The 6 C’s that Shape Organizational Culture to Drive Performance
Peter Drucker was certainly on to something when he quipped, “culture eats strategy for breakfast.” Organizational culture is the accumulation of behaviors, beliefs, and social norms that define excellence in a given organization. If strategy sets the course for where an organization wants to go, culture determines how it will get there. A study by Denison and Mishra found that “strong” cultures, those that permeate the workforce fully and deeply, predicted much better current financial performance and future financial potential then their peers.
Companies that haven’t focused on their cultures are at a serious disadvantage in today’s competitive landscape. We recently saw this first hand with a retailer that is pivoting to survive the industry’s rapid digital transformation. The company and its private equity partner were ready to expand through new products, ecommerce expansion, and acquisitions. The CEO and a few members of the leadership team had some doubt about the company’s ability to successfully integrate new teams, processes, and systems into the business. After unpacking their concerns, the core problem became clear: the organization was unsure of its unique identity, culture, and strategic direction (let alone the mechanisms to follow it). Summit helped the executive team to start by identifying the strategic direction. But we didn’t stop there. We next helped them to identify how culture could be shaped to help achieve that strategy and develop the systems and processes to measure and sustain both.
This example is one of several we’ve come across. In many high-growth, mid-market companies, culture is a social leftover from their history rather than an intentionally crafted atmosphere that facilitates change and growth. Time and again, companies with strong cultures outperform those without them. Unfortunately, few organizations dedicate enough time to culture to understand its reciprocal relationship with strategy. It cannot be stressed enough that the entire company benefits when the C-Suite takes the time to see progress through a cultural lens.
Organizational leaders looking to take their culture from “existent” to “intentional” can start with these six actions.
6 C’s of Culture that Set the Pathway for Success
- Consider Context
The legacy and history of an organization are embedded in its collective cultural story. This is the narrative employees use to explain how and why the company operates the way that it does. Often, this story is transmitted and expanded through informal channels – think water-cooler chats instead of company-wide emails. As such, control over cultural changes can quickly slip out of the hands of those at the top, especially when employees feel threatened or uncomfortable. It is important to anchor strategy and proposed cultural changes within company history and other familiar areas to give employees a sense of reassurance. Show respect for the organization’s legacy and clearly communicate the goal to continue leveraging past strengths while creating new opportunities.
- Clarify Strategic Direction
Lead with strategy. Be sure to clearly establish the strategic vision the company is working towards. As previously stated, effective cultures are intertwined with strategy. In our experience, it’s best to identify a few critical cultural factors that best align with the strategic direction and priorities. Determine the behaviors and stories that most reinforce what is to be strategically accomplished and make them the focal point for change.
- Create Your “Critical Few”
Once there is clarity on the focal points, anchor the “newly” envisioned culture in concrete employee and leadership behaviors that need to happen more often.
Jon Katzenbach, a well-known scholar of culture change, advises that organizations, “pick a small number of important behaviors that would have the greatest impact if put into practice by a significant number of people in the organization.”
A workshop, facilitated by an expert, for the senior leadership team is an effective way to identify the new culture’s “critical few.” Expert facilitation allows the entire team to participate and guides the conversation into meaningful channels. The facilitator should help the leadership team to develop two lists: what must change, and what should change. Both lists should aim to align future culture and strategic vision but differ in their content. The must list should address organizational needs that benefit the organization, (e.g. flextime policies, employee resource groups, gender equity). The should list should be the small set of things to change to drive the strategic direction. The combination of these two lists should be shortened to 3-5 factors: these are the “critical few.”
- Choose the Right Levers
Next, consider the right levers to initiate the changes in the critical few factors. Think of levers as existing mechanisms that can be changed in some way to inspire different behaviors. These can be formal or informal. Formal levers include things like reporting structures, incentives, and performance management techniques. Informal levers include internal champions, peer-to-peer networks, and general communication. Usually, successful companies are those that use a blend of the formal and informal to support the changes.
- Catalyze Your C-Suite
The senior team must be involved in all the prior steps. In our experience, change must start at the top to be believable, to cascade, and ultimately to last. In the best initiatives, the senior leaders changing their messaging and behavior before any official announcements about culture change are released.
If it’s possible that the C-Suite will justify a lack of participation, the organization should seriously consider an external facilitator. This person should be familiar with leadership and team dynamics to coach them through this process.
To get cultural change to “stick” in organizations, employees need to see top leadership buying in. This means key leaders must live the new cultural values in their words and their actions. Where senior leadership goes, the organization will follow – and leading by example is a great way to start.
- Champion the Change
In addition to the C-Suite cultural ambassadors, look to recruit internal champions throughout the organization. These people should be able to explain the change, how it ties into the organization’s mission, and its value to the organization. These advocates are probably scattered across the organization, from ground-level employees who are passionate about social change to high-potentials seeking a better way to lead – just find them!
Once champions are identified, train them on the organization’s new way of thinking, communicating, and succeeding. Similar to how the older culture was transmitted, this training can be undertaken either formally or informally – just make sure it sticks. If advocates are prepared appropriately, their enthusiasm for change should spread to those around them, eventually permeating the whole organization.
In this case, “eventually” can mean as long as 2-3 years. Be prepared to consistently support, reinforce, and recognize employees who believe in the organization’s new culture. Keeping the culture change momentum going is essential.
Following these 6 C’s of culture change helps organizations optimize their strategic direction. Over time, enacting these guidelines to shape the culture will pay off in increased employee engagement and improved organizational performance.
Summit Leadership Partners advises Boards, Investors, CEOs, and senior leaders on strategically scaling business through talent and organization assessment, executive team performance and coaching, leadership development, and organization effectiveness. Our consulting team has held top leadership roles in successful companies across the globe. We are seasoned experts in strategy, assessment, leadership development, coaching, strategic talent management, and organization development. Connect with us to learn more about how we can help your business.
- Scott Davis, CFA, Jake Levinson, CFA and Tom Liu (July 17, 2018) Why Culture Matters: Simplicity is an Investible Theme. Melius research Strategy Brief.
- Denison, D. R., & Mishra, A. K. (1995). Toward a theory of organizational culture and effectiveness. Organizational Science, 6, 204-223. doi:10.1287/orsc.6.2.204
- Jon Katzenbach, Carolin Oelschlegel, James Thomas (Issue 82, Spring 2016) The 10 Principles of Organizational Culture. Strategy and Business Magazine.