Growth CEO perspective: Culture & why it matters

In my time as a CEO my attitude to culture has changed considerably. At the start, I don't mind admitting that I paid far more attention to results, and far less to culture. But it wasn't too long before I was left wondering why I felt like a stranger in my own company, why disunity reared its head where I expected harmony, and why performance felt hard to come by.

Over time I came to realise the quality of outcomes in any team setting correlates to the authenticity, alignment and strength of the culture. Particularly in high growth and fast change environments. In other words, I came to understand that culture isn't peripheral to results, but instead their great enabler.

A CEO should be spending significant time discussing, reiterating and developing culture with the people in their company, considering it as important as any other functional field of activity, or locus of CEO responsibility.

What culture isn't...

Lets start with what culture is not (in my view at least) before we move onto what it is, and why it matters:

• Culture is not "Engagement" – whilst good cultures feature engagement, in my experience, you can still have great engagement in an inappropriate culture.
• Culture is not "One emotion" – culture is not a singular emotion. It is not always easy to have a consistency of one emotion whilst being true to culture norms and values. Happiness is not a given for example, even though it is often cited as a cultural norm. It is of course more likely in a good culture, but it is probably secondary to more enduring markers of meaning like self-esteem, personal growth and development that comes from the challenge a culture lays down to people.
• Culture is not "Strategy" – culture should be capable of enabling a strategy but it isn’t THE strategy. Strategy is vision, objectives and plans. Culture is something less prosaic and more poetic, speaking to hearts as well as minds
• Culture is not "Inclusion" - good cultures do not discriminate by physical characteristics or identity, and businesses are richer for diversity in these aspects. But by definition, a solidly bounded culture that stands for particular values and beliefs, whilst broad enough to accommodate welcome challenge and variety, will not be capable of accommodating ALL AND EVERY value set or belief system. That’s ok.

What culture is...

Ok then, so what is culture? A simple definition I came up with is as follows:

"Culture is the sum of shared assumptions, values and beliefs, which govern how people think, behave & act in a given team or group. It is the “glue” that binds varied individuals together as a recognizable and distinctive group. Otherwise and simply summarised as 'The way we do things around here'"

I don't expect to win an MBA prize, or a medal for originality with those words, but I hope it does the trick!

Supporting foundations...

Like any edifice, culture will typically have some important supporting foundations. I don't intend to look at these in this article, but I will unpack them in subsequent posts. So, this is just so you can see that I consider them as more than incidental concepts:

• Shared purpose
• Common values
• Desired behaviours & ideal or role modelled actions
• As a safety net, codes, processes and policies

The culture spectrum

A useful model for thinking about segmenting different types of culture is as follows (borrowed from Harvard Business Review):

• A learning culture: exploration, expansiveness, and creativity. Work environments are inventive and open-minded places where people spark new ideas and explore alternatives. Employees are united by curiosity; leaders emphasize innovation, knowledge, and adventure.
• An enjoyment culture: fun and excitement. Work environments are light-hearted places where people tend to do what makes them happy. Employees are united by playfulness and stimulation; leaders emphasize spontaneity and a sense of humour.
• A results culture: achievement and winning. Work environments are outcome-oriented and merit-based places where people aspire to achieve top performance. Employees are united by a drive for capability and success; leaders emphasize goal accomplishment.
• An authority culture: strength, decisiveness, and boldness. Work environments are competitive places where people strive to gain personal advantage. Employees are united by strong control; leaders emphasize confidence and dominance.
• A safety culture: planning, caution, and preparedness. Work environments are predictable places where people are risk-conscious and think things through carefully. Employees are united by a desire to feel protected and anticipate change; leaders emphasize being realistic and planning ahead.
• An order culture: respect, structure, and shared norms. Work environments are methodical places where people tend to play by the rules and want to fit in. Employees are united by cooperation; leaders emphasize shared procedures and time-honoured customs
• A caring culture: relationships and mutual trust. Work environments are warm, collaborative, and welcoming places where people help and support one another. Employees are united by loyalty; leaders emphasize sincerity, teamwork, and positive relationships.
• A purpose culture: idealism and altruism. Work environments are tolerant, compassionate places where people try to do good for the long-term future of the world. Employees are united by a focus on sustainability and global communities; leaders emphasize shared ideals and contributing to a greater cause.

In reality, a culture can have multiple components of each and are very unlikely to be one or two dimensional.

And it is important to note that many businesses will shift between different combinations over time, either passively or proactively (see below).

