Are the Best Company Cultures Internally or Externally Focused?

Best Company Cultures
The best company cultures not only attract and retain top talent but also make executing the business strategy seamless. We define culture as how work truly gets done day to day — especially when no one is watching. It reflects the behaviors, values, beliefs, and attitudes that permeate the organization, shaping decisions, guiding interactions, and influencing every aspect of how employees perform and collaborate. In essence, culture is the invisible force that determines how a company operates in practice, not just in principle.

What the Best Company Cultures Deliver
Our organizational alignment research found that the best company cultures account for 40% of the difference between high and low performance in terms of:

• Revenue growth
• Profitability
• Customer loyalty
• Leadership effectiveness
• Employee engagement

The best company cultures serve as the glue that unites business strategy with people strategy. They are not just a byproduct of the organization — they are a strategic asset that drives performance, engagement, and sustainable growth.

Company Cultures Vary
Workplace cultures can vary widely — from company to company, across regions, and even between functions. How would you describe your predominant culture? Is it structured or fluid? Healthy or toxic? Risk-averse or risk-taking? Collaborative or siloed? Fact-driven or intuition-driven? Internally focused or outward-looking? There is no single “right” answer.

The critical question is this: is your culture helping or hindering your business strategy? To answer it, you first need an accurate assessment of your current culture. Only then can you determine where it needs to be to fully support both your business and people strategies.

Internal Company Cultural Focus
We define an internally focused company culture as one in which internal processes, systems, and employees matter most.  They often expect partners and customers to conform to their way of doing things.  Examples include Walmart, the US Postal Service, Ikea, and Union-based shops.  Internally focused leaders feel that they are better at controlling costs, engaging employees, and scaling efficiencies.

Many companies who focus internally strongly believe in the service-profit-chain theory which links employee satisfaction directly to higher levels of customer loyalty and profitability.

External Company Cultural Focus
An externally focused organization typically emphasizes external forces, market share, and customer experiences.  Examples include Amazon, Southwest Airlines, and TD Bank.  Externally focused companies put the customer at the center of everything that they do and feel they are better suited to deliver extraordinary customer experiences and stay ahead of emerging opportunities and threats.

As a way of doing business, customer-centric companies excel at proactively anticipating client needs with the ability and genuine desire to help.  And it matters.  According to the Harvard Business School, companies that increase customer retention rates by just 5% increase profits by up to 95%.

Are the Best Company Cultures Internally or Externally Focused?
One company culture is not better than the other.  They are just better suited to support different business strategies.  This is where many HR leaders miss the mark.

Company cultures are not necessarily good or bad.  Company cultures are aligned or company cultures are misaligned.  The best company cultures are purposefully designed to accelerate and reinforce their specific and unique business and people strategies.

Do You Have to Make a Choice?
Yes.  But on a spectrum.  We believe that leaders should agree on where and how far to directionally lean across four focused-based cultural dimensions to assess if their organizational culture is 100% aligned with their go-to-market strategy across key strategy-culture dimensions.

1. Customer Needs versus Internal Processes?
   Are you more willing to change internal processes to meet customer needs or do you expect customers to modify expectations to conform to your way of doing things?
2. Maximizing Revenue versus Minimizing Costs?
   Do you need to pay more attention to increasing revenue and market share or minimizing costs?
3. Customer Solutions versus Internal Systems?
   Should you focus more on perfecting and improving customer solutions or on perfecting and improving internal systems?
4. External Focus versus Internal Focus?
   Does it make more sense to focus on external sources or internal sources of information?

The Bottom Line
The clearer you are about where your culture needs to be on each dimension to support your strategic goals, the easier it becomes for people to agree on how critical work should be done — efficiently, effectively, and with purpose. This clarity lays the foundation for aligning your culture with your strategy and your talent with peak performance.  Is your culture helping or hindering your strategy?

To learn more about how to build the best company cultures, download How to Create a Purposefully Aligned Culture to Help Your Business and Your People Thrive