Recognise This! – Understanding how cultures evolve and are reinforced is critical to effecting culture change

On my return from India, I finished a terrific book on organisational culture – The Culture Cycle: How to Shape the Unseen Force that Transforms Performance – by James Heskett, professor emeritus at Harvard University Business School. The challenge for me today will be keeping my review short. I highly recommend The Culture Cycle to anyone wondering how to go about the process of culture change in their organisation.

Much in agreement with our own book, Winning with a Culture of Recognition, Heskett defines culture and its importance this way:

“Cultures are not abstract notions. They enable strategies and ways of executing them. They are direct contributors to the bottom lines of both for-profit and not-for-profit organisations. But, perhaps most important, they influence how we work…and with what amount f joy, personal development, and satisfaction. …

Cultures directly influence economic performance through the people they attract and the ability of those people to serve customers and each other well, and, in a for-profit organisation, profitably. There is nothing ‘soft’ about them. …

In an organisation in which a large proportion of employees are customer-facing, as much as half of the difference in operating profit performance between offices can be attributed to culture.”

Indeed, culture is not soft. And a strong, effective culture that leads to greater organisational profitability relies on these key points I’m highlighting and paraphrasing from the book. Throughout, Heskett uses numerous detailed examples from organisations large and small, local and global, across industries.

• Culture must be nurtured over time so that “pride” does not become “arrogance.
• Organisational values are very important, but even more so are the clearly defined and universally understood behaviours behind those values. Changing behaviours changes your culture. You make this stick by linking changed behaviours to improved performance metrics. This is especially true in globally distributed organisations where values can be interpreted several ways.

• Employees can’t live your values or deliver on your mission if they don’t know it. Communications is your first priority, then clear processes, and recognition to reinforce what is most important.
• Heskett makes the connection between culture and innovation with two examples from very different companies and industries – Apple and 3M. As Heskett points out, many marvel at Apple’s consistent innovation and product delivery in the last three decades, yet 3M has been doing the same thing (or even better) for nearly a century.
• Your culture will define how your organisation handles adversity when it comes (and it will come). Will your company’s reputation survive? Can you trust people to act and react as needed in the moment of crisis based on your values and culture? Heskett shares several examples, positive and negative, including the recent BP oil spill.
• Strong cultural foundations make possible fast culture change and resulting actions when needed.
• Global makes a difference. It’s important to understand what all of this means in vastly different global sub-cultures in multi-cultural organisations.
• None of this will work if you focus on a “star performer” system and ignore the vast majority of your employees and how they live your values and embody your culture.

Tools to measure culture and its impact:

• To measure financial impact, use the 4 Rs – Referrals, Retention of Employees, Returns to Labor, and Relationships with Customers.
• Steps are clearly outlined on how it implement culture change, with examples from very different industries and organisations – GM, a hospital system in Florida, and the New York City Police Department (NYPD).
• There are questions at the back of the book to measure the health and effectiveness of your culture.

The book also features excellent chapter summaries for those who prefer to skim, though I do recommend engaging deeply in the entire book.

What are your favourite books on organisational culture?