Culture is “the shared norms and expectations that govern the way people approach their work and interact with each other. Such norms and expectations shape how organizational members believe they are expected to behave in order to fit in, get things done, and at times simply survive.” — Human Synergistics International
Culture eats strategy for lunch. I don’t care if you talk about strategy at every meeting. If you culture doesn’t line up with the strategy you’re promoting, you will never get ahead.
There are three types of company culture: constructive, aggressive/defensive, and passive/defensive. In upcoming columns in the series, we’ll be talking about each of these cultures and interviewing people who will share their wisdom and experience about what has worked for them and what hasn’t. Watch for this column for tips and stories that will act as a mirror, allowing you to analyze your own company culture and work toward one that is constructive and leads to increased revenue.
A constructive culture is driven by the core belief among employees that their effort makes a difference. In this kind of culture, you’ll find encouragement, collaboration, and achievement.
Two types of defensive culture exist and both are rooted in the employees’ belief that their effort does not make a difference. The question is why do they hold to this belief?
In an aggressive/defensive culture, the leadership models arrogance. They promote the idea that the organization is already perfect. An unfortunate example of this is Microsoft. They were an aggressive/defensive culture that became stagnant with success. And they were taken on by Apple, whose constructive culture led to the innovation that ultimately took a big bite out of Microsoft’s influence and market share.
Organizations that become the biggest and baddest must refrain from arrogance because as it leads to success disease. These cultures breed perfectionism, competitiveness, and oppositional mindsets, creating organizations that lose innovation because they believe they are already the best. Whenever you state that you’re right or perfect, it’s impossible to be wrong. You end up creating paradigm paralysis and you never grow. I noticed this with my own company when I started saying that we were the only company with such a complete, long-term training model. It was true, but I’ve shifted the way we say it because I know that we could easily get arrogant—and then stuck. So now we say, “We are currently the only ones doing this. However, anyone could copy us and we have to stay ahead of the game so we remain the best.” That way, we don’t get stuck in success disease.
The other type of culture that stems from the belief among employees that their effort doesn’t make a difference is the passive/defensive culture. In this culture type, employees believe this lie because they have a victim mindset that says, “It’s not me; it’s the circumstances.” Those circumstances might be the market or the prices or the weather or the land positions. They can point to just about anything as the problem—the government, their prospects, the economy, foreclosure rates. You name it: They’ll blame it.
Here’s a question to ask yourself to determine whether your company has this culture: Are people waiting for someone to tell them what to do? Do they feel they can’t make decisions without running them by leadership? If yes, then you have a passive/defensive culture. This leads to an environment where a bunch of “smart” people are making all the decisions, and everyone is waiting on them to make those decisions.
(Here's a video link for more insight on constructive and defensive cultures.)
So why care about what kind of corporate culture you have? Well, it’s simple. Constructive cultures make more money. According to Human Synergistics International, 80% of companies are defensive (unadaptive) in nature (whether aggressive or passive) and 20% are constructive (adaptive). But that’s only part of the story. Over an 11-year period, Human Synergistics studied 207 companies and found that in a constructive culture, profitability went up 756%. On the other hand, in a defensive culture, profitability went up 1%. It’s tricky on the surface because the defensive companies went up higher in revenue, but their profit only went up 1%. That’s because overhead increases when leadership must continually hire more people to achieve less. A defensive culture may lead to bringing in more money, but without increasing revenue. Scary, huh?
The bottom line? Profit looks nice on the surface, but revenue pays the bills. As my dad says, “It doesn’t matter how much you make. It matters how much you bring home.” So if you want to bring home more bacon, you’ll have to work on having a constructive culture. Explore this topic further with us in our next column.
Reference: John P. Cotter: Cotter and Heskett’s “Corporate Culture and Performance”