As per an HBR study1, 52% of Fortune 500 companies have either gone bankrupt, been acquired, or ceased to exist since 2000. Staggering isn’t it? Even the big ones aren’t safe. With the world becoming digital, connected, and smaller by the day, businesses are facing challenges of varied shapes and sizes. Not only that, these challenges are coming from all directions. But are organizations equipped to face these challenges and remain competitive? The ones who do so successfully create legacies and multifold shareholder value. While the others become a statistic like the above 52%. So, what is the difference between the greats and the goods of the business world? Culture!! The greats handle the uncertainty better and face competition better. They provide better customer satisfaction and have focus on performance. The let employees take risks, fail, and innovate. They have leadership that is looked up to and align the entire organization to one vision. These are nothing but culture nuances that these companies have aligned with strategic nuances over time.
On the other hand, it’s never been easier to start a new business in this connected world economy. It takes less than a month to register a company, think of a name, design a logo, get a website, and start a new business. But what differentiates the successful startups from the failures are similar reasons and internal attributes. So, what are these strategic challenges that all kinds of companies face and bring the existence of companies in question? And how are they related to the culture in the company?
Customer stickiness is as much a factor of customer satisfaction as it is of business model. And customer satisfaction is as much a factor of culture that exists in a company as it is of a great product or service. As per a report in American Psychologist, causation impact between employee engagement emanating out of an aligned culture and customer satisfaction has been measured at 0.432. To put this in perspective, causation between smoking and lung cancer within 25 years is 0.08. Need I say more?
Uncertainty about future
Business environment is uncertain, and the uncertainty is only growing. Any organization’s capability to navigate through changing market, customer, and competitive trends stems from the fact that how agile is that company. Is the company proactive and able create a semblance of certainty for itself? At least is the company able to react positively to the changing environment? All this depends on the internal culture and habits within the organization.
Most companies are successfully able to grow to a certain level and then hit a ceiling. This strategic cycle comes several times in a company’s lifespan. But most great companies are well prepared for it. Yes, there are external conditions that cause the plateau. But there are several internal reasons, related to the company’s culture, that also contribute to it. Is the workforce being complacent without focus on performance? Are there new ideas floating around? Is the company developing growth catalysts aka leaders within? Is the company upskilling the workforce effectively?
Often young companies grow at a rapid pace when their offerings are in great demand from the customers. However, the organization is not able to scale up according to the business growth. Leaders find themselves in a position where they become the bottleneck and their bandwidth determines the scale of the organization. The employees either lack the ownership or there is a lack of a middle layer that can help organization to scale up sustainably. Most often, the first-time managers in the organization lack the correct skills to enable to organization to scale up.
Hiring the right employees
Hiring the right employees to scale up with the growth of the company is a challenge for most young companies. How do you attract great talent? More so when you are a bootstrapped company? Even if you are a well-funded company, are higher salaries the only differentiator vis-à-vis other companies? Culture plays a huge part in attracting the right talent. Building the culture is only the start here. To attract the right talent, one must communicate the same to the prospective candidates. The win is when a candidate leaves a higher paying offer on the table to join your company because of your organization’s workplace experience.
Culture eats strategy for breakfast
“Culture eats strategy for breakfast” – this is a famous quote by Peter Drucker. Company executives can draw up any strategy. If the overall organization, its people, and its culture doesn’t support that strategy, it will fail. Any challenge, internal or external, that company faces will find its roots in the company’s culture. The problem is that as business leaders, we remain oblivious to that or do not give enough focus to fixing the root cause. What remain unseen are the root cause of these issues and hence the real fix remains elusive. In the end, employee productivity is impacted and the final victim is the effective execution of company’s strategy. Culture is the differentiator that makes the “greats”
We will be talking about each of these challenges one by one in our upcoming series of blogs. Are you facing any business challenge that is plaguing your company? You have tried so many things but are unable to march ahead? Watch it, it might be related to the company’s culture. Talk to us today at [email protected]