21 Jul #078 – Integriosity – Re-Imagined Implementation – Culture
ESSENCE: Once a leader, armed with a RENEWED understanding of God’s purpose for work and business, RE-IMAGINES the Purpose and Values of the organization they lead, the final (and most difficult) step is to Re-Imagine Implementation of that purpose and those values throughout the organization by re-imagining its organizational Culture. Re-Imagined Purpose forms the cornerstone of the organization and Re-Imagined Values complete the foundation, but Re-Imagined Implementation through Re-Imagining Culture is where change occurs, where employees are engaged (or disengaged), where customers are retained (or lost), and where vendors become loyal partners (or transactional adversaries). Culture is important because every organization has a culture (whether intentional or unintentional, healthy or toxic) and culture defines the day-to-day experience that various stakeholders have with the organization. It is often said that “culture eats strategy for lunch.”
Our last four posts (#074, #075, #076 and #077) have looked at how a leader, armed with a RENEWED understanding of God’s purpose for work and business, begins to RE-IMAGINE the Purpose and Values of their organization. With Re-Imagined Purpose forming the cornerstone of the organization and Re-Imagined Values completing the foundation, the process of Re-Imagining Alignment of the organization with Biblical beliefs, values and priorities can move to the final (and most difficult) step of the RE-IMAGINE stage in Integriosity®–a Re-Imagined Implementation of that purpose and those values throughout the organization by re-imagining an organizational Culture that reflects and re-enforces that purpose and those values.
Re-Imagining Implementation: The Importance of Culture
You have probably heard it said that “Culture eats strategy for lunch” (or sometimes for breakfast), yet so many organizations either ignore culture or even cultivate a toxic culture. As we have said many times in prior posts, purpose and values define the culture of an organization; the culture shapes the behavior of the people in the organization; and the behavior of the people drives the results of the organization.
Every organization has a culture, whether intentional or unintentional.
- Intentional Cultures: Intentional cultures are designed to reflect a specific purpose and set of values.
- Intentional cultures can be intentionally healthy (e.g., our culture is to faithfully “do right”) or intentionally toxic (e.g., our culture is to win at all costs).
- Not all intentionally healthy cultures are actually healthy, but all healthy cultures are intentional.
- We believe a healthy work culture prioritizes relationships, community, human dignity and flourishing of all people.
- Unintentional Cultures: Unintentional cultures will reflect the values that the people perceive as those valued by their leaders.
- If no values are stated and reinforced, people will gravitate to “me” (the worldly defaults of self-advancement, self-protection and personal profit maximization).
- Unintentional cultures tend to become unhealthy or even toxic cultures based on self-interest and the behavior of the leaders.
- Unintentional “informal” cultures can exist even within organizations that are trying to cultivate intentionally healthy cultures. This idea is described well by Jacqueline Brevard, who served as Chief Ethics Officer for Merck & Co., Inc.
There is both a formal culture and an informal culture within an organization. In the formal culture, companies can say all the right things and have all the appropriate infrastructures in place. The informal culture is what actually happens within the company, how people behave, how they are rewarded, which rules are followed and which are not.
Culture is important because it defines the day-to-day experience that various stakeholders have with the organization. It is how employees experience their work-day, how vendors experience contract negotiations and contract performance, and how customers experience interacting with the organization. Unlike lofty purpose statements and value lists, culture is where the rubber meets the road and the boots hit the ground.
In March 2012, the New York Times ran an Op-Ed piece by an investment banker who was leaving Goldman Sachs after 12 years. Whether or not his assessment of negative changes in the culture at Goldman were fair, his statement about the importance of culture at Goldman are insightful (emphasis added):
It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization.
Culture eats strategy for lunch. (Unknown)
Re-Imagining Implementation: What is “Culture”
Organizational culture is clearly important, but what is it? Whatever it is, it is not as easy as agreeing to a purpose statement and memorializing a set of values. Culture in an organization is an ever-changing reality that must be cultivated and curated. It is growing and evolving even if management does nothing about it–in fact, it can grow and evolve BECAUSE management does nothing about it. In some sense, culture is like a flower garden–you can’t just throw seeds (a purpose statement) on the ground and dump water and fertilizer (values). You need to loosen the ground in order to bury the seeds (buy-in) and then regularly water and fertilize (reinforcing the purpose and values through statements, education, reminders, reinforcements, rewards). It is also critical to weed the garden (eliminating forces and influences, such as disruptive employees or ineffective managers, that are working against the flowers) before the roots structure of the weeds chokes the flowers. We love this description by Chris Houston in his book For Goodness Sake:
Corporate cultures do not spring from words, hopes, or even powerful ideas. Like strategy, culture arises from and is made real by the actions and decisions of real people. . . . The enterprise that becomes purposeful does not do so solely because of extraordinary leadership, though that helps. Instead, it is a host of small yet intentional decisions made by extraordinary leaders, yes, but also by every rank-and-file member of the organization that accumulate to produce a cascade of movement in a positive direction.
