What is Corporate Culture?
Culture eats strategy for breakfast is how management guru Peter Drucker characterized the hierarchy that links culture and strategy.
While strategy planning sets a general direction (by defining the whats) and execution sets the implementation gears in motion (deploying the hows), it is the company’s culture that ultimately fuels and lubricates the efforts to get things done.
The math behind it is simple: with a positive culture you will get more for every effort your people put in, while a bad culture will drag efforts downs and even bring them to a halt.
Rather than just being a common set of beliefs, behaviors
Instead of taking it as it is, these leaders “shape” the culture of their organizations to achieve their goals, changing beliefs, behaviors and attitudes along the way.
In fact, we truly believe that company culture is one of the most powerful ways to differentiate a company from its
In the 2000s, Delta and United Airlines went out to take lunch money from Southwest and JetBlue, at the time the most profitable discount airlines. To do this, each created a new subsidiary – respectively called Song and Ted – offering low-price flights and friendly brands that would compete head-to-head with Southwest and JetBlue.
But despite their expensive and well-publicized efforts, they couldn’t make a dent.Delta filed for Song’s bankruptcy protection in 2005, while United shut down its Ted business in 2009.
From the outside, United and Delta’s plan was fairly simple: since they were industry insiders, they knew Southwest and JetBlue’s numbers fairly well. So they set out to build similar operations following the same strategy and business models, with flight options within the same price range and even targeting the same customers.
If it was working for them, why wouldn’t it work for us, right?
Well, no. Culture and perceptions can make a big difference. A business model is one thing but how you make it work is another.
All of Ikea’s competitors know their strategy, yet no one outcompetes them at their market position.
United and Delta underestimated the value of a winning culture and a customer-centric mindset, and both failed miserably. They ignored that part of the success of Southwest and JetBlue as low-cost providers was in their friendly customer service and how they made their customers feel when they flew with them.
Customers didn’t buy the idea of a scaled-down version of the larger inefficient airlines.
Transplant a high-tech startup into a bureaucratic conglomerate and see how it gets nothing done.
Put a high-ranking executive of the conglomerate in to lead the high-tech startup and she won’t make it to her first paycheck.
Their cultures will just not fit.
Creating a winning culture
You must pay close attention to a company’s culture and persistently work to make it the right one. This is one of the hardest jobs of a leader, but that hard work is also what makes it a great differentiator.
There are a few elements that come into the mix in the “making” of a corporate culture:
- Vision: Corporate culture starts with the company’s vision, a high-level statement of purpose that guides every decision an organization makes. For Google, that vision is “To organize the world’s information and make it universally accessible and useful”.
- Core values: While the vision offers a view of the company’s purpose, its corporate values provide the operating philosophies and behaviors that guide everything employees do in pursuing that vision.
- Narrative: How the company’s vision and values are communicated and reinforced. Every company has a unique story, and how you tell that story has a lot to do with how your culture is shaped.
- Community: How people treat each other and how they feel about belonging to the company’s internal community. This includes all the things that could affect the work ambience inside the organization, such as team members’ respect for others’ opinions, personal relations, celebrations and camaraderie.
- Policies: The internal rules that an organization establishes with respect to things like vacations, maternity leave and sick days among other things affect employees’ perceptions about the friendliness of the company and its work environment.
- Responses: How the company responds to external and internal situations influences how employees behave and how they feel about being part of the company. From the way changes are communicated and the care that executives show about personal events in the employees’ lives to how they respond to a team member wanting to quit, everything counts when it comes to culture and employees’ perceptions of the company.
- Consistency: A lot in a corporate culture has to do with traditions. Recurrent behavior and consistency influence what people expect from the company when things happen or when employees behave in particular ways, which ultimately influences their behavior. It is the executives’ consistency in their responses to such events that sets those expectations.
- Workspace: The architecture and nature of the workspace might affect how productive employees will be. Open floor spaces for example can promote more collaboration among team members, while remote working can give employees more flexibility in terms of schedules and attire.
Something we need to point out here is that these components don’t make culture good or bad, they are just the ingredients to make one, and your job as a leader is to mix and match them in the right proportion to influence the behavior of your employees in a way that works well for you.
Netflix is widely known for a very flexible and open culture where employees can take as many vacation days as they want, and where everyone has access to strategic and salary information.
Apple on the other hand promotes compartmentalization and secrecy, and for decades has been known for having internal groups that operate in complete isolation from the rest of the company.
Both Apple and Netflix have the culture that they feel fits their strategy best, and neither is better than the other.
The truth is, a company will always end up having a culture, whether intentionally or not. So instead of letting it emerge by itself you had better embrace it and shape it in a way that works for you, so that rather than getting in the way of execution it helps make execution happen.
Wu, Sun. Strategy for Executives, this book can now be downloaded for free here.
Vossoughi, Sohrab. A company’s culture has to come from within or it will fail. The Globe and Mail. May 2018. URL: https://www.theglobeandmail.com/report-on-business/careers/management/a-companys-culture-has-to-come-from-within-or-it-will-fail/article14169921/
Beirne, Mike. United to Shut Down Ted Airlines. Adweek. June 2008. URL: http://www.adweek.com/brand-marketing/united-shut-down-ted-airlines-95995/
Coleman, John. Six Components of a Great Corporate Culture. Harvard Business Review blog. May 2013. URL: https://hbr.org/2013/05/six-components-of-culture
Griffith, Erin. Netflix Sees Itself as the Anti-Apple. WIRED Magazine website. April 2018. URL: https://www.wired.com/story/reed-hastings-at-ted/