Developing Your Cultural Strategy
Drew Jones
Culture & Workplace Consultant // Author of The Open Culture Handbook: Five questions to drive engagement and innovation
Culture and Your Corporate Strategy
Let's face it, for the most part businesses struggle with culture. Chronically low levels of employee engagement, the persistent failure of change programs, and the consistently poor performance of M&As paint a picture of near-futility when it comes to managing people and culture.
Yet, companies spend billions annually on trying to 'improve' or 'change' company culture. In my forthcoming book--The Open Culture Handbook-- I try to get to the bottom of the culture dilemma by using the lens of evolutionary anthropology (EA). But the challenge is larger than just trying to understand the cultural dynamics inside firms.
What is cultural strategy?
If you google search cultural strategy you will quickly come across the work of Douglas Holt, whose company--The Cultural Strategy Group- has largely put the concept on the map. For Holt, cultural strategy refers to how companies understand the broader cultural environments that surround them and how to create innovative products, services, experiences, and brands that organically reflect and connect with emergent values and practices.
His most recent Harvard Business Review article--Cultural Innovation--is a helpful jumping off point for the current discussion. Holt's focus on the cultural contexts in which companies operate, and on which they depend for their survival, is a critically important yet missing piece in so many generic approaches to understanding and managing company culture.
In this article I present a holistic, ecological framework that hopefully will help leaders appreciate the value of developing cultural strategies that are neither just "the way things are done around here" nor just "marketing research." The Open Culture Framework consists of five components that are best understood sequentially. However, depending on where a firm is in its innovation journey, embracing any of the practices can be helpful.
The Open Culture Framework
Because corporate budgets and critical decision making start at the top, the framework is presented specifically to senior leaders and their teams.
1. Develop your cultural intelligence (CQ)
Humans (employees and customers) are wired for culture. We are an emotional species that comes together as we figure things out to adapt and survice AND to create meaning and purpose in our lives. As Harvard evolutionary anthropologist Joseph Henrich puts it, culture is the collective brain of our communities and is the 'secret of our species success.'
The notion of cultural intelligence (CQ) is often used to refer to cross-cultural understanding and management, and this is indeed important. However, that assumes that business leaders already understand what culture is, which is clearly not the case. CQ, as I define it, is a basic recognition that culture resides at multiple levels and in many contexts, and that most human action and decision making is driven (often subconciously) by cultural narratives and stories of various sorts.
CQ in the business context starts with recognizing that employees (as well as customers) are culture-bearing animals that build culture on their own when in groups. The idea of "changing" culture through a top-down social engineering program correlates with the persistent failure of corporate change programs. The challenge, as I explore much further in The Open Culture Handbook, is how to create conditions where culture can evolve organically.
Beyond that, i.e. outside of the firm, culture is so many things. Cultural narratives that bind people together exist at the industry level, the regional/city level, the popular-cultural level, the national level, and increasingly at the global level. To fully understand the cultural dynamics inside firms, it is necessary to fully appreciate the power of culture throughout the human experience- wherever that takes place. This, I suggest, is CQ.
2. Develop your culture compass
For the past thirty years, anthropologically-oriented research firms have been helping global clients understand customers and potential customers ethnographically as a way to find and deliver innovation opportunities. The list of innovation strategy agencies continues to grow, and their work is absolutely central to the challenge of developing long-term cultural strategies.
Love of large data sets, Big Data, AI, and predictive analytics are like drugs that corporate leader take to eliminate all uncertainty so that they can link up earnings guidance with quarterly results in an endless game of financial engineering and share-price management. Of course data is awesome, but data on its own does not tell stories.
Humans live in stories and in their imaginations, and the hard-earned insights into the contexts of human experience (in restaurants, airports, shops, homes, sporting events, and even at work!) are more valuable than most businesses appreciate. Developing long-term cultural strategies requires firms to be always vigilante about what is going on in the world, where, why, and in what directions.
Developing a Culture Compass can be likened to the Shell Scenario Planning process where social and data scientists collaborate to map the futures that are relevant to where the company and the world are going. Forgeing just one share-buyback cycle could fund such a committment for years and years.
3. Align around cultural narratives
Standard approaches to assessing and "changing" company culture often reify phantams. Surveys reveal culture "types" which can be 'changed' through generic 'gap closing' programs. Or, to use the languae of change management- 'unfreezing, shifting, refreezing.' Such approaches are anathema to actual humans.
Employees live in the same worlds as customers, and cultural experiences cross boundaries. It is time to shift our thinking from company culture as an isolated, definable thing to aligning employee experience with the markets and cultures for whom companies need to innovate. That is, once the ethnographic insights are gathered and delivered by an outside agency (see list above) or internal team, those insights need to be widely and systematically shared across all departments and levels of the organization.
One aspect of culture on which most anthropologists agree is that culture is learned. Or, to put it into motion, the process of learning. In some cases companies will hire outside ethnographers to dive deep into customer experience, but that activity can be siloed off as part of 'marketing.' Perhaps marketing liaises with product designers, but unfortunately those critical cultural insights are often insufficiently socialized throughout the rest of the firm.