But its author and marketing guru Seth Godin who we think best captures the nature of culture that makes it so challenging to change.
The attitudes you put up with will become the attitudes of your entire organization. Over time, every organization becomes what is tolerated. If you reward a cynic merely because he got something done, you’ve made it clear to everyone else that cynicism is okay. If you overlook the person who is hiding mistakes because his productivity is high, then you are rewarding obfuscation and stealth. People are watching you. They’re not listening to your words as much as they’re seeking to understand where the boundaries and the guard rails lie, because they’ve learned from experience that people who do what gets rewarded, get rewarded. Be clear and consistent about how we do things around here. It’s going to be a long time before people act like they own the place. After all, you own the place and you don’t even act like you do most of the time.
Re-Imagining Culture is more difficult than Re-Imagining Purpose or Re-Imagining Values but it is where actual change occurs, where employees are engaged (or disengaged), where customers are retained (or lost), and where vendors become loyal partners (or transactional adversaries). Just as you can’t have a house without a cornerstone (Purpose) or foundation (Values), a house is not a house if you never build on the foundation. We believe it is time to RE-IMAGINE the heart of the organization by pursuing business a better way in alignment with Biblical values and priorities–it is time to begin faithfully “doing right” through Integriosity®.
SPOILER ALERT: In the next several posts, we will explore how Culture relates to Purpose, Values, Products, Sustainability and Connection.
PERSONAL NOTE (from PM): For 23 years (15 as a Partner), I practiced law at a large “Wall Street” law firm (our offices were near Wall Street until 1989, when the firm moved to midtown Manhattan) with a very unique culture. In fact, it was sometimes described as the Goldman Sachs of law firms from the standpoint of culture. Like the Goldman Sachs banker who wrote the New York Times Op-Ed, I had pride and belief in the organization largely because of the culture. The firm’s culture was unique because it had been able to maintain aspects of a true “partnership” that most other large firms had eliminated as law transitioned from a profession to big business. Here are some of the unique aspects of the culture when I joined:
- Associates were given tremendous responsibility early in their careers. I recall being opposite a 60 year old partner from another firm on a transaction during my first year out of law school.
- Associates rotated every 12-18 months to different practice areas within their department (e.g., banking, securities, real estate, M&A, leasing, etc.) in order to develop into “generalists”, better able to think creatively about unique problems and adapt to changing areas of the practice. This continued until an Associate became a Partner or left the firm.
- Associates were all paid the same amount based upon their law school year (there was no competition among Associates for bonuses).
- Partners were compensated on a purely lock-step system, meaning a Partner’s compensation only increased if the firm’s compensation increased, and all Partners knew what others earned (it encouraged helping and covering for others).
- Associates did not have billable hour requirements or targets. The reward for doing good work was getting more work and greater responsibility.
- Each Partner had one vote in firm matters.
- Any Partner could sign a legal opinion on behalf of the firm, without review by any committee. As one Partner told me “my criteria in voting for a new Partner is ‘would I trust this person with everything I own’”.
- Partners felt that the firm was a “family” that took care of its people.
- “Marketing” largely consisted of picking up the phone by the third ring and always returning calls the same day.
- Associates were taught that they were the “safety net” for any transaction. Our job was to get the deal done for our client, even if that meant picking up a ball that some other law firm was dropping (and doing or fixing their work if necessary)–“not my responsibility” was not in the vocabulary.
- All clients were considered “firm” clients, rather than the clients of particular Partners.
- There were no formal committees and the Presiding Partner had as much or as little authority as the other Partners were willing to accept.
- Attendance at firm social events was encouraged but not mandatory.
- There was no written partnership agreement.
The culture certainly had its business as usual problems, but the culture was probably as good as it got in a large New York City firm, and it was the culture that drew me to the firm and kept me there far longer than I originally anticipated.