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Friday, August 12, 2016

What Organizational Culture really is
by Jamie Notter

One reason organizational culture does not make the priority list of leaders is that it is hard to define. It’s squishy. It’s complex. Sometimes it’s even contradictory. Employees will experience your culture in different ways and even describe it differently. With all the other challenges your business faces, I can see why culture takes a back seat. It turns out, however, that the complex nature of culture actually drives its power.

Having the best product or making the perfect strategic move doesn’t buy you much time at the top. The competition moves faster than it used to. As Rita Gunther McGrath wrote in Harvard Business Review, the landscape has shifted from looking for that long-term, sustainable competitive advantage to managing more of a portfolio of “transient advantages,” moving from one short-lived advantage to the next.

Sounds hard, doesn’t it? That’s because it is. But this is where culture comes in. Like most organizations, your competitors have typically ignored culture. They’ve been focusing on strategy and operations (understandably), and culture simply became a luxury that they would get to once they achieved some success. But remember, the whole point of culture is to drive the success of the enterprise. Waiting to work on your culture until after you become successful actually condemns you to a perpetually mediocre culture. This, in turn, weakens your ability to succeed. It’s a negative flywheel effect.

Focusing on culture not only removes this negative flywheel, it can replace it with a positive one if you do it right. And, unlike products and strategies, which can be quickly copied, the culture advantage has more power. The fact that it is complex and challenging only means that any advantage you gain over your competitors will be tough to match. So, how do you secure this kind of advantage? It starts with understanding what culture really is.

A definition

I have boiled down my definition of culture to make it as clear and actionable as possible:

"Organizational culture is the collection of words, actions, thoughts, and “stuff” that clarifies and reinforces what a company truly values".

To explain, I’ll start with the last word: values. Culture is ultimately about what is valued. That can include flowery “values statements” if you like, but to be honest, those statements aren’t where the power lies. Enron had nice statements in their lobby about things like integrity and honesty, but that wasn’t really valued at the end of the day, was it? It turns out making your numbers look good at all costs was valued, so that’s what people did. Your culture is the collection of things that clarifies and reinforces what is really valued by the system.

And that means it’s complex. I listed four things in the definition that create your culture: words, actions, thoughts, and stuff. The first three are brought to life by you and your people. Culture is a complex combination of what we say it is, our behaviors, and the underlying assumptions and thinking behind it. As you might expect, those three areas are often inconsistent, which is one reason why culture can be so messy. It becomes something that you have to piece together, recognizing you’ll find some contradictions along the way.

For example, we’ll say we value customer service, but we’ll also say we value being strategic and focused on the long term. Those values are nice, but at times are quite opposed to each other. One is proactive and one is reactive, and to figure out where the culture really stands on that contradiction, you’ll have to assess several things at once. It’s the combination of what people say and what they do that will ultimately determine how those two values are balanced.

Additionally, you have to factor in the “stuff.” Forgive the technical jargon here, but “stuff” just means the non-human parts of culture. Tangible things like office layout, office location, office decor, dress code, what types of computers you use, etc. These also reflect what is valued, so they have to be included in your analysis of what your culture really is.

There are more eloquent definitions out there, and there are definitions that either go deeper or broader, but I use this one because it facilitates action. Words, actions, thoughts, and stuff give you things you can work with. They give you areas where you can experiment and change and learn. And they keep the conversation about values moving, rather than stuck down a path that leads toward a boring new set of inspirational posters—but no improvement in performance.​

A time for action

So, now I’ll ask you to think about your culture. Think about the words, actions, thoughts, and stuff that clarify and reinforce what your organization truly values. And don’t limit yourself to a culture that sounds cool or represents only your ideals. Get real about “what is.” What is valued? What is rewarded? What is discouraged? Not so clear? Well, now is the time for you to figure this out.
Source: SmartBlog on Leadership

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