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Good strategy has traditionally been seen as the key to business success. More recently, purpose has become an essential element of doing business. But something else is missing: culture, or the essential elements of how an organization and its employees behave, as well as its governing beliefs and principles. And yet, culture often receives less attention than purpose and strategy.
What do successful companies like Microsoft, Netflix, Best Buy, and many others have in common? Culture has been the fertile soil that has enabled their purpose and strategy to come to life and drive extraordinary performance at scale.
Purpose, strategy, and culture form a triangle: Each angle connects with and shapes the other two, and if one changes, the other two must evolve and adjust to maintain balance and shape, or the triangle breaks and falls apart.
Changing a company’s culture requires more than role modelling.
Companies can use three types of levers to profoundly shape an influential culture and allow their strategy to come to fruition:
Business levers, management levers, and “human magic” levers.
At Netflix, there is only one policy for travel, entertainment, gifts, and other expenses: “Act in Netflix’s best interest.” That’s it. Also, there are no company-wide rules on office hours or the number of vacation days employees can take. These reflect the culture of “freedom with responsibility”
There are other management levers that shape culture, such as seeking to recruit only “stunning colleagues” and rewarding adequate performance with a generous severance package; and offering frequent, honest, and constructive feedback.
Key management processes directly impact culture as well.
What kind of people do you appoint to positions of power? What kind of people does your company recruit? Does performance trump bad behaviour? How are decisions made and by whom? What are key business rhythms? How are meetings conducted? What kind of controls and compliance are in place?
All these structures, processes, and rules can shape culture.
These are the essential and interconnected ingredients that, together, create an environment in which people are eager and able to fully give their energy and talent to serve the company's purpose.
Articulating the company’s culture as a singular, simple, and yet powerful idea makes it easier to answer all these questions and use all three levers with that in mind.
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