Shawn Parr, whose company works with large corporations, such as Starbucks and MTV, on innovation wrote a meaty post called Culture Eats Strategy For Lunch.
It reminded me of something I wrote back in 2008, because the title is from a quote by Dick Clark, CEO of Merk and after rereading it I decided it’s worth reposting, so here it is.
Culture Trumps All
A post on Dave Brock’s blog led me to an article at IMD’s site called “An Unpopular Corporate Culture” and, as Dave said, it’s a must read for anyone who still thinks that corporate culture is some ephemeral concept with no real impact that consultants use to sell their services.
And a double-must for those who talk about culture’s importance, but don’t walk very well when it comes to creating a great corporate culture.
For those who prefer to put their faith in plans and strategy, hear the words of Dick Clark when he took over as CEO of Merck in 2005 and was asked about his strategy for restoring the pharmaceutical company to its former glory. “His strategy, he said, was to put strategy second and focus on changing the company’s insular, academic culture.” The fact is, culture eats strategy for lunch,” Clark explained. “You can have a good strategy in place, but if you don’t have the culture and the enabling systems that allow you to successfully implement it… the culture of the organization will defeat the strategy.””
If you’re looking for a best practice corporate culture silver bullet forget it—one size doesn’t fit all.
Rex Tillerson, CEO of ExxonMobil, describes that company’s top-down command and control culture of consistency and discipline as “the source of our competitive advantage,” and has made it a priority to reinforce it.
Meanwhile, Robert Iger and Steve Jobs, in their discussions about the acquisition of Pixar by Disney, have been concerned with avoiding an Exxon style command and control culture. Jobs says that, “Most of the time that Bob and I have spent talking about this hasn’t been about economics, it’s been about preserving the Pixar culture because we all know that’s the thing that’s going to determine the success here in the long run.””
It took Lou Gerstner a decade to remake IBM.
The key lesson Gerstner learned in his time with IBM, as he later reflected, was the importance of culture.”Until I came to IBM, I probably would have told you that culture was just one among several important elements in any organization’s makeup and success—along with vision, strategy, marketing, financials, and the like… I came to see, in my time at IBM, that culture isn’t just one aspect of the game—it is the game.”
The article is more than just additional proof for my favorite hobby horse.
The analysis of the role of employee complaints/negativity play in culture and the importance of what to keep when setting out to change a culture as opposed to what to jettison will give you new insight on your own company’s culture.
In case you still doubt the power and value of culture I hope that Dick Clark, Rex Tillerson, Robert Iger, Steve Jobs and Lou Gerstner combined with the articles in Fast Company and IMD have finally changed your mind.
An “expert blogger” at Fast Company wrote a post about what large companies can learn from startups (next month she’s writing the flip side, i.e., what startups can learn from large companies.)
Here is her advice in a nutshell,
Startups are flatter; if you can’t flatten, delegate and empower.
Startups have tighter timelines; a mandatory deadline is a pretty good way to shut up any last-minute hesitations.
Startups value disruption; when a company is setting out to define their corporate culture “risk” should make an appearance right between “honesty” and “respect.”
All well and good, but not exactly new information.
At Davos, John Kao, who advises corporations and governments on innovation, said that training and discipline and improvised creativity are the yin and the yang of innovation and used Google and Apple as examples of the two approaches.
Useful information and stuff you can put to work in your organization, but not particularly electrifying.
One problem is that so much of the talk about innovation cites either startups or technology companies as examples of risk and creativity.
Yes, Esquire; a print magazine in an industry that most experts have written off as dead.
In 2011, a year when the magazine industry was flat to down a bit, Esquire was up 13.5 percent in ad pages from the previous year.
To put that in perspective, consider that in 2009 it lost 24.3% advertising pages as compared with 2008 and the brand was predicted to disappear in 2010.
What happened?
Esquire’s editor in chief, David Granger did lay off 20% of his staff and substantially reduce editorial pages, but what he did not do was fire the big name talent in favor of younger, i.e., cheaper, staffers.
He did not, as they say, throw the baby out with the bathwater.
And the staff responded with an outpouring of creativity.
For its 75th anniversary issue in 2008, right about the time magazines were heading off a cliff, he and his designers put together an “E-Ink” cover that flashed, right there on the newsstand. (See video below.)
