Changing your business? Think culture first.
Businesses are almost universally experiencing a period of significant change, but how many of them are prioritising their culture at the heart of these changes? When it comes to transformation, only about one in four transformations actually achieve long-term success - and a major cause of failure? Not looking at culture first.
Culture is often dismissed as being just behaviours, attitudes, the ‘soft’ intangibles of a workplace. But in fact, behaviours and attitudes are often the outcome of a culture itself. As the adage goes “what you permit you promote”, so what do your systems, processes, performance management and reward mechanisms focus on? What do they allow to happen? And how are these aligned to the business purpose and values, if they exist?
“Businesses that align culture to strategy see a 117% greater return on investment than those that don’t. They get a 145% higher return on their assets and a 56% greater return on their equity, too.”
In a nutshell, best-in-class cultures improve the bottom line with organisations that outperform on cultural metrics reporting more significant increases in revenue in 2023 than in 2022.
Furthermore, research from Korn Ferry shows that culture will either help or hinder the execution of specific strategies and outcomes. “Companies that outperform their peers through operational excellence have different cultures than those who outperform through innovative products and customer intimacy”. A company that is focused on customers will need a different type of culture to one that is focused on innovation, yet often organisations don’t consider the type of culture that is needed for the type of business outcomes they need to achieve.
Change First vs Culture First
Let’s use the example of a process-reliant organisation exploring a technology update, to stay competitive and increase agility. The change first approach might look like:
We need to be competitive and updating our use of technology can help us do that.
What new platform do we want to use?
What is our tender process for the new technology?
What is the people impact, will we require restructuring or training?
Now, let’s take a step back and approach the same situation with culture first instead. Immediately, this approach allows us to see the bigger picture and ask more valuable questions like:
What about our culture will help or hinder us to be competitive?
What is the existing process and why was it set up in the first place?
What is the impact of the process today?
Have we set clear outcomes and defined success measures around change?
Can the existing process be changed without a major investment in technology?
Are people attached to the existing process?
Are people rewarded for using the process?
Do people understand and believe a different approach will help the business achieve its goals and deliver its purpose?
How do we align a new process or technology using our values?
How do we capture feedback from people who use the process and are impacted by it?
How do we engage them from start to finish? And how do they want to be engaged in changing the process?
How do leaders role model the change?
These questions demonstrate how people can better engage with change from the beginning; after all, we all play our part in contributing to culture and so it stands to rights that we all have a part in change, too.
When we engage people in the right way and talk about the mindset needed to change effectively, we are more likely to see positive outcomes.
As research from the Arbinger Institute shows ‘organisations that focus on employee mindset are:
More than 2x more likely to have an extremely positive outlook on the success of their organization in the coming year.
Are 73% more likely to report that their organisation has employees who trust each other.
Report 2.5x more efficient conflict resolution at their organisation.
And are 53% more likely to report that their organisation has employees who freely share information/resources that are helpful to others.
Expectation vs Reality
When conducting our Culture Audits, we’re often faced with organisations that talk about the right things but don’t necessarily see how their culture undermines their ambitions. For example, often organisations highlight that ‘greater collaboration’ is something they want or need to support their strategic goals. When we get a little further into their audit, however, the missing links start to show; they’ve siloed planning processes, individual business areas don’t share plans consistently until implementation, and reward practices are based on individual or function area KPIs rather than collective or organisation-wide incentive plans.
Whilst behaviourally, most people in the organisation are very supportive of collaboration and want to support their colleagues, in the wider cultural context there is no real incentive or structure to do so.
This is why understanding the reality of what the existing culture is, is so important in executing on strategy or change. When we can understand what the gaps are between the ambition of the organisation and the current experience of the culture, we can make sure that we build the right steps to deliver on the strategy.
Expert Advice
A Culture Audit from The Clear Company takes a full 360* approach using robust methodology. We don’t just consider your processes, systems and business strategy because they only tell us half the story. We also ask the people who experience your culture every day to share their perspectives. All these combined allow us to present you with a clear picture of the alignment between what your organisation wants to achieve, and the culture that exists to help you achieve it.
To learn more, please contact Emma Nicholls or enquiries@theclearcompany.co.uk to take the first step in achieving meaningful business transformation.