Ensuring your Culture is a Driver rather than a Derivative

“Culture is our source of momentum,” a CEO told me.  “With markets changing so rapidly, culture is the driving force, keeping us from becoming stagnant.”

            A vibrant culture can power an organization through the most trying times. As the diagram shows, culture is the flywheel, a continuous dynamic keeping all the gears going in the right direction.

            However, if culture is left unstated or remains implicit, employees look elsewhere for clues on what to prioritize and how to behave when facing difficult challenges.

In a WSJ OpEd piece, former IBM CEO Lou Gerstner questions whether company culture is too often reduced to a derivative of other processes.  In his example, a CEO’s state-of-the-union proclaims their commitment to investments in future growth and R&D.  Six weeks into the quarter, the CFO sends a memo about Q1 results falling behind budget and discretionary spending is put on hold.  “Now which of those communications,” asks Gerstner, “do you believe shapes the employees view of what really matters and therefore what they see as the true cultural priorities of the company?”

Consider what happened at Wells Fargo.  A company founded on trust was hauled in front of Congress because an overemphasis on financial performance and compensation plans cranked the gears of the organization in the wrong direction.  The culture got so poisoned, even those calling out the unethical practices were shouted down.  Their CEO got axed.

I know I’ve succumbed to the tyranny of short-term results, allowing cultural initiatives to be trumped.  What about you?  How do we prevent team members from looking to comp plans or the budget process for behavioral cues rather than core values and cultural norms? 

In a study featured in the Harvard Business Review, researchers stated,  “What we learned about companies that have strong leadership pipelines and strong financial performance: first, they focus on culture.  They talk about it, they live by it.  People in the company know what [culture] stands for and this gives them freedom to lead in different but complimentary ways.” 

I love that notion – the best companies talk about culture.  At my firms, we talked of culture, but not about culture.  We said our culture was great, but we never said what our culture was.

Company culture is most potent when everyone understands the foundations and principles.  With no ambiguity about the Expectations for employees, they are more likely to deliver.  If Interactions and Operating Norms are clearly stated, then staffers aren’t looking to the wrong sources for how to act. 

Codifying your company culture is a great place to start.  In companies I work with, we’re bringing together leaders and team members in discussion groups to define the Expectations, Interactions and Operating Norms.

Priority Management is one area in need of clarity.  Employees often lament about too much work and too little time.  And with market forces shifting company strategies or tactics, priorities must be readjusted down the chain.  Without explicit company approaches to prioritization, staffers have to guess at tradeoffs between tasks generating revenue or fulfilling client requests.  They use their own methods to choose between important long-term projects and urgent requests.  Determining when to say “No” or which items are delegated and which are put on the back burner is a confusing quandary.

This Important vs. Urgent chart is one model for helping staffers decide between seemingly conflicting priorities.  Adopting these fundamentals for allocating individuals’ time can minimize misalignment and inefficiency.

Discussions about Priority Management or other elements of company Expectations, Interactions and Operating Norms can spark conversation and debate.  There are no easy answers.  However, the dialog is engaging, and important!

Culture can be a steadying force as your business scales.  To leverage this asset, put aside the time with your team to codify the foundations of your culture then document the results.  This clarity can make culture a momentum builder for your organization.

Unlocking the Power of Company Culture

Our culture is awesome!  Culture defines us.  Our culture separates our company from the pack and attracts the best talent.

I’ve heard some form of these declarations from most Founders and CEOs.  Having a killer culture is popular nowadays. Leaders can be as proud of their culture as the company they’ve built.  And, rightfully so.

 Zappos’ CEO Tony Hseih said, “If you get the culture right, most other stuff will take care of itself.”  Start-up founder David Cummings called culture an entrepreneur’s only sustainable competitive advantage.  “I used to believe that culture was ‘soft,’ and had little bearing on our bottom line,” said Tech CEO and author of Wired Differently, Vern Dorsch.  “What I believe today is that our culture has everything to do with our bottom line.”

