Expand Your Mind: Culture Effects
by Miki Saxon
Is culture sustainable? Ask Jim Sinegal who, over 28 years, took Costco from $0 to $78 billion and built it into a global powerhouse without catering to Wall Street—workers have health benefits, margins are 14% (15% for house brands) and the price of a hot dog and drink hasn’t change since 1985. Does it work?
Shares of Costco have risen nearly 40 percent in the past year, whereas Wal-Mart shares are up just 6 percent even though the world’s largest retailer enjoys a gross profit margin of close to 25 percent compared with Costco’s 10.8 percent. Shares of another competitor, BJ’s Wholesale Club Inc (BJ.N), have risen about 21 percent over the last year.
Any day you look you’ll find an account describing problems in the money-losing airline industry. But if you keep looking you’ll also find bright spots, such as Southwest and Jet Blue, whose cultures engage their people’s passion and that translates directly into dollars.
A 2009 study by Gallup found that companies in the top decile for employee engagement boosted earnings per share at nearly four times the rate of companies with lower scores.
What do 3M and Virgin have in common? Cultures that invite, enable and revel in creative employees—intrepreneurs—that drive innovation, profits and keep their new product pipelines packed.
3M is 109 years old, the company continues to churn out new products like a young startup which explains why 31% of 3M’s 2010 revenues came from products that were developed during the past five years.
“Virgin could never have grown into the group of more than 200 companies it is now, were it not for a steady stream of intrapreneurs who looked for and developed opportunities, often leading efforts that went against the grain.” –Sir Richard Branson
Finally, and mostly to give you a laugh, here are the totally obnoxious actions from some of today’s truly monster egos.
Flickr image credit: http://www.flickr.com/photos/pedroelcarvalho/2812091311/
