Culture Is — and Always Will Be — a Key Ingredient for High-Performing Organizations
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An organization's culture should inspire all employees to engage, create and do their best work. Executives, therefore, should aspire for culture to serve as a platform for innovation and source of growth.
The health and vibrancy of your culture and engagement of your employees has a direct impact on your organization's ability to innovate and adapt. According to a BCG study of 40 digital transformations, companies that focused on culture were five times more likely to achieve breakthrough performance than companies that neglected culture.
Yet culture remains a paradox for many organizations. A survey from Heidrick & Struggles found more than 80 percent of CEOs view culture as a key priority, but only a sliver of those CEOs identify culture as a critical driver of financial performance. In other words, CEOs know culture is important, but aren't yet treating it as such.
We've learned from helping companies transform their operating models that innovation and transformation thrive when organizations bring together six distinct worlds:
Aligning these worlds makes it easier to prioritize work and accelerate business outcomes and ROI associated with digital transformation and IT modernization. Without a healthy culture, stakeholders from any or all these worlds are more prone to try to do it alone, which leads to inevitable pitfalls and headwinds.
Put simply: Culture is not separate from the business. Culture is the business.
We refer to the above Venn diagrams as bringing worlds together. Think of culture as an ozone layer — a protective shield that absorbs the challenges associated with aligning these worlds and makes it easier for them to work together.
Executive teams must then ask themselves: How can we develop and scale a culture that amplifies creative, innovative thinking? And how can we harness that creative, innovative thinking to maintain a high-performance organization?
Trust, which stems from being vulnerable and empathetic with others, plays an integral role in building high-performance teams and organizations. It builds confidence and enables risk taking.
It is so important that it remains a foundational element to the Fortune Great Place to Work For list — a group of companies that regularly outperforms the Russel 1000 and 2000 and S&P 500 by as much as three to one — and serves as a critical enabler of organizational innovation.
"Our data shows that some of the most innovative companies in the world have cultures that uniquely position them to drive creativity," wrote Tony Bond, Great Place to Work's chief diversity an innovation officer. "These cultures are built on high levels of trust... A fundamental part of an innovative culture is a strong relationship between employees and their leaders, which our data shows is best measured through trust. High-trust relationships create opportunities for the sharing of ideas that help fuel innovation."
Strong organizational cultures embody trust across teams and afford individuals freedom and license to experiment in the name of progress. Not blind trust or distrust, but smart trust, which utilizes judgement and rationality.
Trust is earned and not given. Earning trust begins with establishing self-trust, which is rooted in character (intent and integrity) and displayed with competency (results and capabilities).
For more on trust, consider reading one of our favorite books, Patrick Lencioni's The Five Dysfunctions of a Team: A Leadership Fable.
Culture has historically resided at the executive level and percolated down through the rest of the organization. In today's digital world, culture must be a priority for all.
Accountability may start at the top, but reinforcing and maintaining the culture is is the responsibility of every individual at your company.
Consider this article from Harvard Business Review, which states shared responsibility for culture throughout an organization involves different people and functions within the organization playing different roles in developing and maintaining the culture. Paraphrased, the article effectively assigns duties to each stage of a company:
- Board of directors: Guide the definition of culture and align with business goals.
- Executive team: Define culture and set objectives and outcomes to align to.
- Human resources: Deliver experiences that convey and reinforce the culture. Enable others to embody the culture.
- Compliance, risk and ethics: Ensure the definition and execution of culture aligns with risk management strategies.
- Middle managers: Go the last mile to deliver experiences that support the culture to employees.
- Employees: Provide feedback, ideate on new ways to support and embody culture, and align behaviors to desired culture.
Innovation can only happen where people have a logical and physical space to do it. Finding and rallying around organic high concentrations of innovation and nurturing them to thrive is important.
For many organizations, it can be hard to identify these areas. They don't know where to look or aren't looking at all. And often bureaucratic red tape can smother a group of innovative thinkers before they breakthrough.
At WWT, we've experienced several hot spots for innovation, most notably in our Advanced Technology Center (ATC) and North American Integration Center — fit-for-purpose centers of gravity in terms of engineering and technical prowess that are vital to WWT's success and future viability.
Let's dive into the ATC example.
Over a decade ago, disruptive market conditions forced us to reevaluate how we delivered value to customers. So we formalized the ATC, which at first was more of a place where smart people gathered to talk about, and get their hands on, cutting-edge technology.
When we opened the ATC, we quickly recognized it as an emerging center of gravity where our engineering talent could collaborate, share and contribute ideas freely. As the ATC gained traction with customers and partners, we nurtured it with investment while making sure to give its stakeholders a level of freedom to grow it in new and exciting ways.
Today, after more than $500 million in investment, it is a full-fledged hub of innovation that connects and facilitates collaboration between engineers across technical areas like data center, network, cloud, security and even application development. The ATC now stands as a strategic tool our customers, partners and engineers can use to quickly solve complex business challenges with even more complex technology solutions.
Inevitably, these centers of gravity include people and teams exploring what they are most excited about.
To maintain a culture of innovation, it's imperative for leaders to give their teams an opportunity to share ideas, explore passions and make the case for calculated risk. Risk taking, according to the Great Place to Work article referenced earlier, "is not simply tolerated in high-trust cultures — it's celebrated."
Risk and innovation are intrinsically linked. A culture that is not willing to take risks is destined to remain stagnant, meaning avoiding risk — potentially losing ground to competitors — is a bigger threat to your organization than pursuing risk.
But with risk comes the risk of failure. And it's important to acknowledge that ideas — even great ones — don't always lead to positive outcomes. In those cases, leaders and employees need to understand that "no" is an acceptable answer, but that the rejection of the idea is not a threat or personal.
A healthy culture, in which all share ownership of values and goals, should help mitigate the risk of saying no. But sometimes difficult conversations will be required. Even those challenges are easier to overcome in high-trust organizations where people understand the decision was made with the best interest of the employees and the business.
In our business, people own our culture, and that culture drives our business.
Engaged leaders and a dedicated investment in culture are a strategic investment in the business. Getting the culture right is primary to an organization's ability to innovate, adapt, grow and thrive.