While What we Do objectives and strategies provide direction, a robust culture keeps the firm on course, holding everyone together when market forces and competitors try to tear the company apart.  Culture is the flywheel, the most dynamic force of How we Operate and the key to thriving as the enterprise scales.

Yet when I ask staffers to describe their ‘killer’ culture, they give me puzzled looks.  After pausing to consider the question, they often cite their cool workspace, casual dress code, work from home flexibility or the fun team events.  Pets roaming the office are frequently pointed out.

How can company culture drive an organization when the basics are unclear to those who are part of it?  Why is there such a disconnect between the potency of culture described by leaders and the superficial facets commonly identified by employees?

In my view, culture is an under leveraged asset, its impact nullified by lack of clarity or inattentiveness.  

In most companies, Purpose, Mission and Values have been carefully considered.  You can find the terms and phrases plastered on walls, t-shirts and other company swag. 

On the other hand, company culture is vague and amorphous, a mystical catchall phrase that means different things to different people.  Culture is implicit.  Company norms, customs or idioms are unstated.  Nothing is written down.  Beyond being respectful and kind to one another, explanations on how to act or behave are not defined.  New employees, and veterans for that matter, are left guessing about unspoken standards and expectations.  When it comes to culture, everyone is supposed to “get it” even though nobody seems to know what “it” is.

So what is culture, exactly?

“Culture is a set of shared beliefs, values and practices” is one start-up’s description.  Others define culture as “a way of thinking, behaving and working.”  A broader view stated, “The visible artifacts of culture have to do with stories, ceremonies, symbols, events, the way people dress, and layout of an office. But the roots of culture have to do with beliefs and assumptions that underlie how work is done in the venture.” 

These definitions sound great on paper but are difficult for employees to apply.  What are the company’s specific shared beliefs on decision-making, prioritization or meeting protocol?  Which practices truly guide collaboration or conflict resolution?  Ceremonies and symbols are interesting, but what exactly are the assumptions underlying accountability, initiative or the commitment expected from members of the team?  

To harness the power of culture, everyone at the firm needs to understand the inner mechanics.  Based on my experience, three primary cogs driving company culture: Interactions, Expectations and Operating Norms.

Your company may be committed to authenticity, building a safe environment for team members to be transparent and vulnerable with one another.  Some businesses focus on collaboration emphasizing equal conversation from all while addressing conflict directly in a healthy and constructive manner.  In some firms, the level of ownership and initiative expected from leaders, teams and individual contributors is most important.  The style of leadership, format for meetings (stand-up, sit down) or cadence and means of communication will vary from company to company. 

How your company defines these cultural cogs is up to your management and team members.  There are no right or wrong answers for the Interactions, Expectations and Operating Norms.  The key to bringing your culture to life is to communicate, communicate, communicate!  Make sure everyone is clear.  Don’t leave interpretation to chance.  Be explicit and unequivocal.

Peter Drucker is credited with saying “Culture eats strategy for breakfast.”   Undoubtedly, company culture and other aspects of How we Operate are as impactful as the strategic aspects of What we Do.  Stating your culture plainly can enable your firm to prosper and thus, eat your competition for lunch!

Failing to Scale: The Crisis among Start-ups

There has been much press declaring the fall of American entrepreneurism.  Cited in a 2015 Wall Street Journal story, the Kauffman Foundation analysis of US Census data determined that start-up momentum in the US had stalled. (WSJ Article)  Additional publicity has blamed sputtering entrepreneurship for our country’s slow economic recovery.  Gallup CEO Jim Clifton stated, “We are behind in starting new firms per capita, and this is our single most serious economic problem.”

Venture capitalist Marc Andreessen tweeted his provocative take on the relationship of entrepreneurship and the economy.