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To embed cultural knowledge throughout the various ranks of the organization, the insights team needs to be given the latitude to present findings and conduct workshops at all levels of the organization on a regular basis. It is simply not possible for everyday employees to know what is really going on in the broader environment around them all on their own. They need to be kept apprised so that they know how and where their work fits into where the company is going.
Further, internal learning based on external ethnogarphic insights needs to start at the top- with the CEO and the senior leadership team. This is where the commitment to developing long-term cultural strategy begins.
4. Empower Inside-Out Innovation
From the perspective of EA, culture is largely concerned with adaptation and innovation-- experimentation, trial-and-error problem solving, and learning. Innovation is what humans do best.
Organizations that consistently innovate for customers--Haier, W.L. Gore, Intuit, Google, 3M, Microsoft (under Satya Nadella)--often do so by empowering their employees to autonomously generate innovation as part of their jobs. Long before Google launched its famous 20% time program, 3M had been running a 15% time program for decades. W.L. Gore calls it Dabble time, which is their way of nurturing employee-driven (or inside-out) innovation.
If steps three and four of the framework are sufficiently embraced (CX insights and the sharing of those insights), a cultural strategy can become proactive through organic innovation. This can be a win-win in that the company benefits from having a pipeline of innovations to test out and launch, while also transforming employee experience through innovation. But what does this mean?
In The Open Culture Handbook I suggest that innovation is as much an HR issue as it is a business-growth issue. When employees are allowed to use the full measure of their potential by being challenged to come up with new products, services, processes of business models, the employee experience is transformed and engagement increases. According to research by Culture Amp, eighty percent of highly engaged employees say that their employers prioritize innovation.
Empowering employees and teams to act on ethnographic insights from the inside-out might sound straightforward, but it isn't. Large organizations that must execute at scale silo themselves out of necessity, and working across those silos becomes exceedingly difficult. However, any long-term cultural strategy that enables a firm to be continuosly responsive to external cultural and market demands must figure out their own ways to work across their silos.
5. Engage in Continous Learning
Under the leadership of Satya Nadella, Microsoft has embraced the values of the growth mindset, where employees are encouraged to try new things, take risks, and experiment, as long as there is learning from both successes and failures. Some observers (myself included) suggest that Microsoft's phenomenal financial turnaround under Nadella is first and foremost a cultural turnaround, which is premised on continuous learning and tolerance of risk.
Everyday cultural learning is different than (but complimentary to) the more formal training and development programs that companies embrace. For cultural learning to accrue as new capabilities and organizational learning, though, knowledge sharing and knowledge management must also be put in place.
Too few companies have after action reviews (AARs) in place to capture ongoing learning from everyday work. Whether it is a product or service launch, a beta launch, an A/B UX test, OR an abject failure at doing something new, each such instance is an important learning opportunity. The military is adept at conducting AARs, and there are lessons there for other organizations.
Given the abundance of collaboration technology platforms available, there is no excuse for not systematically conducting AARs and sharing those insights across organizations on an ongoing basis. Note that these are not "suggestion boxes" for new ideas, but rather downloads of lessons learned from projects, research, experiments, prototypes, hits, and misses.
Cultural strategy is an ongoing, unending process, not a strategy document like days of old. And cultural learning is the lifeblood of cultural strategy. As Columbia Business School's Rita Gunther McGrath puts it, there is no longer such a thing as "sustainable competitive advantage." Rather, we live in a world of continuous innovation and learning. That very process--culture--is what has propelled humans to unprecedented success as a species.
Cultural Strategy & Corporate Strategy
Businesses have looked with curiosity at the promises of anthropological insight for the past forty years. Our work has been influential in business in many ways- particularly in the areas of CX/design/marketing research and cross-cultural management. Secondarily, more recently we have been influencing decision making in workplace strategy and employee experience, which is exciting as well.
However, and I know I'm not alone in thinking this, the potential of anthropology is much greater than just research. To the extent that innovation remains a source of (perhaps not sustainable) competitive advantage for most firms in most industries, anthropology is uniquely positioned to contribute to corporate strategy as well.
Using the Open Culture Framework, leaders will learn that cultural strategy can be a vehicle for the types of ever-changing corporate strategies that provide a competitive advantage. Psychology, economics, and Big Data of course all have their roles too, but anthropology's untapped potential is enormous.
In some respects the beginning and end of the discussion is the ethnographic mindset, with its foundations in empathy. Inverting the decision-making process from top-down, MBA-oriented approaches to more of an ethnographic, field approach can be a more effective way to find innovation opportunities that drive a winning corporate strategy. And that will be greatly facilitated by committing to developing your cultural strategy.
About Drew
I am a consultant, business anthropologist, writer, speaker, and former business school professor who provides culture advisory and coaching to senior leaders. To learn more about speaking topics and how I work, visit Drew Jones Design