The culture of your business underpins its level of success in the marketplace. But often we only think about culture when something goes bad, whereas it should be invested in every day as it reflects the business’s ability to compete.

There is a lot of recent noise around business culture again with Uber gaining a lot of attention for all the wrong reasons. But the culture within your business is a lot more than how it reflects social values, such as equality in the workplace. It’s not that these issues are not critical to a business’s performance, they are, but rather it draws the focus into a ‘fire-fighting’ mode rather than building mode.

The Right Culture

Build the right culture and it will not only drive the competitiveness of your business but it will also eliminate all the bad cultural aspects that ‘blow up’ and capture everyone’s attention.

Now there is an important distinction here, you build a culture to drive the competitiveness of a business – not to drive profit maximisation.

Profit is earned by being competitive and a business exists to meet the needs of a customer group, or what I would call a community. A business exists for a purpose and that purpose is not profit, although being profitable is essential for that business to continue to sustain itself.

For a wider discussion on why businesses exist and the role of purpose in their success, have a look at two of my earlier articles, ‘Is Business Doing The Right Thing By Society?’ and ‘Purpose Equals Strength’.

I find that if a culture is designed to maximise profit then with that comes all the bad aspects of human nature and all the breaches of social values that companies seem to be falling foul of a lot more these days.

Leaders who attempt to design a culture that will lead everyone to focus on maximising profit, are, by design, placing people in positions that will likely only cause them to abandon their personal values.

It leads to ‘self-interest first’, and individuals doing whatever it takes to meet the metrics that are set for them so they don’t get ridden by the boss and the system every day.

To repeat what I said above – build a culture to focus on competitiveness. Get that right and the profits will flow and you will have a team that excels in all the right ways.

It Does Flow From The Top

Culture starts and finishes with leadership. It starts and finishes with the way they act and the culture they allow to exist. It has nothing to do with the public statements or public policies that are put in place. It has everything to do with their actions and what they allow to occur on their watch. It has everything to do with the people they appoint to leadership positions and the personal character of those people.

Yes, that’s right, it is all about the personal character of the leadership team that you allow to hold formal and informal positions of authority in your business, including yourself.

Remember the negative traits of leadership that you want to avoid in your team, at all times, no matter who that leader may be:

Leaders who exhibit the following weaknesses should be avoided:

• Courageous and reckless.
• Hasty and impatient.
• Greedy and loving profit.
• Benevolent but unable to enforce discipline.
• Wise but unafraid.
• Trusting but has a liking to trusting others.
• Scrupulous and incorruptible but not loving of people.

Also remember that leadership is founded in centripetal force, that is, the entire organisation is looking inward to the leadership team for signals and guidance.

And if any leader sends the wrong signal then everyone sees that signal and judges that standard as the example of what is acceptable.

If the subject of ‘worthy leadership’ is new to you, you may wish to read another of my earlier articles, ‘Choosing Worthy Leaders’. And if you’d like to delve a bit deeper into the subject, you can download the following free digital guide, Leadership Talk – Great Leaders Building Great Businesses.

Design Equals Culture

The way you design your business determines the culture that will thrive within that design.

Culture is determined by leadership but it is also all the subtle – and sometimes not so subtle – systems and processes that are put in place that mould that culture. Often the minds of leaders are not turned towards culture, but rather profit, and actions are taken or permitted to occur without recognition or regard to their impact on culture.

 

 

 

This diagram of ‘Alignment for Performance’ provides an overview of all the macro level design elements that directly influence culture.

‘Alignment for Performance’ is drawn from my book, ‘Strategy Play – Crafting Undefeatable Business Strategies’.

 

 

The big broad areas that significantly mould the culture within a business are:

• The goals that are set.
• The way the organisation is structured.
• The manner of making decisions, and the actual decision.
• The guiding principles that exist within a business.
• How success is measured.
• The nature and granting of rewards.

Get something wrong in one of these areas, and you could find your culture going sideways and not understanding why.

Remember you design your business to deliver on your competitive posture, that is, how you intend to compete to out-perform everyone else in your chosen market in delivering customer value.

In almost every decision you make, you must always pause and ask yourself, ‘Is this potentially going to impact culture?’

To read more on the role of design in business, take a look at ‘Crafting The Perfect Design For Your Business’.

