Culture is Not Enough

Guest post from Thomas Steding:

Slowly, almost inexorably, culture has big become almost top of mind as a key factor in effective leadership. From the Harvard Business Review “Strategy and culture are among the primary levers at top leaders’ disposal in their never-ending quest to maintain organizational viability and effectiveness.” In the high tech industry, the emergence of culture as a critical factor has been greeted with a sense of relief, a respite from the reductionistic venture investor sole focus on numbers. As a result, Peter Drucker’s alleged comment that “Culture eats strategy for lunch” has become popular in our collective memory.

The problem remains, however, that leaders declaring the culture is a critical factor in their thinking is akin to one wetting one’s pants in a dark blue wool suit: It may give you a warm feeling, but it doesn’t show very much. The issue is that few people can define what they really mean by culture. One venture capital colleague was heard to talk about the importance of culture yet was unable to define what he meant. Another CEO colleague told me that his company had a wonderful culture described in detail in his company presentation. Upon examination, I discovered it contained in a series of typical bromides like “We don’t do politics” or “Be passionate” or “Go for the best” along with a promise for pizza on Fridays. A subsequent HR benefits survey across 1500 employees included questions about the company culture. It revealed that a vast majority of the employees actually hated the culture. I suggested to the CEO that he pour himself a glass of wine and sit in a quiet corner to review the results. I never learned his reaction to the survey, but the company stock eventually went from $95 to $2.

To understand an effective culture you need to start in a
different place. If you define the Cultural Layer as the de facto patterns of
behavior between members on the team you can define the Mindset Layer as the de
facto patterns of thought between the ears of the key leadership. The Mindset Layer,
therefore, sits below the Cultural Layer and determines its outcome. We have
defined the four archetypal (“original model or prototype”) dimensions of the
Mindset Layer. These are the underlying, universal factors driving mindset.
Over more than a decade, we have found that understanding where an organization
resides along these dimensions provides a powerful predictor of organizational
outcome and is critical to establishing an effective underlying culture.

The
four dimensions are Courage, Relatedness, Awareness, and Agility. Each of these
dimensions has a dual, or complementary, aspect, typically along intellectual
versus emotional dimensions. Courage is facing danger and fear with confidence
and resolution. Courage includes the capacity to take bold and fearless action
in the marketplace, but also to be willing to hear and process unwelcome input
from the team that could have a redeeming effect on organizational outcome.
Relatedness implies an intellectual understanding of staying connected with
customers, but also insists on respecting the emotional connections across the
team. Awareness implies a thorough understanding of the company’s markets,
technologies, and strategies. It also implies a close understanding of the
emotional life of the team. Agility is nimbleness of thought and action. It means
the ability to change direction and turn on a time due to changing conditions
in the market or industry conditions. Emotional agility, on the other hand,
means the ability to hear and consider another person’s perspective even in the
case that you hold an opposing point of view ex ante.

A
balanced state among these four Mindset dimensions provides a defense against
organizational dysfunction. The inferior Mindset dimension is the gateway for
dysfunctionality to penetrate. At the same time, it can offer an effective
roadmap for organization improvement. For example, a team was stuck in the
process of making a fundamental product development decision for six months.
Clearly, their inferior dimension was Courage—in this case, courage to make a
product decision, get the product out, and determine its viability. The lack of
team courage lead to dysfunctional behavior, such as gossip, blame shifting,
and, obviously, schedule slippage. Their dysfunctional behavior cost their firm
market leadership.

Hence
any conversation, or program, addressing culture has to start with the Mindset
Layer. Misalignment between mindset and culture leads to the all-too- frequent
case where the behavior in the room bears no resemblance to the code of ethics
on the wall. Authentic culture must reflect who the company and its personnel
are authentically. Going through the intellectual process of specifying the
culture without understanding underlying mindset is like building a structure
starting on the second floor. So, we add: “Mindset eats culture for breakfast.”

Dr.
Thomas Steding
is a senior corporate executive
with an excellent track record in founding and growing successful businesses
based on complex, leading edge technologies.  He has been CEO of over 12
high tech companies and active chairman of several others. His new book is
called Real
Teams Win: What Smart Leaders Need To Know About Achieving Performance
.