On almost any given day there are dozens of articles on how to juice innovation and creativity, but I think the Esquire article stands out.
Not because it gives you a list of what is wrong or spells out what to do, but because it proves that just because the “experts” say that not just you, but also your industry, are dead doesn’t mean they are.
What truly innovative companies have in common is a culture that embraces a willingness to live or die by risking failure.
A Friday series exploring Startups and the people who make them go. Read allIf the Shoe Fits posts here
I seem to write too many stories about bosses who don’t walk their talk, which, I realize, is an overused, hackneyed expression.
But that doesn’t mean it’s not an accurate one.
Here’s the background and I have to admit it really floored me.
“Mark” is a thirty-something engineer and was the third person to join 23 year old “Jim’s” startup early in 2011.
Out of several offers he chose Jim’s. He’d read and heard a lot about the values that Millennials demanded and Jim’s description of his values and the culture he was building based on them closely matched Marks own.
Things were going well and they had grown to 6 people when they landed on the radar of a major corporation.
Near the end of the year Mark heard a rumor that the company was being acquired.
When he asked Jim if it was true he said it was and that they hoped to keep the staff.
Mark was flabbergasted; not because Jim was selling, but because the acquiring company’s culture was known to be diametrically opposed to almost all of Mark’s stated values.
When Mark said as much Jim said that it was an amazing offer and that he would be a fool to turn it down. Although they could easily raise an investment round, his holdings were far more valuable with the acquisition than if they were diluted by new investors.
Mark asked Jim if he had meant anything he said during the interview or if it was all just BS.
Jim’s response really blew me away.
Mark said he shrugged and said “that was then and this is now.”
What do you think? Was Jim justified? What would you do?
I’ve read a lot about Sam Palmisano and previously written about him.
That said, I still found Wharton management professor Michael Useem’s interview with Palmisano covering his 40 years at IBM, including the last decade as CEO, interesting and informative.
It’s a long interview and, if you prefer, you can use the link to read it or download an audio version.
Most importantly, be sure to read the comments, most by IBMers, which, by and large, are anything but flattering.
Do you agree that his focus on the company screwed the employees or did he get it right?
How does a CEO balance the legacy needs of employees against the needs of the company to survive in a different world?
What would you have done differently to achieve the same success?
A McKinsey study on the value of corporate social responsibility found “…highly innovative Fortune 1000 companies derive greater financial returns from their corporate-responsibility activities than their less innovative counterparts do,” and suggested three actions to improve CSR ROI,
“Upwards of 40 percent of industry’s energy efficiency improvement opportunities can be realized through low or no-cost projects rooted in corporate culture change”
They must know something since dollar savings to date are not millions, or even hundreds of millions, but billions.
“The key to this model is the formation of multi-disciplinary, cross-functional site teams, with insight from operators, maintenance, mechanics, core process experts, energy experts, engineers and management.”
Two of the biggest stumbling blocks on this path are Wall Street, with its short-term, i.e., quarterly, focus and the current definition of “stakeholder.”
Typically, stakeholders are viewed as investors, management, customers and workers; progressive companies have added the local communities where they do business and a few have tiptoed further.
Whereas Richard Branson points out in Screw Business As Usual every living thing and the planet itself are stakeholders.
Sadly, rather than being in the lead, the majority of US corporations are staying focused on short-term results and narrow definition of stakeholder.
But the winners in the future will be those companies, large or small, whose thinking is longest and definition is broadest.
I hope you are one of them.
~~~~~~~~~~~~~~~~~~~~~~~~~~
Kung Hei Fat Choy (Wishing you an abundance of wealth and prosperity!) Happy Year of the Dragon
An engineer friend sent the following story because he knows I’m an evangelist for KISS** and this is such a great example of it.
A toothpaste factory had a problem: they sometimes shipped empty boxes, without the tube inside. This was due to the way the production line was set up. Small variations in the environment (which can’t be controlled in a cost-effective fashion) mean you must have quality assurance checks smartly distributed across the line; otherwise you will have disgruntled customers at all points.
Understanding how important that was, the CEO of the toothpaste factory got the top people in the company together and they decided to start a new project, in which they would hire an external engineering company to solve their empty boxes problem, as their engineering department was already too stretched to take on any extra effort.
