Culture Eats Strategy for Breakfast

This week’s guest blog post is provided by Kate Erickson.  Kate has over twenty years experience in professional services including organization design consulting, human resources leadership and employment law.  She was the head of HR for Coca-Cola, did the HR start-up for Ontario Power Authority (OPA) , and is currently working with Walmart Canada to effect culture change.

Over the years, the statistics are consistently grim – 70% of change efforts fail and 70% of business strategies are not executed.

Yet we know from John Kotter’s 11-year study of high performing organizations that great corporate culture has a significant impact on a company’s long- term performance, resulting in:

  • 4 times higher revenue
  • 12 times higher stock price and
  • 756 times higher net income

So if culture is so critical to success, why don’t we have it handled?  Here are 5 things that leaders can do now to narrow the cultural divide.

1.  Be honest about what your culture is now.
Arrange for an objective assessment of your culture and be prepared to make the necessary changes.  No matter what your particular Achilles heel is, whether your people lack focus, drive or a commitment to excellence, you can upgrade to a culture of teamwork, accountability and stellar results.

2.  Consciously design your culture
By now, everyone knows the story of Zappos’ meteoric rise.  The company was  chronically losing money until its owner brought on a young entrepreneur, Tony Hsieh, as its CEO.   Within 12 years the business was bought by Amazon for $1.2 billion.  Tony credits this extraordinary success to focusing relentlessly on creating culture as his top priority.  Under Tony’s leadership, nothing went forward unless it supported Zappos’ strong culture of WOWing customers. As a result Shieh’s strategy of year-over-year earnings gains has been successful since 2003 and the Company gives tours so others can learn from its experience.

3.  Treat culture as your North Star
Nordstrom is also well known for its laser beam focus on customer service.  Legend has it that one day a new customer walked into Nordstrom’s shoe department and asked to try on various pairs of shoes in two sizes.  It turns out one of his feet was a full size larger than the other.  When he found the shoes he wanted, he stepped over to the cash and prepared to pay for two pairs of the same shoe, one in each size.  However, the Nordstrom’s salesperson, well trained and empowered to create customer loyalty, made the decision to sell both pairs for the price of one, telling the customer, “It’s not your fault that Nordstrom’s didn’t have a single pair of shoes to fit you.”  At Nordstrom, a culture of accountability for stellar customer service makes it easy for people at all levels of the organization to make the right decisions for the business.

4.  Recognize the importance of social relationships

From the last Ice Age to the current time, humans have survived and prospered because we rely on each other.  Ancient tribes recognized the value of diverse strengths –  hunters, gatherers, toolmakers, medicine men & women – and combined forces for the good of the group as a whole.  Successful organizations today can also structure for powerful collaboration.  A great place to begin is with small groups.  Get them working on projects that have meaning for them and for the business, and add people as it becomes obvious that other strengths and skills are required to achieve more.  In organizations that do this deliberately and well, results jump a factor of 300-500% as employees naturally form well-rounded and collaborative teams.

5.  Measure the Results
Currently, the most widely used people metric is Employee Engagement which measures individual employees’ concerns about their leaders, their compensation, their best friend at work.  Zappos and other top employers whose engagement scores were high, don’t do these surveys anymore because it doesn’t tell them anything they need to know.  As you build a vibrant culture, trying to measure progress through an Engagement survey is like putting a bicycle speedometer on a Ferrari – it quickly becomes irrelevant.  What is important to measure now is the stage of your culture, the quality of work relationships, and the results produced by people working in vibrant collaboration.

These tools and methods are readily available and those who take advantage of them now will have a competitive advantage.

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Tags: accountability, business strategies, corporate culture, gains, Jim Stewart, organizations, performance, ProfitPATH, quality of work relationships, results, strategy, structure, teamwork

Comments

  1. Mark Burden says:

    Wow. I couldn’t agree more. I recently dealt with an organization with a terrible culture that thought everything was fine. When confronted with the reality of their cultural disfunction they chose to ignore it and not address the 5 points you’ve made here. They continue to struggle and will never be the powerhouse to which they aspire as long as they keep their head in the sand. As you’ve pointed out, not only can culture be purposefully created, but it is essential for the long term health of an organization.

  2. Mark, thank you for your comment. Yes, many companies are not aware of the importance of culture. It’s often helpful to focus on the something more concrete, like conflict between people or departments that’s hindering performance. Painful symptoms are signals that there may be systemic issues in the organization’s culture.

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