Your Culture Sees You Through - Or Does For You

Reading through a list of well-known strategy failures recently, I wondered why some companies rebounded from their mistakes, and others did not.

The list of corporate strategy failures included:

Apple

In the early 1990’s Apple was struggling due to declining innovation and increased competition from Microsoft. By 1997 Apple teetered on the brink of bankruptcy.

Boeing 737 MAX Crisis

To compete with Airbus, Boeing hastily launched the aircraft to market – without fully investigating potential issues with the MCAS (Maneuvering Characteristics Augmentation System). Intended to improve flight handling automatically, instead, two fatal crashes occurred, leading to a worldwide grounding of aircraft and billions of dollars in losses.

New Coke

The sweeter version of Coca Cola launched in 1985 caused an outcry from customers (400,000 complained) and a swift withdrawal of the product and reversion to Classic Coca Cola.

Blockbuster

In the 2000’s Blockbuster continued to operate video rental services from physical outlets, missing the chance to move to streaming services – and also passing on the opportunity to buy Netflix for $50m.

LEGO

Entering the 21st century, LEGO was facing financial challenges. It had expanded into video games and theme parks which diverted attention from the LEGO bricks.

Enron

A leading energy company that collapsed in 2001 due to unsuccessful expansion in tandem with widespread accounting fraud aimed at hiding massive debts and misleading regulators.

For an in-depth read, turn to, ‘Enron: The Smartest Guys in the Room’ by Bethany McLean and Peter Elkind.

Toyota

In 2010, Toyota recalled 8 million vehicles in response to faults with the acceleration mechanisms. Cars were accelerating without driver input, with at times fatal consequences.

Common Cultural Traits

Whilst some failures would be pretty much impossible to recover from, such as Enron, there are common cultural traits across those companies that did rebound.

It struck me that the culture of these companies facilitated the effective regrouping and regeneration of a new strategy – and its successful implementation.

Looking at a few of the organizations that rebounded fully, how did culture support the recovery?

Commitment to Core Values

Values, when lived and visible through the actions of leaders, drive behaviour – and culture is embodied in behaviour.

Those that stand out from the above companies as especially relevant to the situation include:

·???????? Creativity and learning for Lego

·???????? Integrity (be real), accountability and leadership for Coca-Cola

·???????? Genchi genbutsu (see for yourself) and kaizen (continuous improvement) for Toyota

·???????? Design – a core competency and implicit value at Apple

Customer-Centric Focus

You know you’ve made a mistake when over 400,000 people write to you complaining about the New Coke.

Some wrote to him addressing his as ‘Chief Dodo’, another asked for his autograph because in years to come it would be worth a fortune as the signature of ‘one of the dumbest executives in American business history.’

Robert Goizueta, CEO at the time, admitted the mistake – and even today, Coca Cola doesn’t shy away from its error.

Their website states that New Coke, ‘was one of the most memorable marketing blunders ever’

Toyota CEO, Akio Toyoda, publicly apologized and took responsibility for the crisis, admitting Toyota failed to live up to its own standards of quality and safety and saying he was ‘deeply sorry’.

Resilience and Adaptability

Taking accountability for failures, learning from them and taking decisive action to implement change requires significant energy and resilience – as well as constant communication to all stakeholders.

As you just saw, Coca Cola is still open about its mess up with New Coke – living its value of integrity – and being real.

Courageous Leadership

The CEO’s took accountability, engaged stakeholders and empowered employees in crafting the solution, and continuously communicated on progress. They drew on their core values to drie the necessary change.

Emotional Intelligence and Culture

Can a corporate culture be successful without emotional intelligence?

Even formulating core values and deciding how these are to be lived, and how people are going to be assessed in their performance reviews and feedback sessions requires emotional intelligence – the blending of thinking and feeling skills.

Everyone is a leader in an organization – as everyone is influencing and making decisions that impact others – whether in a formal people manager role or not.

Of course, the CEO and leadership team are (hopefully) highly visible, so their actions set the tone.

The EQ thing to do in a crisis is accept and acknowledge it.

Sometimes it’s difficult – due to a variety of reasons, some of which are themselves cultural.

Take Akio Toyoda – who didn’t speedily acknowledge failings, but did step up to offer a sincere apology and then take swift and lasting action to correct the failings.

Culture Sees You Through...

Whilst many factors play a role in enabling a comeback from failures, mis-steps and crisis, to what extent does culture enable companies to rally?

And to that point, how robust is your culture?

Will your people be driven by the practiced values and embedded behaviours in your organization in the event of a major challenge?

Or will you need to revisit your culture – perhaps reconnect to its roots – to move ahead?

Perhaps this is the question for Boeing, where to turnaround continues to be a work in progress. Researchers suggest that a culture shift post the acquisition of McDonnell Douglas steered Boeing away from its values of engineering excellence towards a stronger focus on shorter-term financial performance.

For more on this you can watch the John Oliver Last Week Tonight episode on Boeing. (Note his language includes a spattering of expletives).

...Or Culture Does For You

In Enron’s case, the culture that had developed under the leadership of Kenneth Lay, Chairman and Jeffrey Skilling, CEO and COO was one of obfuscation – hiding or ignoring reality, enormous risk-taking in the pursuit of short-term profits, unethical accounting practices, and covering up employee concerns.

The performance review system, ‘rank and yank’ where employees in effect performed against each other, fostered a culture of fear and self-preservation.

Culture - The Tangible Intangible

Culture – often described as an intangible – is clearly felt and experienced by people in an organization.

It’s a curious case of an intangible having a very tangible impact on sustainable success.

Andrea Stone is an Executive Coach and Educator, working with leaders and their teams to create sustainable success in global, dynamic organizations.

A former global marketing leader in tech-driven organizations, she brings diverse insights and cross-cultural appreciation to support leaders and teams build on strengths to generate long-term value.

? Andrea Stone, Stone Leadership