“Companies that proactively manage culture demonstrate revenue growth over a 10-year period that is, on average, 516% higher than those that do not,” said Kotter and Heskett’s in their study regarding this matter. But how do organisations actually create and manage a performance-driving culture? a question that if it is left unanswered, will see many struggle to grow and improve.
Creating company culture: it is not cut and paste.
In Deloitte’s global human capital trends of 2016, 9-out-of-10 executives cited culture as important, yet only 12% of those companies believed they understood how to develop culture to drive business performance.
In response, many leaders have sought examples of great culture and attempted to emulate them. Years ago, executives cited GE and IBM as best practice. Recently, many executives are more likely to aspire to the Googles, Apple & Amazons of this world. However, while their intentions are pure, creating culture is not a cut and paste exercise: it needs to be generated organically, on companies’ own terms.
Let’s take Netflix as an example…
n 2009, Netflix produced not another binge-worthy series, but a 124-page document on their company. Held at an almost biblical status and honed “the most important document to ever come out of the valley”, Netflix – “freedom and responsibility” outlined the streaming services unconventional company policies. Unlimited vacations, no annual reviews, a five-word travel and expense policy, are to name but a few. What’s more, they place emphasises on treating the employees as a team, not a sugar-coated “family”, like many big organisation try to do.
But what made Netflix’s culture work?
“If you look at an innovator’s mind, that person never says, ‘we should look around and see what everyone else is doing and do it a smidge better,’” said Patty McCord, who headed up Netflix’s HR for 14 years.
“We took risks with the people aspect just like we took risks with the business.”
When moulding the culture, McCord isolated herself from external influences, refusing to learn how other competitors operated. It appears that for Netflix the best practice was to ignore other practices. With no playbook good enough to follow, they had to make their own and make it work.
In business, company culture is uniquely personal. And similarly to the way you cant become a carbon copy of an idol you admire, this is the same within corporations. However, there is no harm in adopting a few key traits.
Transparency differs from place to place
At Google, transparency means giving new hires access to board materials, product plans, and almost the entire code base. In return, Google sees less duplication, greater creativity, and increased collaboration.
At Patagonia, transparency means being open about products’ origins. This includes how they’re made, sources of materials, and worker conditions. If the process needs improvement, Patagonia admits it and invites feedback. Customers know and feel good about what they’re purchasing.
Teamwork and collaboration
Netflix sees itself as a professional sports team: built to win.“In many companies, adequate performance gets a modest raise. At Netflix, adequate performance gets a generous severance package,” they claim.
In contrast, American cloud-based software company Salesforce uses the Hawaiian concept of Ohana: a family bound together and responsible for one another. That extends to employees, partners, customers, and the community. In their words, “we collaborate, take care of one another, have fun together, and work to leave the world a better place.” Which is quite the contrast!
Amazon follow Jeff Bezos’ “2-Pizza Rule”: no team (or meeting) should have more people than two pizzas can feed. This keeps things small, fast-paced and avoids groupthink. Teams are given independence, allowing them to create without limitations and autonomy that replicates small start-ups.
At Zappos, Tony Hsieh demonstrated his belief in flexibility by switching hierarchy for holacracy. Employees had to decide whether to embrace self-management or leave with a severance package. This was blasted as a bad business move; however, it ultimately led to a faster-paced, more creative, and happier Zappos.
These examples show that the best practice is self-defined. Instead of developing your organisation’s culture identify the principles that best suit your business purpose and objectives, and how to apply them within the context of your own organisation.