Recently, our Chief Strategy Officer Gord Dmytriw wrote about how a strong company culture can give your organization a competitive advantage. And he’s not alone. Flip through the web archives of Forbes, Harvard Business Review and other like publications, and you’ll find countless articles on corporate culture and why it matters.
“It’s the act of intentionally developing your culture that allows you to create a competitive advantage and better attract your ideal clients and employees.”
In our work helping global companies enact strategic change, we’ve found that success can’t be found in simply allowing your culture to develop organically; it’s the act of intentionally developing your culture that allows you to create a competitive advantage and better attract your ideal clients and employees. And the development of a strong culture isn’t a one-time activity on your leadership team’s to-do list — it’s a continuous process, something that must be shaped and revisited time and again.
What Is an “Intentional” Corporate Culture?
A culture is a collection of values, behaviors and beliefs that guide and define a group of people. For organizations, culture can commonly be referred to as the proverbial “secret sauce” or “Kool-Aid” that makes the organization look, act, think and feel the way it does. But while all organizations possess a corporate culture, it may or may not be intentional.
Ultimately, cultures arise naturally and, absent of any direction, will change organically. When a company is young and small, the behaviors that support and encourage positive interpersonal dynamics are easily reinforced. The influence of company leaders, the stewards of the company’s culture, is strong. But as the company grows, this influence wanes. Adding more people to the workforce means adding more minds with different perspectives and different influences. These perspectives and influences can inculcate different behaviors, which in turn, work to possibly dampen the original desired cultural influences, putting the foundation at risk.
Therefore, leaders must take responsibility for culture stewardship by defining and documenting their corporate culture to ensure that what’s important stays, as well as to put structure in place to address the behaviors that get in the way of fully developing its potential.
3 Components of an Intentional Culture
In our approach to intentional corporate cultures, we posit that success lies in an organization’s ability to courageously define and demonstrate their unique set of cultural components as captured in the following framework:
- Organizational narrative: Consisting of a purpose, vision, mission and values statement, your organizational narrative is the shared story about why you company exists and where it’s going. It’s something that bands your people together towards a common goal, as it outlines your shared vision for the future and how its realization can make the world a better place.
- Focus of constituency: Every organization serves three groups, or constituencies. By focusing primarily on one of these groups (though not to the exclusion of others), you can better guide your strategic decisions:
- Customer-driven: these companies look through the lens of the customer and invest heavily in customer research in order to better understand trends, set policies, drive new product development and inform the sales process. Nike, for example, is a customer-driven company. Every one of their team members is expected to think like a customer, and many of their executives are former athletes.
- Employee-driven: strategic decisions focus on empowering the employee to create value. These companies have fewer policies and more guidelines; they hire for culture fit and alignment, and typically push decision-making authority as far down to the front lines as possible. The Ritz-Carlton is an employee-driven example of corporate culture. Their employees are empowered to do what it takes to create the perfect guest experience.
- Shareholder-driven: these companies believe that creating shareholder value will also drive value to customers and employees. Thus, they prioritize activities and decisions that support quarterly earnings goals and annual shareholder ROI. General Electric, for example, is shareholder-driven. Their expectations are clear, as evidenced by their 2016 goals: provide ROI and increase earnings per share, free cash flow and return cash to investors.
- Style of people culture: There are four styles of people culture, which are each best suited for a company of certain sizes and needs. No style of culture is better than the others, but it’s important to choose intentionally based on the needs of your company:
- Loyalty-based: this culture trades favors instead of cash; it’s most commonly found in small companies and start-ups.
- Performance–based: in this culture, the fastest horses win; it’s most commonly practiced by large companies with 500+ employees.
- Opportunity-based: this culture recognizes that organizations have a limited set of opportunities to distribute to their employees, so opportunities are distributed among those who reach for them. This style of people culture is most suitable for small- to mid-sized companies.
- Lifestyle-based: this culture offers a particular lifestyle as a form of compensation in order to attract and retain employees that associate value with that lifestyle. For instance, to get X kind of perks (related to a certain lifestyle), you must trade Y for it (your flexibility, your compensation, your time).
Making these types of cultural decisions can have a sizeable effect on the way an organization looks, thinks, acts and feels, both internally and externally. As such, it’s easy to see how an intentional culture can serve as a means of effectively differentiating one organization from another, even when offering similar products.
Want to learn more about creating an intentional corporate culture? Read our recent eBook, “How CEOs Drive Lasting Change.”