Your Business Strategy is Brilliant, So Why is it Failing? Start with Your Company Culture
Most leaders would agree that company culture is essential. After all, seldom does one wish their company possessed traits like bureaucracy or a toxic talent pool. However, it’s a topic that typically gets lost in the mire, yet directly affects organizational success.
The goal of achieving excellent culture, however, is easier said than done and can often move further down the priority list with internal barriers such as company structure, processes and budgets making up the majority of job descriptions for most leaders. Even economic recession, government regulations and major lawsuits are a few substantial external challenges that the most reputable brands face. Regardless, lack of a healthy, sustainable and strong company culture is a risk no organization can afford to accept — just look at the numbers.
An evaluation of company cultures published by John Kotter and James Heskett (1992) found that in over an 11-year time period, companies with healthy cultures had a 682% average increase in sales versus 166% of companies with unhealthy cultures. There were also stock increases of 901% versus 74%. This proves that excellent business strategy is a result of great company culture and ineffective business strategy is a result of poor culture.
With numbers like these, one wonders why culture often sits on the sidelines. However, it isn’t that most leaders don’t want a great culture, rather they simply don’t always know where to start. The overwhelming amount of information on culture and differing opinions on how it’s implemented is enough for any leader to cross it off the list.
Not only that, but in today’s world it’s not enough for a culture to simply be good enough – it must be great, and it must be relevant. So how can companies best align their business strategy along the foundation of a strong culture? Here, are four fundamental truths based on my experience as a champion for culture at the world’s largest retailer.
- Your why is your strongest position. According to Simon Sinek, the difference between the haves and the have nots in the business world are those who confidently know why their business exists. It’s not enough to simply “megaphone” to the world what your company does and how they do it. Instead everyone in the company must fully embrace and act as strong advocates of why their company makes a difference. “People don’t buy what you do, they buy why you do it,” Sinek says. This is the same for both customers and employees. It affects whether or not employees will bring their best selves to work every day. It determines the quality of your services and passion behind every effort within the organization. Think about what makes up the core of your business. Can you effectively communicate your why? If not, take time to think about your why and how you best communicate it internally and externally. Brands connect at an emotional level, not at an intellectual level.
- The best strategic ideas mean nothing in isolation. If your strategy conflicts with how people believe, behave or make decisions it will fail. Euro Disney suffered major losses shortly after opening because they failed to understand the cultural differences in Europe. For starters, the name Euro Disney was confusing to customers since they associate the word “euro” with continental money versus a generic term for those living in Europe. They also didn’t provide kennels for the majority of tourists who traveled with pets. The key lesson in this for leaders is not only take the time to understand the behavior of others, but instill a trickle effect of that same behavior inside the company.On the contrary, McDonald’s is headquartered in the U.S., but gives full control of local operations to managers within each country. A strategy like this is key for how you gain an emotional connection with your brand and drive company success.
- Culture is all about behaviors. Although your core values should remain the same over time, it’s important to adapt the approach to your business based on a changing customer base, economic environment and generational behavior. The true culture has to be relevant to the times. It’s also important to understand the difference between a dominant culture and its effects on the subcultures within the company. Dominant cultures often override and define a culture while subcultures may steer left from it. There can be healthy dominant cultures with unhealthy subcultures and vice versa. However, it’s up to leaders to determine how to act and reward behaviors that personify the company’s core values.
- Culture must be lived out. Doug McMillon, CEO, Walmart Stores, Inc. says, “You cannot overemphasize culture, and that means behavior. It’s more than words or phrases on the website or on the walls.” He said that because he knows getting 2.2 million associates to strive toward the same vision starts with one act at a time. Living out your core values starts from the top down and has a ripple effect that no mug or ping pong table can ever replace.
What’s the core takeaway when it comes to a successful business strategy? You simply cannot achieve optimal success without a strong culture. It’s in the values you hold to be true and the bright lines that define behavior in any organization. As Tony Hsieh, CEO, Zappos puts it, “At Zappos, our belief is that if you get the culture right, most of the other stuff — like great customer service, or building a great long-term brand, or passionate employees and customers — will happen naturally on its own.” I certainly agree. Culture is the great differentiator.
Kotter, J and Heskett, J. Corporate Culture and Performance, 1992, https://www.forbes.com/sites/johnkotter/2011/02/10/does-corporate-culture-drive-financial-performance/#63c158bb7e9e
Ranter, B. 3 Key Marketing Takeaways From Simon Sinek’s ‘Start With Why’, 2014, https://blog.hubspot.com/customers/3-takeaways-from-start-with-why