You may be familiar with Peter Drucker’s quote “Culture eats strategy for breakfast.” After listening to Success Authority Ronn Lehmann explain how a company’s culture can differentiate, strengthen, and keep it thriving even in a rapidly changing environment, you may conclude that culture also eats the competition before lunch.
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Transcript:
Linda Ruhland
Ronn, talk to me about the impact culture has on keeping our businesses viable and competitive.
Ronn Lehmann
Culture is really the bedrock of Competitive Immunity. Any effort to achieve that really depends so much on the people, and the people operate within the culture. As a result, if the culture supports the things necessary for true Competitive Immunity, then you’ve got a great chance at it. If it doesn’t, all your efforts are really going to be challenged.
Ruhland
In other words, it’s wonderful to have a great idea and a great vision. But if people don’t come together around that vision and know-how to behave with one another to make it happen, then it goes nowhere.
Lehmann
Yes. And I think that is one of the challenges that any change effort takes, not just deciding to go after Competitive Immunity. But any time you’re trying to change things, the culture is one of the main impediments that very often doesn’t get addressed. A high percentage of change efforts, a really high percentage, fail simply because the culture wasn’t addressed.
People aren’t prepared and helped through the change process, the culture doesn’t support it, and as a result, you get a lot of people who have learned to wait and see. And they can wait out a change or they can perhaps give it tacit approval and bobbleheads agree with everything. But they don’t change how they do it because they know, first of all, there aren’t any real repercussions for that, and so often change efforts are abandoned. The next thing will come along and the flavor of the month.
People get trained by the culture to just wait it out. That gets in the way of velocity and gets in the way of creativity and innovation and risk-taking. That all spells “doom” for Competitive Immunity.
Ruhland
Can you provide me a brief synopsis of what is Competitive Immunity?
Lehmann
A simple way to think about Competitive Immunity is that it’s an organization that has significant differentiation from the competition. I stress the word “significant” because incremental differentiation or small levels of differentiation are not going to do it. Especially when it comes to products and services, everything can be replicated these days with astonishing speed. If you want to have something that lasts in terms of being differentiated, it really comes down to the people. People make the difference, and to that extent, culture makes the difference. Those are things that are really difficult to replicate. They can copy your product, perhaps, and mimic your service, perhaps, but what they can’t do is replicate and mimic the people and culture. That’s why I say it’s the bedrock of Competitive Immunity.
Again, you’re going for significant differentiation that lasts beyond the next quarter or the next year. That requires the efforts of the people to create that differentiation—certainly in terms of products and services, but also in terms of how they do things, how they show up, how the customer experiences the organization, and its products, services, and people. That’s everybody.
If you watch a company’s ads and think, “Boy this is great! It’s easy to use and fabulous, and they care about the customer.” Then your first interaction with an actual human does not live up to that. Most of us don’t go, “Well, maybe that’s just an aberration. I’ll bet their ads are right.” We tend to believe our experiences over the ads. Frankly, every time I look at an ad after that, I look at it with a bit of a jaundiced eye because I say, “That doesn’t really match up with my experience.”
If you see customer-satisfaction surveys that are put out by companies, one of the questions they have is always, “Does this organization care about its customers?” If your experience is “I didn’t really have a great experience when I interacted with a human.” Or worse, “I could never find a human.” It’s pretty difficult, at least for me, to say “Yeah, they really care about their customers,” because I’m a customer, this is what I wanted. They don’t seem to care about that. They seem to care about making it easy for them. That’s an extreme example, but I think everyone has those.
Ruhland
It seems that you read about culture in connection mostly with large corporations. Is culture a differentiator only when it comes to large corporations. How important is it to small and medium-size organizations?
Lehmann
I think it’s almost more important. And good news! It’s a lot easier to change. If you, unfortunately, have a culture that isn’t working, or that has created barriers to any change effort, but especially to Competitive Immunity, the smaller the organization the easier it is to affect significant change. You get a large organization; that is a huge ship to try to turn around. It takes a long time and a lot of effort. A lot of people just run out of gas. Leadership changes. People change. It just doesn’t ever get there.
Whenever people discuss having a large-scale change effort with a large company, I try to always warn them, “This is a significant operation and will be very difficult to do.” It’s not impossible, but it takes a lot of time. Especially if you’re making subtle adjustments, or stressing different things, or building on strengths of a culture, that’s different. That can actually go pretty quickly because people are sort of on the way there.
