Culture. Every organisation has one. It reflects your values, your vision, and your mission. If the culture of your organisation isn’t right, it can harm people’s ability to function effectively, making it more difficult –and sometimes painful– to reach your goals. From my perspective, as someone leading a global business that is active in over 45 countries and has a diverse workforce of more than 16,000 people, the importance of culture cannot be overstated. Much of our growth has come from acquisitions, adding a layer of inherited corporate culture to the multiple geographical cultures. Understanding the importance of culture striving to integrate not only business units, but the people who make up those business units, can be one of the most important aspects of all merger and acquisition activity. Getting it wrong can have painful consequences, whereas getting it right benefits everyone.
It would be wrong to attempt to homogenise corporate cultures though. As part of the integration process, you have to encourage the cultural differences within different parts of your organisation. It breeds tolerance and that is good for business and good for people. Research from McKinsey & Company shows that cultural diversity within a team encourages more objective decision making and has the potential to improve financial performance. So how then do you create a unified organisational culture while also encouraging the differences and celebrating the diversity?
Building the leaders of tomorrow
Your vision and your mission are fundamentally important, not only to the commercial success of the business, but to its cultural success too. That means you need to look for opportunities to initiate changes to the way people interact, the way teams are structured, so you foster a culture everyone engages with. A few years ago, in one part of the group, there were issues with people failing to collaborate effectively, and relying too heavily on meetings. It seemed to me that these meetings were taking up time, and slowing down the decision-making process– this was a cultural issue, meetings were within everyone’s comfort zone. So, I decentralised that part of the business to create regional business units, and then empowered the heads of those divisions to act with more autonomy. In this way, we created new leaders, and changed the culture without resorting to top-down rules.
Of course, while you’re shaping the organisation and its culture, an effective leader should always be open to learning new ideas– you won’t always have the ideal template to impose on everyone else. For example, the importance of structured, planned communication –both internal and external– was really brought home to me via one of our business units. It was a great learning experience personally, and has really benefited the rest of the group.
Taking the long view
All businesses have a goal to succeed and grow. But the way in which you evaluate your progress toward that goal tends to be dictated by culture. Not just the culture of your organisation, but the wider societal culture in which you are based. For some, success is all about short-term revenue targets and sales outputs, whereas others focus on longer-term outcomes. Understanding these differences in outlook can help overcome a great deal of potential confusion. If hitting a target jeopardises an established relationship, risking loss of business in the future, the importance of that target will seem different, depending on where you are in the world. A sales-oriented culture may struggle to comprehend another where maintaining sustainable relationships with customers and suppliers is seen as more important than a few revenue points– and vice versa. But both have their merits, and both seek to benefit the bottom line. It is crucial that the business leader has the vision and drive to identify the right balance, and strike a happy medium between differing cultural outlooks where necessary.
In his book Breaking Bad Habits, Freek Vermeulen –a professor of strategy and entrepreneurship at London Business School– talks about just this. He demonstrates how quick wins can lull firms into being longerterm losers, how outsourcing can quickly boost profits, but also lead to knowledge erosion in the future, for example. It is only by establishing the right organisational culture that employees will have the freedom to raise concerns over the longerterm implications of decisions that appear to have obvious benefits. Fostering a culture in which collaboration and long-term thinking become second nature can help avoid some of those challenges. I am a great believer in learn fast, fail fast, and this is an outlook we work hard to instil into the Finablr culture. From inclusive decision-making to transparent internal communications, if your people understand your vision and the company’s mission, they will become naturally disengaged from short-term thinking, and more inspired to achieve longer-term sustainable growth.
Breaking the mould
It is also important to remember that changing a business culture takes time– especially in the wake of mergers and acquisitions. It will never be as simple as flicking a switch, no matter how much you wish it was. If you overlook the importance of culture and cultural alignment, you could find yourself pondering the inescapable truth of the saying, “culture eats strategy for breakfast.” Getting culture right across merged organisations is hard work. But the price of failure is even more hard work. So, it really is worth the effort. Make sure you back all your plans up with communication and engagement. Make yourself available, and stay committed to the process over the long-term. It can’t all be done over emails and intranets– it must be high touch and personal. There is no substitute for personal interaction– of the real face-to-face kind. It helps you understand the individuals you will be leading, and how you can inspire them. It helps them gain trust in you and your vision.
And when it comes to avoiding the trap of stereotyping people, nothing is more effective than actually getting to know people. When we started working in the UK, I would visit our operations there every month, so I could spend time with colleagues. You need to invest an entire day in someone. As well as the meetings, make sure you have time to eat lunch with them, and maybe even dinner too. Then, you can start to understand each other. They will become one of the key players in your vision– the nucleus of change. Over time, you can gradually expand that nucleus, bringing more people into the fold. Gradual change should be the objective. To give another example, as part of our commitment to open dialogue and transparency, we started doing town hall meetings. But we soon discovered nobody wanted to ask questions– either out of fear, or respect, or some other worry.
So, we changed things. People were asked to submit their questions in advance, we would respond, and they could then ask about those responses if they wanted to. There were one, two, three, four town halls where no one spoke up. But by the fifth one, a few people asked questions in the open. And that’s when you know that the process of change is really underway. Such differences may seem inconsequential, but they are important when it comes to establishing a working culture. At the heart of that culture is the way your values are expressed through people’s everyday actions– the way you live out those values, and the way you bring them to life. In the final analysis, the way people behave at all levels within the organisation reflects the very essence of the company. Get the culture right, and you’ll be in a strong position to grow a vibrant and successful business.
This article first appeared in Entrepreneur magazine.