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!

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. 

Advancing beyond the "Megamind" Organization

In most businesses, leadership’s primary focus is on “What we Do”.   An ingenious idea is hatched and a cavalcade of strategy, product design, engineering, branding, sales and servicing steps follow.  Squadrons of talented staff execute tactics to bring the vision to life.  “What we Do” consumes significant mindshare and resources as well as driving investment in the firm.

So what’s the problem?

Years ago, a unique idea could launch a lasting franchise – Polaroid cameras, the Xerox machine, the VW Bug, Intel processors, Windows.  Visionary founders and their colleagues could keep such businesses humming for generations.  

Today, markets evolve too rapidly and global competition is too intense to sustain businesses on a single breakthrough.  Smartphone technology, social networks and the sharing economy are examples of overnight disruptions in consumer behaviors.  CEOs and Founders tell me the accelerating rate of change and increasing complexity of markets makes their business planning mostly guesswork.  With only a murky view of the future, companies must be even quicker and more nimble or be left in the dust.

Megamind
(Courtesy of Dreamworks)

Many firms rely on a “Megamind” approach when their business model is threatened.  A brilliant leader or two go off to devise ways of outthinking the marketplace.  An alternate “What we Do” strategy, tact or “pivot” is then shared with the team to be executed.  For Megamind organizations, individual heroics can keep them afloat for a time, but not indefinitely. Besides, the burden on the leaders to be the principal source of innovation can be exhausting. 

Staying ahead of the curve nowadays requires an acknowledgment that nobody is smarter than everybody.  To create a culture of innovation, the most progressive organizations leverage the collective wisdom of the entire staff by focusing as much on “How we Operate” as “What we Do”. 

“How we Operate” represents the inner workings driving fluid collaboration among team members.  Authenticity and accountability are essential to strong internal relationships.  In a trustworthy environment, colleagues are unafraid to provide input and openly challenge one another’s thinking to hone ideas.  With engagement high, they take risks and speed decision-making to launch a stream of new initiatives.

More often than not, "How we Operate" defines the company culture.    

Firms expert in “How we Operate” are intentional.  They dedicate as much creativity and foresight to the mechanics of teamwork as to software architecture.  Their people don't settle for traditional structures, instead iterating on organizational designs as they might on product designs.  Leadership development is a priority, never left to chance or happenstance.

To ensure “How we Operate” is more than a mindset, savvy leaders are learning to measure how well their teams live out company Core Values.  They are devising ways to evaluate the quality of conversation and the depth of interactions.  Employees are creating more transparency by conducting daily communication in public forums.  Meeting protocol is continually upgraded, demonstrating cutting-edge personal dynamics and respect for each individual's contribution.

Conflict is not avoided.  Teams recognize the value of diverse perspectives to uncover the best solutions.  Debating differing viewpoints is welcomed at all levels and managed in a healthy and constructive manner.

While “What we Do” continues to occupy the lion’s share of C-Level time and attention, many recognize the need for better balance.  “How we Operate” will become increasingly important in scaling their business and sustaining future market position.  The craft of “How we Operate” will be an essential element in the company identity, establishing a point of distinction for attracting the best and the brightest.

Next Generation Organizations: Distributed Authority

Reflecting on my years as a leader in large corporations as well as start-ups, the most profound cultural difference between the two work environments is trust.  Early stage companies trust their employees; bigger businesses do not. 

Start-ups assume the best in their people.  Founders and leaders freely give away power and control. They have faith in their teams’ judgment and provide means to empower individuals.  As a result, their work teams are highly engaged risk-takers, iterating quickly and adapting to changing markets.

Large firms see the worst in people.  The structures, policies and compliance procedures demonstrate their lack of trust.  Vertical hierarchies, approval processes and sign-offs sap their speed and creative spirit.

Organizational trust is fundamental to collaboration and continuous innovation. 

To foster trust, next generation organizations such as a Collaborarchy™ operate with 

Distributed Authority.

Authority is a right.  In a business context, authority centers on the right to make decisions about product strategy or marketing tactics, verdicts on hiring and firing staff, spending company resources or resolving customer problems.

In traditional hierarchical organizations, titles define authority.  Those at the top have the power.  Making decisions in this vertical structure requires an information exchange between those with situational knowledge and those with authority.  This constant up and down the ladder creates bottlenecks and organizational friction.

In advanced organizations, decision-making rights are granted to those closest to the problem.  Management trusts the wisdom of team members, believing the staff will act in the best interest of the company and it’s customers. By distributing authority, leaders put power in the hands of those best positioned to find the right solution.  This permission speeds decisions so companies can be nimble and outflank competitors.

Clarity of decision-making authority is essential, especially at high growth businesses.  In a Decision-making framework I use with clients, Leaders classify decision situations as Strategic or Tactical.  Categories of decisions can include hiring/compensation, budgets, key company initiatives, product development, etc.  From there, teams or individuals are granted authority over decisions in these realms.

Posting this matrix publicly ensures domains of responsibility are clear.  With mutual understanding of boundaries and expectations, confusion and frustration among staff teams is minimized.

How we make decisions is as important as who pulls trigger.  The decision-making process has several distinct stages from problem identification and information gathering through evaluation of options.  Oftentimes, these activities are conducted simultaneously or worse, in the wrong order.  Many of us choose an option first and then gather the information needed to justify our decision.

Effective teams conduct a methodical decision-making process to ensure wise choices.  Getting the process right upfront saves time and rework down the line.  During the information gathering stage, they reach out to all constituents (including customers) for input.  When riffing through possible solutions, they actively seek divergent ideas and consult the skeptics as well as quiet members of their team.  Selection criteria are clear, defined in advance of the evaluation process and aligned with both customer interests and company Core Values.

In organizations built for speed, the default action is to move an idea forward.  Short of a viable objection or potential harm to the business, initiatives are pushed ahead.  Release reviews and project postmortems enable the team to candidly assess the outcome, learn from mistakes and try again.  This rapid iteration process works best if autonomous teams gain cross-functional input and have the authority to make decisions.

Enlightened leaders are re-examining traditional decision-making criteria.  Most companies base decisions on KPIs.  Ideas and initiatives are assessed for their impact on revenues, units sold, production costs or profits.  These results are lagging indicators, outcomes only measuring performance.  They can answer the question “How much?” but they can’t answer the question “Why?”  Operating via KPIs puts teams in firefighting mode, always reacting to results from the past.

More progressive firms are getting ahead of the curve by focusing on Business Drivers - leading indicators producing future outcomes. Business Drivers can include customer satisfaction, repeat purchase rates, Net Promoter scores as well as staff retention and employee engagement ratings.  Operating by Business Drivers enables companies to anticipate customer needs and market trends while ensuring their teams are working at peak productivity.  Firms focused on Drivers rather than KPIs are more attuned to the end-to-end customer experience enabling them to be out front, leading change and defining the future.

In our next post, we will examine the power of transparency.