A 2016 study by MIT researchers tells a different story.  Using more granular measures of entrepreneurial quality, the research team concluded, “Starting in 2010, there is a sharp, upward swing in the expected number of successful startups formed and the accumulation of entrepreneurial potential for growth.”

           

While the MIT research showed entrepreneurship on the rise, they highlighted a more vexing issue.  “To the extent that the current state of American entrepreneurship is facing a crisis, it is not the rate of creation of high-growth start-ups or in the initial funding of those firms but instead in the potential of those firms to scale.”   

            The conclusions of this groundbreaking investigation square with my own experience.  In a blog posted last October, I outlined how Founders struggle to pilot their businesses through the turbulent Transition Stage between Start-up and profitable Going Concern.  The MIT research team added, “Even as the number of new ideas and potential for innovation is increasing, there seems to be a reduction in the ability of start-ups to scale in a meaningful and systematic way.” 

            The MIT report does not provide recommendations for how to address the problem.  I see this gap as well in my work with start-up leaders.  There is no consensus or common approach to deal with this perplexing phase of a company’s life cycle.  

While well suited for launching a start-up, Founders are less experienced in the organizational and cultural nuances needed to scale their business.  Collapse during the Transition Stage can be driven as often by internal meltdowns as missteps in strategy or product design.  

Why is this?  In my view, C-level leaders are focused so heavily on “What we Do”, they neglect the appropriate balance of “How we Operate.” 

Young firms tend to rely on a few brilliant minds at the top to outsmart the market.  Today’s complex and competitive business arena requires a broad array of perspectives.  Adopting the axiom ‘Nobody is smarter than Everybody’, companies tapping the collective wisdom of the entire team are best positioned to seize market opportunities.

Unfortunately, organizational friction can stymie team member input.  As headcount soars so do functional structures, hierarchies and other vestiges of bureaucracy.  Turf battles, silos, political maneuvering, and lack of authenticity inhibit collaboration.  Trust breaks down.  Staff engagement drops and innovation stagnates.

            So how do Founders/CEOs minimize organizational friction while keeping their firms nimble and quick?  What aspects of “How we Operate” enable start-ups to scale?

Two key areas to consider: Core Values and Collaborative dynamics. 

Clearly articulated Core Values and explicit cultural norms are an excellent first step to sustain growth.  Most young firms have defined their Mission, Vision and Values.  Some design snazzy posters to plaster around the office.  Noticing a set of eloquent Core Values artistically rendered on the conference room wall, I asked a CEO how well his team was living out these standards.  He looked at me quizzically.  Shaking his head, he realized his team had not considered how to measure this basic of company progress.

In one start-up where I served, employees could name the company values but were confused over what they meant or how to apply them.  Our Values were vague words to them, too open to individual interpretation.  To rectify the situation, we identified a series of attributes to define each Core Value.  Adding explanatory prose helps.  

We augmented a section of our annual reviews to rate how well employees exemplify these virtues.  This evaluation reinforced the meaning of our Core Values while assessing if our organization was operating accordingly.

Culture is another nebulous concept.  While all firms champion a company culture, their personnel may struggle to pinpoint the specifics.  Culture is regularly expressed in terms of dress code, vacation policy, office décor or team building exercises.  This cursory view misses the critical inner workings defining "How we Operate."  Too often, the firms's implicit cultural norms are left unspoken, creating ambiguity and confusion, particularly among new employees.

Rules and handbooks do not define company culture.  Passions and purpose do.  Culture is the expectations between us as well as interactions among us.  Our approach to prioritization, decision-making, conflict management, meeting protocol and the role of leadership are the life-blood of the organization.  Communicating openly about our cultural underpinnings connects team members more deeply with one another while enabling the company to thrive.

