“Failures of culture have been the single biggest destroyers of value in the last five years,” states the former senior vice president of HR of Google in a recent article.[i]  This revelation by one of the contemporary tech giants supports the previous dictum, “Culture eats strategy for breakfast.”  Depending on one’s perspective, this latter quote can be attributed to literature dating back to the mid-1980s.[ii]

Regardless, the central role of culture in an organization has long been recognized.  One wonders, if this is true, why has so little changed in 30+ years?

This writer is personally aware of three major cultural debacles by large publicly traded firms where shareholder value was destroyed through inter cultural challenges.  In one case, the ‘then’ acquiring firm was subsequently acquired itself in part because of a seemingly dysfunctional culture.

The Inc. article goes on to describe three demonstrable risks management must attend to in their mitigation strategies:

  • The internal is now external—Organizational ecosystem employees/contractors/customers now have unfettered access to outside the ‘door.’ Constituent parties can use social media posts to comment about the good, bad, and ugly of an organization.
  • The data on culture shows clear economic impact—Case studies on culture are no longer ‘fuzzy’ and the impact of culture on the bottom line can now be documented.
  • People technology has advanced enough to help—Data and analytics enable organizations to develop a better understanding other their ‘workforce’ market constituency and develop strategies addressing their concerns and needs.

The article concludes that culture is no longer a buzzword and organizations can leverage it to drive organizational alignment and behavior towards shareholder value.  Culture is now a measurable KPI.

Care to benchmark yours?

 

Cross Culture

If one accepts the above premise, competitive value is created by the organization’s culture.  This is not a new statement and has been addressed by this author in various forums for years.

Fundamentally, there are two types of cultural interactions:

  • Collaborative—Two or more organizations seek to work together to realize joint value. For example, the organizational ecosystem, i.e., suppliers and long-term customers.
  • Adversarial—Two or more organizations seek to realize value at the expense of others. Examples include competitors, government regulatory interactions, i.e., IRS or legal actions.

Even an internal team is a composite of several legacy (organizational) cultures not to mention diverse ethnicity and societal circumstances.  It is this heterogeneous environment that the bottom line is ultimately impacted.

This author began investigating cross-cultural engagement value (or lack thereof) in the era of Culture eats strategy for breakfast.  In any cross-cultural situation, the Relationship is the ultimate value developed, sustained or even lost.

The R B C model describes a set of interpersonal Behaviors based upon a set of Conditions.  Behaviors are observable and describable (beware of observer bias) and Conditions can be equally known.  The Relationship(s) between parties are latent (not directly observed) and must be inferred.[iii]

This inference is often the source of poor decision-making—the reason so many deals go ‘south.’  If the internal culture is now better defined, manageable and a bottom-line item, focus must be turned to intercultural engagements.

Even as your organizational culture is more knowable.  Its relationship with other identifiable cultures is not.  If that were true, there might be fewer issues among parties.  One might even surmise; the divorce rate might be lower.

At all levels, culture is an evolving construct.  Cigarette smoking is no longer publicly acceptable for many while marijuana consumption is.  Fashions come and go as well.

Certainly ‘pop culture’ evolves rapidly.  Perhaps slower, but so do societal and ultimately business cultures.

In this pundit’s opinion, successful inter-cultural engagements are the key to long term value—shared or otherwise.  The more the organization knows Who and What it is, the better it will be able to develop a ‘relationship’ with counterparts who know Who and What they are.

Culture is the Food of Choice.  How is Your Organization Watching its Weight?

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End Notes

[i]  https://www.inc.com/michael-schneider/googles-former-head-of-hr-issues-a-warning-that-all-business-owners-leadership-teams-should-read.html

[ii]  https://quoteinvestigator.com/2017/05/23/culture-eats/

[iii]  http://www.stat.cmu.edu/~brian/905-2009/all-papers/Bollen-annurev.psych.53.100901.pdf