Organisational Culture: The secret that is hidden in plain sight

By Keith Coats 

The capacity to lead depends on trust. As a leader keeping trust alive is your primary responsibility for without it, you cannot lead. Trust is the air in a healthy organisational culture; it is the very currency of leadership. This is the secret that is hidden in plain sight – it must be given how often leaders act in a manner that would indicate that they are unaware of this reality.

Organisational culture is the leader’s responsibility. It is the primary focus of leadership bar none. For too long leaders have focused on strategy – both the formation and execution and as important as this work is, it is not where the core responsibility of leadership rests.

Why is culture so important?

One reason is that it provides the context for all that is either good or bad in an organisation. Ultimately, it is the culture that will determine whether or not an organisation is able to sustain itself through both the calm and the storms that beset the journey. Yum Brands CEO, David Novak provides a relevant case study in underscoring this ‘secret’. Over the past 17 years, Yum stock has returned 16.5% compounded annually against the S&P 500’s 3.9% over that same period. Yum, which comprises of KFC, Taco Bell and Pizza Hut have over 39 000 locations worldwide making it the largest restaurant company (measured by units) and this footprint has been built by the staggering measure that has seen Yum open a restaurant every 14 hours for the past 16 years.

Novak reveals a deep understanding of what is important when it comes to leadership. In the Fortune magazine, he was quoted as saying, “If (our) people were asked, ‘What’s our inherent competitive advantage?’ they’d say it’s our culture…What really made the difference was the idea that if we trusted each other, we could work together to make something happen that was bigger than our individual capabilities”. At the heart of Novak’s strategy was to build teams that operate on trust. Novak goes as far as saying that because of this trusting culture Yum has attracted talent from companies such as Coca-Cola, General Electric, and Procter & Gamble. The right people join because they see something that is worth belonging to; something they want to contribute towards and be a part of – it is a matter of culture.

As mentioned but worth highlighting further, culture is the soil from which adaptive intelligence is grown – not a strategy. The response to meeting the challenges of tomorrow is a cultural one and not a strategic one. Understanding this ought to be all the incentive that any leader needs in order to ensure that they build a culture that will help ensure adaptability. This is an insight that emerges from evolutionary biology and is a lesson to be taken seriously by leadership.

If it is this obvious that culture is so important, why is it that it seems beyond the grasp of so many leaders?

Leaders have been told and conditioned to look elsewhere. They have been told that the really important stuff is that which can be measured by the current metrics and all that matters is the bottom line. In a one-dimensional frame of reference this is true, however, the link between delivery on the bottom line and culture is what has been ‘lost’ in this one-eyed view on what really matters.

Culture has been left to Human Resources to ‘get sorted’ or has been outsourced or worse still, reduced to sporadic events designed for the purpose of boosting morale or making all things right. Culture emanates from the top – from leadership. No amount of sloganeering or rhetoric will substitute for how the attitude and actions of the leader impacts on organisational culture. In Novak’s case at Yum, he centered his focus on recognition and fun. His office is a wall-to-wall photo gallery of pictures of him meeting employees from around the world. Novak explains, “People want to see the CEO’s office, and when they come in, they understand what’s important in our company”. He also understood the importance of having fun in doing what you do and so fun became a central mantra in building the corporate culture at Yum. Fun at work, whilst an oxymoron to an older generation, is central to the working requirements of a younger generation. Too many leaders hear this talk and immediately default to a cynical ‘that’s not how things work in the real world’ type of response. But it can be, and Yum is living proof.

How, as a leader, do you start this kind of journey?

The temptation is to look for a quick fix, a Band-Aid type of approach. That is a little like wanting to get fit but only doing 30 minutes exercise a month. It simply doesn’t work. Shaping the ‘right’ (for your organisation) culture starts with a clear idea of what it is you want that culture to be. It sounds obvious and is, yet I am amazed at how many times leaders lack intentionally when it comes to organisational culture.

The culture they have is more a result of a default than intentionally. There are instances when that may work for you but the lack of intentionally means that you don’t really know ‘why something works or not’. This is then always dangerous ground to be on. Novak’s ‘clear idea’ was that through effective and engaged teams, Yum would achieve success. Everything he then did would reflect this philosophy that people and teams were what mattered most. What that looked like and how it was built would be context specific but there was a clear and unmistakable underpinning philosophy that guided the activity.

The interesting thing about this was that Novak believed that this journey was first and foremost an, ‘inside-out’ one. In other words, it started with the individual and that ‘inner-work’ preceded ‘outer-work’. This insight and understanding is the exception and not the rule when it comes to corporate leadership. It is framed by an understanding that you lead ‘out of who you are’ – a mantra we speak about a great deal in TomorrowToday. Leadership skills and expertise that are marooned from authenticity and character soon get exposed. The question posed by Goffee and Jones in their book title, ‘Why should anyone be led by you?’ – is a good one and whilst skill sets are important in the leadership equation, character is more so. Novak believes that you are not fit to lead a team until you’ve worked hard on yourself. Yum leaders are encouraged to practice reflective exercises and relational evaluations and Novak himself leads the way. That is how you build authentic organisational culture when as a leader you practice what you preach; when you do what is deemed good for others to do. Again, it all seems kind of obvious doesn’t it, and yet…

It would appear that there might be more than one secret that is hidden in plain sight. An understanding that culture matters most; that our people are our culture; that people work in in teams and the currency of all this is trust; that being intentional about paying attention to what matters most is – well obvious; that first and foremost it involves inner-work; and that, as the leader, it all starts with you.

‘If only it were that simple’ you might be thinking but I want to suggest it is that simple. Our HR language and processes have often got in the way of what is straightforward and obvious. The fixation with measurement and the coupling of that with reward and recognition have served to skew everything to the point where we have lost sight of what is really important and how best to get that done. Novak and the Yum story reminds us that it can be done and more importantly, it can be done in a context where there is both complexity and global reach. Novak is quick to admit that they haven’t yet fully translated all this to every corner of their operation and that much work still needs to be done. Yet somehow that recognition in itself speaks volumes.

As a leader, you might need to ask yourself some serious questions and if there is a failure of culture within your work environment, look no further than yourself. It is a tough call on leaders but then again, who said leadership was easy?

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