Leaders talk extensively about building a strong culture around their key values. Business researchers, too, often cite culture as being a crucial contributor to success and its lack as being a central cause of failure. Recently, I observed the CEO of one of America’s largest banks being grilled by the US congress for the bank’s deceptive practices. His response to almost every attack on his character and his bank’s was to say that these deceptive practices did not reflect the bank’s culture. He claimed the bank’s culture was built around ethics and customer service. Unfortunately for the bank president, this particular deceptive practice was not an isolated incident. After repeated violations, the CEO’s defense of “this is not our culture” did not align with the behaviors of his employees. It was obvious that, at least for some segments of the bank, there was a different culture that guided people’s decision making.
It’s clear that leaders should spend quality time determining and building the right culture. When even a small segment of employees blatantly violate the desired cultural norms, leaders should lose sleep and do a deep dive to discover what went wrong. This is especially true when the violations have ethical implications.
However, we must be aware that a strong culture may lead to some unintended negative consequences. Adam Grant in his book, Originals: How Non–Conformists Move the World, presents research that shows paying too much attention to culture can create a barrier to innovation.
He cites a study that examined start ups across industries and their “blueprint” or organizational model. The study identified the following templates:
- Professional (31%) – hire the best candidate with specific skills.
- Commitment (14%) – hire candidates for cultural fit.
- Star (9%) – hire the candidate with the best potential. The focus is less on current skills and more on having the raw brain power to acquire it.
- Autocracy (7%) – rely primarily on money and direct supervision to manage performance.
- Bureaucracy (7%) – focus on a challenging task coupled with detailed rules and procedures.
In the study, the companies that used the “Commitment” blueprint had a 100% survival rate. But the study presented a less favorable finding for those who promote the importance of culture. The study showed that “Commitment” companies grew their organizations 140 percent slower than “Star” companies and 25% slower than those with the “Professional” blueprint. The strong cultural fit is a benefit during the startup phase where everyone recognizes the need for flexibility and persistence. The challenge to growth results from having greater difficulty attracting, retaining, and integrating a diverse workforce. Over time, the organization becomes less likely to recognize and adapt to change.
The Polaroid Story
Grant tells the tragic story of Edwin Land and Polaroid and his failure to lead the company into the digital age. Polaroid’s “commitment” blueprint featured intensity, originality, and quality. After Land invented the instant camera in 1948, Polaroid developed a loyal customer base and grew to nearly a billion dollars in sales by 1976. The company executed around its core values in a largely stable industry. Trouble arrived with the digital revolution. Land and the Polaroid executive team steadfastly believed that customers would always want prints. Grant argues that Land’s inability to listen to dissenting opinions and to seek advice only from a very similar inner core contributed to the failure. Grant notes that, “Land knew how to think different, yet he created a company that didn’t.”
Unfortunately, according to the research, it is very difficult to change blueprints. In the study, companies who attempted to change were twice as likely to fail. “Commitment” firms seeking to change their organizational model encountered the most difficulty.
A tight insular culture was not the only contributing factor. Certainly having great success also blinded Land. Grant notes that in a rapidly changing world, the lessons of experience can point us in the wrong direction. Research suggests that the more success people have experienced in the past, the worse they perform in a new environment.
Grant’s conclusions can be pretty concerning, especially if you are over 30 years of age and still want to be relevant. All the things that have contributed to your success are now suddenly suspect going forward.
Fortunately, he offers some hope by exploring the factors influencing two distinct styles of innovation: conceptual and experimental. The young genius who provides the breakthrough discovery in his twenties (think Einstein and the Theory of Relativity) is an example of the conceptual innovator. The experimental approach involves solving problems through trial and error and the great contribution does not happen for many years.
Grant believes that in order to sustain originality we must adopt an experimental approach.
By contrast, those who become old masters refine a much different process over a much longer period of time. Leonardo da Vinci finished painting the Last Supper at age 46 and was in his early fifties when started working on the Mona Lisa. One scholar wrote, “Only by drawing did he truly come to understand, was his vision clarified.”
A balanced blend
Culture matters and leaders who don’t pay attention to building and maintaining the right culture will experience significant failure. Some values are timeless and act to unify organizations to become their best selves. Those are the values that attract people who bring diversity of thought as well as alignment of values. Leaders who make learning and experimentation both values and practices for their organization are best positioned to survive and keep innovating.
©2016 Lead International
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