Episode #367: How To Join The Culture Champion Workplaces – Part One

Harvard Emeritus Professor James Heskett’s comparative study of the impact culture has on corporate financial performance was shocking. He found that “as much as half of the difference in operating profit between organisations can be attributed to effective culture”. Half, wow. Now that is a big impact point, especially when we are talking operating profit rather than just gross revenues. What is going on here?

Corporate culture is like a glue that holds everything together. It impacts the formation of the strategy, how decisions are taken and followed, clarity around the WHY, respect for those at the top and how customers are thought about and therefore how they are treated.

Edgar Schein’s famous study of organisational culture identified how to uncover your existing culture. If you have a great culture, a so so culture or an underperforming culture, how would you know that in detail and where should you look. He found there were three levels of observable culture. Artifacts describe the layout, the furniture used, the dress code etc. Espoused Values are those rules around behaviour, and how the team represents the organisation to each other and to those outside. This will easily be found in the Vision, Mission and Value Statements gathering dust on the wall. The degree to which the team’s behaviours match the aspirations captured on glass protected, beautifully framed, parchment paper says everything about the culture and the people. Shared Basic Assumptions was his third indicator. These are the deeply embedded, taken for granted, this is how we roll around here, approaches on the part of the team.

Toxic cultures are easy to spot. Widespread distrust, no accountability, depressing negativity, lack of a clear strategy, finger pointing, blame shifting, infighting and greasy pole climbing internal corporate politicians running amok. What about the rest of corporate humanity? What then is a good culture, apart from being the opposite of this tawdry lot of refuse dwelling, disease infested rats in the system?

Actually there is no one size fits all solution in play here. It depends on a number of factors to do with the environment in which the firm operates. Following on from Charles Darwin’s ideas about adaption to survive as a species, there may be adaptions of culture in organisations which enable them to thrive in the environment in which they find themselves. It might mean being highly competitive internally or highly collaborative, incredibly creative or enforcing razor sharp discipline, etc.

Even if you have plumbed a culture that really works for you, it is devilishly hard to maintain it. Past success promotes self propelling inertia. Covid 19 has shaken everything up and requires changes, but the organisation is stuck in ways which are familiar and which worked just fine in the past. They just can’t make the needed changes. This is especially tricky here in the Japan, the risk aversion epicenter of the Universe.

Mergers and acquisitions rarely work and the most common reason is the disparate cultures can’t blend well enough together. The bigger player flexes their muscles and enforces their culture. The junior partner either collapses, as the best people depart or they descend into an internal guerrilla war against the invaders. Diverse Societal Cultures revolves round different ways of thinking , conflicting value systems, and expectations. The greenhorn gaijin CEO arriving in Japan, pre-briefed and recently instructed to shake things up and get these folks to fly straight, like everyone back home, is unknowingly on a kamikaze mission of self-destruction and folly.

Leadership changes are such a huge factor in culture change. Never throw your strategy plans away, because every five years the CEO will change and that work you did previously, that has been shelved, will now be in demand. If it was consolidation, centralisation and discipline before, it is now “let a hundred flowers bloom, let a hundred schools of thought contend” local innovation and the blitzkrieg of decentralisation.

Covid -19 has overturned the workplace. The rabbit hutch kitchen table is now the battlefield HQ, as the scattered troops go about their business, in blissful isolation from central command.

This culture extravaganza is a big topic. In Part Two, we will continue to talk about the impact on culture of new tech, corporate transparency, communication changes and the chain of command. We will also go deep on what the corporate culture champions are doing, so that we know what we should be doing too. We did some proprietary international research on the most successful corporate cultures and all will be revealed in the next instalment.