I heard an Investment manager talking about culture the other day. Given what is happening at Valeant, Volkswagen, what happened at Enron, etc. it’s a topic of interest. It seems that when the financial performance of the firm degrades, then – and usually only “then” (to their detriment) – do they consider culture.
“How could this happen” is usually the question they ask and then they talk about “bad” culture
But one of the huge mistakes that people make again and again is that they tend to think of culture along a scale.
Good culture as being far to one side and Bad culture as being far to the other.
This is completely wrong.
In fact it is the habits and seeds of good culture that can often lead to bad culture.
Let me give you an example:
In the beginning of the firm you are building a team. You are small and you are taking on the big guys. “We can do it better” becomes the rallying cry. This helps to pull the team together. It helps you push harder.
But let’s say you start to succeed. You may even become “the big guy”. The tight team you developed to get you to that place might become a little paranoid. “Watch out for the competition”. “Do what you have to in order to stay on top”.
Now your tight team is not working outward to build better systems for your clients, for your people. Your team has turned inward to protect itself. Maybe even some arrogance comes in along the way – “We can do it best so we trust only ourselves”.
The team strength that grew your team has now become the wall against the outside world. And it is here, in these moments that bad things can happen.
When you become a tribe looking at the world from the perspective of survival rather than growth and learning you can be convinced to take some actions you might otherwise not have taken.
Because the team over time has become isolated from the outside world, it can lose its reference points. The team, in effect, has lost its conscience. You might stop questioning the actions of leadership and just start following commands.
This never happens in drastic moves. It happens incrementally over time and that’s why it might not be felt by the participants.
Now I am not talking about some companies that are just straight out bad. I am addressing the misconception that good and bad cultures occupy completely different parts of the universe.
In fact, good and bad cultures live in houses next to each other. They see each other every day.
The key is knowing and monitoring your culture so you know when the bad has come calling.
Transparency, relentless focus on others (the customers and the employees), outside voice are all methods that must be built into your process to prevent the bad from moving in.
Because the bad is never that far away.