1. What is it?
Set of values and beliefs that define what is encouraged, discouraged, accepted, or rejected within an organization.
When properly aligned with personal values, drives, and needs, culture can unleash tremendous amounts of energy toward a shared purpose and foster an organization’s capacity to thrive.
1.1 Characteristics of a Corporate Culture
- Unwritten: It is present implictly in everyone's behavior
- Enduring: It lasts over time
- Reinforced: It makes sure more of the same joins the company, and less of that leave it
- Unsupervised: It is what is left when the leaders are not in the room
- Pervasive: It is followed by everyone despite role or position
1.2 What is composed of?
- Behaviors (Practices)
- Incentived through rewards
- Corrected through discipline
Also (Vision, Assumptions, People, Place)
2. Culture and Strategy
"Strategy eats culture for breakfast" Petter Drucker
- A company culture can't exist if the company goes out of business.
- Good strategy is clearly important. But if culture becomes a powerful enough influence on the motivations of the workforce, the culture can actually negatively impact an organization to the point of jeopardizing its solvency and its future.
- It's about discovering the organizational landscape: figuring out first if the existing culture in our business is going to readily enable our strategy or not.
Find what behaviors lead to decisions and actions that gets you to your strategy.
2.1 Golden Circle
- WHY: Purpose/Mission
- HOW: Culture
- WHAT: Strategy
3. Culture Consistency (Strong vs Weak)
"There's no such thing as a good or bad culture, it's either a strong or weak culture. And a good culture for somebody else may not be a good culture for you." – Brian Chesky
A well-defined culture is important because:
- It gives the team some first principles to fall back on
- It aligns people on values that matter to the company
- It provides stability for the company
- It provides trust that bind people together
- It gives you a list of what to do and what not to do (exclusion)
- It allows you to retain the right employees. If you have strong core values, you'll know who you do and do not want to retain.
Somebody asked me: "What's the job of a CEO?", and there's a number of things a CEO does. What you mostly do is articulate the vision, develop the strategy, and you gotta hire people to fit the culture. If you do those three things, you basically have a company. And that company will hopefully be successful, if you have the right vision, the right strategy, and good people." – Brian Chesky
Each person plays his or her part in determining what the culture of the business will be. If they don't know what the company stands for, how they need to behave and where they fit in, then they will make it up for themselves.
4.1 Three types of people
- Culture-neutral: Apathetic
- Culture-negative: Toxic
- Culture-positive Culture-positive people are the ones who will help improve your business and drive home what you want to achieve
4.2 Unaligned Leaders
Incumbent leaders who are unsupportive of desired change can be engaged and re-energized through training and education about the important relationship between culture and strategic direction. Often they will support the change after they understand its relevance, its anticipated benefits, and the impact that they personally can have on moving the organization toward the aspiration. However, culture change can and does lead to turnover: Some people move on because they feel they are no longer a good fit for the organization, and others are asked to leave if they jeopardize needed evolution.
Our own data from executive recruiting activities shows that a lack of cultural fit is responsible for up to 68% of new-hire failures at the senior leadership level.
For individual leaders, cultural fit is as important as capabilities and experience
It is not about hiring someone for the next 3 or 4 features. It is much more than that. It is hiring their network and your next 10 employees. You want diversity in background, experience etc., but you want homogeneity of beliefs! You want people that are here to champion the mission — which should be the only thing that never changes.
It is very interesting to see interviews focusing on testing skills through technical questions instead of testing culture fit. The best firms are "fanatical about recruiting new employees who are not just the most talented but also the best suited to a particular corporate culture." Ellis highlights that those firms often have 8-20 people interview each candidate. One study found applicants who were a cultural fit would accept a 7% lower salary, and departments with cultural alignment had 30% less turnover. Chesky tells us that he viewed bringing this first employee as analogous to bringing in new DNA into the company. He didn't view it as the person to build a few features. He viewed it much more long term, because there were going to be a thousand people just like him. You want diversity, of course, but you won't want diversity of values.
5. Types of Culture
- Macrocultures: What distinguishes one industry from another
- Organization Cultures: What differentiates two organizations in the same industry
- Subcultures: What distinguishes HR from Operations
- Microcultures (tribes): What distinguishes one team from another
- The experience of culture is probably more a factor of intra and inter tribal dynamics, than any organisational one. Read more here
- Proposing a new method of doing work directly effects the employees at the front-line (operators). Because of this, new methodologies should consider the subcultures that already exist as they are being introduced.
6. Cultural Styles
6.1 People Interaction
An organization’s orientation toward people interactions and coordination will fall on a spectrum from highly independent to highly interdependent. People in such cultures tend to collaborate and to see success through the lens of the group:
- Highly Independent: Autonomy, individual action, and competition.
- Highly Interdependent: Integration, managing relationships, and coordinating group effort
6.2 Response to Change
Whereas some cultures emphasize stability—prioritizing consistency, predictability, and maintenance of the status quo—others emphasize flexibility, adaptability, and receptiveness to change.
Stability: Prioritizing consistency, predictability, and maintenance of the status quo. Follow rules, use control structures such as seniority-based staffing, reinforce hierarchy, and strive for efficiency
Flexibility: Adaptability and receptiveness to change. Prioritize innovation, openness, diversity, and a longer-term orientation
Caring focuses on relationships and mutual trust. Work environments are warm, collaborative, and welcoming places where people help and support one another. Employees are united by loyalty; leaders emphasize sincerity, teamwork, and positive relationships.
Purpose is exemplified by idealism and altruism. Work environments are tolerant, compassionate places where people try to do good for the long-term future of the world. Employees are united by a focus on sustainability and global communities; leaders emphasize shared ideals and contributing to a greater cause.
Learning is characterized by exploration, expansiveness, and creativity. Work environments are inventive and open-minded places where people spark new ideas and explore alternatives. Employees are united by curiosity; leaders emphasize innovation, knowledge, and adventure.
Enjoyment is expressed through fun and excitement. Work environments are lighthearted places where people tend to do what makes them happy. Employees are united by playfulness and stimulation; leaders emphasize spontaneity and a sense of humor.
Results is characterized by achievement and winning. Work environments are outcome-oriented and merit-based places where people aspire to achieve top performance. Employees are united by a drive for capability and success; leaders emphasize goal accomplishment.
Authority is defined by strength, decisiveness, and boldness. Work environments are competitive places where people strive to gain personal advantage. Employees are united by strong control; leaders emphasize confidence and dominance.
Safety is defined by planning, caution, and preparedness. Work environments are predictable places where people are risk-conscious and think things through carefully. Employees are united by a desire to feel protected and anticipate change; leaders emphasize being realistic and planning ahead.
Order is focused on respect, structure, and shared norms. Work environments are methodical places where people tend to play by the rules and want to fit in. Employees are united by cooperation; leaders emphasize shared procedures and time-honored customs.