Why Neglecting Company Culture Could Lose You Everything

 Why Neglecting Company Culture Could Lose You Everything

By Phil Lewis

We need to talk about culture. More importantly, as leaders, we all need to be acting on it. Because while the business world has long deployed it as a buzzword to polish up their reputations, there is plenty of evidence that senior management teams simply don’t understand at an intrinsic level exactly what it means—particularly in relation to their own companies.

Consider the late David Foster Wallace’s joke about two fish swimming along one morning. An old fish swims by and says, “Good morning boys, how’s the water?” The younger fish swim on, before one turns to the other and says, “Wait a minute. What’s water?”

In business, the culture is the water. It’s not just the mission statement on the wall or the HR manifesto—it’s what surrounds and influences everything the company does, from the environment to workplace behaviour to the very product it sells.

Didier Elzinga, CEO of fast-growing people and culture platform—and hotly tipped future unicorn—Culture Amp, explains it like this: “We always say if you want to be financially successful, you’ve got to have customer-centricity, but to be customer-centric you have to actually put culture first. If a brand is a promise to a customer, culture is how you deliver it. And it is that human—or cultural—literacy that matters.”

Most CEOs will happily acknowledge its growing importance in the modern workplace—culture eats strategy for breakfast, as Peter Drucker’s well-worn saying goes. Yet actually doing something to define or galvanise it is another matter. And after all, if it’s there anyway, if we’re swimming in that pond whether we like it or not, is there really a need to make a fuss about it?

This is what, in my practice, we have come to call the Drucker Disconnect: the paradox that Boards understand the importance of culture, yet take little action to prioritise it.

When you consider that the main source of expenditure for most P&L statements is salary, it seems foolhardy to neglect any factors that influence how your people work together—and how they relate to your brand mission. In other words, if your culture has a direct bearing on your P&L, why are you doing nothing to optimise it?

“You either care about [culture] or you don’t,” says Elzinga. “It’s just that the ones that do believe culture eats strategy for breakfast and are doing something about it are actually carefully trying to make that an intentional thing. Often people say, ‘Why should I invest in my culture?’ Or ‘Why should I invest in my people?’ And I would say that if you’re in business for long enough, there’ll come a time when your people have to invest in you. And that’s where you see culture really play out.”

Elzinga bases this observation not on behavioural theory but on hands-on experience with the likes of the All Blacks, Pixar, NBA and Cirque Du Soleil.

“When you look at professional sports or anything like that, it’s one thing to win in a season,” he says. “But it’s another thing to build something that wins on an enduring basis over time and what we see in all of those places is that culture is how you win for long periods of time. In any given season other things may happen, but in the long run culture wins out.”

Of course, honing that culture—making sure you’re constantly focusing and improving it—is the hard bit. It’s been all too easy, over the years, to bring in some consultants, workshop it on a whiteboard and end up with a list of inarguably obvious aims: “be a more winning culture”; “be a more respectful culture.” The real challenge, argues Elzinga, is to align your culture with your company’s core values in a strategically effective way.

He believes you can measure culture across an axis: when your culture is at its peak, how good it is; and then how distributed or accessible that experience is across your organisation. And if you have that valuable data, you can use it to find genuine insights into what is happening in your company. Rather than sitting in a room and saying, “This is what we think the culture is,” we can use the data to say, “This is the experience your people are having”—and define real change as a result.

“I think a lot of people think that they can go and dream it up, and then just decide that’s the culture they want,” he says. “But when the culture is already there—which it always is in some way—the power is in taking away the cobwebs and being clear about what it is. I’ve worked with companies that have been running for hundreds of years and I’d say, ‘Just go and find the people that have been in the company for the longest—50 or 60 years—and ask why they joined, listen to their stories.’ That’s your brand. And it’s been true for all this time. You’ve just forgotten it.”

So what can a business actually do to put culture at the centre of its approach—to remind itself of the brand’s core function, and find ways to make it fit for purpose in today’s environment?

Start by understanding where your flaws are: if you think you’ve already nailed it, you might well be blind to the weak spots in your company culture—because you should always be crafting its direction, not just from the top but throughout the business. This only works if you are ready to embrace change and willing to commit to the long haul. It’s not an easy or quick process. But it is the most valuable one you will undertake, if you want to build resilience that goes beyond the finances.

And, indeed, says Elzinga, it is as much about avoiding catastrophic failure as growing success.

“A lot of other people are realising that culture can also be largest destroyer of value. Look back at WeWork, Uber – some of the scandals that have happened at these places. They’re a failure of culture. So they had all this money and now they’ve wiped all of this money away because they couldn’t create a culture that was appropriate for the environment in which they now exist.”

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Originally posted on Forbes

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