Culture is front and center in a growing number of events in the news lately; and not in a good way. Recently I was amazed listening how General Motors dealt (or failed to deal) with its ignition defect that was related to 13 deaths.
I had some experience with GM’s culture when I worked in the company’s press and public relations department during the summer of 1967. I got to see GM’s culture up close in an event-filled time. That summer, GM had a small team working on deflecting the criticism from “Unsafe At Any Speed,” Ralph Nader’s book about the Chevy Corvair, in which he described it as a “rolling death trap.”
The team’s job was to take the book apart and see where Nader may have distorted facts by taking engineering documents out of context or misrepresenting them. What we didn’t know was GM had hired private detectives to investigate Nader to get any kind of dirt that would discredit him. GM was later prosecuted when the investigation was exposed.
The cultural meme of GM at that time was simply that it was the most successful company on the planet, enjoying 52 percent of the U.S. auto market. Consumers would buy what GM offered because of its dominance. Competition from imported vehicles was still 10 years in the future.
Rather than admit the Corvair had numerous problems of instability or a steering column that impaled the driver in a head-on crash, GM discontinued the car and introduced the Camaro.
That summer GM executives wined and dined automotive news editors from around the country to impress them with demonstrations at the company tech center on their efforts on safety, while at the same time behind the scenes they were fighting mandatory seat belt legislation.
The objections from the Big Three (GM, Ford and Chrysler) were: seat belts will drive up the costs of cars for everyone; the public won’t pay the extra money for safety features. This same drama played out when the U.S. auto industry vigorously fought against airbags.
A March 30 headline in the Washington Post’s business section was “Why did it take so long for GM to react to a deadly defect? Company culture may be the answer.” Another good question might be, is GM so complicated that it can’t figure out who made the decision not to fix the problem and recall defective cars?
More recently Michael Lewis published evidence that the stock market is rigged with his latest book, “Flash Boys.” Would we be surprised if he turns out to be right? Hardly, when one looks at all the illegal practices that have been exposed and record fines paid by the big players in the financial-services industry. JPMorgan Chase led the pack with record fines then turned around and gave CEO Jamie Dimon a huge raise.
On the other side, some companies are excelling because their cultures gives them an extraordinary advantage in the marketplace. These are companies that treat their customers and their employees like VIPs. Chipotle, Zappos, Apple and Southwest Airlines come to mind. Since 2008 new research has been published about the impact of culture on top-performing companies.
In their best-selling book, “All In: How the Best Managers Create a Culture of Belief and Drive Big Results,” Chester Elton and Adrian Gostick offer some big data and multiple case studies demonstrating how companies with extraordinary cultures outperform their competition by wide margins.
The Gallup Organization and the Hay Group are two other well-known researchers that have come up with similar studies. The results of Gallup’s survey of the American workforce are more than a little frightening, finding 25 percent of workers engaged, 25 percent disengaged and 50 percent present but not engaged. To put this into perspective, Gallup estimates there are about 100 million full-time workers in the U.S. This lack of engagement is costing American business hundreds of billions of dollars.
Another Elton and Gostick study of 25 top-performing companies similarly identified a combination of factors that delivered financial results two to three times greater than their competition. They call them “The Three E’s,” where workers are engaged, enabled and energized.
The “All In” culture as defined by Elton and Gostick is, “where people believe what they do matters and that they can make a difference.”
As we read the headlines about success and failure in business, organizations and government, I will predict that culture will be integral to the stories. There’s a bright side and a dark side to it. Management guru Peter Drucker is credited with saying, “culture eats strategy for breakfast.” And while he makes a dramatic point, he had it wrong – enlightened CEOs should make sure that culture is an integral part of the strategic plan. There is too much research to ignore culture as a differentiating competitive factor.
Any CEO thinking about his or her company’s competitive assets has to include the culture factor for three reasons. First, ROI – it’s one of the least-expensive investments to be made to improve results. Second, building a great culture is a strategy that will improve the performance of all the moving parts of the business on a sustaining basis. And three, how much easier will your job be if your employees are “All In” and totally engaged?
Chris Westerkamp is a principal with Noll & Associates Management Services.