Culture vulture: Keeping an eagle eye on culture helps companies soar

In other words, culture is the invisible hand guiding the decisions, behaviours and, ultimately, the identity of a company. A strategy without the right culture is akin to a ship without a rudder.

Imagine a football team with a brilliant strategy but disengaged players. Their plan might be flawless on paper, yet they struggle on the field. In one of my favourite films, Dead Poets Society, Robin Williams plays an English teacher with highly unorthodox methods. His leadership style, which is captured in his 'carpe diem' philosophy, instils a culture of creativity and non-conformity, fundamentally altering his students' approach to life and learning. He wills them on to make their lives extraordinary. 

Of course, strategies are vital, but the heart of success lies in culture. Strategy provides a direction, but culture fuels the journey. 

You're only as good as your culture

Organisational culture is the collective values, beliefs and principles of a company. It shapes the way employees interact and the decisions they make and forms the backbone of a company's identity.

Unlike strategy, which is often delineated in boardrooms and on spreadsheets, culture is lived and breathed daily. It's alive and should continue to change, grow and adapt with the company. This is true whether we're talking about a now-defunct company whose toxic culture led to its downfall, or a sports team where a lack of teamwork and discipline can lead to underperformance despite having star players.  

And for established businesses, changing a culture or having a culture that can adapt according to changes and opportunities is critical to survival and success. Just look at Satya Nadella's transformation of Microsoft from a company that, while hugely successful, was mired in internal competition, to one that focuses on collaboration and innovation. His achievements underscore the power of cultural change.

The New Zealand All Black's' mantra, "No one is bigger than the team" reflects a culture where humility and teamwork are paramount, turning a group of talented individuals into a sporting juggernaut. Or consider the San Antonio Spurs under Gregg Popovich; their culture of selflessness and hard work has created a legendary NBA team.

On the flip side, the corporate graveyard is littered with the carcasses of companies that prized strategy over culture. Remember Enron? A robust strategy, undoubtedly, but a culture steeped in greed and ethical myopia led to its spectacular implosion. Enron's aggressive and competitive culture, which emphasised profit over ethical behaviour, eventually led to its demise. It's not unlike the cautionary tale of Jordan Belfort depicted in The Wolf of Wall Street, where a toxic corporate culture leads to both meteoric rise and dramatic fall. The lesson here is clear: culture not only supports strategy but, in many cases, is what determines whether a strategy succeeds or fails.

Getting it right from day one

For startups, establishing a positive culture from the outset is crucial. The initial members of a team set the tone for its future, impacting long-term success. Brian Chesky, co-founder of Airbnb, stresses the importance of culture in the early days of a company. He believes that the first ten employees determine the culture of a company as much as the first ten customers dictate success. Similarly, Jurgen Klopp's transformation of Liverpool FC hinged not on tactical genius alone but on cultivating a culture of positivity and collective belief. Therefore, instilling the right values and practices from the beginning is paramount. 

Good culture equals good business

A great culture has tangible real-world benefits. In short, it makes good business sense. It's widely recognised that there's a direct correlation between culture, employee engagement and customer satisfaction. According to Deloitte, a staggering 94 per cent of executives and 88 per cent of employees believe a distinct workplace culture is crucial to business success. 

A poor culture is also horribly unproductive. In fact, according to research by the Queens School of Business reported in Harvard Business Review, organisations with low employee engagement scores experienced 18 per cent lower productivity, 16 per cent lower profitability, 37 per cent lower job growth, and 65 per cent lower share price over time. 

What's more, culture significantly impacts a company's profitability and longevity. The book The Culture Cycle, written by Harvard Business School professor James Heskett, suggests that effective cultures can account for as much as half of the difference in operating profit between organisations. Indeed, it seems that employees who are engaged and invested in the company's values deliver better customer service, driving customer loyalty and, ultimately, profitability. Howard Schultz, the former CEO of Starbucks, recognised this. He famously said, "If people believe they share values with a company, they will stay loyal to the brand." Starbucks's culture of valuing its employees has translated into a loyal customer base and robust financial performance. 

There are plenty of other examples. Patagonia's commitment to environmental activism has created a culture that attracts employees and customers who share these values, driving its success. Virgin Group has a deeply rooted culture of employee empowerment and customer satisfaction. It could be argued that Virgin's fun, inclusive and innovative environment encourages risk-taking and creativity. And that its culture has been pivotal in Virgin's ability to venture into various industries successfully.

So while strategies are undoubtedly crucial in setting the course for goals and direction in any organisation, it's the prevailing culture that truly energises and brings these strategies to life. A robust, positive culture is the underpinning force that shapes interactions between team members, their approach to adversity and their overall performance. The link between a vibrant culture, high levels of engagement and organisational success is unmistakable and direct. While strategic planning is essential for setting clear goals and directions, it's the culture within an organisation that imbues these strategies with life and meaning; so in the end - it's not just the strategies you employ but the culture you cultivate that determines long-term success in business.