The Culture Threat

Today we have a post from Andrea Olsen. Andrea started her career in the tech start-up world, and brought much of that innovative thinking to her work as the CEO of Prag’madik, an operational strategy consultancy, specializing in the industrial and manufacturing markets.

The Culture Threat

“I want you to find a bold and innovative way to do everything exactly the same way it’s been done for 25 years.”

Organizational culture is an amorphous thing. It is incredibly hard to define, and virtually impossible to measure. Leaders try to influence and shape organizational culture through a variety of tactics, from incentives and perks, to team building activities. Yet, more often than not, the “culture” seems to remain the same. The most frequently asked questions are “why” and “how do we fix it”?

The traditional definition of organizational culture is “a system of shared assumptions, values, and beliefs, which governs how people behave in organizations”. These assumptions, values, and beliefs don’t arise simply because they are outlined in a mission statement, or reiterated ad nauseum during company meetings. Culture is shaped by behaviors – particularly of organizational leaders – which don’t singularly exist within one’s title.

Manufacturers have voiced their concerns with organizational culture. Many we have surveyed have complained about lack of employee drive, proactive innovation, problem-solving abilities, and communication. We tend to lose sight of the fact that there are two parts to the leadership equation. For leaders to lead, they need the ability to attract followers. In addition, leaders can have their own biases, which can cloud judgement and unwittingly reinforce counter-productive behaviors in their followers. These biases are often built by previous experiences, which unwittingly create a corporate culture that can be stuck in the past.

Many mid-market manufacturers are led by second, third, or even fourth generation owners, which have grown up through the ranks in the organization. While this immersive experience can be an asset to the organization, often there is minimal exposure to continuous change or outside perspectives. This can form a “groupthink” mentality, where the company remains mired in a narrowed view of “the way we do business”, and unintentionally resist progress.

This is the essence of the Culture Threat – the lack of diversification in behaviors and continuous learning, creating a resistance to change. Whether this resistance stems from fear, lack of exposure, pride, comfort, or simply laziness, retaining a “status quo” culture will ultimately diminish the organization’s ability to compete, and in turn, put the company’s fiscal health at risk.

There are 4 primary impacts of the Culture Threat:

1) Obsolescence or Commoditization of the organization’s offerings, due to comfort in the perception that things will always remain the same. For example, consider things like the Phone Book, Floppy Disks, VCRs, Printed Maps, and the Rolodex. Manufacturers of these products were in their comfort zones – confident that these products would never become obsolete. But advancements in technology, even outside of the core industry, impacted the health and survival of these manufacturers. Those companies that stay set in their ways and remain culturally insulated will run the risk of potentially having their entire businesses go the way of the do-do.

2) Employee Retention will continue to suffer, as manufacturers grapple with implementing change in organizational cultures designed to resist it. Over the past 30 years or so, top executives have tended to choose a certain kind of person to manage their manufacturing organizations. They assumed that if the manufacturing process was carefully set up, staffed, and equipped, all they needed to keep things running smoothly was a group of caretakers. Today, however, companies are beginning to realize that they need something more than caretakers and specialists. They need generalists—people with an architect’s skill, who can pull out a fresh sheet of paper and design something new. As older employees begin to retire, and the remaining employees are pushed out of their comfort zones to become “architects” when they have been “caretakers” for 25 years, the struggle to retain talent will dramatically increase.

3) Talent Acquisition will become harder, with the Millennial generation having grown up in the digital era. Organizations that rely on outdated methods of data management, customer engagement, communication, and employee relations will find young prospects flocking to more tech-savvy companies, where the opportunity to be challenged and make an impact are more prevalent. Manufacturers that keep the old guard without integrating new blood will continue to fall further behind and struggle to stay afloat.

4) Innovation will be more elusive, with less new ideas and perspectives coming into the company. Manufacturers that are risk-averse, who’s culture relies on consistency and the status quo, will miss new opportunities in the marketplace to grow and expand, generating new revenue streams and reducing operational costs. Think back to a time where customer data was managed on spreadsheets and business cards, versus utilizing a CRM (customer relationship management) system. The amount of insights a company gains from purchase behavior tracking alone, can create new opportunities for intelligent up-selling and cross-selling never before realized. Companies that aren’t embracing innovation throughout their organizations will find themselves exponentially falling behind the competition and will reach a tipping point where crossing the chasm is virtually impossible.

Good leadership is perhaps the most important competitive advantage a company can have. While organizational culture is shaped by leadership, it’s sustained and grown by the employees living within that ecosystem. An organizational culture is like a community, where each individual influences that community, and brings a unique perspective to the table that can create a positive impact. If that community isn’t continually nurtured, it will have a harder time adapting to a changing market environment, and when a change becomes critical, it will likely be unable to implement that change.

Are you thwarting your own progress as a company? As a first step in understanding and shaping your culture, a level of introspection must be done. Are your behaviors supporting change and new ideas, or are you holding back disruption for fear of its repercussions? As the old adage goes, nothing worth having comes easy. Maybe it’s time for a change.

This article is reposted with permission, click here to read the original.

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