Why (no 1)
In their corporate governance review for 2016, Grant Thornton reported on the FRC’s publication: “Corporate Culture and the Role of Boards.” This report was the result of an 18-month collaborative project to engage companies, investors and a wide range of stakeholders in considering culture. The report urged companies not to wait for a crisis before reflecting on their culture, and to focus on culture as a driver of long-term value. Grant Thornton reported that 86% of companies mentioned culture in their 2016 annual reports.
Culture is a big ‘thing’ in sporting organisations at the moment. In the past, Sir Dave Brailsford has said this: “You can’t get performance on a continuous basis over a long period of time through fear.” Whatever the real story at British Cycling, recent events have cast an important spotlight on the high performance culture.
What exactly do we mean by the ‘culture’ in/of an organisation? This is the view of Jeff Bezos, CEO of Amazon, as set out in Amazon’s 2017 SEC filing:
“This year, Amazon became the fastest company ever to reach $100 billion in annual sales. Also this year, Amazon Web Services is reaching $10 billion in annual sales … doing so at a pace even faster than Amazon achieved that milestone.
What’s going on here? Both were planted as tiny seeds and both have grown organically without significant acquisitions into meaningful and large businesses, quickly. Superficially, the two could hardly be more different….. Under the surface, the two are not so different after all. They share a distinctive organizational culture that cares deeply about and acts with conviction on a small number of principles…. A word about corporate cultures: for better or for worse, they are enduring, stable, hard to change. They can be a source of advantage or disadvantage. You can write down your corporate culture, but when you do so, you’re discovering it, uncovering it – not creating it. It is created slowly over time by the people and by events – by the stories of past success and failure that become a deep part of the company lore. If it’s a distinctive culture, it will fit certain people like a custom-made glove. The reason cultures are so stable in time is because people self-select. Someone energized by competitive zeal may select and be happy in one culture, while someone who loves to pioneer and invent may choose another. The world, thankfully, is full of many high-performing, highly distinctive corporate cultures. We never claim that our approach is the right one – just that it’s ours – and over the last two decades, we’ve collected a large group of like-minded people. Folks who find our approach energizing and meaningful.”
Whilst Bezos refers to a culture that’s created over time, a study by Jim Collins, the well-known business consultant, places the leader of an organisation at the centre. Collins set out to discover what made some companies move from being good to being great. What enabled them to make that leap, and stay there? Collins and his team embarked on a 5 year study, selecting 11 companies whose stock returns had skyrocketed relative to other companies in their industry, and who had maintained this edge for at least 15 years. They matched each company to another one in the same industry that had similar resources but did not make the leap. They also studied a third group of companies that had made the leap but could not sustain it. What distinguished the thriving companies from the others? Several important factors, as Collins reports in his book Good to Great, but one that was absolutely key in every case was the type of leader who led the company into greatness. They were not larger than life, charismatic types who oozed ego and self-proclaimed talent. They were self-effacing people who constantly asked questions and had the ability to confront the most brutal answers- in other words those who were able to look failure in the face, even their own, while maintaining faith that they would succeed in the end. They believe in human development. They are not constantly trying to prove they’re better than others, but they are constantly trying to improve.
Conversely, looking at the famous failure of Enron in 2001, many commentators put this down to a failure of mindset. Enron was talent-obsessed, creating a culture that worshipped talent, and so forcing employees to look and act extraordinarily talented. It basically forced them into a mindset unable to admit mistakes, and so unable to learn from them.
Interestingly, Bezos added this to the end of his statement above: One area where I think we are especially distinctive is failure. I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there.
Why (no. 2)
We see it working as follows: organisations generally have a goal; an ambition. A destination that they are aiming for. This requires getting it right at three levels: strategy and structure; environment and culture; and people. Sticking with Collins’ work, let’s use his analogy of a bus. So to get to the destination, (i) you have to get the right people on the bus. For us, more important than existing skillset is people with the right attitude and mindset, and a good diversity of thought and perspective. (ii) The right culture and environment is then key, to make sure you get the best out your people, and help them to help you as on organisation achieve your aims. So what will the look and feel of your bus be, and what behaviours will you facilitate and encourage? Will your bus be steamlined, all sharp edges and cutting edge materials? Or will it be a green and environmentally friendly bus? (iii) Finally, your strategy and structure. What road is your bus going to take? The fast motorway, or the slower country road? And what do you need to have in place to take that road?
Back to Sport
It’s important to remember that the piece around culture and environment isn’t soft and fluffy. On the contrary, it is a key factor in driving success. All UK Sport funded sports are looking at this now, and none of them will be doing so at the expense of winning medals.
What about rugby union, a sport where we have had an incredibly successful time post the World Cup. These, apparently, are Eddie Jones’ Standards for Building a Sustainable Performance of Excellence:
- High work ethic always;
- Passion for detail;
- Get the right staff;
- Create a learning environment;
- Rules – make them very clear and understood;
- Meetings – no longer than 15 minutes;
- Communication – clear and concise;
- Evaluation – clear criteria, no grey areas.
Imagine what his bus would look like?!
Getting this right can drive your organisation to achieve its goals. And research is increasingly showing how key it is, across sectors.
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