Culture is critical to execution – and to long term sustainable success. Is your culture in sync with your business strategy, or is it in need of a refresh? We often hear about the cultural challenges that large, public companies like Enron and Volkswagen faced, but in fact many startups and smaller companies face similar challenges when they go through periods of fast growth and culture does not scale with it.
Startup unicorn Zenefits is in the midst of a culture shift. Earlier this year, the company found to have employed unlicensed insurance salespeople in some states, found a way to cheat on California’s online licensing course, and support what many described as a frat house culture. The outcome? Lost jobs and a new CEO to reorient the company’s culture and processes to succeed in a highly regulated environment.
Just like the operating system of your computer, once in a while your culture may need a refresh.
What Comes First – Values vs Environment?
There are two parts of culture – the parts that we can see – structures, processes, physical surroundings and the parts that we can’t see – the values and behaviors that underlie all decisions and actions, including the systems, operating model and processes. Any successful culture shifts depend on aligning structures, systems, and processes with the desired values and behaviors. Some leaders choose to start with redefining values and then aligning the systems to support the new values.
When Meg Whitman became CEO of HP she saw that the company needed an increased sense urgency and that it had also lost touch with its core values which were written by co-founders Bill Hewlett and Dave Packard in 1957. She began her culture shift by focusing on the core values and what it did well and then identifying the things that needed to be fixed.
“What are the core values of this company? Let’s identify what it does really well and do more of that as the anchor for the turnaround. Then let’s make a to-do list of the things to be fixed.” So we went back to our core founding principles, and the company responded.”
Others start with changing the systems and processes. In a recent HBR article Culture is Not the Culprit several corporate leaders suggested that “culture change is what you get after you have put new processes or structures in place to tackle tough business challenges like reworking an outdated business strategy or business model.” This approach focuses on changing the environment to get people acting their way into a new way of thinking.
Alan Mulally took this approach when he took over as CEO of Ford. The company was on the verge of bankruptcy and he knew that survival depended on people collaborating more effectively. He implemented two key changes. The first was instituting regular meetings with several levels of executives. He increased the level of transparency and created an environment where people felt comfortable and accountable to speak the truth regarding progress on initiatives and issues they were facing. Through these meetings the team began to work together more effectively and find solutions to issues more quickly. Second, he launched a “One Ford” initiative to integrate the company globally and streamline business processes. Through these changes, he was able to shift the culture from one of internal competition to one focused on collaboration.
GE is the only company from the original Dow Jones Industrial Index that is still listed today. GE could not have survived this long without adapting its culture to changing market environments. The company is in the midst of one of these culture shifts as it looks to be a key player in the industrial internet. GE tapped into Lean Startup principles to increase its speed and agility. It launched FastWorks – an approach that involves continuous experimentation, learning and iteration, the use of cross-functional teams, and involving customers and suppliers in the process. It quickly learned that to successfully implement FastWorks across the company required reorienting the culture. The company reached out to its employees to crowdsource the new behaviors it needed to be successful and the top five became the updated GE Beliefs. Then to make sure that the beliefs and new ways of working took root, the company revised their expectation setting and performance management processes.
So, whether you start by defining the behaviors or by changing the environment, both approaches are needed to shift your culture.
Your culture is key to fulfilling your purpose and vision. Is your company in need of a culture shift to succeed? The following steps will help you keep your culture in sync with your strategy.
Consciously tweaking your culture to support your strategy will engage and energize your people, and, enhance your execution capability. It will keep you at the top of your game and maximize your growth potential.
The HBR Interview: HP Enterprise CEO Meg Whitman, “We need to intensify our sense of urgency”, Harvard Business Review, May 2016, https://hbr.org/2016/05/we-need-to-intensify-our-sense-of-urgency
 Jay W. Lorsch and Emily McTague, “Culture is not the Culprit,” Harvard Business Review, April 2016, pg. 98