Entrepreneurship

Culture vulture: Keeping an eagle eye on culture helps companies soar

"Culture eats strategy for breakfast" is more than a pithy aphorism attributed to management consultant Peter Drucker. It's a philosophy that says that strategy might set the course, but it's the culture - the deeply ingrained ethos of an organisation or team - that navigates its path to success. 

Date
Author
Alastair Turner, CEO, Aspectus Group
Reading time
4 minutes
English teacher stands on top of a desk in a classroom, addressing students who are looking up at him.
Instilling a culture of creativity and non-conformity in "Dead Poets Society" © KEYSTONE/Touchstone Pictures/American Pictorial Collection

In other words, culture is the invisible hand guiding the decisions, behaviours and, ultimately, the identity of a company. A strategy without the right culture is akin to a ship without a rudder.

Imagine a football team with a brilliant strategy but disengaged players. Their plan might be flawless on paper, yet they struggle on the field. In one of my favourite films, Dead Poets Society, Robin Williams plays an English teacher with highly unorthodox methods. His leadership style, which is captured in his 'carpe diem' philosophy, instils a culture of creativity and non-conformity, fundamentally altering his students' approach to life and learning. He wills them on to make their lives extraordinary. 

Of course, strategies are vital, but the heart of success lies in culture. Strategy provides a direction, but culture fuels the journey. 

You're only as good as your culture

Organisational culture is the collective values, beliefs and principles of a company. It shapes the way employees interact and the decisions they make and forms the backbone of a company's identity.

Shop sign with a clear message: your culture is your brand
Simple but essential: your culture is your brand © Shutterstock/ESB Professional

Unlike strategy, which is often delineated in boardrooms and on spreadsheets, culture is lived and breathed daily. It's alive and should continue to change, grow and adapt with the company. This is true whether we're talking about a now-defunct company whose toxic culture led to its downfall, or a sports team where a lack of teamwork and discipline can lead to underperformance despite having star players.  

And for established businesses, changing a culture or having a culture that can adapt according to changes and opportunities is critical to survival and success. Just look at Satya Nadella's transformation of Microsoft from a company that, while hugely successful, was mired in internal competition, to one that focuses on collaboration and innovation. His achievements underscore the power of cultural change.

New Zealand's national rugby team, the All Blacks, performing the haka before a match.
"No one is bigger than the team" - humility and teamwork are key for New Zealands Rugby Team "The All Blacks" © unsplash/Stefan Lehner

The New Zealand All Black's' mantra, "No one is bigger than the team" reflects a culture where humility and teamwork are paramount, turning a group of talented individuals into a sporting juggernaut. Or consider the San Antonio Spurs under Gregg Popovich; their culture of selflessness and hard work has created a legendary NBA team.

On the flip side, the corporate graveyard is littered with the carcasses of companies that prized strategy over culture. Remember Enron? A robust strategy, undoubtedly, but a culture steeped in greed and ethical myopia led to its spectacular implosion. Enron's aggressive and competitive culture, which emphasised profit over ethical behaviour, eventually led to its demise. It's not unlike the cautionary tale of Jordan Belfort depicted in The Wolf of Wall Street, where a toxic corporate culture leads to both meteoric rise and dramatic fall. The lesson here is clear: culture not only supports strategy but, in many cases, is what determines whether a strategy succeeds or fails.

Getting it right from day one

For startups, establishing a positive culture from the outset is crucial. The initial members of a team set the tone for its future, impacting long-term success. Brian Chesky, co-founder of Airbnb, stresses the importance of culture in the early days of a company. He believes that the first ten employees determine the culture of a company as much as the first ten customers dictate success. Similarly, Jurgen Klopp's transformation of Liverpool FC hinged not on tactical genius alone but on cultivating a culture of positivity and collective belief. Therefore, instilling the right values and practices from the beginning is paramount. 

When culture matters most

As leaders, entrepreneurs and business owners, it's imperative to nurture a culture that aligns with your vision and values. By doing so, you not only set the stage for immediate success but also lay the foundation for lasting impact and profitability.