A second key aspect of “How we Operate” is Collaborative dynamics.  In a number of posts, I have dug into the foundations of Autonomous Cross-functional teams, Distributed Authority, Transparency, Peer Accountability and an emphasis on leaders as Catalysts and Coaches rather than commanders.  None of these collaborative cornerstones are revolutionary.  In fact, many firms have tested these concepts on special project teams or key initiatives.  The intentional integration of these five dynamics enables organizations to operate more fluidly.  Staff members have a stronger sense of ownership.  Teamwork flourishes.  The steady flow of creativity inspires the innovation driving further growth.

With ample capital flowing into the venture space, start-ups will continue to sprout.  To meet the return expectations of investors, the most progressive leaders are experimenting with fresh organizational paradigms to scale their start-up and create a profitable business.

Next Generation Organizations: Peer Accountability - Part Deux

           

High growth leaders are always seeking ways to spark innovation from their staff.  Experimenting with progressive organizational paradigms is an emerging strategy. 

Thriving collaboration and employee engagement result from well-conceived approaches to  “How we Operate”.   Core Values are clearly defined and measured.  Explicitly communicated cultural norms and expectations enable teams to work together more fluidly and generate the market breakthroughs needed to sustain growth. 

Autonomous, Cross-functional Teams, Distributed Authority, Transparency and Peer Accountability are part of the next generation of organizational design.  

In the last post, we explored the power of Peer Accountability to create ownership within the ranks.  Relationships with colleagues are important in today’s workplace.  Tapping these bonds can create greater accountability than traditional superior/subordinate systems.  Peers hold one another responsible for deadlines and deliverables as well as inspire teammates to perform at their best and break new ground.  Side by side every day, co-workers have the richest insight on how teams are operating and steps to improve.

While a powerful source of productivity, Peer Accountability is not without downsides.  There have been several well-publicized accounts of this new approach gone wrong.  So how do we create the ideal situation for success?

Peer Accountability is most effective when companies promote organizational trustworthiness, authenticity and healthy conflict.

           

Trust is fundamental to collaboration.  Young firms understand this dynamic and many operate more like a family than an institution.  In a trustworthy environment, employees see the best in each other rather than the worst.  They celebrate one another’s strengths instead of carping on their flaws.  They grant the benefit of the doubt, an aura of grace and mercy where forgiveness reigns over bitterness and resentment.  When individuals look to help their team members grow, serving each other is as important as serving the customer.

Strong connections among colleagues as well as management engender a setting for effective Peer Accountability.  Authenticity and candor are cornerstones.  People are real with one another; open, direct and honest.  There are no masks or curated reputations.  They respect each other enough to speak the truth.  And they are unafraid of being transparent about who they are and what they stand for.  Staffers feel safe enough to be vulnerable, admitting fears or concerns, disclosing mistakes or willingly facing the inevitable failures that come with innovation.

Peer Accountability is natural when trust and authenticity are norms.  Individuals are open to input, valuing the constructive feedback of their co-workers to further their professional development and improve team dynamics.   
For many, Peer Accountability seems like a formula for conflict.  Truth is, conflict is unavoidable in a robust, growing organization.  Bright, passionate people will have differing opinions.  Sadly, too many companies wrestle with unruly, rancorous conflict or worse, conflict avoidance.

We have all experienced interactions on the conflict continuum, some constructive and others damaging.  Neither extreme is ideal, either.  Healthy conflict is a balance point where parties share relevant information, feel heard and respected while having optimism in each other.  Debate is open and unfiltered.  There is a willingness to disagree yet a commitment to support the resolution regardless of the outcome.  

With healthy conflict, teammates are not worried about questioning the ideas of others regardless of where they sit on the Org chart.  The best idea does not have to be one’s own and deliberations among one another are simply part of reaching the optimal solution.

With a foundation of trustworthiness, authenticity and healthy conflict, the power of Peer Accountability can be fully leveraged to help businesses thrive and scale.

In our next post, we will more examine how Transparency augments Autonomous Teams, Distributed Authority and Peer Accountability as well as laying the groundwork for leaders to serve as Catalysts and Coaches.