The Importance of Company Culture
Company Culture and the Power of Purpose
The main goal of Intentional Leadership is to create a company culture of high performance. Managers are great with the hard stuff… the stuff that you can see, feel, and quantify. Managers understand Key Performance Indicators, Management by Objectives, Status Reports, Performance Reviews. True leaders are good with the soft stuff. The stuff you can’t measure. A great company culture is something you feel. It is created from the heart and not the head.
You’ve heard the tales of the mother who can unleash superhuman strength to save her child. These aren’t just stories that get passed around some campfire. These aren’t just fables.
In 2006, Tom Boyle, an ordinary human, a man who just like you and me, unless your a woman in which case he has a few anatomical differences. Boyle was sitting in his pickup truck, in regular street clothes, his caped crusader costume left in a closet. His wife was at the wheel, looking for an opening to pull out of a shopping center. The Camaro in front of them, peeled out onto the street. All of a sudden there were screeching wheels and sparks. The Camaro hit a bike rider, 18-old Kyle Holtrust dragging and pinning him under the car.
Boyle, bolted from the truck, hearing Kyle’s agonizing screams. Boyle lifted the front end of the 3,000+ pound car for nearly 45 seconds while the driver of the Camaro pulled Kyle free. Boyle was a strong man, yet the most he had ever deadlifted was 700 pounds. The world record for the deadlift is 1,041 pounds. This was a 3,000-pound car.
What happened? Where did that energy?
It was a combination of things. It was a potent mix of fear, adrenaline, and purpose. It was not triggered by intellect. It was triggered by that ancient part of our brain evolution has not erased.
Managers form a contractual relationship with their “employees” to trade a certain amount of energy in return for cash. Great leaders harness more than the simple energy for which they contract with their teams. Managers contract with their employees, leaders inspire their teams. Great leaders create a company culture that unleashes discretionary energy.
Company Culture of Survival
I use to coach a company that hovered at a steady revenue level. The partners were comfortable. They made a more than comfortable living. They put just enough effort to maintain their lifestyles. The company depended on six to 10 large contracts that delivered revenues in the $18 million dollar range.
Every 18 months or so the company would face an existential threat. On a regular basis, they would lose one of their larger contracts. Like clockwork, on an average of 18 months, they were faced with losing a $3 – $5 million contract that provided all the profit in the business. Their lifestyles were threatened. Heck, they might have to do like their employees and get a job.
Every time this happened, every time the very existence of the company was threatened, the partner’s energy level increased. Their urgency filtered down to the team. They lifted the proverbial 3,000-pound car. They found a replacement client. And then, the partners would put their feet back on the desks, sit back, read the sports page, count their money, until the next lost contract.
Here was a steady state company, a no-growth, highly-profitable, lifestyle business. When the partners were in a comfortable space, they were managers. They were non-inspirational mangers. When they were forced into preservation mode, when they’re livelihoods were threatened, when all the employees knew they could lose their jobs, they would revert to preservation mode unleashing the discretionary energy to drive performance exceptional performance from their employees.
I once pointed out that the difference between a no-growth, lifestyle company and a $100 million rocket ship that could make a difference in the world was the lack of culture. Was the laissez-faire attitude that existed in the company until the crisis came along. How big would the company be if didn’t just replace lost contracts but added three new contracts a year? They didn’t care, they were in their comfort zone. Preserving their lifestyle was all they needed and punching a clock was all they got from their employees.
Company culture begins at the top. When the leaders of a company show their employees that they are satisfied with mediocrity, how can they expect more than mediocrity from their employees? When the company culture is lifestyle, you get employees who are motivated by vacations over vocations. When the bosses punch a clock, the employees watch the clock.
Company culture begins with purpose. When the purpose is fear, survival or preservation like with Tom Boyle and the Camaro or the survival of a lifestyle company, purpose unlocks extraordinary performance (see this blog post regarding Simon Sinek and Why)
But how do you tap into the discretionary energy of a team that is not in danger?
