Culture is Not Enough

Guest post from Thomas Steding:

Slowly, almost inexorably, culture has big become almost top of mind as a key factor in effective leadership. From the Harvard Business Review “Strategy and culture are among the primary levers at top leaders’ disposal in their never-ending quest to maintain organizational viability and effectiveness.” In the high tech industry, the emergence of culture as a critical factor has been greeted with a sense of relief, a respite from the reductionistic venture investor sole focus on numbers. As a result, Peter Drucker’s alleged comment that “Culture eats strategy for lunch” has become popular in our collective memory.

The problem remains, however, that leaders declaring the culture is a critical factor in their thinking is akin to one wetting one’s pants in a dark blue wool suit: It may give you a warm feeling, but it doesn’t show very much. The issue is that few people can define what they really mean by culture. One venture capital colleague was heard to talk about the importance of culture yet was unable to define what he meant. Another CEO colleague told me that his company had a wonderful culture described in detail in his company presentation. Upon examination, I discovered it contained in a series of typical bromides like “We don’t do politics” or “Be passionate” or “Go for the best” along with a promise for pizza on Fridays. A subsequent HR benefits survey across 1500 employees included questions about the company culture. It revealed that a vast majority of the employees actually hated the culture. I suggested to the CEO that he pour himself a glass of wine and sit in a quiet corner to review the results. I never learned his reaction to the survey, but the company stock eventually went from $95 to $2.

To understand an effective culture you need to start in a different place. If you define the Cultural Layer as the de facto patterns of behavior between members on the team you can define the Mindset Layer as the de facto patterns of thought between the ears of the key leadership. The Mindset Layer, therefore, sits below the Cultural Layer and determines its outcome. We have defined the four archetypal (“original model or prototype”) dimensions of the Mindset Layer. These are the underlying, universal factors driving mindset. Over more than a decade, we have found that understanding where an organization resides along these dimensions provides a powerful predictor of organizational outcome and is critical to establishing an effective underlying culture.

The four dimensions are Courage, Relatedness, Awareness, and Agility. Each of these dimensions has a dual, or complementary, aspect, typically along intellectual versus emotional dimensions. Courage is facing danger and fear with confidence and resolution. Courage includes the capacity to take bold and fearless action in the marketplace, but also to be willing to hear and process unwelcome input from the team that could have a redeeming effect on organizational outcome. Relatedness implies an intellectual understanding of staying connected with customers, but also insists on respecting the emotional connections across the team. Awareness implies a thorough understanding of the company’s markets, technologies, and strategies. It also implies a close understanding of the emotional life of the team. Agility is nimbleness of thought and action. It means the ability to change direction and turn on a time due to changing conditions in the market or industry conditions. Emotional agility, on the other hand, means the ability to hear and consider another person’s perspective even in the case that you hold an opposing point of view ex ante.

A balanced state among these four Mindset dimensions provides a defense against organizational dysfunction. The inferior Mindset dimension is the gateway for dysfunctionality to penetrate. At the same time, it can offer an effective roadmap for organization improvement. For example, a team was stuck in the process of making a fundamental product development decision for six months. Clearly, their inferior dimension was Courage—in this case, courage to make a product decision, get the product out, and determine its viability. The lack of team courage lead to dysfunctional behavior, such as gossip, blame shifting, and, obviously, schedule slippage. Their dysfunctional behavior cost their firm market leadership.

Hence any conversation, or program, addressing culture has to start with the Mindset Layer. Misalignment between mindset and culture leads to the all-too- frequent case where the behavior in the room bears no resemblance to the code of ethics on the wall. Authentic culture must reflect who the company and its personnel are authentically. Going through the intellectual process of specifying the culture without understanding underlying mindset is like building a structure starting on the second floor. So, we add: “Mindset eats culture for breakfast.”

Dr. Thomas Steding is a senior corporate executive with an excellent track record in founding and growing successful businesses based on complex, leading edge technologies.  He has been CEO of over 12 high tech companies and active chairman of several others. His new book is called Real Teams Win: What Smart Leaders Need To Know About Achieving Performance.


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