Culture and institutions are your two levers for change

[Culture] and [Institutions] are the two pillars that hold up this world. -Cersei Lannister.

We’ve been very abstract so far, to the point of nausea. Sorry about that. I blame my 20+ years of school, plus not really knowing what I’m doing here.

Today we are going to get extremely concrete! Hooray. I’ve talked at length about how we need to look at the inputs to diversity, not just the numbers themselves. But what are the inputs in a company that give rise to diversity or not? How do we make sense of them? And then how do we make changes? I suggest using a framework I am 100% stealing from Jenna Bednar and Scott Page, who have a robust research agenda (I humbly coauthored two of their many papers) on this topic: Culture and Institutions.

In political science we talk about culture as the behaviors, values, beliefs, preferences, and so on that characterize people and groups of people, whereas institutions are the formal rules of the game. An example given to me early on was from Jim Morrow, who explained that in hockey (I’m already out of my depth here), there are the same rules followed by teams in the US and Canada. But, culturally, the teams do different things. I think the trend is that US teams are more violent, but I am not sure. I also am only reasonably sure he was referring to ice hockey rather than field hockey.

In political science in both domestic and international contexts, there is a big debate about whether institutions, like laws or treaties, or culture, like norms or values, are the primary drivers of the outcomes that we see. Most agree that the answer is some mix of both (though hardline IR scholars would say neither, and they are wrong — zing! I said it), but it’s not obvious which way the causal arrow goes. For example: Do we respect human rights because of a fear of punishment from others, or do we respect human rights because we think it’s the right thing to do? And, do we think it’s the right thing to do because it’s been formally enforced for so long? Or did we decide to formally enforce human rights because we believed it was the right thing to do?

Scott and Jenna’s work helps clarify a number of ways culture and institutions might be linked. For example, in their first paper they showed that culture (a repertoire of behaviors) is something that emerges from all of us playing according to multiple sets of rules at once. In another paper (one I helped on!), we showed that the order in which you introduce institutions can affect the cultures we see, which affects the viability of future institutions. The lesson is that certain cultures give rise to certain institutions, which make certain cultures later more or less possible. Basicaly (and this is their diagram that I am copying!):

Take that, chicken-and-egg problem!

In a company, I think the exact same logic applies. I first realized this in a conference room at a large global corporation, where their head of talent was walking me through their impressive and complicated model of compensation, rewards, and promotions, and how they’re enforced. As we talked, it became apparent that the decisions they had made long ago around some of these rules impacted some of the corporate culture I was learning about from surveys and interviews, which was then affecting how much they could realistically shift these institutions.

I wanted to leap out of my chair and run down the halls of this office building shouting “It’s all culture and institutions!” But, I am a professional, and so I stayed in the room with her and, instead, we had a fascinating three-hour discussion.

What’s the so-what here? I have been asking myself the same thing for the past three years since that original conversation. I think it’s this:

1. In companies, I am often asked to come in to talk about behavior — usually things like unconscious bias and microaggressions (an important concept with a name I hate). But the logic above says that culture and institutions are linked. So you can try to talk about behavioral change all you want, but if you really want traction, let’s think about what the formal rules are we can put into place to really spur that behavior. To use another sports analogy (this never goes well for me): If we don’t like how a particular game is being played, say, basketball, we could gather all the players in a room and say, hey, everyone, you’re taking too long to move down the court, or you’re making too many 3-point shots, and it’s making the game boring. So let’s everyone try to not do that anymore. Or, you could install a shot clock or move back the 3-point line. (Heavens, I am impressed by myself right now.)
2. Other times, I am asked for best practices. What’s the best hiring process for minimizing bias? How can I increase objectivity when I consider people for promotions? What’s the right parental leave policy? These are great questions, and there are good ideas out there about things that generally work (e.g., take names off résumés). The problem is, the logic above says not all institutions will work in all cultures. Thus, before just stealing the “best” set of rules and applying them blindly, you need to think about how they’ll perform in your company’s culture. In other words: there’s no institutional panacea. (Nobel Laureate Elinor Ostrom (et al.) wrote an excellent paper on this topic applied to governments.)
3. I haven’t quite spelled this out in my abridged version of this broad area of work (I’ll add some links to further reading soon), but this framework also inspires humility. While we know that some cultures are more amenable to some institutions, and that different cultures will respond differently to the same institutions, we also cannot predict exactly what the consequences of a new institutional change are going to be, nor can we assume with certainty that a certain culture cannot “handle” a particular institution. We know this is true because of all the times any policy ever has led to an unexpected outcome, and also all the idiots who thought things like democracy or economic growth weren’t possible in certain countries or cultures. The same is true in companies: You could do all the research you want and put all the “perfect” institutions in place according to how you think your culture works and what your values are, and you still might be surprised by what transpires. (For example, lots of companies spend a lot of time devising the ‘best” paternal leave or vacation policies, only to find that no one takes them.)

Speaking of research — that’s the topic of next week! See you then, and thanks as always for reading. I hope it’s useful and not too esoteric and weird. Also sorry for always talking about Scott.

P.S. Culture+Institutions4Ever.