Why is culture very difficult to achieve?

Success in the past always becomes enshrined in the present by the over-valuation of the policies and attitudes which accompanied that success. As long as the environment and competitive behavior do not change, these beliefs and policies contribute to the stability of the firm.

However, with time these attitudes become embedded in a system of beliefs, traditions, taboos, habits, customs, and inhibitions which constitute the distinctive culture of that firm. Such cultures are as distinctive as the cultural differences between nationalities or the personality differences between individuals. They do not adapt to change very easily.

These characteristics are deep-seated and difficult to change. Frequently, this means that the organization becomes the prisoner of its own past success. Such individual characteristics become so much a part of the firm that any effort to change them is quite likely to be viewed as an attack upon the organization itself.

Examples of these observations are a matter of common experience:

• The sharp and painful adjustments when two comparable organizations merge are the inevitable consequences of the differences in corporate style and culture.
• When a new chief executive is appointed from outside the organization, one of two actions will follow. There will either be a substantial period with little change while he gets “to know” the organization, or there will be a period of considerable stress and perhaps personnel turnover while a new corporate culture is being evolved.

These problems of change cannot be avoided, however. All organizations, like all organisms, must adapt to changes in their environment, or die. All organizations do change when put under sufficient pressure. This pressure must either be external to the organization or be the result of very strong leadership.

It is rare for any organization to generate sufficient pressure internally from the ranks to produce significant change in direction. To do so is likely to be regarded as a form of dissatisfaction with the organization's leadership. To change by evolution rather than revolution, the change must not only be tolerated but actively guided and directed in very explicit terms by the leadership of the firm.

In this process the corporate leadership faces major dilemmas. The organization's investment in the status quo is always a heavy one. This is almost inherent in the definition of a culture. Changes in policy and strategy are inherently threatening, producing a whole series of changes in objectives, values, status values and hierarchy arrangements. Jobs, rank and many cherished beliefs are put into jeopardy.

Most of the organization is not in a position to see the needs for policy and organization change until long after the optimum time for action has passed. Corporate culture tends to blind organization to a need for change until the organization as a whole can accept the reality of the need. But when the need is so obvious that the whole organization can recognize it, competitive advantage in flexibility and speed of response has been lost.

On the other hand, if an effort is made before there is a general awareness of the need, it endangers the very ability to lead. Any fundamental change in corporate policy is almost certain to be regarded by a significant part of the organization as irrational. No matter how sound the change may be, it is at some point rooted in a nonprovable, intuitive concept of the relative values of a complex of factors affecting the future. There will always be a large part of the organization which does not perceive these values in the same way and, therefore, considers the change unwarranted and a reflection on the leadership's ability to make “reasonable” decisions.

It is obvious, as well, that major changes in policy have far reaching consequences that dictate caution and conservatism. The attitude toward change is always conservative or reactionary until both the reasons for the change and the consequences are clearly defined. This is an impossible set of preconditions for most policy changes. Any significant change produces a train of interrelated and often unanticipated corollary changes. Each policy has been keyed to others and changes in one requires a reevaluation of the related policies. Too much readiness to change policies leads to a complete structuring of the corporate edifice with all the cost and confusion incident to any major reconstruction.

Not only the organization, but the leadership itself, incurs considerable risk by changing policy. By definition a policy is applied to decisions in the future. To be valid the policies must be based upon assumptions about the conditions and competition in the future. These assumptions in turn are based upon other assumptions. At some point the needed information becomes so problematical and conditional that further fact finding and analysis is unrewarding, and the decision becomes intuitive.

Such decisions on major issues constitute a severe exposure risk. The apparent verities of the past successes must be abandoned for unproven policies based upon uncertain data. And, to the risk of failure from incorrect choice, must be added the risk of failure in leadership because the organization just does not see the need for the change. Even the best chosen risks may still prove to be fatal to the current leadership if the consequences are unprovable in fact.

All the forces of corporate culture are set against change. Yet the rewards can be substantial for those managements who have strong enough leadership to both anticipate the change required and manage the evolution. The competitive advantages of superior strategy will only be available to those managements which can make major shifts in policy early enough for the need or the purpose not to be obvious to their organization as a whole or to their competitors.

