The Importance of Personality, Leadership and Culture in Building a Business (Part 3 of 3)
Culture helps to attract the top 20% of candidates (Gallup, 2018)
The $30 Billion DaimlerChrysler merger failed due to “…unbridgeable differences in cultures…” (Harvard Business Review)
Good cultures attract and can lead to a 12x increase in share valuation (Design Bridge, Global Advisory Firm, 2018)
$8 Million settlement decision at Uber and change in leadership“…permitted a culture of sexual harassment and retaliation…” (New York Times)
These are examples of how culture has helped and hurt organizations.
“Culture has an impact on the ability to attract & retain talent, receive funding from investors & lenders and generate strong financial results.”
In the previous articles, we discussed how personality and leadership style play a role in building a business. This article will culminate the discussion and describe the importance of culture in building a business.
Culture Explained
Culture can be defined as how people ”work, act, think and interact with each other” in an organization. It is often described as what employees are doing when no one is watching.
Culture explains why and how employees and the organization behave. It is also representative of an organization’s values and beliefs.
How is culture established? The leader (leadership) of an organization establishes the culture. The culture is established by how a leader:
Responds to crisis
Motivates employees
Adapts to change
Celebrates success
Learns from failure
Culture can be more overt in large organizations as Netflix did with its famous Culture Deck in 2009, where it simply and plainly described its culture (no Canva or Prezi required).
In large organizations (more than 1,000 employees) sub-cultures may exist where teams or departments have a variation of the organization’s broader definition of culture.
These sub-cultures are for the most part in harmony with the organizational definition of culture, however, it is possible that ‘mutations’ exist with aspects of dysfunctional behaviours.
The bottom line is that leadership at all levels is a significant influence, if not the sole determinant of an organization’s culture.
Culture Is An Asset
The influence or power of culture also plays a critical role in determining if a business can operate in an environment of perpetual uncertainty.
The degree of Environmental Uncertainty can be determined based on two (2) factors: Stability — the predictability of change, and Complexity — the number of different elements in the environment.
Nigel Taklalsingh, The SLG Project
Based on the extent of stability and complexity, your business will need to have the necessary organizational capabilities to allow it to thrive, not just survive, in that environment.
If the focus is on innovation and risk-taking, then your employees need to feel trusted to experiment, make calculated risks and challenge the status quo.
If the key requirement is efficiency and integration, workplace behaviours must be guided by the appropriate policies and procedures, with a clear understanding of roles & responsibilities.
McKinsey & Company outlines four (4) other reasons why culture matters:
What is Your Organization’s Culture?
Answering this question is not the answer to this question.
The first step is to understand the cultural elements needed for your business, based on the degree of environmental uncertainty
Next ask your employees, customers, suppliers, investors and lenders how they would describe the culture
Then ask yourself to describe the culture with points that support your perspective.
A common occurrence is that all three (3) of these responses will be different. You now need to align these descriptions — perceptions — so that there is a common understanding and demonstration of the culture.
Bringing It All Together: Going Beyond Start-Up
Nigel Taklalsingh, The SLG Project
So, again Congratulations on starting your business, or considering starting a business. You may have already:
Identified a new product or service that provides value to a customer.
Completed a scan of the market and identified prospective customer segments, competitors and potential risks.
Introduced some level of innovation or differentiation, which is new to the market.
Developed a distribution and marketing strategy that aligns with your brand and ‘speaks’ to your customer.
The next questions you need to consider, which are vital to realizing your vision, are:
Have you considered how aspects of your personality can be a strength and weakness to the organization?
If your leadership style can adapt to different situational factors and can influence, motivate and enable the organization to achieve its objectives.
Have you developed the necessary organizational culture that fosters the needed capabilities for your organization to succeed?
The entrepreneurial journey is a difficult path, which can include challenges, setbacks and failures.
The question of why these situations occur is often centred on the missed requirements in product design, gaps in marketing tactics, limited distribution networks, or stifled supply chains.
However, the underlying cause of the difficulties in building your business may reside in your personality, leadership style and culture. //