Do you have a Growth Culture?
The topic of culture is on the mind of many executives. Deloitte’s report Global Human Capital Trends 2015: Leading in the new world of work, rates culture and engagement as the most important issues leaders are facing. Not only does culture influence employee engagement and retention, it impacts customer satisfaction and innovation and therefore growth. Leaders must cultivate a culture that supports, rather than hinders, their vision and growth goals.
What is Culture?
My favorite definition is the simplest one – “Culture is the way things are done around here”. Culture is like an iceberg – the visible elements are the processes, structures, rituals and physical environment of the company. Start-ups will often define their culture by the pool tables and free food and beer they offer. While these are visible aspects of culture, they do not necessarily define it. The real drivers of culture are the invisible elements – the values and beliefs that underlie why people behave the way they do, how the office looks and what behaviors or actions get rewarded. They determine what happens when no one is looking.
Each company has its own, unique culture that dictates how people work with each other, customers and other stakeholders. The ultimate definition of your culture is what your customers say about you. Culture evolves whether you pay attention to it or not. And it self-perpetuates unless there is conscious intervention to change it in some way.
The Link Between Culture and Results
Remember Nokia? I do. I was there in the third quarter of 2007, when it was the number one provider of smartphones in the world with a 48.7% market share. Then Apple and Samsung came along and the leading mobile phone company in the world had to figure out how to compete with these companies that were wowing their customers. In 2010 Nokia brought in a new CEO. One year later, the new CEO, issued a “burning platform” memo to all employees. In it he identified several cultural elements that needed to change.
“I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally.”
The company embarked on a culture change, but it did not happen fast enough. By the third quarter of 2012 Nokia’s market share of smartphones had fallen to just 3.5 percent, and in September 2013 the mobile phones division was sold to Microsoft.
Nokia is not the only company whose culture played a role in their downfall. Kodak actually invented the digital camera and yet it failed to capitalize on the innovation. How does this happen? As organizations grow they can become bogged down in their own processes. They may become complacent and lose sight of what’s important, or they may become arrogant and not listen to signals from the market. The behaviors that made them successful may no longer be appropriate given changing market dynamics – e.g. when the company shifts from creating a new market to surviving in a mature market. Whether you are a fast growing startup or a global corporation, culture is key to your success. The larger a company gets the more effort it takes to maintain a growth culture.
What Makes a Growth Culture?
“If you’re thinking in 100-year terms, the culture is the only important thing,” ….”The culture is everything in the long-term. The culture is much more important than the current product. The product is the current product; the culture is the next hundred products.”
—Phil Libin, Evernote Co-Founder and Executive Chairman
Having a purpose and a set of core values is no guarantee that you have a growth culture. Values define what you stand for and play a key role in your culture. Whereas your core values typically do not shift over time, there may be other behaviors that are critical to your success that may shift as market dynamics change. For example, to adapt to a shift from closed standards and environments to open standards and ecosystems. Some common behaviors that that we have seen in successful companies, both large and small include:
You may have other behaviors not listed here that uniquely support and complement your business. These behaviors may be part of your corporate values, they may be woven into your operating or leadership principles, or they may be part of your core competencies. Amazon defines its culture through its 14 Leadership Principles which guide every action and decision employees make on a daily basis, and are deeply integrated into their hiring practices. Google has a list of “10 Things we know to be true” .
The key is that you identify the values and behaviors that are critical to your success going forward and then integrate them into the everyday language and actions of your employees. They must become part of the ongoing communications within the company. Decision making, talent and performance management, and all processes and systems must reinforce them. Most importantly, management must lead by example and recognize and reward those that embody them in their day to day activities.
Do you have a growth culture? Have you defined the key behaviors that will be critical to your success?
 Global Human Capital Trends 2015: Leading in the new world of work, Deloitte University Press, page 4
 Deal T. E. and Kennedy, A. A. (1982, 2000) Corporate Cultures: The Rites and Rituals of Corporate Life, Harmondsworth, Penguin Books, 1982; reissue Perseus Books, 2000