How Culture Drives Performance
Posted January 14, 2011
"Running a Fortune 50 company is like steering a tanker ship at sea. All a CEO can do is guide his company culture. The culture does the actual sailing." - Bill, retired CEO of a Fortune 10 company.
In valuing real estate, the old saw goes, only three things matter: location, location, location.
In business there are only three things as well: culture, culture, culture.
Every organization has a culture, a way that things are done. This is passed along to new members primarily through the retelling of exemplary stories, as I wrote here: Stories Build Culture.
Some cultures are weak, with a lot of differentiation in how things are done. One branch or division may be driven and competitive, another a miserable slave-ship, a third an upbeat but unfocused place to work. At one location, innovation may be the life-blood uniting the entire group, while at another within the same company (possibly even on a different floor of the same building!), the workforce is just keeping its collective head down and putting in its time till the bell rings at five o'clock.
Don't confuse weak culture with diversity, because it's anything but - they're completely unrelated. Weak culture means that the company is unfocused and poorly-led. Weak cultures founder and get acquired at bargain-basement prices. They churn not just workers but leaders. Weak cultures are slow-motion train wrecks.
Strong cultures, on the other hand, are typically incredibly profitable. They're also much more likely to be iconic. Disney has a strong culture. Nordstrom. 3M. GE. Apple and Cisco both have very strong, though quite different, cultures. Microsoft and Google have powerful cultures - yes, I chose these two bitter rivals on purpose, to illustrate a key point: that not all winning cultures are alike. Indeed, far from it!
CEOs, your job is to craft and guide culture. That's it! "Vision" is great, too - you've got to know where you're going, and you've got to share that with your staff so they can help you get there. Duh! But then what? Seriously. You see the future. You plot a course. And...?
...And for the next 3 or 5 or 20 years, you have to get to that Utopian vision you've dreamed of, that goal you've set for your company. Getting from the thoughts in your head one run to the cover of Fast Company next year and Business Week in five: that's what a strong, healthy culture will do for you!
If you want to attract top talent on a consistent basis across your entire organization, you're smart. How are you going to win the Superbowl with a team you recruited from St. Mary's School for the Lame? A winning culture will attract the talent you need.
How do you build a winning culture? Focus on the culture. A CEO who focuses her attention on cost-reduction or building plans or next year's investors' presentation is not doing CEO-work.
But don't take it from me. Ask one of the hottest (and unlikeliest?) leaders going, the (un)Celebrity Tony Hsieh, CEO of Zappos. During the Great Recession he sold his 10-year-old online retail company to Amazon for a billion dollars, maintaining full control all the while. How'd he do it? He didn't. He let his company's culture do it for him. All Tony did was build and maintain and refine that culture.
Don't believe me? Read his book, "Delivering Happiness." He'll tell you himself.
Other Posts by Ted Coine
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