Nathan/ How do you define Culture and how does it relate to strategy?
Josh/ Culture is the cause and effect of every decision you make or gets made in an organization. It’s about choices, both those you make and those you enable everyone else in the organization to make. Strategically, you need to create a structure and framework for the right culture to take root and grow.
Nathan/ OK, that sounds kind of clear, right? Why is it so difficult, in practice?
Josh/ It’s mostly due to lack of alignment between the organization’s goals and values and those of the people in that organization. Everyone in the organization needs to be not only be aligned but understand the intent of the organization and where they fit into it, as well as how they contribute to it. The more people there are, the more difficult that gets.
Few organizations ever have a unifying theory of culture because they don’t even know they should have one. And, just because you don’t specify, create, and grow one, doesn’t mean one doesn’t exist—it means it’s there without any consideration. In that case, which is most companies, the culture isn’t a healthy one. It’s not conscious, tended to, or watched so people are usually left to competing interests. Culture isn’t usually even recognized as a business tool but some sort of other thing that, sometimes, some people pay attention to. But, there’s always a culture there, regardless.
Then, even if leaders recognize the need for a considered culture, few have experience building one consciously. It’s usually not a responsibility in anyone’s job description. When it is, it usually falls to HR, where it’s sometimes treated as a set of trainings and rules, not a living, evolving, pervasive, and embodied thing. If all of the leadership isn’t part of the process, it’s not likely that any culture is going to be cohesive throughout the organization, nor tied to anyone’s responsibilities.
The culture is the sum total of all of the actions within the organization. It’s lived every moment by everyone in the company whenever they do something.
Nathan/ How do you help businesspeople manage the qualitative aspects of measuring culture?
Josh/ You have to measure both quantitatively and qualitatively. The latter is easier than the former, as you know. But, both are critical. The quantitative aspects you can get from surveys, pulse checks, and reports of the various business activities—actions—within the organization. That’s fairly straight forward (though not always done well). That tells you a lot about what’s happening in the organization, and, to some extent, who is feeling what.
However, you need to be more indirect to get to the real why behind people’s actions. It’s difficult to see all of the choices people make—all of the behaviors. Without the qual, you don’t really see how everyone understands the company, and whether what they are trying to achieve lines-up with what you’re trying to achieve.
Ultimately, it all comes down to prioritization. What do you want to prioritize and how are you going to communicate that so that other people will act on that same prioritization. That’s what makes it strategic and why it has to absolutely needs to tie to the organization’s strategy.
Nathan/ Is culture like leadership then? Where does culture live?
Josh/ It has to live everywhere and it has to be aligned to everything but it also has to be driven from the top. Growing a great culture is nearly impossible if leaders aren’t on board. If different business units are building different cultures, it’s going to be a mess—and likely unsuccessful. And, leaders may not even realize this is the case, especially in really large organizations.
Just look at HP (Hewlett-Packard). For so long, they had “The HP Way.” They were explicit about what they prioritized and they let everyone in the company know it: security, respect, etc. They had feedback loops to understand where it thrived and where it didn’t.
Even now that business changes a lot faster than it used to, the same basic ideas still apply.
Nathan/ There’s the famous Tom Freidman quote: “Culture eats Strategy for breakfast.” I assume you agree?
Josh/ Sure. But, you need to go so much further than just that. That quotes represents the reality but doesn’t tell you how to do it.
Nathan/ What are the components of culture then?
Josh/ There are six components to the framework I created, plus one. Purpose This defines how you inspire your employees and communities—even those outside the organization.
Then, there are Values. These are the guardrails of your actions. What actions are in-bounds and which are out-of-bounds?
Third, are the Behaviors of your organization: these are the actions, themselves. How are you going to achieve you goals? What are your employees actually doing—and allowed to do? How will they do these best?
Perhaps, one of the most important, one that lots of leaders miss, is Recognition: How do you reward the right behaviors? It’s one thing to say you want everyone to do “the right thing,” but if you never define what that is and then you never actually reward it, you can’t expect people to act that way. Worse, is when the organization says one thing but rewards the opposite. Sometimes, this is people being promoted, given bonuses, given new titles or raises, even just being called-out in a company meeting for some kind of success but at the expense of the stated values of the company.
Instead of recognizing outcomes like sales numbers, or an arbitrary best like a president’s award, every company needs to reward “values-driven behaviors.” Most organizations lean heavily on extrinsic motivations like bonuses. A little extra money is fine, but it sends the wrong message—or at least not a complete message. You need to layer in more intrinsic motivation like peer recognition of a job well done that supports the values of the organization.
Nathan/ Right. No company says that their values are to treat people terribly but so many do, nonetheless. They “value” one thing but reward bad behavior, regardless of what they say.
Josh/ Yes. It creates confusing, contradictory messages, internally and externally. And, today, with social media and so many avenues for employees and customers (as other stakeholders) to reach people, bad behavior doesn’t have a lot of places to hide.
The fifth component is Rituals: How do you build and strengthen the many relationships within and outside the organization. This needs to be deliberate and not accidental (as it so often is). Rituals are the synapses of culture and they’re difficult to create and enact when people aren’t together. This has gotten more difficult with so many people working remotely, now. It’s not easy to develop true trust when you don’t have a lot of experience working with people.
The last component is Cues: How so we keep people connected to our goals? What are the digital and physical reminders of everything above?
Nathan/ That’s six, what is the plus one?
Josh/ I know this sounds obvious, but Feedback: How do you evaluate and assess the six components, continuously, in your organization?
Nathan/ OK, I’ll bite: How do you?
Josh/ There are a lot of ways. Obviously, there are the surveys and pulse checks that are so commonly deployed by HR these days. But, also, stories are a good way to talk about values and define them together. You can also recognize culture ambassadors: those people in the organization who excel at embodying and communicating the values and culture or the organization. These can be official and unofficial—sometimes the latter works better because it’s seen as more genuine. You can’t just “create” culture for others, you have to help them co-create it for themselves.
Nathan/ All of this is in your book, Great Mondays, correct?
Josh/ This and much more.
Nathan/ I remember when my company vivid, worked with Nike. Now, this was over 20 years ago. Their culture, then, was really important to them, and it was important that they knew we understood it. They flew most of our team to Beaverton, Oregon to get the full indoctrination. Of course, everything with Nike is in sports metaphors so their big message is that everyone at Nike is a “team player.” What we found, however, was that wasn’t aways the case, especially with some of the leadership. Our experience was that there were a lot of people at Nike running around like their celebrity athletes: they had the ball and they were not passing it to anyone else. There weren’t really a part of a team, the team was more an audience of players for them. However, the lesson we really learned was that, because their communication of their goals was so strong and constant within the company, everyone was running in the same direction. Many people were running down field with their own ball and they were not going to pass it to anyone but they were all, still, running toward the same goals. That taught me how powerful and critical internal communication is to culture—and to success. Even when different people had different cultures and different priorities—even alliances—they were all contributing to the same thing.
Josh/ As you experienced with Nike, there’s really no such thing as a good or bad culture, objectively. Some cultures work better for some organizations and some cultures work better for others. The only truly bad cultures are those that aren’t communicated well. Now, there are some very unhealthy cultures but that’s really a different thing.
This interview is from A Whole New Strategy: Everything You Need To Think And Act More Strategically