Leader Imperative #1. Culture: Your Enduring Competitive Advantage

NumberOne small_18681809_OK“Your business plan is what you are, but Culture is who you are.”
– Gary Kelly, Chairman and CEO, Southwest Airlines

Every organization has a culture, sometimes referred to as its personality or organizational DNA. An organization’s culture grows out of the values, behaviors and norms that its top management encourages, rewards or – in some cases – simply allows to exist.

Key Point. Research has long shown that organizational culture has a significant impact on bottom-line performance.

For instance, a comparative study of high versus low-performance corporate cultures by John Kotter and James Hesket in 1992 found revenue growth of 682 percent versus 166 percent, stock price increases of 901 percent versus 74 percent, and job growth of 282 percent versus 36 percent.

Do I have your attention now?

Five Characteristics of High-Performance Cultures

1. High-performance cultures share common strengths and traits. Inside the organization, these cultures are strong in teamwork, communication, transparency and capability development. Externally, they are relentlessly focused on their customers and strategy execution. They are also nimble in responding to changing business circumstances.

2. High-performance cultures are consciously tended by their leaders. “I came to see, in my time at IBM, that culture isn’t one aspect of the game; it is the game,” says Lou Gerstner, former CEO of IBM, who led a turnaround of the ailing company in the 1990s.

3. Core values and behaviors are aligned with the organization’s mission and strategy. Two great examples of winning culture alignment are: 1) Google, which puts a premium on user experience, speed and web-based revenue generation; and 2) the Mayo Clinic, which achieves outstanding patient care through professionalism, teamwork, and mutual respect.

4. Leaders consistently reinforce – and enforce – cultural values and priorities. Steven Stoute, Chairman of beauty line Carol’s Daughter, makes the point well: “I think it’s very important…to have checks and balances to know when somebody has not bought into the culture, because at some point in your organization, something is going to backfire and something’s not going to get done because somebody’s not paying attention.”

5. High-performance cultures are not easily replicated. Seriously, does anyone believe that hypercompetitive CEOs like Howard Schultz (Starbucks), Tony Hsieh (Zappos), and Andy Grove (Intel) would publicize the inner workings of their corporate cultures if this gave rivals a leg up? They know that while their business strategy can be readily copied, their high-performance culture cannot.

When it comes to forging a path of sustainable growth in increasingly complex times, the smart money is on leaders who can build and extend high-performance cultures. Are you one of them?

About the Author

Susan Battley

An advisor to Fortune 100 executives and world-class institutions for more than twenty years, Dr. Susan Battley is an internationally recognized expert on CEO and leadership effectiveness. Her clients include Fortune 500 companies, professional service firms, and elite research institutions. She has worked with chief executives, university presidents, Nobel laureates, and prominent scientists, diplomats, and educators. A respected media source for analyzing leadership in the context of news-breaking events and key trends, Battley has been featured in outlets worldwide including CNN, CNBC, Fox, Bloomberg, and National Public Radio, and in The Wall Street Journal, The New York Times, The Washington Post, Chief Executive, Business Week, United Press International, Harvard Management Update, Entrepreneur, Science, Leader to Leader, Investments, and Worth. She is the founder and CEO of Battley Performance Consulting, a leadership strategy and organization effectiveness consultancy.