The project followed the usual process: budget and project sponsor allocated, RFP, third-parties selected, and six months (and $8 million) later they had a fantastic solution – on time, on budget, high quality and everyone in the project had a great time. They solved the problem by using high-tech precision scales that would sound a bell and flash lights whenever a toothpaste box would weigh less than it should. The line would stop; someone would walk over and yank the defective box out of it, pressing another button when done to re-start the line.
A few weeks later the CEO checked the ROI of the project: amazing results! No empty boxes shipped out of the factory after the scales were put in place. Very few customer complaints and they were gaining market share. “That’s some money well spent!” he thought, but before closely checking other statistics.
To his consternation, the number of defects picked up by the scales after the first three weeks of production use was zero, where as it should have been picking up at least a dozen a day, so maybe there was something wrong with the report.
He filed a bug report and after investigating the engineers came back saying the report was correct; the scales really weren’t picking up any defects, because all boxes that got to that point in the conveyor belt were filled.
Puzzled, the CEO traveled down to the factory to see for himself the part of the line where the precision scales were installed.
A few feet before the scale there was a $20 desk fan blowing the empty boxes out of the belt and into a bin.
When the CEO asked a production worker about it he got this response, “One of the guys put it there ’cause he was tired of walking over every time the bell rang.”
While I agree that this is a great example of KISS it also highlights another piece of management idiocy.
How many times have you seen a similar story play out not only in manufacturing, but also in development, marketing, finance, sales and especially administrative areas?
How much money is spent every year on expensive consultants and external specialists while the actual workers are never asked for solutions?
Why haven’t more bosses learned that solutions can come from anywhere and listen to all their people?
Of course, workers’ solutions wouldn’t be described in multisyllabic words in bound in custom folders on heavy bond and presented in a darkened room using impressive power point slides by ego-stroking consultants.
Creativity. Thinking outside the box. Innovation. Whatever you call it, idea generation often starts with a brainstorming session and too often goes no where.
McKinsey alumni Kevin P. Coyne and Shawn T. Coyne offer a seven point guide that will make your efforts much more productive.
Know your organization’s decision-making criteria.
Ask the right questions
Choose the right people
Divide and conquer
On your mark, get set, go!
Wrap it up
Follow up quickly
Sounds like common sense, right? But you’ll see from the explanations how habit, misconceptions and politics often undermine these efforts.
And remember, while the first six points assure you of a productive effort this time, ignoring number seven will cripple not only this time, but all your next-times, too.
It’s not often that I unequivocally recommend a book, but Richard Branson’s Screw Business As Usual meets all my criteria.
It’s not a do-gooder book, per se, although Branson is passionate about “doing good by doing right.”
I realize that his take on entrepreneurism will fall on deaf ears for anybody who starts a company with the prime motivation of getting rich, but even they might reconsider after reading it—Branson started Virgin so he could afford to make a difference.
And there is prime proof that doing right pays.
“Companies that consistently manage and measure their responsible business activities outperformed their FTSE 350* peers on total shareholder return in seven out of the last eight years.”
Branson believes that the right focus is your employees and your customers; take care of them and the rest will follow.
The people, stories and advice in Screw Business As Usual are about, and dedicated to, entrepreneurs, business people and anybody else who believe that there is more to work and business in the 21st century than making money.
What worked in the past isn’t going to work in the future, from top-down, command and control management to companies whose policies destroy people, resources, etc., in the name of profit.
The doing-good-by-doing-right bandwagon is picking up steam, fueled by a vocal new generation that is disgusted with business as usual and older generations (maybe not as noisy) with the same feelings who are learning to vote with their feet—as US banks so recently found out.
Business needs to recognize that if they want to keep making money they need to do it responsibly—assuming, of course, they need both workers and customers to succeed.
In other words, screw business as usual.
*FTSE 350 is the British version of the Fortune 500.
Entrepreneurs: Screw Business As Usual (book review)
I rarely read book that I unequivocally recommend, but Screw Business As Usual meets my criteria.
It’s not a do-gooder book, per se, although Branson is passionate about “doing good by doing right.”
I realize that his take on entrepreneurism will fall on deaf ears for anybody who starts a company with the prime motivation of getting rich, but even they might reconsider after reading it.
And there is prime proof that doing right pays.
