Corporate Culture Myths

Myths

The great enemy of the truth is very often not the lie, deliberate, contrived and dishonest, but the myth, persistent, persuasive and unrealistic. ~ John F. Kennedy

Corporate culture is one of those business issues that is difficult to define and certainly more difficult to manage than a supply chain or even the business brand. And yet corporate culture is one of the most talked about topics. I recently spoke with a senior investment manager who had just returned from a financial conference in Brazil and he was floored by the number of times corporate culture came up during investment presentations!

Anything popular is also subject to exaggeration, misinformation and just plain myths. Corporate culture is no exception. Below are what I believe to be the most pervasive myths relating to corporate culture.

Myth: There is an overall corporate culture

There is no single, overriding central corporate culture.  Most organisations are a collection of subcultures of various strengths and characteristics. Subcultures are formed around informal leaders who are highly trusted and respected by employees. These individuals have a great deal of influence about how things get done, employee beliefs about the company and management, and how to survive and keep your job. In many organisations, these subcultures have informal groundrules that determine employee beliefs and work behaviours.

In one sense, subcultures are a natural part of any organization. Subcultures can be defined as “groups of organizational members who interact regularly with each other, identify themselves as a distinct group within that organization, share the same problems, and take action on the basis of a common way of thinking that is unique to the group”. 

If leadership ignores the management of corporate culture, the need for belonging to a group interested in more than quarterly profits draws employees to form tightly knit subcultures. Usually led by an employee that the group trusts and respects, the human need for belonging and being accepted into a group makes these subcultures remarkably strong. When they are aligned with the overall company strategy and ways of working, subcultures provide a direct connection between company strategy and daily work activities. When subcultures form that are out of alignment with the overall values and business strategies, they can be a considerable barrier to strategy execution and a major blockage to change initiatives.

subcultures

Myth:  Large or multi-national companies cannot manage culture effectively

Corporate culture is a leadership force-multiplier!

Managing a large or multi-national company is hard, period.  The diversity of people and national cultures, combined with the time zone distances and language differences make the role of senior management extremely complex.  In that situation, we see culture as a “leadership force-multiplier” in that a high-performance culture creates alignment among people and helps keep things on track and focused.

Consider Wal-Mart, with 8,970 global locations, revenues of $470 billion and 2.2 million employees, which has a very strong and high performance culture that was built by the founder, Sam Walton, and kept alive by successive leaders.  In his book, The Wal-Mart Way, Don Soderquist, former Senior Vice-Chairman states: “The Wal-Mart Way is not about stores, clubs, distribution centers, trucks or computers.  These tangible assets are all crucial ingredients in the company’s business plan, but the real story of success is about people; how Wal-Mart treats its employees and its customers.”

Another large, global company that uses culture as a means of providing consistent customer service and employee engagement around the world is Yum! Brands, owners of Kentucky Fried Chicken, Pizza Hut and Taco Bell.

Yum! Brands, headquartered in Louisville, Kentucky, does business in 117 countries with 1.4 million employees and more than 70% of its profits originating outside the United States. Over 12% of its 37,000 restaurants are located in China alone. Yum! posted an annual EPS growth rate of at least 13% between 2002 and 2012 during its accelerated global expansion.

When we first started our company, the single highest priority I had was to create a global culture where we can galvanize around the behaviors that we know will drive results in our industry. ~David Knovak

The leaders of Yum! Brands realized that the behaviors for success at store level were the same across all its brands and were based on the fact that employees want to work in a culture where they can add value to the customer on a daily basis and not be micro-managed or hemmed in by rigid processes and company policies. Yum! calls it “Customer Mania” and the culture revolves around employee recognition and peer celebrations. Store managers make recognition fun and engaging with awards like the famous rubber chicken, cheese heads and giant taco sauce packets. They even have a management award of an oversized set of walking teeth for those who “Walk the Talk”. And these basic human elements of recognition, peer learning, team support and adding value to the customer experience translate well across multiple cultures. And at Yum! the CEO, David Knovak designed and taught internal management workshops titled “Taking People with You”.

The Yum! brands phenomenal growth in China, where they opened 656 new restaurants in 2011 alone is a good example of building a global corporate culture. The key to building a global corporate culture is to identify a few basic core human behaviors that help employees grow, develop skills and receive peer and customer recognition, and then for each global region, understand the regional customer base and customer preferences. Yum! has taken Western brands like KFC and Pizza Hut with products like Original Recipe chicken and Pan Pizza and made them relevant for the Chinese consumer by extending menus with innovative products to fit local taste preferences.

Cross-cultural competence is at the crux of a sustainable competitive advantage in a global marketplace.

(Learn more about corporate culture in CULTURE RULES! The 10 Core Principles of Corporate Culture, available on Amazon in early October, 2017.  Download a free summary copy of CULTURE RULES!

Culture rules

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

 

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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