The Rebirth of Organisational Culture

Few business school graduates at the turn of the millennium will have completed their studies without the oft-repeated phrase “Culture Eats Strategy for Breakfast” ringing in their ears.  Fewer still will have emerged unscathed from a well-intentioned but ultimately flawed corporate ‘Culture Change Programme’.

However, as Clarendon Executive’s Mark Latuske explains, after a period of dormancy the ‘C’ word is firmly back on the agenda for businesses seeking ways to differentiate themselves and outperform competitors in an increasingly complex operating market. 

Louis Gerstner Jr. who famously overhauled IBM in the 1990s and early 2000s is synonymous with the quote: “I came to see, in my time at IBM, that culture isn’t just one aspect of the game, it is the game.”  The centrality of culture in organisational success is not a new idea but there has been limited success in codifying, explaining, and repeating how the very best organisations have been able to harness their culture to deliver impact and excellence.  

A piece of research by the Katzenbach Center in 2013 found that 84% of respondents believed culture was critical to business success yet only 35% thought that their company’s culture was effectively managed.  Let’s pause on that statistic for a moment…. is there any other area within business where such disconnect exists between perceived importance and perceived effectiveness?

And yet, this disconnect is unlikely to come as a surprise to those of us fascinated by the workings of the modern organisation. There is probably no more commonly misunderstood and potentially unloved construct in modern business than the ‘C’ word.  It has become, to many, the corporate equivalent of either the ‘Scottish Play’ or Harry Potter’s arch enemy Lord Voldemort – “We dare not speak its name.”

“His Last Bow?”

Yet, it was not always thus.  In the late 1990s and 2000s, ‘Culture’ became a ‘buzzword’ within organisations – it was a word commonly used in society, but pulled into a corporate context as a new and dynamic way of making sense of organisational performance.  In those more affluent times, the world was not short of organisations willing to invest significant money and resource into a range of linked initiatives including ‘Cultural Assessment’, ‘Cultural Change Programmes’, and even the appointment of ‘Heads of Culture’. 

But, over time the wheels fell off the culture bandwagon – in part due to a period of recession and austerity, with many organisations unwilling to be seen to invest in initiatives that were not always clearly tangible and explicitly core to organisational success.  This was a decline not just attributable to a reduction in discretionary spend, but also the product of failed ‘Culture Programmes’ which very often were run in a separate and disconnected way from both an organisation’s strategy and goals, and as a separate construct away from the day-to-day operation of a business. 

Culture could indeed eat strategy for breakfast, but all too often organisations approached ‘Culture Change’ as an optional stand-alone meal – like the fabled ‘second breakfast’.

“There is nothing new under the sun. It has all been done before….”

However, culture in the organisational context has in the last number of years begun to awaken from its slumber and leave behind a period of hibernation. 

Organisations are speaking openly again about the impact of culture, are actively measuring it, and are not ‘afraid’ to talk again about cultural change.  Yet, this is not simply a repackaging of old concepts, wheeled out from the back of the ‘ideas cupboard.’  This rebirth feels quite different to the organisational culture ‘phenomenon’ of 10-15 years ago - culture is back, but with a twist. 

It is increasingly seen as not something distinct and separate, but something that is at the heart of the design and delivery of an organisation’s strategy and objectives.  Culture is no longer stand-alone, it is the way in which an organisation can focus on and accelerate the delivery of outcomes.  

Organisations are these days less likely to talk about culture being ‘The way we do things around here’ – which to my mind, always had the air of an excuse that could be rolled off the tongue - and increasingly inclined to see the contribution made by culture as ‘The way we achieve things around here.’  The right kind of culture is a prerequisite for excellence; not a by-product of success.

To some, this might seem like splitting hairs – but this nuance matters. Organisations that are beginning again to embrace the measurement of, and take action on, organisational culture are those that appreciate its worth and impact.  Companies are investing in assessing and amending their organisational culture because they increasingly see that in a more complex and competitive business environment, having the ‘right’ approach acts as a material differentiator in delivering excellence internally and externally, and in turn achieving organisational outperformance.

It used to be that the route into a conversation around organisational culture was a period of dreadful hand-wringing with individuals commenting; “The culture is dreadful here – we need to change it.”  Undoubtedly this scenario still arises, but increasingly we see senior individuals spending as much time on the analysis, design, and implementation of an organisation’s culture as we might normally have expected on say strategy and product development.  They realise it matters and spend effort and energy in taking stock of how the company’s culture currently is, and how it will need to evolve for the next phase of growth and progression.

“The Sign of More”

With an enhanced focus on the importance of organisational culture in the ability of a business to accelerate delivery and success, the most progressive companies increasingly realise the impact of the ‘wrong hire’, and are doing more to check for ‘fit’ when recruiting from outside, particularly when recruiting for critical and senior leadership roles. 

Assessing technical competence and track record continue to be critical, but recognising the impact of ‘the way we do things’, organisations are placing an enhanced onus on how a potential new external recruit’s style could complement and also improve the existing way things are done in the business. 

The very best organisations have moved from seeing a ‘test for fit’ as one small element of a selection process, typically one question at the end of an interview.  These organisations design all elements of their selection approach with ‘culture in mind’ – with every question asked and exercise undertaken designed to give data and intelligence that fully reflects the ‘range’ of sub-cultures that exist within a business; the ‘below-the-surface’ skills and styles the individual brings; and indeed, how some of those less overtly obvious factors might be as compatible as oil and water. 

At the heart of this, organisations are trying to heighten their insight into the likely impact of an intact organisational culture on the ability of an individual to make an impact; and the likely impact of the individual’s style and approach on the existing organisational culture. 

And this focus does not stop once a preferred candidate has signed on the dotted line.  In our previous articles, both Anne Daley and I have considered the importance of ‘new external hires’ and indeed ‘new internal promotes’ to Senior Roles in an organisation taking the time to manage their transition properly, appreciating and utilising their strengths, and taking the time to both work on their developmental areas, and ‘hit the ground learning’.

“A blended approach”

Arguably this is most acute in the concept of organisational culture, and in fact applies to both the individual transitioning and to the organisation - this willingness to ‘hit the ground learning’ should be felt on both sides. 

The new hire needs to blend the way that they have succeeded in the past with the ‘way things get done around here’ – weeding out and amending the poorest practices and implementing the very best. 

Similarly, an organisation needs to consider whether the ‘way we do things around here’ could be improved, and an appreciation that the individual who now holds this position does not just bring ‘technical’ competence, but also an appreciation of how to get the best from the people at their disposal.

Culture is at the heart of an organisation’s ability to succeed, and both existing members of staff and new hires shape and determine ‘The way we achieve things around here.’  As Howard Schultz, the former CEO of Starbucks, famously said; “The only thing we have is one another. The only competitive advantage we have is the culture and values of the company.”