Article

The Cultural Dilemma

Why your biggest asset – a strong company culture – risk becoming your biggest liability.

by Jens Højgaard, CEO, Maestro Business 

Companies, which are growing and performing consistently in the long run, have one thing in common. They have a strong and deeply rooted culture, which supports the company in achieving its sustainable success. Collective learning of what works and what doesn’t work in real life has forged the company culture by making it and its people successful. The company culture is embedded in a strong (and often unspoken) set of collective rules, values and norms about what behavior is right and what is wrong.

 

Leaders like a strong company culture because it becomes self-reinforcing. New hires quickly either learn “how we do stuff around here” or mis-thrive and end up leaving the company. Opposed to a weak company culture, a strong company culture ensures a high level of consistency in performance and delivery without a need for much managerial heavy lifting. The business almost takes care of it self.

 

The average life expectancy of a Fortune 500 company lies between 30 and 40 years. In fact of the companies listed in the 1970 Fortune 500 – a full one third had vanished by 1983 and from 1955 to 2011 87% are gone.

 

As long as the future trajectory of the company is sound and vital, a strong company culture is probably the strongest asset of  any organization. But, when a sudden disruption occurs that requires the company to make rapid changes in it’s trajectory, the strong company culture can easily become its biggest liability. 

 

The same unspoken rules of the game that made the company so successful in the past, is now rapidly eroding the same company’s performance. Fighting hard to change its disastrous collision course, company leaders – many of whom themselves are heavily biased by the old culture - are now required to endure a lot of emotional toughness while working to change beliefs about former best practices, excellent business processes and the collective mindsets in the entire organization.

 

And while the organization stays on its fatal collision course, it’s easy to believe that they need to start doing something new … fast. While in fact what is keeping the organization locked on the current course is the inherent inability to stop doing something old. So, while HR is busy designing new cutting edge training programs in support of the new strategy - the company-wide unlearning programmes are nonexistant. Business consultants and coaches talk about attracting the right people and setting new bold goals, and not about how to deal with old and trusted employees doing the wrong things (because they were the only right things to do a few minutes ago).

 

Companies like Kodak, Nokia and Palm Inc. where all great companies, with solid revenue streams, long and successful legacies, loyal customers and ALL had the innovative and technological lead in their respective marketplaces. All had a strong brand and an ability to attract some of the smartest and most skilled people in the world. All had successfully built very strong and high performing company cultures. But they were unable to regain control over their own strong cultures and thus the cultures ended up driving them off the cliff. Those same highly admired high performance business cultures that grew them to become admired icons of their time – ended up destroying them all.

 

When companies collapse the reason is most commonly a lack of liquidity. But the core reason behind lack of liquidity in formerly sound companies, is almost always the inability to execute new ideas and behaviors …. by stopping to execute old ones.