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Culture Eats Strategy

you’re off and running…

Growing an organization and doing everything you can to help it succeed as it scales is the wildest of valley rides.  Those few that successfully cross the chasm from a great idea to cash-flow positive know the really hard slog and tough, often personal choices that you have to face along the way.  Keeping your baby on the rails as it skids along the path to success is your singular biggest priority and obsession.

So consider this scenario:  you’ve hired some great talent and are beginning to make key investments in the business to maintain the momentum. The culture still operates in a largely informal, unstructured way, and is largely based on personal connections – but it’s getting harder to leverage and coordinate these connections as you accelerate and grow.  As a result, you’re beginning to spend too much valuable time dealing with thrash in the organization, and facing the hardest problem of all to solve (which ironically is often referred to as a ‘soft issue’) namely, how to develop a high performance workplace culture that people actually want to work in.

fighting to stay small

This thrash is a result of the tension that exists between the power of being part of a small team that can move fast and get things done, contrasted with the need to grow the business and do more to build customer value. You want to and must grow – but equally, you can’t afford to slow down as this is a clear risk to growth.  Fighting to stay small and run lean is an imperative for survival. But that tension is constantly biting at your heels.

Because this isn’t your first rodeo, you know that poorly managed scale can lead to confusion and unproductive behaviors that can sadly optimize for:

  • power and status building
  • grandstanding
  • resume building
  • political maneuvering
  • risk mitigation

You know that behaviors like these have the potential to hurt you if they undermine performance and innovation, or distract your people from the fundamental reason they joined your company in the first place.  All of which can take months, even years to fix – time and energy you simply don’t have.

staying connected

When communities grow to a certain size, the personal and intimate connections that were so useful in getting things done in the early days begin to break down and get much harder to leverage.

Anthropologist Robert Dunbar posits that there is, in effect, a practical limit to the number of people with whom you can maintain stable, productive social relationships before things start to break down. This number is thought to be in the range 120-160 people.  To complicate matters, sociologist Duncan Watts has found that our own personal communications and effective decision making network is likely limited to around 15 people.

So scale can inevitably make communications, coordination and the effort in building social capital much harder if it’s not being proactively managed.  Growing your organization at this scale in a way that optimizes for the ability of people to still feel connected to each other, and to communicate efficiently so that they can continue to get things done, and know the part they have to play is both the risk and the opportunity you face.

culture trumps brand

The path to success is a narrow and oftentimes stressful one, and frankly, it doesn’t get any harder than successfully solving these issues.  For your shareholders, investors and clients expect you to create value as rapidly as possible, by leveraging the four core resources at your disposal:

  • capital – of the company
  • time – yours and others
  • trust – of your customers & employees
  • culture – your ability to get stuff done

You will need to constantly optimize for all of these, often making difficult trade-offs as you go. Ruthless prioritization, internal transparency and a business plan that leverages the culture as a key growth asset is essential, and for many, a huge untapped opportunity.

The difficulty is that it often doesn’t matter how great your value proposition is, if that thrash persists and gets in the way of effective performance, innovation, decision making, problem solving and information sharing, etc.

Because your culture is where all your institutional memory and energy to perform resides, it therefore makes sense to have a plan for scaling the culture, just as you would with any  other of the tools at your disposal. After all, you’re going to get performance, so why not manage it?

measuring culture

One effective way to measure the impact your culture is having on the business, is to measure the extent to which your people feel engaged at their work.  Engagement is simply a measure of the extent to which your people feel passionate about their work, and feel committed to its purpose to such an extent that they are willing to put extra discretionary effort into the work.

Engagement is essentially a measure of sentiment and experience. A key step towards successfully scaling your operating culture is recognizing that these things actually have to be managed and building a plan for change. At an individual level, Gallup’s workplace research of what engages people to perform has found that among twelve dimensions that drive performance, four dimensions really stand out:

  • I know what is expected of me at work
  • My manager seems to care about me as a person
  • I receive regular praise and recognition for good work
  • I have an opportunity to play to my strengths

In other words – be clear with me, care for me, validate me, and set me free. Successful performance cultures anchor these dimensions in their approaches to performance management and in everyday interactions with employees.

a path forward

From our client work serving the start-up community in the silicon valley, and from our combined 40 years of organizational experience working in some of the most progressive organizations in the world, we posit that your organization can flourish as you scale, and you can  minimize thrash and dysfunction, if your plan for the culture is reflected in four foundational strategies:

One:  connect each person to the purpose of your organization in an intentionally positive manner, which speaks to each individual in a personal, perhaps even transcendent way. This is essentially an emotional commitment that lies at the heart of the ‘psychological contract’ – that most foundational of means by which every one of your employees defines their relationship with you, and validates their decision to stay.

Two:  define and ignite a culture of innovation and high performance by supporting each person in finding their individual path to impact through their own strengths and talents, and through encouraging every team to organize their work in a way that enables each of them to do more of what they do best every day.

Three:  build and reinforce a people culture where each person feels safe to express their authentic self at work, and to believe that their opinion counts in a culture that encourages and recognizes the value of honest and open feedback, even when it’s really hard to say what needs to be said.

Four:  Recognize that this is your family, and like all families they need intentional nurture and care in order to flourish. Showing care for the well-being of the community you are building in a way that is positive and invests in their energy so they can continue to perform, will be felt by your employees and customers, and set you apart from the majority of your peers.

In essence, great leaders of high performance workplaces understand and leverage the intrinsic link between performance and innovation on the one hand, and positive workplace culture on the other.  They recognize that success in harnessing this link is fundamental to understanding and cultivating a culture of high engagement.

conclusion

In today’s intense and highly competitive labor market, this is more than a nice -to-have; companies that embrace these ideas are increasingly seen as progressive, highly desirable places to work. And a slew of compelling  data from the academic world, and from organizations such as Gallup reinforce that this has game changing consequences for employee performance, loyalty, innovation and a sense of fulfillment.

We believe that this is nothing short of a redefinition of the very relationship we have with work, and the psychological contract that lies at the heart of that relationship. Those organizations that understand how their precious culture is also their greatest lever of competitive advantage, will succeed and out perform those who don’t in the next 10 years.  For as business sage Peter Drucker once said: “Culture Eats Strategy for Breakfast”. Get this right, and so many other things become easier to address.

Culture Eats Strategy For Breakfast.
– Peter Drucker

 

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