When Culture Turns Septic

A loooooong, long time ago, back in my science days…..we learned that bacteria are both good and bad. Everyone has bacteria on and in them, on their skin, in their nose, in their gut. In small quantities or in the right combination, bacterial cultures are benign or more commonly in fact, rather conducive to health. In large quantities, an overgrowth of bacterial cultures or cultures in the wrong combination can cause havoc, even death.

We, that is business types, bang on a lot about culture these days. It was a buzz word for a while, now it’s just part of the corporate vernacular. A vague word that is supposed to summise the collection of behavioural traits and values that identify and unify you as a sub group (I don’t actually know if this is an accurate definition, I’m on a plane and can’t look it up, that’s maybe just how I see it). Our company bangs on about culture a lot. And to be honest I don’t think this is unusual, especially for a company that has grown from nothing, and is not very old. When you start out, it’s just a few entrepreneurs striking out, you don’t have a lot of resources and you don’t have much to unify or differentiate yourself from the masses, and so culture yields a disproportionate focus and becomes a key strategy to attract customers and team members. And by that I don’t mean ping pong tables and meditation rooms…that’s not culture. I mean the purpose that drives the organisation, its values and how that is effected in its people and its decisions. When people remark someone is a good cultural fit or a good cultural addition, part of this is an assessment that this person will ‘get along’ with the existing people in the team, but actually, I think if you really dig a little deeper, that assessment is a general proxy for ‘this person will uphold or add to the values and purpose we have agreed are important and thus hold dear’.

This week someone made the remark to me that organisations constantly overestimate the importance of culture, not an abstract concept, but as a relative one. That is, organisations/companies spend too much time celebrating or waxing lyrical about culture, when they should be placing more or equal time and focus on governance. My immediate visceral reaction to that was to wince like someone had just drawn their nails over a chalkboard. But then I remembered I’m a director of several companies, including a ASX300 public company, and so I took my fingers out of my ears and stopped shouting ‘I cant hear you, I cant hear you” long enough to contemplate for longer than a picosecond.

I think there is genuine truth to this. At some point, probably when companies transition from startup to scale up, companies need to wean themselves off their reliance on their culture as a strategy to power growth, and transition this to a tool for retention and stability. Companies, and leaders, can often make the mistake that the strategies that helped get them to a certain value inflection point, will be effective at getting them to a different value inflection point. Or alternatively, if one strategy has led to a Company’s success, then more of it will lead to more success. Uber is a case in point — its anti-establishment, rebellious culture was imperative for yielding success in the face of and when every regulator and city wanted to shut them down. This rebellious indifference to the transport establishment is how they expanded and won city by city, country by country, in unprecedented fashion. However, this same cultural zeitgeist grew out of control (a culture overgrowth if you will) and translated into rebellious indifference to the human establishment as evidenced by indifference to equality. Now, unlike the first paragraph may have foreshadowed, I don’t think this ‘infection’ will lead to the death of Uber, but its undeniable its health has suffered.

And so back to the remark that started me on this post, could better governance have saved the day? Yeah, actually, I think it could have. If the HR processes were more rigorous then those employees making complaints about harassment, sexism and unequal treatment would have had their concerns appropriately dealt with an escalated rather than glossed over and lip service paid. And if the Board had undertaken proper diligence and ensured the Company responded appropriately to the ever growing public criticisms relating to public safety concerns, harassment, and poor leadership, then the Company would very likely not have found itself in the PR and shareholder value destroying position it found itself in a few months ago.

I liken culture to the foundations when one is building a home. At the start, you lay the slab and it represents the sum total of the buildings infrastructure. As you build upon it, adding the first story, then the second, it becomes a much smaller proportion of what makes it a home, but nonetheless critical for its growth, stability and longevity. Too often, governance is a dirty word for small and young companies, because its viewed as getting in the way of fast decisions and agile strategic movements. And there is no doubt it can. While there is absolutely no reason good culture cannot coexist alongside good governance, I do think that those companies who have less focus on governance do so because they believe the strategies that supported their historical success, like culture, will be sufficient to ensure their future success. It just ain’t so. Continued company success is like any biological system, its Darwinian, evolve and adapt or die.

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