The rise of Silicon Valley-based companies through the 2010s disrupted our understanding of organisational culture for a whole range of reasons - both positive and negative. Perhaps most famously, these companies began creating a shorthand for culture represented by office perks like ping pong tables and a constant supply of snacks. Culture in this sense was about keeping people “happy” and willing to put in the extra effort.
We all know these superficial trappings of culture don’t translate to the real thing. Companies that get culture right are aligned from top to bottom and left to right on their purpose and how things are done. And this alignment isn’t created by the presence of sleeping pods. When everything else keeps shifting, culture is the one constant. And because of this, culture, more than any policy or procedure, will guide every decision made and action taken by the organisation’s employees, partners and providers.
This isn’t just a theory. When CEOs really get culture and achieve that ultimate organisational alignment between culture and strategy, their companies see a 117% greater return on investment than those that don’t. Why? Because culture determines what people do when no one is telling them what to do.
Why is culture so hard to get right?
Even as CEOs now know the importance of getting culture right, almost a third of leaders say they’re still struggling. This is because culture lives in people’s unconscious assumptions. Any cultural change therefore requires you to first help people to understand what these unconscious assumptions are and then to reframe and align them to the desired culture.
Take, for example, a strategic shift from selling products to selling solutions. Previous success will have been all about knowing the product and being able to communicate its features and benefits to the customer, because - and this is the underlying assumption - the customer knows their business best. So long as the salesperson can describe the product in a way that shows how amazing it is, the customer will be able to see how it will benefit their business and - simple as that - the sale is made.
Selling a solution doesn’t work this way. It requires the salesperson to believe they can add value to the customer’s business by selling them the solution. But if the salesperson continues to believe that the customer knows their business best, they can’t make this leap. Changing incentive structures or offering training won’t help. It requires the individual salesperson to confront their underlying assumption. Then, they need to understand and accept that while this belief may have served them well in the past, the business landscape has changed and that assumption is no longer true. Only then can they change their behaviour and sell a solution, not just a product.
The three critical success factors for culture change
Culture change is hard, but our research has identified three critical success factors for making it happen:
- The CEO must believe in the need for change. People at all levels may recognise the need for cultural change, but unless the CEO believes their personal success is linked to culture change, it won’t happen. Culture change almost always requires the CEO to change and if they’re not fully committed, the wider change won’t stick.
- Employee engagement needs to go deep. Both leaders and frontline employees need to believe they will only achieve their goals and have the impact they want to have if they shift their mindsets and change their behaviour. This requires a much deeper level of engagement that taps into people’s intrinsic motivation and helps them see how the changes are necessary for them to achieve their own purpose.
- It needs to feel as easy as possible. People must be enabled to make the necessary changes to act in alignment with the new culture. This means ensuring they’re rewarded for the right behaviours and the organisation is set up with the right teams doing the right work with the right tools to execute the strategy.
Our paper, Time for Truth, delves further into why culture matters, the business case for culture transformation and why some organisations keep getting culture so wrong.