‘The single greatest tool in any leader’s toolkit is culture,” Mike Harper, former chairman and CEO of ConAgra, explained to me during an interview at his home. Culture is like the water in the aquarium; the fish don’t even know it’s there and yet it affects everything, and without it there would be nothing. You may have a comprehensive rule book, a checklist, and an operating manual, but without the right positive corporate cultural attributes, those concrete instructions and processes will not work.
When your culture is strong, people seem to genuinely enjoy their work and the people they work with; they tend to do their work well and on time. When your culture is failing, however, you’ll see a gap form between behavior and your operating processes; less discipline, energy, commitment, and compliance; unexpected departures or delays; and an increase in triangulating conversations and workarounds. People will stop honoring or identifying with the organization. Sometimes this distancing happens gradually, and sometimes it happens quickly–soon after a bad hire, a failure of leadership, or a divisive decision/event.
Once a culture has turned sour, it’s hard to generate the goodwill and energy necessary to right the organization. Cautionary tales abound. Corporate culture allowed AIG to put its entire organization at risk, Wells Fargo employees to open fake customer accounts, the American auto industry to prematurely age (by not being as flexible and adaptive enough to stay competitive even when the market clamored for a change), and Kodak to invent digital photography but not capitalize enough to secure their own future.
By contrast, GE brought good things to life by building a generative, positive corporate culture around how to hire and train some of the best leaders in the world in such a way that gives it a competitive advantage. And corporate culture allowed Google to flourish by redefining failing; failing fast is now a good thing that can get you a bonus rather than a bad thing that will get you fired.
How do leaders build effective cultures?
There are so many different ways that leaders can build creating a positive company culture. The culture can emerge from the leader’s own personal charisma or ethos. The culture can also take shape around how the organization differentiates itself from others or how it innovates. Innovation is as good a way as any to build effective cultures. Consider for a moment the four methods of innovation that Gary Hamel identified:
- Process Innovation (Make it better)
- Technology / Offering (Make different)
- Strategy/Management (Sell different)
- Leadership Innovation (Work different)
Of these, Hamel suggests that Leadership Innovation provides the greatest competitive advantage over time. It’s hardest for others to replicate, and it has the most lasting impact on your organization’s culture. Are you and your organization working differently than others? If so, how?
Leadership Innovation: The Questions Leaders Ask
In his HBR article, The Why, What, and How of Management Innovation, Hamel poses questions that will help reveal the source of the problems leaders may encounter in terms of the work process. These problems present opportunities not only for improvement but innovation.
- What tough trade-offs do we never get right? Oftentimes a company will pursue or get used to pursuing sales at all costs and not see that their operational issues have grown with the scaling of sales and have not kept pace. And when the organization considers spending more funds on sales and marketing or on improving operations, the organization continues to follow the cultural norm of always using resources to improve revenue growth. Habits and “truisms” are tough to break, and they can result in ill-advised trade-offs. They can become so ingrained that leaders fail to even see that a trade-off is taking place.
- What is our organization bad at? Have you grown to a point where the organization needs to decentralize authority beyond the entrepreneur/founder, but because of that individual’s charisma and influence no one objects to creating bottlenecks for the entire business? You wouldn’t be the first. It’s tough for organizations to execute a divorce from a founder accustomed to making most, if not all, important decisions.
- What challenges will the future hold for us? Will you miss spotting a new competitor because you are focusing on the usual suspects rather than a totally new manner in which your clients and customers will be served by another industry? Or have you become so immune to risk that you avoid the steps that you clearly need to make because it will negatively affect your ROI?
- What are you tolerating? This is by far my favorite question to ask around understanding your current culture. As an organization, you become what you tolerate. If you tolerate low performance, you will get low performance. If you tolerate a lack of discipline in your decision-making process, you will get episodic results on decision effectiveness. If you tolerate a lack of accountability, your organization will suffer from not getting things done.
As you answer these questions, consider what changes you can make to not only work better but work differently.
Tools to discover your culture
When my colleagues and I at CO2 do 360 assessments of a leader or engage in team coaching, we assess the organization’s culture using a set of questions developed by my dear departed friend Dr. Marilyn Mason and Harry Levinson; both of these people were legendary in their fields of psychology and organizational development. Some of the questions we ask are:
- How are decisions made around here?
- What are the main unspoken rules around here that everyone has to follow?
- How welcomed are your opinions?
- When aren’t your needs being met?
- What would it take to turn the culture into a “change environment?”
- Imagine that your organization is a car. What year is it? What model? Describe that car so I can get a good idea of what you have in mind and how it performs.
This is just a sampling of the proprietary list of questions we use to assess organizational data, communications, needs, culture, and values. Additionally, we learn a great deal about the organization’s leadership and culture through our online 360 PEAK Leadership Tool (which we offer at no cost to anyone who wants to try it–no upsells or cross-selling, I promise).
If you’re interested in knowing more or working to improve your corporate culture, start by assessing norms and asking questions like the ones CO2 and Hamel use. Find out where the current culture is implicit. Then be very explicit about what the culture needs to be in order to optimize the vision, mission, and values of the organization. Establish how and why you’ll not only work better but work differently.