Think about the change that any business that scales up will go through. At so many points of development, it's the leader who understands and can leverage the power of culture who will succeed in taking their business to new heights.

Culture matters most during:

  • Mergers and acquisitions: A common hurdle in M&A is cultural integration. Successful mergers often hinge on harmonising wildly different or even non-existent cultures. 
  • Global expansion: As companies expand globally, understanding and adapting their culture so that it has a local flavour is crucial for success. 
  • Crisis management: In times of crisis, a strong culture can be a company's anchor, providing resilience and a path forward.

Good culture equals good business

A pavement with the phrase "PASSION LED US HERE" inscribed on it, capturing the essence of a journey driven by enthusiasm.
A great culture makes good business sense © unsplash/Ian Schneider

A great culture has tangible real-world benefits. In short, it makes good business sense. It's widely recognised that there's a direct correlation between culture, employee engagement and customer satisfaction. According to Deloitte, a staggering 94 per cent of executives and 88 per cent of employees believe a distinct workplace culture is crucial to business success. 

A poor culture is also horribly unproductive. In fact, according to research by the Queens School of Business reported in Harvard Business Review, organisations with low employee engagement scores experienced 18 per cent lower productivity, 16 per cent lower profitability, 37 per cent lower job growth, and 65 per cent lower share price over time. 

Celebrate and reward behaviours that embody your culture.

Alastair Turner, CEO, Aspectus Group
 

What's more, culture significantly impacts a company's profitability and longevity. The book The Culture Cycle, written by Harvard Business School professor James Heskett, suggests that effective cultures can account for as much as half of the difference in operating profit between organisations. Indeed, it seems that employees who are engaged and invested in the company's values deliver better customer service, driving customer loyalty and, ultimately, profitability. Howard Schultz, the former CEO of Starbucks, recognised this. He famously said, "If people believe they share values with a company, they will stay loyal to the brand." Starbucks's culture of valuing its employees has translated into a loyal customer base and robust financial performance. 

Outdoor enthusiast, environmentalist and founder of Patagonia, Yvon Chouinard on a rocky beach at his home in Ventura, CA.
Patagonia has a very loyal customer base attracted by the company's values. Outdoor enthusiast, environmentalist and founder of Patagonia, Yvon Chouinard set an example. © Lucia Griggi/Redux/laif

There are plenty of other examples. Patagonia's commitment to environmental activism has created a culture that attracts employees and customers who share these values, driving its success. Virgin Group has a deeply rooted culture of employee empowerment and customer satisfaction. It could be argued that Virgin's fun, inclusive and innovative environment encourages risk-taking and creativity. And that its culture has been pivotal in Virgin's ability to venture into various industries successfully.

Practical tips for cultivating culture

  1. Early integration: Introduce and integrate cultural values right from the start.
  2. Authentic leadership: Demonstrate the cultural standards through your own behaviour as a leader. 
  3. Employee engagement: Cultivate a strong sense of ownership and community among employees. 
  4. Open communication: Create an environment where dialogue and feedback are valued and encouraged. 
  5. Recognition and reward: Celebrate and reward behaviours that embody your culture. 
  6. Constant evolution: Regularly reassess and evolve your culture to keep pace with growth and changing circumstances.
     

So while strategies are undoubtedly crucial in setting the course for goals and direction in any organisation, it's the prevailing culture that truly energises and brings these strategies to life. A robust, positive culture is the underpinning force that shapes interactions between team members, their approach to adversity and their overall performance. The link between a vibrant culture, high levels of engagement and organisational success is unmistakable and direct. While strategic planning is essential for setting clear goals and directions, it's the culture within an organisation that imbues these strategies with life and meaning; so in the end - it's not just the strategies you employ but the culture you cultivate that determines long-term success in business.

Where a healthy corporate culture matters

Mutual respect, personal integrity, and loyalty are the cornerstones of LGT's working culture. We want employees to grow, develop and make a lasting difference together. Find out more about LGT's culture and values.

 

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