How Corporate Culture Drives Revenue Growth (or Derails It)

Corporate Culture Drives Revenue Growth
If you want to create sustainable and high revenue growth, be sure you understand the relationship between corporate culture and growth.  Smart leaders know growth strategies must go through culture to produce results.  How the company culturally views areas like decisions, customers, markets, quality, and risk tolerance plays a key role in go-to-market strategy execution.

What Corporate Culture Is
We think of corporate culture as how things actually get done in an organization.  It is the way employees think, behave, and work.  It includes the values and beliefs that drive business behaviors and practices.  It is guided especially by leaders in who they hire, fire, and promote and how they themselves behave.

What the Corporate Culture Research Says
Harvard Business School recently reported that an effective workplace culture can account for up to half of the differential in performance between organizations in the same industry.  Our own organizational alignment research found that cultural factors accounts for 40% of the difference between high and low performing companies in terms of:

• Revenue growth.
• Profitability.
• Customer satisfaction.
• Leadership effectiveness.
• Employee engagement.

Needless to say, organizational culture should play a powerful role in a company’s growth strategy.

An Example of a Bad Relationship between Corporate Culture and Growth
Wells Fargo’s toxic sales culture caused significant harm.  Beginning around 2011 and continuing through at least 2016, employees at Wells Fargo opened large numbers of checking, savings, debit-card, and credit-card accounts without customers’ knowledge or consent.

• Roughly 1.5 million deposit accounts and 565,000 credit-card accounts were initially disclosed as possibly unauthorized.
• Later internal reviews expanded the estimated number to as many as 3.5 million accounts.
• To hit aggressive sales targets and earn bonuses, employees reportedly transferred funds from customers’ authorized accounts into these newly opened accounts, issued cards or enabled online accounts without full customer permission, manipulated email/phone contact info, and opened products that customers did not ask for.
• The bank’s incentive/sales model (“cross-selling” many products per customer) created pressures that contributed to the misconduct.

Their corporate values about serving their customers with integrity were nowhere to be found  The organization became a target of congressional hearings, their stock suffered huge losses, and there was a leadership shakeup. Not the high growth they were looking for.

An Example of a Good Relationship between Corporate Culture and Growth
We consider Zappos an example of a good relationship between corporate culture and growth.  Zappos touts its “Culture of Wow” whereby each employee is empowered to live the company’s commitment to deliver out-of-this-world customer service.  The company claims that their “Core Values are more than just words; they’re a way of life.”

They believe as we do that “companies with a strong culture and a higher purpose perform better in the long run.”  Their belief led to their phenomenal success reaching $1 billion in sales in less than ten years.

Implications for Strategy Execution and Leadership

• Misaligned Incentives Create Risks
  When strategy execution is driven by quantitative sales targets once removed from customer value, the strategy (growth-through-cross-sell) may catalyze unethical behaviors rather than sustainable performance.
• A Lack of Controls Can Make It Too Easy to Game the System
  A strong sales culture without sufficient governance, oversight, and ethical grounding can derail execution and undermine strategic intent.
• Transparency and Accountability are Critical
  Leadership must ensure that what is being executed aligns both with strategic objectives and corporate values. In this case, execution of the strategy (sell more products per customer) violated ethical and legal standards.
• Monitoring and Feedback Loops are Essential
  The misconduct persisted for years, suggesting that oversight, audit, and corrective mechanisms were inadequate. For strategy execution, this means building measurement, review, and adjustment processes into the execution plan.

How To Align Your Corporate Culture with Your Growth Strategy

1. Align the Executive Team on the Culture Required for High Growth
   The first step is to align the executive team. We believe that the same people who are responsible for setting the corporate strategy should also be responsible for defining the workplace culture required to best execute the strategy.
2. Assess Organizational Health & Cultural Alignment
   Once the required growth culture has been defined by the executive team, the next step is to get a reality check of how the rest of the organization perceives the current workplace culture in terms of health and strategic alignment by assessing your current corporate culture.  This enables you to identify the key gaps that need to be closed to meet growth targets.
3. Align Teams
   Once the assessment results have been analyzed, the next step is to prepare people leaders with the tools, metrics, and practices to connect the What (Growth Strategy) and How (Growth Culture) for their teams.  The goal is to align behaviors and business practices with growth targets.
4. Sustain the Required Culture
   The final and ongoing step is to sustain your cultural transformation by building the growth capabilities and mindsets necessary to overcome the inevitable growth challenges by preparing culture champions, providing 1-on-1 coaching, and enabling action learning leadership development to drive growth.

The Bottom Line
Pay close attention to the relationship between corporate culture and growth.  Your growth strategy must go through your culture and your people to be successfully implemented.  Your culture will make or break your go-to-market plans for high growth.

To learn more about how corporate culture drives revenue growth, download The 3 Levels of a High Performance Culture that You Must Get Right to Grow Faster