18 Jun 2019
The unwritten culture rules that make businesses great
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An open culture boosts the chances of success in today’s chaotic, rapidly-changing world, finds Steacy Sun, Partner at Odgers Berndtson, Shanghai.
When he resigned from Goldman Sachs, Greg Smith, a Vice President with the firm, wrote in the New York Times that "culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great."
He then added rather bitterly: “I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years.” One can dispute the accuracy and question the motivation of Smith’s words, but what is in no doubt is the central importance of culture in the workplace.
Yet what exactly is business, or corporate, culture?
The intangibility of the idea leads many to resort to metaphors, such as referring to corporate culture as “the DNA” of an organisation, which is certainly true. But one yearns for a much firmer definition.
Émile Durkheim, the 19th-century French sociologist, is recognised as the leading explorer of what culture actually means. For Durkheim, culture is first and foremost the medium through which a collective entity presents itself to itself, and therefore gains a sense of its own existence. In other words, culture is tribal. What holds a tribe together? What makes one tribe superior to another? What values, rituals, common understandings are shared by the tribe? What Durkheim did not tell us however was how to deal with the warp-speed pace of cultural change in today’s world.
The march of AI
This state of ‘perma-change’ – driven largely by the ever-advancing march of AI – leads to massive, continuous, and radical disruption, in which the culture of an organisation must keep pace, or the organisation withers and dies.
My colleague Mark Braithwaite, who heads Odgers Berndtson’s APAC business, has written a book titled Leadership Disrupted about the disruption facing businesses and their leaders. In his view, “culture is about how people interact with each other – what their shared values are. If it is part of what people really believe in, then it becomes part of the culture. So it includes language, it includes rituals, the way people are treated, the way they regard their leadership – these are all part of what I would describe as the culture.”
When people talk about a business’s culture they are not discussing whether there are beanbags in the office or a slide through the centre.
They are talking about what it’s like to work there, to be there. What are the people like? Will I like them? Will I fit in?
Listening at every level
I supported Mark in writing his book. We concurred that in today’s disrupted world, the ‘command-and-control’ leadership style has stopped working. Successful organisations are now listening to people all the way through them. Companies are changing the mood of the organisation – an important part of the culture – to encourage employees to speak up, to make it ‘safe’ to do so. There is a personal element about the way the leader of a company behaves, their authenticity, their humility, their agility. People see those things and take note.
Companies that are thriving in a time of disruption are able to do so because they can adapt more quickly. Some companies are struggling and don’t know what to do. It is all about leadership.
The companies that are struggling still have command-and-control leadership. Today, everything is coming at them too quickly and their decisions are poorer.
Their leaders can’t know everything. But there are companies where the leadership is much more humble. They know they can’t know everything, and they have learned to trust their people. They are decentralising the decision process, it is much more collaborative. And this is a massive cultural change.
What we found in our meetings with 70 companies, with more than a $1 trillion in aggregate revenue was clear. Companies who are succeeding in adapting to a fast-changing environment have a much more open culture than companies that don’t.
An approachable human face
We heard from the regional head of a major multinational chemicals company. He told us that he started visiting China and wanted to hear from people on the factory floor. He started hosting brown bag lunches, bringing 20 people into the room, and the workers did not say anything.
Now, China has a very hierarchical national culture and the factory floor workers clearly were not going to say what they really think to the ‘boss’. The regional head said that he had to re-position how they saw him, to be able to get closer. So this 55-year old had some photographs taken of himself skateboarding, with a tee-shirt and his cap on backwards, with his son, which he enjoys doing at weekends.
The photos got ‘leaked’ to social media and suddenly he seemed to be human to the factory floor workers. They started talking to him because they realised they could. And he told us that he knows much more today about the business as a result, and he makes better decisions. This is a cultural change in operation.
Inflexibility means trouble
There are permanent disruptions happening to the way we live. The accelerating pace of change has overtaken our ability to cope with this ‘perma-change’. Customers are behaving differently and the competition is behaving differently and the implications for companies that do not keep up with this are that at some point they will be in real trouble.
We found that almost all the CEOs ‘get it’; they know they need to change. What’s happening is that these companies know that something is coming but they are struggling to react.
By placing the issue of culture on the agenda of the Board, and ensuring that culture is aligned with strategy, then culture will no longer “eat strategy for lunch”.
The unwritten ‘rules’ that guide the thousands of decisions employees make throughout the company every day are tribal – often instinctive and not thought-through. Yet they are there and can make or break the business.
This article is from the latest ‘Culture’ edition of the Odgers Berndtson global magazine, OBSERVE.