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Culture As Competitive Advantage - Breath In AND Out!

by Andy Hanselman October 22, 2010

I read a survey that revealed that 9 out of 10 executives believe that corporate culture is as important as strategy for business success. The report surprised me because that seems so obvious, why would it be a headline? (it also implies that 10% of executives thought it wasn’t as important which is even more surprising!). Surely this is like saying 9 out of 10 executives believe that breathing out is as important as breathing in! The two are inextricably linked, and to be honest, each on their own has limited use without the other (to put it mildly!).

The report went on to say that fewer than 10% of companies succeed at building high performance cultures – now that doesn’t surprise me! One of the main reasons is that they are not sure how to! Culture is often seen as ‘soft’ or ‘touchy feely’, whereas in reality it’s actually the hardest part of management. Why? Because it deals with attitudes and behaviours which all somehow seem a bit vague. It’s much easier to talk about territories, product life cycles, sales targets, margins and advertising budgets. They’re ‘real’ and ‘tangible’.

So how do the best businesses develop a culture that creates competitive advantage? There are no easy answers, but here are a few pointers from the stuff I’ve seen:

Pointer 1: Understand your current culture:

One delegate at a conference I spoke at, came up to me after and explained although he found what I talked about on culture fascinating, he was troubled. “We don’t have a culture at our place,” he explained. “You do,” I replied. “We don’t,” he assured me. I suggested that if I spent only a few minutes in his offices, I’d get a feel for it relatively quickly. “We definitely don’t have a culture,” he persisted, “no one gives a damn at our place!” “That’s your culture!” I cried.

My definition of culture is ‘the way we do things around here’. It’s a bit simplistic, I know, but that’s my point. Many organisations don’t address it because it’s deemed too complicated.

So, getting a clear ‘objective’ view of your current culture and in particular how it shapes the way you deal with customers, is a useful point to start from. Getting a true picture helps you work out what you need to keep, eliminate and work on. Think baby and bathwater!

Pointer 2: Spell out your ‘preferred culture’

In the same way that great leaders shape and communicate a ‘vision’ they also spell out a picture of the culture they are striving for. It can often be a set of guiding principles or ‘values’, but the best seem to go further by establishing ‘preferred behaviours’ that support these values. This helps provide guidelines for acceptable and unacceptable behaviours throughout the organisation.

Remember this is about action, not words. Enron had a set of published values, one of which was integrity! It’s not what you say, it’s what you do that counts!

It’s also about what you reward….

Pointer 3: Value Your Values

Ever had someone in your team who achieves all their goals and hits all their targets, but is basically a real ‘pain’ because they wind others up, de-motivate colleagues and upset team members? If you measure individuals on results alone, regardless of their behaviours, then you’re asking for trouble.

Successful companies reward the behaviours they want as well as results. A frustrated business leader explained how she was struggling to get her people to ‘go the extra mile for their customers’. “What’s the reward for working hard to ‘delight’ customers in your business?” I asked. She looked puzzled. Talking to her staff it was clear that the ‘reward’ for putting in all the effort to exceed customer expectations was lots more work!

Effective leaders ‘Champion Their Champions’. This means encouraging, acknowledging, supporting and rewarding those that promote and act in line with the preferred behaviours. Equally, they ‘Challenge Their Challengers’. They deal with those individuals who do not. What happens in your business to those who don’t? If the answer is nothing, then expect some people to take the ‘easy option’ of not bothering.

If you’re really serious about this stuff, then you need to ensure that your ‘culture’ is positively reinforced by your reward systems, feedback systems, appraisal processes, promotion criteria, recruitment and selection processes (do you currently look for evidence of preferred behaviours in prospective employees?). Be a role model, make it visible and talk about it at every opportunity. Put it on the agenda at team meetings, board meetings and corporate communications.

Whatever you do, please, please don’t just put stylish ‘arty’ posters of people rowing together ‘as a team’ on the wall in your reception and hope for the best that you promote ‘teamwork’. You need to live and breathe it (in and out!).

Developing a culture that creates competitive advantage isn’t as important as strategy for business success. It is a strategy for business success! You can’t have one without the other, and it’s crucial you work on both.

So remember, breathe in…. and out, in ….and out.