Company culture is at the heart of competitive advantage, because it determines how things are done and how people behave; it is the hardest thing for competitors to copy. High performers create an environment with a unique personality and soul, and with a passion for performance—so that people make the right decisions and do the right thing wherever they are in the business.
A true high-performance organizational culture provides a company with its single greatest source of competitive advantage. The culture inspires people to go the extra mile–to make and execute good decisions even when nobody's looking. But fewer than 10 percent of companies actually succeed in building a winning culture, and even the ones that do so may find it hard to maintain.
High-performance cultures have two central characteristics:
- Each one is unique. Some companies, such as Johnson & Johnson, HSBC or Sony, have a powerful organizational personality–a "soul"–derived from a deep heritage. Others, such as Southwest Airlines or Google, create their own distinctive environment. This potent combination of values, character, rituals and beliefs creates a deep bond with employees, making their work unusually meaningful and rewarding.
- But all foster a similar set of behaviors. However distinctive such corporate "personalities" may be, they all encourage remarkably consistent patterns of behavior. People in these organizations care passionately about winning. They orient themselves outward, focusing on customers and competitors rather than on internal politics. They think like owners and have a bias to action. They build teamwork and are open to change.
Creating and maintaining such a culture is challenging, but it can be done. Leadership is key. Cultural change won't happen unless leaders themselves model the behaviors and values that define the new culture. The most effective leaders also spread the word through constant personal contact and communication, particularly with "linchpin" employees who will buy in to the culture and whose words will carry weight with others. They don't shrink from making the organizational changes necessary to support the new culture–for example, altering incentives, redistributing decision rights or streamlining processes. They rigorously track their progress as the culture evolves to make sure performance stays high.