A smaller company is typically more nimble. An extreme example of a downside for a small organization is that a lot of times a smaller company was started by an individual or small group of individuals that had a very clear idea of what they wanted to do. They get used to being the person or persons that have the ideas. As the company grows, people are inculcated by the culture to wait for the leader or leaders to tell them what to do. So, they wait. The organization starts to slow down, and you get to a certain point where it’s difficult and you cannot sustain the velocity within the organization because everyone’s waiting for one person to make all the decisions. Plus, you’re relying on one person to have all the great ideas. The sooner you can spread that out, get away from command and control, the better your chances are for creativity, innovation, risk-taking—all those things that can lead to Competitive Immunity.
Ruhland
How do you do anything with that? How do you move in a more desirable direction?
Lehmann
People will have to make it important to sustain and nurture the culture they really want. Not just from a standpoint of “Mom and apple pie.” But really, what are the values that (A) we stand for and (B) will lead to the behaviors and decisions, and opportunities that we really want? These days it’s hard to find someone who’ll say, “I don’t think culture is really important, at all.” Everybody sort of nods and says, “Yeah, culture’s important and so is fire prevention.” But we don’t spend perhaps as much time and energy unless we’ve had a cultural problem or there’s been a fire. Then, suddenly, we get more interested.
I find, ironically, the companies that are most interested and pay the most attention to culture are ones that already have a pretty good culture. When I talk to organizations about doing a cultural audit, the ones that are interested in finding out, “Let’s see if the culture we think we have is actually the one that we have…Are these the operational values at every layer of the organization?” The companies that are going to get a pretty good answer are the ones who lean into that. I’ve had very little success getting people to pay me money to tell them they have a rotten culture. At some level, they already know, or they don’t care. And they’re not going to throw money at finding out the truth.
The good news is that I get to work with a lot of really good companies that are more interested in making sure that they have the culture they want, and it’s operating at all levels, and everyone is clear on it, than they are of saying, “We know we have a rotten culture; find that out for us.” They treat it as a priority. They understand, especially the leaders, that their job is the development of the people and the culture. There are significant other things that they have to do, but really, they have to set the tone that says, “We’re going to make values just as important as outcomes. If you do something really, really well, but you don’t do it in line with our values, that’s going to have to get adjusted.”
In my career, I’ve always known people who’ll say all the things they do wrong, and how they’re inappropriate and they’re “this and that,” but they get the sales, so I guess we’re going to let that slide, or for whatever reason. As long as you understand the cost of that because the message it sends to everybody else is, “This culture’s just kind of talk.” The real operational culture is “As long as you deliver, you can get away with just about anything.” You don’t have to worry too much about the values. The headlines are full of examples of people who did whatever they wanted. Now more companies are saying, “We have to deal with that. We have to be better than that.”
When I go in to look at a company’s values, I rarely go in with a list of values they should have. When I do a cultural audit, I look for what’s really going on there and whether it works or not based on their strategy and what they’re trying to accomplish. You can have any values you want. It’s okay with me. What I try to point out is this value that operates is either helping or hindering your efforts. You want to look at that and you want to take steps to adjust that.
Ruhland
You said, “values that operate.” How do operational values differ from cultural values?
Lehmann
Almost every company, if you go to their website or talk to their leaders, they have a list of values. Those are what I would call the espoused values or desired values. Operational values are the ones that actually are exemplified by how people show up, what they do, what they don’t do, how they make decisions, what’s okay and not okay. It’s the unwritten rules in the environment that say, “We can do this, and we can’t do that.”
People learn that the culture does the training these days, much more so than a lot of other things. I learn on my first day what not to do and what to do, what’s okay and what’s not okay. Whatever the values that are listed on the website say, those may be in alignment, I may see lots of examples of them. Or I may find, those don’t really show up. An example would be if the value is “care for the customer, the customer comes first;” things like that. But a service person is rewarded or punished for how long they spend on each call, then that is a value that gets in the way of another value.
More often than not, it’s not a question of having good values or bad values. It’s having really good values that collide. Customer focus but efficiency—those are two values. Both are good. But how do I make the decision: Which one to do? There are times when I have to make the call. For an organization, every single interaction with a customer is a decision point for that person. You have to help them make that decision.
For instance, in the construction industry rarely do you find a company that doesn’t say, “Safety comes first.” But also, productivity is really important, and efficiency is really important. And with those two things I have lots of examples where an individual had to make a decision, “Shall I do this in a very safe manner where it will take a little longer? Or can I be super productive and get all this done?” The old belief was that safety always takes longer. That’s not true most of the time, but that’s an example of a decision. Or the phone person who has to decide, “Do I really take care of this customer, or do I get off the phone as fast as I possibly can because that’s how I’m going to be rewarded? Most humans are going to go with “Where am I going to be rewarded?” That’s kind of human nature. Or more importantly, “Where am I going to go that I don’t get punished?”
