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TPL Insights: Building Peak-Performance Cultures #124 – Does Your Company’s Culture Reinforce Its Strategy And Purpose? Part 2

June 23, 2022

By  

Rob Andrews

By Rob Andrews with paraphrased content from Hubert Joly’s article in Harvard Business Review – June 10th, 2022

Last week we left off our discussion of company culture’s influence on strategy and purpose with a reflection on the leadership role modeling. Click here to read part one.

How to Shape an Effective Culture

Changing a company’s culture requires more than role modeling, of course. In Joly’s experience, there are three types of levers companies can use to profoundly shape an effective culture: business levers, management levers, and “human magic” levers.

Business Levers

“Operational progress creates strategic degrees of freedom,” including around organic growth, partnership, or M&A activities, one board member told Hubert when he was CEO of Carlson Companies. In other words, improving operations influences strategic choices. He was right of course, and he could have added that changes in business operation shape a company culture, too.

When Joly’s team focused on fixing customer pain points during the Best Buy turnaround, they emphasized the importance of acting from the outside in and from the bottom up. That made it clear that the future of the company depended on listening to customers and making their lives better. Similarly, Best Buy’s successful partnerships with suppliers like Apple, Microsoft, Samsung, Sony, and even Amazon to create branded mini stores within our Best Buy outlets introduced a more expansive perspective than a traditional zero-sum-game stance. And acquiring technology companies that offered health services helped shift employees’ view of Best Buy from an electronics retailer to a company enriching customers’ lives through technology.

Management Levers

Key management processes directly impact culture as well. What kind of people do you appoint to positions of power? What kind of people does your company recruit? Does performance trump bad behavior? How are decisions made and by whom? How does your company measure and reward success? What are key business rhythms? How are meetings conducted? What kind of controls and compliance are in place? All these structures, processes, and rules can shape culture.

At Netflix, for example, there is only one policy for travel, entertainment, gifts, and other expenses: “Act in Netflix’s best interest.” That’s it. Also, there are no company-wide rules on office hours, or the number of vacation days employees can take. These reflect the culture of “freedom with responsibility” that CEO and cofounder Reed Hastings credits for the company’s radical reinvention into a streaming and creative giant that seeks to entertain the world. But this “no rules rules” approach goes hand in hand with other management levers that shape culture, such as seeking to recruit only “stunning colleagues” and rewarding adequate performance with a generous severance package; providing a lot of contexts to facilitate decentralized decision making (for example, by sharing information openly and broadly); and offering frequent, honest, and constructive feedback.

Over his career, Joly learned to start monthly performance management meetings by talking about people and organizational issues, then the business and finally financials. This may seem like a small change, but it reinforced a culture that put employees at the center.

Human Magic Levers

These are the essential and interconnected ingredients that, together, create an environment in which people are eager and able to fully give their energy and talent to serve the company purpose.

During my time at Best Buy and through research I conducted when writing The Heart of Business, I’ve learned about the power of six ingredients: meaning, human connections, autonomy, psychological safety, mastery, and a growth mindset. How do you enable every employee to connect what drives them with their work? How do you create an environment where employees experience genuine human connections? How do you give employees enough autonomy to allow them to be their best? How do you ensure employees feel safe to be who they are and express what they think and feel? How do you enable learning and growth?

Articulating the company’s culture as a singular, simple, and yet powerful idea makes it easier to answer all these questions and use all three levers with that in mind. This is how the idea of being an inspiring friend shaped so many of Joly’s teams’ decisions and actions at Best Buy, which all converged toward building a very human culture that supported the company purpose and strategy. For example, Best Buy decided to eliminate scripts for sales associates and instead encouraged them to use their ears, their eyes, and their heart when interacting with customers.

For a long time, Joly focused on strategy far more than purpose and culture. He now says this was a huge mistake. In a world that’s now particularly volatile, uncertain, and complex, crafting and pursuing a top-down and linear strategy is rather pointless. Who could have predicted the Covid pandemic? Or put together a detailed strategy that could survive the consequences of the war in Ukraine? What teams need is a guiding frame to be effective and energized when the unexpected invariably happens. In a recent conversation Joly had with business leaders struggling with the challenging state of the environment, they concluded that being guided by our purpose and some key principles — a way to describe culture — and then doing our best was going to work better than hoping they had a clairvoyant strategy they could predictably execute.

This article by Hubert Joly is one of the best articulated pieces on tying purpose, strategy, and culture together I’ve seen to date. At Allen Austin, even though we do search, interim and leadership advisory, everything we do is about building peak performance cultures. It supports our purpose of enhancing the lives and effectiveness of our associates, clients, and stakeholders. At a time when our world seems to be in chaos, I hope you’ll find this material invaluable.

Warmest Regards,

Rob

Rob Andrews
Allen Austin
Consultants in Retained Search & Leadership Advisory

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