its culture – culture trumps strategy every time.”[iv]
We work with clients every day to help their organizations develop a consistent definition of culture. Our approach is designed to help you identify the culture that will support your strategy and the steps you need to take to shape your desired culture. Contact us to begin your journey to purposeful culture today.