Ruhland
Unfortunately, that’s how we usually communicate in a very busy environment.
Lehmann
Yeah, absolutely. We’re always pushing efficiency, moving quickly, and getting as much done as you possibly can. That’s an example of how a great value gets in the way of, perhaps, other values.
As much as we don’t want to prioritize values, we have to make people know, “Here’s how you make that decision.” For example, in that scenario, if I had been appropriately prepared for that call, I have the information to say, “You know what, if I spend a little extra time with this person, I will give them better care.” They make that decision and then get positive for that. Say, “You spent more time on that call, but that customer was really taken care of and they didn’t have to call back or have a bad experience.”
You can make the case for “I went with customer care in that place.” In other places, you might say, “You know what? I can give a good level of care and be efficient at the same time.” Most of the time, you can probably figure that out. But sometimes if you’re given really unrealistic expectations that are purely about efficiency, then people start to question, “What’s this customer service value? You say that, but efficiency seems more important.” They may or may not air that to you. But that’s what’s going on in their heads.
I always counsel people to really be clear and help people make good decisions. Because, otherwise, if we are left to our own devices, we’re going to make stuff up. And being that we’re human, we’re going to err on the side of “How can I not get into trouble?” Or, “How can I get rewarded?”
Ruhland
How do you reconcile, or do you reconcile people’s personal values with the company’s values?
Lehmann
That’s always a challenge because if people come in with different values or have been working there a long time and their values change, that’s going to show up as a problem. I think it’s difficult, for instance, to recruit or hire for values or promote for values, but it’s certainly worth looking at for organizations. But I think a lot of the time it’s formulating thoughtful questions that get people to talk about their experiences. You can learn a lot by letting people talk about things. Listen to what they say to find out what’s important to them. Especially as you get to a certain place in the recruitment process, where you’re really considering someone, that’s important to look at.
If you don’t pay attention, on their own cultures don’t get better, they get worse. Every new person, every new customer, every new change has a chance to erode the culture or strengthen it. If you don’t pay attention to that, especially now when it’s so difficult to find people, there may be a tendency to hope for the best. And maybe they will.
When I talk to people who do a lot of hiring, they have developed a way to say, “Is this person going to be a fit? Are they going to have a hard time fitting into our culture?” They might eventually fit in great. It’s just how much time and effort are we going to have to spend on letting them know, “Here’s the way we do things around here?” By the way, if you don’t do that early in the process, I’m not talking about the espoused values, but if you don’t talk about “Here’s how we really do things…” you’re just asking for trouble.
Think about any job you’ve ever had. You may have gone through orientation. Then, on your first day, you find out what’s really going on. When those two things match up…I’ve been in organizations where their orientation talks a lot about the culture and gives very specific examples of “Here’s how we make decisions and here’s the right thing to do.” Then when they get out there and that’s reinforced by the supervisors or the managers, or the foremen—everybody reinforces that, then it’s a smooth transition.
If their personal values don’t match up, they’ll make that decision, or the organization will make it for them. But it will become evident very quickly. It behooves organizations to give people a chance to really experience the culture and stay with it. I think there are a lot of people who would be very interested in being part of something that’s exciting.
Ruhland
One of the nice things about culture is that you don’t have to make a capital investment in it. It isn’t something that’s going to erode over time if it’s properly attended to. It’s something that’s renewable and sustainable. There are a lot of good things you can say about culture that can keep a company alive and vibrant and, like you mentioned, nimble.
Lehmann
Yeah, and it’s going to be there whether you do anything or not. It’s the environment that you’re working in. I think of it like when your culture is operating pretty well, it’s weeding the garden. You have to go in and clear out weeds once in a while. Maybe plant some new things. But the soil is strong. You’re watering it. You’re taking care of it. You know, there may be some work to do up front to make some changes. But typically, the garden’s in pretty good shape. It’s a matter of keeping it that way under all the time and people pressures that exist today.
Your culture’s the thing, as I said earlier, that is a significant differentiator. It pays to take care of it. It involves time and some resources and effort and focus and leadership. But you’re right, it doesn’t involve going out a buying a gigantic piece of capital equipment, unless you’re thinking of going with all robots. In which case, culture’s not an issue.