Part 1: What is culture and why is it crucial for business success?
What’s on the CEO’s mind? Let’s simplify it. Think about this as a pie chart; the CEO is responsible for three things: 1) the vision, the mission, and strategy (or another way this is expressed is the “why” or the “purpose”); 2) operational excellence and; 3) culture. All three of these responsibilities have to inform each other.
On Bain & Company’s website they describe culture like this: “A company culture is at the heart of a competitive advantage because it determines how things are done and how people behave. It’s the hardest thing for competitors to copy.”
Peter Thiel, the venture capitalist in Silicon Valley, defines it a little differently: “Every company IS a culture. No company HAS a culture.”
At Tribe, we like to think about it in terms of the head, the heart, and the gut. The gut is really where culture resides. There’s a terrific Harvard Business Review article about this, and here’s the best part:
“Culture guides discretionary behavior, and it picks up where the employee handbook leaves off. Culture tells us how to respond to an unprecedented service request, it tells us whether to risk telling our boss about new ideas, and whether to surface hidden problems. Every employee makes hundreds of decisions on their own every day, and culture is our guide. Culture tells us what to do when the CEO isn’t in the room, which of course is most of the time.”
So, culture informs the gut instinct. A strong culture ensures that your employees are making good decisions in the moment, quickly and under pressure.
What is the purpose of a 21st century business?
When you picture good examples of companies that embody a strong culture, it’s a varied set: Zappos, the Navy Seals, Shake Shack, Apple, Netflix, Salesforce, Whole Foods, Nordstrom, or a couple of our clients - Stanley, Black & Decker and American Express.
Each one of these examples evokes a certain kind of experience and feeling. As consumers or customers of those companies, you’re part of their tribe; you’re involved.
But what does having a high-performance culture mean for your employees?
Some research says that right now 7 out of 10 people in your organization are not actively engaged at work. What does that cost? A disengaged workforce is estimated to cost, in the US alone, 450 to 550 BILLION dollars. To have people that are actually engaged in your company -- engaged in your mission, engaged in your operational excellence, engaged in thinking about how to make your company successful -- is an enormous competitive advantage.
What’s the purpose of business? According to Peter Drucker, it’s “to create and keep a customer.” You’ll see that a lot of businesses put the customer at the center of the experience.
At Tribe we think that Peter Drucker’s quote is only partially true. The purpose of a 21st century business is to create, engage, and build your tribe.
When you think about a company, it’s not just your customers. It’s your employees, it’s your investors, and it’s the community in which you operate. The great businesses -- like the examples above -- really create, engage, and build the entire tribe. It’s not only about making the customers happy, if you really are trying to generate a high-performance culture.