I walked into an event last week in San Francisco to a panel discussing how culture is everything when it comes to innovation. I had to interrupt, because they didn’t really know what they were talking about. Everyone puts an emphasis on culture – understandable, as it’s an easy target to blame as the biggest and single root cause of a company’s inability to reinvent themselves.
I’ve talked to many strategists in my company, telling them that no one should be writing any whitepapers on cultural change, as they have no idea what it means. It’s easy to say that something is a culture problem, and that transformation is needed. But no one knows the “how” – and the “how” is not that simple. At the core of that is about trust and energy. You don’t have to be soft in order to get your employees to trust you. You have to trust them. But they have to prove first they are trust worthy. You need to know how to create the energy sphere.
It is written everywhere in journals and business publications that culture is the core of a company’s sustainable competitive advantage. They tell you that the most successful organizations have leaders that are perfectly aligned with their company’s culture. This is only a half-truth. While it is important for the CEO, senior executive team, and the rest of the organization to be aligned and bound together by a strong company culture, the other half of the mission is for them to evolve the culture that matches the company’s stage of development and external competitive context.
This is backed by a recent study published in the Journal of Applied Psychologyby Chad Hartnell and his colleagues. The results argue that your leader shouldn’t line up with the company culture, but that they should supply what is not there. They surveyed management teams to rate their CEOs on task leadership and relational leadership, and to rate their organization’s culture on these same tasks and relational dimensions. The data drew a very different picture for each alignment.
For relationship focus, mismatches were always better. Firms with a strong relational culture performed better when led by a leader with a low relational focus, and highly relational leaders were associated with stronger results when they operated in a culture with a lower concern with relations. A similar picture emerged for task focus, where a combination of a high-focus culture and leader was the worst one possible. It means that tunnel vision is practiced to a point that it becomes detrimental for the organization.
Their conclusion was that when a leader and culture are aligned, much of the leader’s efforts are redundant. The job of a CEO is to bring something new and needed to the table, and not simply follow what is already working – that is the job of a COO. It’s about providing balance, or a new balance. It’s a very different case when it comes to strategic alignment, where – in an ideal world – the company should be aligned as much as possible. But cultural alignment is distinct; here, the CEO should be the filling the gaps. There should be a healthy tension between who are we today and who we want to be.
When a company is on a downward spiral, all eyes are on culture as both the cause and the cure. They go down because the business model is outdated or broken. But simply fixing the culture is nonsense for larger multinational organizations. It makes sense only on a business unit level, or for small enterprises. And when organizations are operating in some sort of crisis mode, fixing the culture is a bad prescription. People don’t realize two things: 1/ it takes too long to change any culture, and when you’re in a crisis, there is no time, and 2/ you can’t “fix” a culture. Culture is a byproduct of a system, where structure dictates how things need to be done and what behavior is preferred. That shapes culture over time, and in order to evolve a culture, we need to start fixing it on a system and structure level.
When a company is in a crisis, fix the business – not the culture.