1. The Power of Corporate Culture

An organization's culture is a powerful force. It affects everybody at every level, in every aspect of their work, all the time.

When well designed, culture can build a spirit of customer focus. It can empower people as internal entrepreneurs; it can support collaboration; and it can encourage innovative leadership.

On the other hand, when culture evolves in the wrong direction, good people may fall victim to common practices which are widely accepted but counterproductive. This can destroy teamwork, undermine individual initiative, and seriously impede everybody's performance.

Poor teamwork, a lack of initiative, and performance problems are often blamed on people. It's assumed that people aren't working hard enough or smart enough, or that they aren't cooperative or well intentioned.

However, blaming people may be both unfair and mistaken. In the following case studies, consider how easy it would be to blame individuals, when in fact the root cause is the organization's culture:

• A human resources department attempted to control its clients with corporate mandates and restrictions, and did little to help them when their unique needs seemed to conflict with corporate policies.

  The information technologies department found it was unable to hire the specialists it needed because the corporation's job grading system didn't recognize the unique attributes of the high-tech labor market. IT complained that HR was unresponsive and difficult to work with.

  HR staff responded that they were working for the "corporate good" and protecting shareholders' interests in the face of unruly business units that wanted to violate HR rules.

  The root cause: HR staff didn't understand that they're in business to help clients succeed with their unique missions within the bounds of corporate policies -- that they're a service organization, not police. They didn't understand that they should help IT attract top talent in an equitable manner, not enforce rigid procedures.

  Instead, HR staff thought they knew what's best for their clients and felt responsible for clients' business decisions. As a result, they antagonized the people they were supposed to support, and ultimately lost credibility and influence.

  The solution: a culture of customer focus in which staff learn to serve internal clients with their products and services.

• An executive was concerned about a lack of innovation in his organization, and personally sponsored a few high-profile research projects. As interesting as those projects were, most staff remained languishing in aging technologies.

  The root cause: Staff knew it was their job to produce the products of their group (i.e., deliver projects utilizing current methods and technologies), but didn't think it was their job to keep their product line up to date. They left all the innovative thinking to the boss, so the pace of innovation slowed.

  The solution: a culture of entrepreneurship in which staff take responsibility for running their business within a business, and for keeping their products and services up to date.

• An executive noted that one group within his organization seemed to be growing more rapidly than was warranted, and suspected the manager of "empire building." The leader of the expanding group claimed that she had to hire people with skills that already existed in other groups because those other groups didn't have time to support her when she needed them.

  The root cause: This leader had a habit of making promises to clients before checking with the other groups she needed on her team (her internal suppliers) to find out their availability. When she later realized that internal suppliers were busy, she was forced to have her group do the work themselves.

  The solution: a culture of teamwork where people coordinate with their team members before making commitments to their customers.

• Staff were constantly frustrated by their supervisor's micro-managing them. Although he'd told them they're empowered to do whatever is necessary to please their customers, he dictated every detail of every project and reviewed progress daily.

  The root cause: The supervisor didn't understand that empowering people means asking for and monitoring results. This manager gave assignments by requesting tasks, processes, and effort rather than specifying the needed deliverables. And staff didn't negotiate with him for all the resources and authorities they needed to succeed.

  The solution: a culture of empowerment where people learn to negotiate assignments in terms of deliverables and the resources needed to produce them.

• An executive was unhappy with her engineering group's reputation for delivering projects late.

  When a client demanded another project, engineers had a habit of agreeing even when they knew they didn't have the time to do it. Although they worked long hours and tried their best, engineers couldn't keep up with clients' demands.

  As they juggled their commitments to satisfy competing demands, all their projects fell behind and disappointed clients learned that they couldn't trust the organization. The engineers blamed their clients for unreasonable expectations, while clients accused the engineers of inefficiency.

  The root cause: These engineers felt they had to say yes even when they knew they couldn't deliver their promises, fearing they'd be accused of being uncooperative, unproductive, or unsupportive of the business.

  The solution: a culture of integrity where people say an honest "no" and then offer viable alternatives (like adjusting priorities, funding contractors, or waiting for the next available time slot).

• An information technologies department had a reputation for building "Rolls-Royce" TM solutions, even when a "Chevrolet" TM would have been more appropriate and less expensive.

  The systems developers took pride in producing the highest-quality solutions in their industry, but their clients began to buy less expensive packages from vendors outside the corporation.

  The root cause: Staff didn't understand that customers vary in their willingness to pay for perfection, and that quality does not always mean delivering high-end products. Their culture induced high costs because people always tried to maximize functionality and delivered the highest level of service rather than allowing their customers to specify their needs.

  The solution: a culture of quality that differentiates professional excellence (always there) from level of functionality or service (price point, decided by the customer).

• A project leader needed help from people in another group, and invited them to join her team. Although that other group committed to a target date, they failed to deliver on time.

  When challenged, the group said that they got a higher-priority job from a "real" customer, a client outside their organization, so the internal commitment was put on the back burner.

  The root cause: Staff didn't realize that promises must be kept, regardless of whether they are made to internal or external customers. After all, peers were working for "real" clients too, and failing at internal commitments ultimately affected some client.

  The solution: a culture of teamwork where internal customers (teammates) are respected as much as external (client) customers.

These are just a few examples of common organizational problems that trace their root cause to bad habits -- cultural problems -- not to individual performance problems.

In fact, the people in the above case studies were intelligent; they all had good intentions; and they all worked hard. Unfortunately, they were not working within the framework of a well-defined, world-class culture.

These same people would have behaved quite differently in a healthy culture where the norm is a set of behaviors that are empowering, collaborative, productive, customer focused, innovative, and motivational.

By solving the kinds of problems described above, implementing a healthy culture inspires staff, improves the effectiveness of the entire organization, and satisfies internal and external customers with effective partnerships.

Building a healthy culture is a powerful act of leadership, one with lasting effects.

Surprising to many, culture can be changed relatively quickly, offering immediate payoffs. This monograph explains how.