Company culture: the not-so-secret key to future-proofing your organisationby
In the first part of a new content series on organisational culture, Solveig Nicklos explains why culture is key to strategic planning and implementation and why now is the ideal time for organisations to get to grips with this.
As companies seek to navigate these turbulent times, any new or retooled strategy will inevitably collide with organisational culture. Reconciling them is no easy matter.
Culture is only an asset if it is aligned with an organisations’ unique goals and strategy.
Samsung, for example, faced a bill of over a billion dollars when it failed to implement its strategic transition from an original equipment manufacturer (OEM) to an FMCG organisation. How does an organisation of that size, with seemingly unlimited resources, fail at a transition so strategically important? The answer: a lack of alignment between culture, structure, and strategy.
Is your organisation just as likely to do the same with your next key strategic implementation? That depends on how you answer the following question: did you spend any time during your last strategic retreat or planning session focused on structure and culture?
It wasn’t lack of planning or resources that caused Samsung to fail; it was a complete lack of structural and cultural alignment. Organisational levers, structure, communication, signals and messages from leadership, and the skills required to execute such a radically different business model, are all essential for success – and they must start in the C-suite during strategic planning conversations.
Defining your culture
Culture is often explained as ‘the way we do things around here’. That definition can feel fuzzy, difficult to quantify, and therefore make it hard to change. In reality, a root-cause analysis of your current outcomes and behaviours – both good and bad – will lead back to the organisational structure, policies and procedures, rewards and punishments etc. In any system, outputs are driven by inputs, and staff behaviour – i.e. culture – is no different.
This realisation can have a profound impact on results, whether or not an organisation is going through a major strategic shift. According to Deloitte, 82% of executives view culture as a strategic differentiator, only 28% of companies truly understand their culture well, and only 19% believe they have the ‘right’ culture. Samsung is not the only example of this: 70-80% of mergers and acquisitions do not deliver on their intended objectives and fail to realise full value due to cultural conflict – yet most organisations ignore culture during due diligence.
Can’t this wait?
‘We can’t worry about this now,’ I hear people saying, ‘the world is in total chaos and no one knows what is going to happen’. To which I respond, ‘fortunes are made when bombs are dropping in the harbor, not when violins are playing in the ballroom’.
Constant change is the new status quo. Innovation and agility are not just fundamental skills related to future-proofing organisations and the fourth industrial revolution, they are key to survival during uncertainty. During times of transformation, we tend to cling to what we know at the exact moment when we need to question our assumptions and evolve.
There is no organisation or industry that won’t experience change at a fundamental level due to the current pandemic. Covid-19 is providing the perfect opportunity to have these difficult conversations and really question our assumptions. Treating symptoms isn’t good medicine and it isn’t good business. Focusing only on bottom-line results is a lazy and ultimately ineffective way to grow a business because it is frequently ignoring the drivers of much larger issues.
Finding the right culture
As a consultant, I am asked a lot about what is the ‘right’ culture, competency model, value set, strategy, goal, or way to future-proof an organisation etc. The response I give is that there is no right answer. The ‘right’ culture is about what aligns to the organisation’s strategy. The Netflix Culture Manifesto is highly regarded as a roadmap for the culture of the future. It has been downloaded over 12 million times and, according to Harvard Business Review, it has helped reinvent HR.
It is an excellent example of how an organisation is using culture strategically and is very successful as a result. Its willingness to share this innovative approach shines a light on this important topic and elevates the public discourse.
It also emphasises that culture is only an asset if it is aligned with an organisations’ unique goals and strategy. No one else will be able to take that model and simply implement it in another context. It is a brilliant example of culture as a strategic differentiator, but an equally brilliant example of how there are no short cuts. Each organisation must go through the process of building and aligning the culture that works for them.
“Culture eats strategy for breakfast”
The headline above is a quote from Peter Drucker and it is not a new idea, but it is truer now than ever before. Strategic thinking has evolved to show that in the wake of the fourth industrial revolution, where change is constant and genuine uncertainty has replaced risk, issues of culture are key to long-term success and survival.
Agility, resilience and communication are all hallmarks of culture and therefore must be encouraged and consciously cultivated. Culture is not an accident. It is the outcome of the policies, procedures, infrastructure, strategy and, most importantly, the tough decisions that the leadership makes or is unwilling to make. Culture can be curated deliberately to support top performance but is more often ignored and left to evolve organically with damaging consequences. In five years it will be very clear which organisations realise this paradigm shift and have evolved their culture accordingly, because they will still be here. Will you be one of them?
It is clear that culture needs to be a significant strategic priority, one of the fundamental pillars to future-proofing your institution and living in a world of uncertainty. In future articles in this series I will discuss myths, facts, and deep dive into the details of the critical steps that leaders can take to create the most appropriate culture for them.
Interested in this topic? Read How can HR leaders create an insight culture?