In the first blog of a series exploring Organisational Culture, TPC Leadership’s Global Chair Christian Scholtes, explores what organisational culture is and why you should care.

What is organisational culture – and why should you care?

In Culture Map, Erin Meyer shares the much-told story of two young fish who meet an older fish. He nods at them and says, ‘Morning boys, how’s the water?’ – which prompts one of the young fish to ask the other, ‘What the hell is water?’. 

Similarly, organisational culture can be an easy thing to forget about, often because, being so very immersed in it, it’s difficult to notice in the first place. As it rarely becomes explicit in its manifestations and because we’re typically drowned in operational minutiae, we don’t think about it much, we don’t prioritise conversations about it, and we very rarely measure its impact.

The fact that we don’t think and talk about it, doesn’t mean that it does not affect us, in the way we build implicit assumptions about ‘what’s truly important and needs to be done’, and in the behavioural and decision-making patterns that derive from these assumptions. 

Defining corporate culture

 “Cultural patterns of behaviour and belief frequently impact our perceptions (what we see), cognitions (what we think), and actions (what we do).” – Erin Meyer, Culture Map

Before we can begin to address the impact of culture, we need to differentiate between what it is and what we frequently believe it is.

We often imagine (there may be some degree of wishful thinking involved) that our company’s list of values is our company’s culture. But there can be a vast divide between our stated values and our day to day reality.

Professor Geert Hofstede conducted one of the first and most comprehensive studies of how culture affects the workplace. He defined culture as “the collective programming of the mind,” which distinguishes “the members of one group or category of people from others.” It is a subconscious set of values, a collective way of thinking, that directly affects how we act. It affects how the organisation’s teams respond in times of crisis, how we articulate executive strategies and how we interact with one another.

In other words, as Marc Randolph, the co-founder and former CEO of Netflix, says, “Culture isn’t what you say, it’s what you do.”

This being said, Mazars’ Board Leadership in Corporate Culture survey revealed that only 5% of company board members are able to say they are “very confident” that there is “clear alignment”’ between their desired and actual culture. It is a gap that needs to be addressed, if we want to succeed as leaders.

Organisational culture enables business success

“The bottom line was that while everyone was rowing the boat… there was no forward movement.” ― Ed Catmull, Creativity, Inc.

The impact of culture on the success of a business is pervasive. Often we imagine that strategy – our business idea and our business plan – is what ensures success. But it is our company’s culture that affects our team’s capacity to rally around the strategic vision and to fulfil the strategic priorities.

In Creativity Inc. Ed Catmull, co-founder of Pixar, writes “There is nothing like a crisis, though, to bring what ails a company to the surface.” For it is then that our true culture, not the one we assumed we had, is revealed.

Inevitably, unexpected obstacles will hinder our progress, unforeseen problems will limit our initial vision, and sometimes, a business initiative will simply fail. Our culture affects our ability to recover, to adapt to the unexpected, to learn from our experiences. It is our culture that determines whether we will be sunk by hard times, or rise above forecasted results.

Culture attracts talent

…it’s often something intangible – like a diverse, inclusive, values-driven culture – that determines where the best and brightest talent decide to work.”- Marc Benioff and Monica Langley, Trailblazer: The Power of Business as the Greatest Platform for Change

When it comes to attracting and retaining the most talented individuals, ‘cultural fit’ is probably the most important factor. Eric Schmidt and Jonathan Rosenberg emphasise this in How Google Works, “Many people, when considering a job, are primarily concerned with their role and responsibilities, the company’s track record, the industry, and compensation. Smart creatives, though, place culture at the top of the list. To be effective, they need to care about the place they work.”

Culture determines to a high degree who stays and who leaves. Those that feel at home in a company’s culture will gladly remain while those that strain against it will either tire and leave, or compromise to tow the company line, for a while. But the best leaders, the smartest creatives, will never be content to stay in an organisation that is at odds with their ideas, their work ethic, their ideals. They’re not interested merely in career progression as much as career purpose, in the ‘feels right’ kind of an environment.

Implications for the next decade

 “Leading with culture may be among the few sources of sustainable competitive advantage left to companies today. – Boris Groysberg, Jeremiah Lee, Jesse Price, J. Yo-Jud Cheng, HBR, The Leader’s Guide to Corporate Culture

As the current decade unfolds, the impact of corporate culture on businesses keeps increasing. It affects business reputation, employer branding and the subsequent appreciation among both existing and potential customers and employees. It affects investment – already some major funds only invest in companies that meet certain criteria in regard to gender balance, or approaches to their workforce. It affects the quality of the recruitment pool and the retention of high performers. It also affects the capability to navigate an increasingly unpredictable world. Margaret Heffernan explained at the 2019 TED Summit, “the unexpected is becoming the norm. It’s why experts and forecasters are reluctant to predict anything more than 400 days out.”

As leaders, we therefore need to truly explore our corporate culture, to have lively debates about what currently is part and what’s missing in our culture, and to begin shaping it with intention, so that we can fulfil our company vision. Yet to understand our own culture, we often need an outside-in perspective, the clear, detailed, truthful mirror provided by an external sparring partner. We invite you therefore to check out our leadership consultancy services to begin exploring how to align your company culture with your company vision. The sooner we undertake these steps will possibly determine the level of success we experience in these systemically turbulent times we’re living in.

Interested to learn more? Get in touch to talk with one of the team.