“Companies that consistently manage and measure their responsible business activities outperformed their FTSE 350* peers on total shareholder return in seven out of the last eight years.”
Branson believes that the right focus is your employees and your customers; take care of them and the rest will follow.
The people, stories and advice in Screw Business As Usual are about, and dedicated to, entrepreneurs, business people and anybody else who believe that there is more to work and business in the 21st century than making money.
What worked in the past isn’t going to work in the future, from top-down, command and control management to companies whose policies destroy people, resources, etc., in the name of profit.
The doing-good-by-doing-right bandwagon is picking up steam, fueled by a vocal new generation that is disgusted with business as usual and older generations (maybe not as noisy) with the same feelings who vote with their feet as US banks so recently found out.
Business needs to recognize that if they want to keep making money they need to do it responsibly—assuming, of course, they need both workers and customers to succeed.
*FTSE 350 is the British version of the Fortune 500.
In a series of studies, Francesca Gino and Dan Ariely found that inherently creative people tend to cheat more than noncreative people. Furthermore, they showed that inducing creative behavior tends to induce unethical behavior.HBS Working Knowledge
Not good news when your goal is to increase creativity in your people, but not really surprising.
When we think actively, we see more possibilities, and that includes ways to gain an advantage – a survival mechanism. When we think passively, we don’t see the possibilities, so we follow the rules. –Deb Pekin, Change Manager, Kraft Foods Inc (from a comment)
Creativity isn’t a faucet that can be turned off when it’s inconvenient—it’s part of a person’s MAP; it’s who they are, so they will apply it across the board.
“Dan and I are of the hope that managers will start thinking about how to structure the creative process in such a way that they can keep ethics in check, triggering the good behavior without triggering the bad behavior.”
That’s one approach.
Perhaps a better one is to build a strong ethical culture first and overlay it with a culture that encourages creativity and innovation.
One of the most important things is to make sure that unethical behavior is not tolerated, let alone rewarded; in fact, in some cases it should be terminated.
Of course, that means ethics would trump expediency; not the most common scenario in modern business.
I don’t think I’ve ever watched a show on TLC (a unit of Discovery Channel), but I plan to this spring; even more surprising to me is that it’s a reality show.
A reality show about great corporate culture in an industry known for the opposite.
“We were interested in working with Southwest,” said Dustin P. Smith, vice president of communications for TLC, “as it is one of the largest airlines in the country and is known for its exuberant corporate culture and for having refreshing and personal customer service that is regarded as unique in the industry.
I doubt that anyone who travels is surprised at the choice of Southwest; and certainly not Southwest.
Ashley Dillon, a spokesperson for Southwest Airlines, said the airline was chosen also because of its tradition of transparency, which relies heavily on the use of social media, blogs and other media.
In a 2009 post citing the airline’s success even during the height of the recession I linked Southwest’s and Zappos’ success to the same core cultural belief—happy employees (one Southwest flight attendant even rapped about its GAAP results).
They stowed drugs in secret panels inside planes; stole laptops, lobsters and fine clothing flown as freight; and rifled through passengers’ belongings for perfume, liquor and electronics.
Passenger losses in 2009 totaled 5.3 million dollars and for the last eight years American Airlines was the source of more reports than any other airline.
“What percent of American Airlines employees would you say engaged in this conduct?” a federal prosecutor, Patricia E. Notopoulos, asked Matthew James, a defendant in the case who pleaded guilty and testified for the prosecution. “About 80 percent,” Mr. James answered.
Of course, management claims it’s just a few bad apples.
Over the years I’ve read about and listened to hundreds of reasons why creating a culture that keeps employees happy just can’t be a priority— productivity and profit are the top priorities.
Obviously, they haven’t found the correlation, in spite of the high-profile examples that abound.
Shawn Parr, whose company works with large corporations, such as Starbucks and MTV, on innovation wrote a meaty post called Culture Eats Strategy For Lunch.
I seem to write too many stories about bosses who don’t walk their talk, which, I realize, is an overused, hackneyed expression.
How many times have you seen a similar story play out not only in manufacturing, but also in development, marketing, finance, sales and especially administrative areas?
In a series of studies, Francesca Gino and Dan Ariely found that inherently creative people tend to cheat more than noncreative people. Furthermore, they showed that inducing creative behavior tends to induce unethical behavior. 
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