However, somethings you can count on as "laws of cultural physics":

• Order, Authority and Safety cultures tend to fit best to low change/slow growth environments
• Learning and purpose cultures tend to thrive best in high change, high growth environments
• Choices between caring/enjoyment cultures on the one hand, and results cultures (if being made deliberately by businesses) should be symbiotic with the goal-setting on the speed and magnitude of financial aspiration.

Like it or lump it, you have one, so pay attention!

Importantly for any leadership team, culture exists whether you like it or not, and whether you want it or not, and won't simply be a reflection of the "top of the company's way of thinking", and nor should it.

In truth, culture comes into existence passively or proactively.

Passive cultures tend to be:

• Inherited from the founders, or previous stewards of the business, so may be anchors in a past long since irrelevant
• Or, accidentally developed through the habits (good and bad!) and experiences of people
• Or, refined/defined through how the mix of people in the group alters organically (hiring)

Passive drivers of course can result in successful culture, but there lots of risks to the "let it be" approach, namely the emergence of vastly different and opposing cultures in different parts of a business, culture that may be incompatible with the strategic goals of a business, and resulting tensions and frustrations and/or sub-optimal results.

Personally, I would not recommend passivity in culture as it leaves "too much to chance".

Proactive cultures tend to arise when:

• The foundations of culture are challenged, changed and shaped to the purpose and strategy of the business, involving everyone in the business
• Culture is consistently exemplified and discussed by leadership
• Cultural foundations are consciously and continuously applied, tested and refined by everyone of the organisation
• Culture fit/evolution is considered actively in the hiring and development of people

Proactive drivers can also result in successful cultures and have the benefit of a coherent and cohesive attempt to create a spine of culture that links it to business strategy and objectives.

But there are risks here too, namely that by working with your people to determine what you stand for, you will surface misalignment at an individual level that may well lead to churn. It is best in the long run that those misaligned to a consensually constructed culture of a particular group find an environment better suited to them. But that doesn't mean it will come without disruption in the near term which will need to be managed. The medium term benefit is worth it, but be alive to the risks.

It is also a courageous undertaking for leaders as in truth, if they seek to develop cultures collaboratively with their people (as they should) then it means conceding some illusory control. I say illusory because in reality, no leader really controls culture unilaterally anyway, so better to be brave and play a key part in driving consensus than to keep pretending!

But aside from this, once you begin down this road be prepared for this to be a perpetual adventure. Culture is not a project but a way of life, that involves everyone playing their part.

When the magic happens...

Culture is the foundation of strategy and enables performance. As a result, I would contend strongly that successful organisational culture:

• Will be focussed on proactively, and not left to chance
• Will have in mind the values, behaviours and norms that are compatible with strategy, business context and purpose
• Will be developed collaboratively across organisational levels and boundaries
• Will manifest through every functional process, project or policy of a company
• Will be tended to and evaluated regularly, with leaders playing a central role in this exercise

Firstly, I freely admit that I have never managed to lead a culture consistent with each of these criteria. I am merely sharing what I consider to be the aspirational approach given all the lessons I have learned because I think that has value.

And secondly, I would focus in on the final bullet in particular. It is a cliche but the one constant is change, and never more so than in recent times when we see substantial paradigm shifts in the macro environment.

Business goals and strategies need to be both resilient and agile. Business change as a constant factor is implicit. So, therefore culture also needs fluidity. If culture is the foundation of strategy and enabler of performance, then work on any business change should ideally begin with the culture first.

Business change can be made to work if it front runs culture (so the change forces culture to follow), and sometimes you have no choice but to accept this. We have learned since 2020 that the world won't play ball with our best laid plans. But be under no illusions that when culture is forced to follow business change, rather than being primed to support it first, then it makes for a tougher transformation of the company, with a particular burden falling on the shoulders of leaders.

So, a key job of the leadership team in a company is to be constantly thinking ahead, and working back to understand activities which can prime culture to support foreseeable business change. To a degree, we all have to take the black swans on the chin, even if we prime people to "expect the unexpected", but we certainly shouldn't make excuses for failing to prep culture for the changes that we do control.

In other words, the success or failure of a strategy is just not determined by the quality of a powerpoint deck, or long term financial model at Board level, however important those elements are. These set destinations, but it is culture determines the speed and smoothness of the journey towards them.

Thus, work must then begin to build and align a culture to realise the preferred strategic goals. An exciting process that - if got right - unleashes the immense collective potential of your people. And one that rightly warrants the full attention of leadership teams.