For the last several years, practitioners and consultants have been talking about culture as it relates to risk, compliance and ethics.
Two new pieces reinforce my view that culture is not just about risk, compliance, and ethics. There are many, many dimensions and sometimes they may actually conflict.
Culture Slowdown and Culture Shock
The first of these is an interview with Jim DeLoach, a friend who is managing director of Protiviti. "5 Keys to Building an Innovative Culture: A Q&A With Protiviti’s Jim DeLoach" includes some interesting comments which I agree with, especially when he says: "When I think of innovation culture, I'm thinking about an organization that innovates with speed, is able to make decisions at a relatively high velocity, an organization that is very engaged and focused on customers, an organization that embraces external trends."
One key point, which DeLoach doesn’t make but which I am sure he will agree with, is that if you are so focused on the "risk culture" that you become risk averse, you can not only slow down decisions and inhibit performance, but also make it more difficult to be innovative.
Harvard Business School’s Working Knowledge (its well worth subscribing to) published a fascinating piece: "Amazon vs. Whole Foods: When Cultures Collide," in which the authors describe a "culture clash."
Amazon’s acquisition of Whole Foods last August was the corporate equivalent of mixing tap water with organic extra virgin olive oil. You’d be hard-pressed to find two companies with more different value propositions. Even so, it was surprising to hear reports shortly after the marriage about Whole Foods customers, really angry customers, regularly encountering empty shelves at their favorite retailer. Then stories surfaced about Whole Foods employees crying over their new performance-driven working conditions imposed by Amazon.
Both Amazon and Whole Foods had a "culture" that emphasized and encouraged the behavior that made them successful. As the piece says, “This is not a story where there is a good guy and a bad guy."
So what does this all mean?
Related Article: 5 Ways to Constantly Evolve Your Company Culture
Culture Has Many Dimensions
Culture is not something that is limited in its scope to ethics, risk, and compliance.
It’s about the behaviors that are necessary for the organization to thrive, with people making the decisions you want them to make. You want them to be ethical, compliance, and risk-aware, but you also want a culture of innovation and creativity, empowerment, customer-focus, teamwork, quality, performance, openness and so on.
- Stop talking about ‘culture’ without at least adding a modifier, such as risk or innovation.
- Start recognizing that sometimes you have to make compromises in one dimension of culture in favor of another. For example, you cannot always involve everybody or seek all possible information when a decision has to be made with speed. Sometimes you have to take a cyber risk that is outside your comfort zone to keep up with your competitors in a dynamic world.
- Define the behaviors you need, from ethics to teamwork to performance to innovation. Then and only then think about whether your organization’s culture provides reasonable assurance that those behaviors will be practiced.
If you don’t have that assurance, then do something about it.
If you do, continue to monitor the situation because culture tends to change with every new executive or acquisition (for example, Amazon and Whole Foods).
I welcome your thoughts.