Competitive Advantage through Culture — How to Create It

The Competitive Advantage through Culture
Most business leaders talk a good game about wanting to create a healthy and high performance culture, but few fully understand how to create the environment to get the most out of their people in a way that accelerates their people and business strategies at the same time.  Most admit to no knowing how to create a competitive advantage through culture.

The founder of Southwest Airlines, Herb Kelleher, said it best: “Everything [in our strategy] our competitors could copy tomorrow. But they can’t copy the culture — and they know it.”  That’s what keeps Southwest as a leader of the pack.

All well and good.  But how do you go about creating a true competitive advantage through culture?

The Definition of Corporate Culture
While strategy is the WHAT, corporate culture is HOW things truly get done in an organization.  A high performance culture occurs when the unique beliefs and ways things get done at your company are understood, consistent, and leveraged to best achieve your unique strategy.  In the strongest company cultures, employees act in ways that help, not hinder, the overall strategic agenda —  even when no one is watching.

No Two Organizational Cultures are Alike
While many companies are similar, each organization is culturally distinctive enough so that what works in one organization will not necessarily succeed in another.  The key is to determine what culture will be most effective in achieving your specific strategic priorities in your unique industry.  Will your business thrive with tight structures or flexible guidelines, emphasis on low costs or high quality, predictable products or innovation? 

That is for you to decide.

Three Attributes of a High Performance Culture
Culture change may seem difficult to measure or to pull off, but the effort is worth it.  Our organizational alignment research found that an effective culture accounts for 40% of the differential in business performance between companies in terms of revenue growth, profitability, customer retention, leadership effectiveness, and employee engagement.  When we assess organizational culture, three key attributes of a high performing culture stand out:

1. Organizational Health
   Think of organizational health as the combination of behaviors and corporate values that are consistently lived across an organization. In general, organizations strive to be healthy, and people want to work in a healthy environment.

   An organization must be healthy enough to set the stage for high performance; but organizational health alone will not set you apart from your peers in terms of business results or talent management.  It is just the ticket to play the game.

2. Organizational Performance
   The next ingredient in creating a high performance culture is your performance environment. We believe that people change when their environment changes.

   We also believe it is a leader’s job to create the circumstances to consistently get the most out of their people in a way that fits with the organization’s core values, behaviors, and strategies through clear direction, transparent performance status, and aligned motivation that is fair and meaningful.

3. Strategically Aligned Culture
   The third, and often the least effectively used, ingredient required for building a high performing culture is the alignment of your culture with your strategy.

   The goal is to design a purposeful culture that is 100% aligned with moving your business and people priorities forward across ten cultural dimensions of an aligned workplace such as customer intimacy, market approach, decision making, focus, operational variation, risk tolerance, and results.

The Bottom Line
There is no underestimating the powerful impact of committed leaders to building a high performance culture that is aligned with strategic and people priorities.  The degree to which senior leaders model, encourage, and promote the desired behaviors to move your strategy forward is the measure of the success of your culture transformation.  Is your culture creating a competitive advantage?

To learn more about creating a competitive advantage through culture, download The 3 Levels of a High Performance Culture Leaders Must Get Right