There are at least three major requirements of management who expect to outperform their competition. The first is to conceive and make explicit a superior strategy. The second is to provide the leadership required to overcome the obstacles to change. The third, and often critical one, is to provide that leadership at a time when the organization as a whole would ordinarily oppose the changes required. 

Are your employees speaking in a way that suggests they are disillusioned with your business?

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Pop quiz! Heard any of the following around the office recently?

• "Why bother? Someone’s always going to say 'no'."
• "The people we need most are leaving."
• "I’m not sure what I’m doing here anymore."
• "We’re good at saying hard things - by email."
• "We’re on our fourth re-org in four years - and nothing’s working."

Yes? Statements like the above predict the need for culture change. And the issue is likely pressing: the way your employees are speaking about your business suggests a near-crippling level of frustration and disillusionment that could already be causing significant commercial issues.

Culture matters

The fact is that while “culture” can seem nebulous–or even nonsensical–a healthy culture where employees are enabled and engaged is a critical part of every financially successful business. In their pivotal book, Corporate Culture & Performance, Harvard Professor John Kotter and James Heskett defined strong businesses as being able to “facilitate adaptation to a changing world… If customer needs change, a firm’s culture almost forces people to change their practices to meet the new needs. And anyone, not just a few people, is empowered to do just that.” Every business needs this type of empowerment in today’s fast-moving world or they will fail to innovate and grow.

The professors went on to prove the commercial impact of such a culture. The data stuns. Over 10 years, firms who embrace responsive and forward-thinking ways of working enjoy average revenue growth four times greater than those who don’t (682% compared to 164%). Stock price differentials are also stark (901% compared to 74%). 

Leaders know the importance of culture

According to PwC, 86% of C-Suite executives believe culture is critical to their organisations’ success. Indeed, 60% see it as a bigger success factor than either their strategy or their operating model. Despite this, almost all (96%) say “some change to their culture is needed”, with over half (51%) believing their culture requires “a major overhaul”.

I work with some of the most dynamic, experienced and interesting leaders in the world. Yet, even they admit that being able to manage and develop their cultures is a major barrier to organisational effectiveness. Why? There are many reasons but here are the three most fundamental.

1. No shared concept

Do your leaders have a shared definition of what ‘culture’ is - and how it relates to your organisation?

The OS makes everything work.

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Culture is not your values, your diversity programme or your vision (although all these contribute to it). It is not good enough to use the word as a sort of dropbox for every non-specific complaint you might have. If you don’t have a shared concept about what culture is, everyone may be trying to solve a different problem–a recipe for getting nowhere fast.

Culture is the social order of a business. It is the unseen narratives, legends, hierarchies, processes and politics which govern what gets done and how. You might consider it to be the Operating System of a business. Look at your iPhone. The OS is not the star of the show but it runs all the applications and impacts the functionality of the whole device.

2. No shared language

Do you have a language to discuss your culture that everyone shares and understands?

Progress does not come from pushing adjectives around on paper.

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This is not about a set of aspirational values. Progress does not come from pushing adjectives around on paper. Language is the tool through which we manipulate concepts. If we can’t find a mutually comprehensible way to describe to each other what we’re experiencing, we can’t hope to change it.

3. No meaningful data

When it comes to your culture, what are you measuring?

Employee engagement and pulse surveys aren’t sufficient

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Measurement is not a new thing in people management. But, when it comes to culture, employee engagement and pulse surveys aren’t sufficient. They will often tell you what is happening, not why. They don’t analyse culture in the correct way, as they don’t consider key factors such as conflict or risk tolerance. And the data they produce is often questionable, as it doesn’t interrogate the non-conscious thoughts and feelings that shape all our behaviour.

Without a shared concept, language and data as a foundation for management, it is impossible to change or develop anything. If you need proof of this, consider how you would manage company finances without an understanding of what money is, a language to describe transactions, and accounting data.

As a starter for ten, why not start your next management meeting by asking everyone to define and describe your culture? The answers you get might be revealing. Even if what you find is that everyone is on a different page, at least you know what you’re facing. As daunting as that may feel, it is the first step to a better, more profitable future.