Corporate Culture – Hearts at War and Peace

If strategy, the subject of a previous blog, is what to do, culture is the wellspring of actually doing it. The energy and drive that the company needs to execute comes from the people there and the culture of the company greatly impacts what they do and how successful they will be.

Culture is just about as soft as you can get when you look at leadership. It is feelings and emotions and learned behaviors. Certainly some of it is mirroring the top leadership and how they act, but sometimes it is different. As soft as it is, it is absolutely crucial to making sure your company will succeed. Even with the best technology, the wrong culture can mean you don’t get the full benefit of it or you completely beat even your high expectations.

Here is a reasonable,definition of what corporate culture is from Investopedia:

Corporate culture refers to the beliefs and behaviors that determine how a company’s employees and management interact and handle outside business transactions. Often, corporate culture is implied, not expressly defined, and develops organically over time from the cumulative traits of the people the company hires. A company’s culture will be reflected in its dress code, business hours, office setup, employee benefits, turnover, hiring decisions, treatment of clients, client satisfaction and every other aspect of operations.

http://www.investopedia.com/terms/c/corporate-culture.asp

Cultures in companies evolve and change over time. The small team that was there at start-up probably had one culture t it might not be the right one 10 years later. A culture that works in one country may not work well in others. For example, some countries require some form of national service and at least all the men and sometimes the women as well have served in the military for a year or two when they were younger. There is a much higher chance that a more hierarchical culture is more natural. If you expand into or out of such a culture from a more free wheeling culture, you might run into clashes and resentment.

Although culture is not strategy, morale and people working together obviously is a key concern of strategists. In his Earth book of his The Book of Five Rings, Musashi says:

“The comparison with carpentry is a metaphor in reference to the notion of houses. We speak of houses of the nobility, houses of warriors, the Four houses [there are also four different schools of tea], ruin of houses, thriving of houses, the style of the house, the tradition of the house, and the name of the house. Since we refer to houses all the time, I have chosen the carpenter as a metaphor.”

In the examination of corporate culture and how it fits with strategy, you need to know what you have and what state it is in, you need to know what style of house you have and what the traditions are.

“The master carpenter should take into account the abilities and limitations of his men. Circulating among them, he can know their spirit and different levels of morale, encourage them when necessary, understand what can and cannot be realized, and thus ask nothing unreasonable. The principle of strategy is like this.”

As a member of the senior leadership team, you need to know what you have and what can and cannot be reliably done. If you do not understand the culture of what you are working with, you well thought out strategic moves can easily fall flat. You also cannot only rely on what you have done before, what others do, or what you prefer.

Finally Musashi makes clear that you should not rely on only one weapon but use whatever one is best. So you should be able to cope with whatever the culture is and get good results. If you need a more traditional culture on a job and you are in a “flat” culture, then build a more traditional team within your company.

I will make a broad and sweeping characterization of cultural types:

Hiring priority:

A) Team first – hire based on fit into existing staff without concentrating as much in experience or raw qualifications.
B) Skills first – hire experts based on skills and not so much focus on how they fit with the current team.

Organization structure:

A) Horizontal – very few or no layers. Most employees have immediate access to top leadership. Common in start-ups. Functional roles may be blurred somewhat.
B) Traditional – more defined hierarchy with clear roles and responsibilities, may not be many layers but they are there. Traditional functions exist.
And one final group

A) Transitional – a culture or company that is going through a large change. Maybe because of an M&A event or maybe a significant setback or success made the old mode less useful. Could even be a death of the founder or a handing from one generation to another, something as simple as a CEO change.

There is no obvious right culture or organization for every circumstance and every country you do business in. You can change the culture, but it is never a quick process. How to change a culture is a very demanding process. I will address that topic in a future blog, but you certainly need to create a transition culture before change can happen.

As much as I admire Musashi for his deep insight into strategy, if you approach the company culture looking for the right tool to apply, you are almost guaranteed to fail. The simple reason is that the culture is made up of people, not tools. From a top level strategic view point, the culture is a tool you are handed. In actual execution, you are dealing with people.

The Arbinger Institute has published two excellent books on effective interpersonal relationships. These are Leadership and Self Deception and The Anatomy of Peace. The foundation for both books is the work of philosopher Martin Buber. Buber identified two views you can have towards other people – I Thou and I It. One is seeing others as people and one is seeing people as objects. He actually does not say one is markedly better than the other, he more explores the way our thinking changes depending on how we view the others.  http://www.iep.utm.edu/buber/

The Arbinger Institute has developed the basic point that our thinking changes based on if we see people as people or objects into an entire program to improve interpersonal relationships. It applies just as much to the team first structure or the expertise first structure and they argue that if you want a truly effective and committed company culture, you need to insist that the culture is built on I Thou, not I It.

The heart of the books is the idea that once you view someone as an object, as I It, you commit an act of self betrayal and enter into a state where conflict is much more likely. Once you put yourself into that box, it is hard to get out and others are highly likely to react the same way. Your heart is at war. Not with others, with yourself. Since no one likes to think of themselves as a bad person, you start justifying your behavior. This pattern tends to lead to more conflict and there is so much investment in the conflict that the whole organization becomes frozen in it.

Is not unusual for a company to get stalled in cultural issues, and making sure you do not put yourself into a box (the books have different names for the different self justification archetypes we inflict on ourselves). As CFO, you do not have time to get mired into conflicts caused by the corporate culture, you need empowered teammates that feel that they have good prospects and a leader that sees them as people and not as a means to an end.

Of course, people need to do their jobs and you can have high expectations, but you need to act like a leader, and not allow yourself to work against your natural and best instincts. The culture usually is at least a partial mirror of the leadership and if you set and live the right example, you can influence the culture and that can result in better results over time.

When I first was exposed to the ideas in the books, I thought that it was saying to be soft and overly caring, but that is not the message at all. If you think of your staff as people, not objects, then you will want them to do well and have good careers. That could mean that they need to improve. There is nothing that says you cannot wage war with s heart at peace, just that the way you execute will be better.

This is something that I struggled a lot with earlier in my career because my people sense was off. I was too busy in my box thinking others were slow or incompetent or lazy or all the other labels that spring to mind when you try and justify your own bad behavior. I was lucky and had a few good mentors, but I also was in a larger company that had been around a long time. Many of my peers started in smaller companies and did not have that same opportunity.

So read your Musashi or whatever strategy wizard inspires you. Just don’t forget that you will quickly have to work with the messy people issues soon enough to get things done. Knowing yourself and acting well, staying out of the self betrayal box, keeping your heart at peace when working in teams, that is a skill that you can practice. As Musashi would say, this needs to be considered deeply.

There are a few other topics that I want to explore, such as how to write an earnings release beyond just the outlook section I already wrote about, but I will return to the question of corporate culture soon and in more detail. Toxic corporate cultures are all to prevalent and there is a lot of work here that needs to be done.

Books on avoiding self betrayal

The Anatomy of Peace

The Anatomy of Peace – kindle version

Leadership and Self Deception – getting out of the box

Leadership and Self Deception – getting out of the box kindle version