Aspirational Company Culture
In 2007, the dawn of the great recession, CEO Gerry Anderson, DTE Electric was in a pickle. DTE is a Detroit-based, electric utility with 10,000 employees. Many entrepreneurs would view a large electric utility as stodgy, beurocratic and just plain boring. In 2008, their large company customers like Ford, GM, Steele plants were closing, their consumer customers were being laid-off or fired. Energy demand was diminishing. Customers were leaving town. DTE faced extinction.
Anderson’s executive team recommended lay-offs. Anderson is a typical hard-skills guy. A numbers man… a head and not a heart guy. He is an engineer and former McKinsey consultant. Yet something told him that layoffs, were not going to turn the company around, that layoffs would merely stem the bleeding on the way to DTE bleeding out.
Despite the advice of his executive team, Anderson decided to take a stand. He asked the employees, his team for help. He laid out the situation and then according to a Harvard Business Review article he asked for more from the team.
“We couldn’t promise how it would turn out, but we would promise one thing. We promised that the last lever we would pull to protect the integrity of the company would be a layoff. That we’d do everything in our power to prevent it. But in return, we said there’s something we need to ask of you. You need to go to bat for this company with an energy level and an intensity and a level of creativity that you never have before.”
How did that work out? The company began crushing expectations. Anderson relates one story that illustrates the companies comeback. The company had embarked on a $30 million renovation project. The project had entered a stage of no return and therefore he couldn’t just delay it. The team responsible for executing the project went to their vendors and asked for better pricing. They cut $3 million off the cost to $27 million.”
And then, something extraordinary happened. The project managers asked themselves, what are we really renovating? What are we upgrading? They determined that they were replacing old systems with new systems that were substantially the same except for upgraded logic boards.
So they went back to their suppliers and explained the dire nature of their situation, and asked the vendors to figure out how to replace the logic boards in the existing systems. The cost of the upgrade dropped to $3 million. Yes… that’s right. Ten percent of the original cost.
By 2010 DTE had exited from peril and company culture of mutual survival was no longer an effective motivating purpose. Gerry started thinking about DTE and how could he harness his team’s discretionary energy now that people were no longer fighting for their survival. Here was this large company, part of a stodgy, beurocratic electric utility industry, thriving in a Detroit when everything around them was in decline. It was obvious to Gerry that a common corporate purpose created a disaggregated system where employees were making a difference because they were inspired instead of just managed.
Gerry and his team moved from the purpose of preservation to something more aspirational. The 10,000 DTE employees were citizens of a community that was suffering. Their neighbors were suffering, businesses were closing. The city was shrinking. According to Gerry,
“I realized that we needed to move from preservation to aspiration. And that was we needed to turn our people’s energy outward and help them realize that yeah, we were OK as a company, but the people around us weren’t. So, that’s what I started to talk about. That we could be a force for growth and prosperity in our city and our community and in our state.”
The Soft Stuff, the purpose translated into better performance with the hard stuff, the numbers. By 2017 shareholder return was up 275% compared to DTE’s average peer which was up 83%.
As Jerry says, “the soft stuff is hard,” and the well-executed soft stuff resulted in superior hard stuff returns.
Aspirational Company Culture
Leadership is not about managing employees. It is about inspiring followers. Leadership is about creating a company culture of high performance. A strong culture inspires followers to do more. It creates disaggregated teams of autonomous productive teammates. A shared aspirational purpose results in self-motivated, self-regulated, creative employees. When a team realizes that their leaders care about something besides just profits and numbers, they respond.
Intentional leadership is designed to help you develop such a culture. Intentional Leaders create, maintain, and retain productive motivated employees.
Want to talk about culture? Want to figure out how you can unleash the discretionary energy of your team? Want to drive performance improvements without being a slave driver? Try a complimentary, one-hour, online, coaching session. Schedule it now by pressing that little red button down there.