A few years ago in Europe, I asked a group of business leaders if they had the right culture. Someone responded that their company had purchased tickets to the opera. Today, the issue of culture is no longer a joke or afterthought; it is central to business success.
Peter Drucker is attributed to have said, "Culture eats strategy for lunch." Culture was the word of the year for Merriam Webster dictionary in 2014, has been on the cover of regular stories in Harvard Business Review, is the subject of 100s of corporate off-sites and is a key outcome of HR work.
Many companies have begun cultural transformation journeys. Unfortunately, many of
these culture transformation journeys begin with fanfare and promises, and end with fizzle and disappointment. They start with declaring that culture matters and may work to define desired values that then shape behavior. But the culture journey is a cul-de-sac without clearly defining the destination or outcome of the effort. Too often, culture is about the past, not the future, and about generic, not tailored values.
First, HR Must Identify the Right Culture
For culture transformation to be effective, it is critical to identify the right culture: What is the destination of the culture change journey?
The value of culture is that it shapes the right behavior. But who defines what is right? The leader’s personal values or the customer who acts on those values?
We believe that the right culture starts by identifying what leaders want their firm to be known for by targeted customers in the future. This means that internal culture starts with firm brand or identity. There is a right culture that goes beyond noble generic values.
A number of months ago, the New York Times wrote a scathing piece on the dysfunctions of the Amazon culture. They cited employee abuses, which are obviously wrong in any setting, but they went on to criticize the culture as demanding, rigorous and driven.
When I teach any group and ask: “Who has purchased from Amazon?” nearly everyone raises their hand, many committed to Amazon prime. Then, when I probe: “Why?” the answers are consistent: easy to work with, accessible from anywhere, predictable delivery within short time frame, low cost and so forth. So, I then ask, if these are the reasons you (and millions of other customers) choose Amazon, what does Amazon have to do inside to realize these customer values?
Quickly, participants realize that to meet their (the customer) expectations, Amazon requires a culture of discipline, rigor, standardization and precision. Customers want Amazon to be predictable, so they need a culture consistent with those promises. Amazon has the right culture for their customers.
Likewise, Marriott’s commitment to customer service comes from an internal culture of high employee service. Disney’s theme park culture of guest experience requires an internal culture of employee experience. Apple’s public commitment to innovation draws on an internal culture of employee experimentation. Wal-Mart’s “always low prices” identity leads to a culture of cost consciousness in all aspects of work.
Cultural Alignment
Culture matters, but the right culture matters more. Generic values (like integrity, trust and transparency) obviously matter, but the real differentiating value of values is helping organizations turn customer promises into tailored internal cultural norms.
In this logic, culture is more than a physical setting or stories, and more than norms, values, beliefs and statements of noble purpose. The right culture turns a firm’s external brand into a set of internal thoughts and actions.
A cultural transformation journey begins with what the firm wants to be known for by key customers in the future. Articulating the right culture, by starting with customer promises and firm brand, provides a clear direction for the culture change journey. Culture can then be managed against this desired destination. Culture can be measured, not just in how employees behave, but how customers behave relative to those promises.
Again, culture matters, but the right culture matters much more. Leaders can work with marketing and advertising groups to articulate the desired firm brand. Leaders can then work with HR professionals to turn this external identity into a set of organization policies and employee actions.
With the right cultural logic (see graphic), employees are connected to customers and customer promises to employee expectations.
Hopefully, future culture journeys have direction based on customer value. These culture journeys will be more likely to endure and deliver real value.
Dave Ulrich is a Rensis Likert Professor at the University of Michigan’s Ross School of Business. He is also Partner of The RBL Group.