often become calcified around their culture and resistant to new ideas and new opportunities. They even begin to reject people with different points of view or backgrounds, or who speak out of turn, point out problems, or try to shake things up. They prefer to protect their dominant position and grow in a steady and incremental way, rather than risk change or play bold. Ironically, that’s when a once-great culture can actually hold an organization and its people back. Most of us have experienced an environment in which culture actually gets in the way of the organization’s goals despite brilliant people, great strategies, and solid operations.
Some leaders believe that culture does not change. Once established by the founders, it is Holy Writ and remains the same forever. Others concede that culture does change but argue that its evolution should and must be organic. In their view, culture is like a slow-moving glacier or a trickle of water in the Grand Canyon—a powerful but subtle force, shaping the landscape of the organization gradually and magnificently over time.
Yet, those cherished myths around culture don’t withstand much examination. I have found that cultures:
1. are not immutable and do change over time;
2. can in fact change dramatically and suddenly in a short period of time;
3. are strongly influenced and shaped, for good or ill, deliberately or unintentionally, by the leader.
Just think about GE. One of the original dozen companies on the Dow Jones Industrial Average in 1896, GE is the only company that remains on that list today. As former CEO Jack Welch said, “The reason why GE has been the only company to remain in the Dow Jones from the beginning to the present is that it has changed with the times.”4
Despite being very well-known and thoroughly studied, GE is not a particularly well-understood company. In my own experience working closely with several of its many high-performing groups, the GE culture is subtle but pervasive. It doesn’t scream at you from posters so much as it permeates the way people work and the decisions that get made, big and small. In fact, GE is one of my favorite environments. Each business is very autonomous from corporate and held in high regard, but there’s a consistency across what could otherwise have been a sprawling enterprise. The people I’ve met there are some of the brightest and most aggressive I’ve known—they’re “mad hustlers” when it comes to execution and getting things done. But they’re also kind and passionate, generative with ideas rather than skeptical about them, and intensely curious and open-minded.
I asked some prominent people in the organization how much GE culture has changed over the decades, particularly in the transition between CEOs Jack Welch and Jeff Immelt. They said that the culture has shown both remarkable consistency and noticeable shifts as the company has adapted to market forces and new ways of working. Welch’s GE was hard-nosed and bottom-line oriented. In a short time, Immelt has shaped GE according to the needs of an era marked by rapid change, global competition, and constant innovation. He’s moved decision-making closer to the point of customer interactions and he’s challenged overly engineered processes, which have made it harder to meet or respond to customer needs. This has had a big impact on culture. As Vijay Govindarajan says in the New York Times of that ongoing change effort, ‘“Jeff Immelt will have totally remade GE . . . It’s a different company for a different time.”’5
Raghu Krishnamoorthy, GE’s vice president of executive development and chief learning officer, wrote a fascinating piece in the Harvard Business Review recently about that imperative of culture change at GE. Everyone knows that product life cycles are getting shorter, Krishnamoorthy explained, but few know that culture also has a life cycle that’s getting shorter as well. Indeed, many organizations “get in trouble because of a frozen culture.”6 Significant strategic shifts require shifts in culture too. As Krishnamoorthy put it, “a constant reengineering of our business portfolio, operating model, and culture has been a key to our evolution.”7
Like all visionary and effective leaders, Welch and Immelt both understand that culture is a tool and a resource to be used deftly and sometimes forcefully to move the company in the direction the leader believes in. If the culture isn’t right for the times, that culture needs to shift, too, in ways that reinforce what’s working, and to pivot toward what would achieve even better results.
Eric Schmidt, chairman of Google, and Jonathan Rosenberg, former SVP of Products, argue the same belief in their book, How Google Works. “Most companies’ culture just happens; no one plans it,” Schmidt and Rosenberg write. “That can work, but it means leaving a critical component of your success to chance.”8 They warn that even strong cultures may have to change with circumstances for a company to continue being successful. Their advice is to take a hard look at culture and ask, “What problems has this culture caused with the business? It is important not to simply criticize the existing culture, which will just insult people, but rather to draw a connection between business failures and how the culture may have played a hand in those situations. Then articulate the new culture you envision.”9
I guess we shouldn’t be too surprised that a company filled with hyper-bright engineers is not afraid to tinker with what’s working. In truth, they believe that’s the only way it will continue to work.
PUTTING CULTURE INTO ACTION
Organizations need healthy, dynamic cultures and disciplined cultural practices to thrive as circumstances change. In this book, I am going to show you how culture is architected or reconfigured in the first place, and which levers need to be pulled and which measures need to be tracked in order to maintain that dynamism and discipline over time.
In Part I, I am going to do a deeper dive on the importance of culture—why how beats what—and tell stories of companies that have deliberately architected their cultures to succeed. I’m going to explain why the mindsets of those organizations are critical differentiators and explore the attributes that make the most dynamic companies today “nimble, focused, and feisty.” To give you a primer on those terms:
• Nimble companies are much faster and more agile than ordinary organizations.
• Focused companies use their sense of purpose as a lens to understand and meet the needs of customers and markets.
• Feisty companies play big and act bold in order to capitalize on advantages and out-muscle the competition.
In Part II, I’m going to show you how you can architect your own culture to bring the same dynamism and discipline to your organization. I’ll start with purpose because that is how you focus your organization on what your people have been brought together to do. Then I’ll look at the structures and processes you will need to be nimble, and at the attitudes and practices that enable you to be feisty.
There is no such thing as a permanent advantage anymore—not in a world changing this quickly. But if you build your organization to be nimble, focused, and feisty you will be far more resilient to the chaos and turmoil of our time, and much more likely to be leading disruption rather than being disrupted and outperformed by others.
HOW CULTURE MAKES OR BREAKS YOU
ON NOVEMBER 6, 2013, the death knell rang for Blockbuster Video. The floundering organization announced that it would close its 300 remaining US stores
