Culture Really Does Matter: How (And Why) To Manage It

When my friend Jim Rainey took over as CEO of a huge agribusiness operation, the organization was hemorrhaging tens of millions of dollars each year. Within 18 months, it was on solid financial footing. The turnaround became a case study at the Harvard Business School.

You might assume that Jim, coming from the outside, cleaned out the executive ranks and brought in his own team. No. He kept the same players.

His primary focus was on the way people interacted with each other. The way they brainstormed together. The way they corrected each other’s mistakes and celebrated each other’s success. The way they held each other, and themselves, accountable for performance.

In other words, Jim focused on that sometimes-nebulous thing called culture. Business theorist and psychologist Edgar Schein, credited with founding the discipline of organizational behavior, offered this insight: “The only thing of real importance that leaders do is to create and manage culture. If you don’t manage culture, it manages you.”

Dr. Schein said culture consists of the basic assumptions and beliefs that are shared by members of an organization. They operate unconsciously, he said, and in a basic “taken for granted” fashion define an organization’s view of itself and its environment.

Mark Miller has devoted his professional life to studying and managing culture. For more than four decades he’s worked at restaurant chain Chick-fil-A. He started as an hourly team member in one of the chain’s local restaurants, then worked his way up the corporate ranks to his current position of vice president of High-Performance Leadership.

Miller is the bestselling author of several books. And he doesn’t write about chicken sandwiches and waffle potato fries. His focus is on leadership and organizational effectiveness. His newest book is Culture Rules: The Leader’s Guide to Creating the Ultimate Competitive Advantage.

So, how exactly does he define culture?

“Culture is the cumulative effect of what people see, hear, experience, and believe,” he says. “Leaders have a tremendous opportunity to have significant influence on these elemental components of culture.”

Peter Drucker is credited with saying that “culture eats strategy for breakfast.” Miller agrees. “In an organizational context, there is nothing more pervasive or powerful than culture,” he says. “The only thing that can rival its reach and impact are the leaders who create it. Culture can be the ultimate competitive advantage.”

When it comes to recognizing the importance of culture in their organizations, many businesspeople seem to have blind spots. Miller has some suggestions on how to remove the blinders.

“In a word—listen,” he says. “Among the bedrocks of a strong culture are early warning systems. Leaders need both formal and informal ways to stay in touch with the truth about their organization. In order to lead from a position of strength, a leader must be grounded in reality.”

Miller’s views on culture are backed up by research showing that it’s not uncommon to see a 40-point gap between the leader’s view of reality and the perceptions of the front-line employees.

So what’s Miller’s advice to a leader who’s new to an organization that clearly has a culture in need of a significant overhaul?

“Culture typically evolves slowly, but not always,” he says. “A leader can change a culture quickly or at least make significant progress in a moment, or with a single decision.”

Examples?

“When Alan Mullaly took over at Ford, the company was on track to lose $18 billion,” Miller says. “He changed the culture almost immediately when he mandated a weekly senior leadership team meeting. He changed the culture again when he established the expectation that this team would work together to solve Ford’s biggest problems. Yes, time is often required to truly shift a culture, but Alan began the process very early in his tenure with just a few strategic decisions.”

Another example Miller cites is President Reagan’s handling of the Challenger disaster in 1986. He effectively shut down NASA during the Rogers Commission study, and the organization that emerged was fundamentally different from its predecessor. Although this transpired over many months, the culture of the agency changed quickly.

Our post-pandemic world is growing more and more accustomed to virtual teams. What impact has this had on organizational cultures?

“We’re living through a social experiment on a global scale, and the implications of it are not yet fully known,” Miller says. “I do wonder how similar this time is to the advent of the assembly line and interchangeable parts, or any of the other changes that fueled the first or second industrial revolutions.”

He says there’s much we don’t know about this particular shift in our world, but there are a few things we do know.

“People love being well-led. I would argue this is more challenging in a virtual/hybrid world. This doesn’t mean that this human need has diminished. People want meaningful work. As humans, we want to be connected to others in a meaningful way. As a matter of fact, most of our human desires for the workplace are the same as they were prior to today’s remote environment.”

Miller’s bottom line for leaders: “Whether leading is harder or not is not the point. Our job is to lead. Let’s focus on the unchanging needs of the people we serve. Work is fundamentally about what we do, not where we do it. Let’s help our people do their work well.”

To shed more light on the role culture plays in organizations, Miller and his team conducted a global study involving more than 6,000 leaders and front-line associates from ten countries.

“We knew we had to make the topic of culture as simple and approachable as possible—without becoming simplistic,” he says. The study identified three rules.

The first rule is to Aspire. “Leaders must share their hopes and dreams for their culture. This probably sounds like a blinding flash of the obvious. I agree. However, far too many leaders cannot do this. A culture may take shape in the hearts and minds of leadership, but it cannot stay there”

The second rule is to Amplify. “Leaders must ensure the cultural aspiration is reinforced continuously. I don’t need to tell you that there is so much noise in the world today. Leaders have the challenge and the opportunity to elevate their aspirations above the noise. Without this essential rule, their aspirations will be nothing more than a dream.”

The third rule is to Adapt. “Leaders must constantly be looking for ways to enhance their culture. This is the trickiest of the three rules and is often ignored. If the Aspiration is clear and the Amplification sufficient, the culture will move toward the Aspiration. Too many leaders quit at this point; they declare victory and want to move on. If they don’t pay careful attention to the culture moving forward, the sustained success of their culture is unlikely.”

As a first step to creating a high-performance culture, Miller recommends a mind-stretching activity that involves capturing aspirations in writing, then distilling the document multiple times. He explains how such a written declaration helps guide operational decisions.

“Ultimately, for a culture to take root, it must be understood, embraced, and activated by the people in the organization,” he says. “How can this happen if the people don’t know the aspiration? Here’s the test—as a leader, is your aspiration simple, clear, and repeatable? If not, the aspiration can have no meaningful role in the day-to-day behavioral patterns and norms of your organization.”

Having a clear and compelling “purpose” is no doubt critical to the success of every organization and its people. But what can a leader tell someone who regards this “culture stuff” as “soft” or even irrelevant to performance?

Miller points to research showing that 72% of U.S. leaders say culture is their most powerful tool for driving performance. “Those who think culture is soft are likely referring to the ‘unseen’ nature of culture,” he says. “Things that are unseen can still be very real. The wind is unseen, yet its power can be harnessed to provide energy for entire cities. There are also numerous studies testifying to the superior performance of organizations who have strong and vibrant cultures. The jury is in: culture rules!”