Changing Culture

In the article ‘10 Principles of Organisational Culture’ published in Strategy + Business, writers Jon Katzenbach, Carolin Oelschlegel and James Thomas set out how they believe a business should approach changing their culture. They do not believe that ‘swift, wholesale cultural change is possible – or even desirable’. Culture reflects a business’s personality and that cannot be readily or easily changed. The authors set out 10 principles to realign the existing culture to where leadership may want it to be. These are:

1. Work with and within your current cultural situations.
2. Change behaviours, and mindsets follow.
3. Focus on a critical few behaviours.
4. Deploy your authentic informal leaders.
5. Don’t let your formal leaders off the hook.
6. Link behaviours of business objectives.
7. Demonstrate impact quickly.
8. Use cross-organisational methods to go viral.
9. Align programmatic efforts with behaviours.
10. Actively manage your cultural situation over time.

In considering your approach to crafting your culture, I would reiterate two fundamental principles:

• Culture starts and finishes with the example and actions set and taken by your leaders.
• Culture is moulded by the way you seek to ‘align your business for high performance’ as outlined above.

Two rules to deliver the culture you need:

• Select only worthy leaders based firstly upon their character.

• And, always align the performance of your business to deliver the highest customer value and from which profit will be earned.

 

The Right Culture For Your Business

Is there one right culture for every business? To answer this question, firstly ask, ‘Is there one best way to compete and win in every market?’ And then a further question, ‘Is the way you compete static and fixed, or does it need to be always evolving?’

Every individual business should craft the competitive posture that will lift their competitive strengths to the forefront and minimise any strengths that competitors may possess. And that competitive posture will be adaptable and dynamic.

I touch on this in another of my earlier articles, ‘Staying True To Your Competitive Strength’:

‘You step into the market with a competitive posture that allows you to out-compete anyone else and you evolve, re-invent and add value. You lead change and are not led by it. The entire business knows your competitive posture; it is your shared and clear identity. It allows you to deliver on your purpose.’

Dieter Zetsche, Chairman of the Board of Management of Daimler AG/Head of Mercedes-Benz Cars, addressed the issue of culture at their Leadership 2020 initiative in a presentation titled,  ‘Going Viral With Cultural Change’.

Here is some of what Dieter said:  ‘Our goal: a new corporate culture. We’re re-thinking the way we motivate, cooperate, and lead at Daimler in the future. The first is: Don’t copy and paste! Nobody wants to see yet another “Ice Bucket Challenge,” right?’ The tricky thing is this: Right now Daimler is doing well. And those numbers have some saying, “If it ain’t broke, don’t fix it.” I probably don’t have to tell anyone… that this would lead to a dead end.’

‘Groundbreaking innovations demand both analytical and creative strengths. As an engineer, when I look at Daimler I can say without reservation: We‘re outstanding at doing analytical work! But to recognise the trends of tomorrow and beyond and turn them into fascinating products, we need even more creative strength – and the guts to go for it!’

Zetsche, in his presentation, is not only giving authority to the cultural change but linking it to the competitive posture that Daimler needs for the future. This involves not just great engineers but looking to future trends and creating the right fascinating products. A move which will take courage. In one of my earlier articles, ‘Mercedes Corrects Its Course – Do You Need To?’, I explored the competitive challenges that Daimler are evolving through, a related read if you would like to know more on the subject.

There is a culture that is right for your business. And it may have some elements in common with other businesses. But it is tailored and designed to lift your competitive posture to the forefront.

A competitive posture that is focused on delivering more customer value than anyone else.

 

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Active Knowledge Questions:

• Describe your competitive posture, the way you as a business need to compete to deliver more customer value than anyone else.
• What type of person does your business need to be to deliver on the promises inherent in that competitive posture?
• You have just described the culture you need to build in your business.

 

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Act Now:

Need to lift the leadership performance in your business? Learn how in C88 – Leadership Performance Guide and Journal.

Or do you need to rework your business strategy? Take a look at Strategy Play – Crafting Undefeatable Business Strategies.

Want to become a part of the Entrepreneurs+ community? Sign up for my eNewsletter, and join the conversation by sending me a question via Ask Richard.

 

 

All the best in the success of your business,

Richard Shrapnel