Culture as a Competitive Advantage for Small Business

By at 21 June, 2019, 4:15 pm

by Raymond J. Keating-

Culture. Business culture. We all know culture is a big deal, right?

Entrepreneurs and soon-to-be entrepreneurs certainly hear a great deal about “culture,” and that having the right culture in your company can be a make or break issue. That’s true, but let’s back up a minute, and ask a straightforward question: What exactly is a company’s “culture”?

Basically, culture amounts to the beliefs and values at the core of an organization. One of the best, succinct definitions of culture that I’ve come across was from Jon Katzenbach and DeAnne Aguirre, writing in the Summer 2013 issue of Strategy & Business (“Culture and the Chief Executive”) They explained:

“A company’s culture is the collection of self-sustaining patterns of behaving, feeling, thinking, and believing, the patterns that determine ‘the way we do things around here.’ At its best, an organization’s culture is an immense source of value. It enables, energizes, and enhances its employees and thus fosters ongoing high performance. At its worst, the culture can be a drag on productivity and emotional commitment, undermining long-term success.”

So, the next question is: How do I make this happen in my business? Following are 6 sources that can help entrepreneurs think more clearly about culture and make sure that their company’s culture ranks as “an immense source of value.”

1) Katezenback and DeAnne’s article emphasizes the CEO’s importance in establishing a productive change in culture. They point out that the CEO must take an honest look at the state of the company’s culture, and where realignment is needed, a business leader has “to be rigorously selective and disciplined in dealing with cultural issues.” Consider the following points from the authors on how the high-profile CEO or owner can spark cultural change:

● “Demonstrate positive urgency by focusing on your company’s aspirations—its unfulfilled potential— rather than on any impending crisis.”

● “Pick a critical few behaviors that exemplify the best of your company and culture, and that you want everyone to adopt. Set an example by visibly adopting a couple of these behaviors yourself.”

● “Balance your appeals to the company to include both rational and emotional cues.”

● “Make the change sustainable by maintaining vigilance on the few critical elements that you have established as important.”

They go on to argue, “In all this activity, avoid delegating your culture-oriented actions. Do as much as you can yourself.” That last point is essential, as employees take their cues from the owner or CEO.

2) A June 11, 2019, piece posted on the Harvard Business Review website (“Scaling Culture in Fast-Growing Companies”), Jordana Valencia focuses on scaling culture in high-growth businesses. But one need not be operating a high-growth firm to find value in some of Valencia’s points. For example:

● Like Katezenback and DeAnne, she highlights that behavior is critical in defining culture. After all, “abstract values such as ‘innovation,’ ‘respect,’ or ‘drive’ can mean different things to different people.” Therefore:

“The first step to scaling culture is to define each company value or belief into two or three behaviors that people can observe. For example, ‘respect’ can be defined as 1) being a great listener and 2) giving equal consideration to different ideas. The output of this exercise is a clear list of the top 10-15 observable behaviors that define your culture. This has two purposes. First, it ensures everyone is working from the same cultural definitions. Second, it ensures abstract values can be seen in concrete ways. Thus, employees can more easily learn, measure, and reinforce values.”

● Valencia points out that companies need to go beyond “short, in-person onboarding programs to teach employees about culture.” They need to provide employees a digital data base on company culture that can be accessed when needed. The author adds: “The digital library or platform can showcase the top behaviors you want to scale. Then, for each behavior, include curated learning materials that can help employees understand and exhibit the behavior. These can be short articles, study guides, videos, online assessments, or recorded interviews.”

● Again, the role of managers – or the owner – in this entire process is critical. Valencia writes:

“Not only can employees model the behaviors of their managers, but they also look to managers for approval and direction… Remind all managers to use this tool relentlessly. Immediately recognize people for positive behaviors, no matter how simple these behaviors are. And praise doesn’t always have to be a grand public gesture. Managers can praise individuals during small team meetings, in private, or even over email or chat. What’s important is that recognition is immediate, frequent, and highly personalized. It only takes a few seconds, but it can make a strong and lasting impact on institutionalizing target behaviors.”

3) An piece by Sujan Patel is titled “The Importance of Building Culture in Your Organization.” He points out that culture is not something you can just leave alone so it can work itself out. Instead, culture is much more than a buzzword today; it is “an important differentiator to set your company apart from the competition,” to “attract the right talent, and to bring in “the right customers.”

He hits on four key points:

● On culture and brand identity: “The more your audience understands and identifies with your brand, the more they’ll want to buy from you. Your customers want to feel a connection with your brand, and it’s your culture that will forge this bond. When you define culture, you’re also defining your company’s values and goals. These will contribute to your company’s mission and show your employees and the public what is most important to the brand.”

● On culture and employee loyalty: “Companies with a strong culture have employees who like the challenges of their job, get along well with their co-workers and enjoy the atmosphere of the workplace. Culture gives employees a driving goal and purpose for what they do… Plus, employees who are more enthusiastic about the companies they work for tend to be more productive.”

● On culture, and attracting and retaining talent: “Hiring an employee is an investment, and you want to make sure you invest in the right people. By ensuring each individual you hire fits well with the company culture, you make it more likely they will stay with your company long term and contribute more to the success of the organization.”

● On culture making advocates out of employees: “It’s true that good talent knows other good talent. And when your employees are happy with their work, they are more likely to share with others. They’ll spread the word about their positive experience with your company, and you’ll soon gain a strong reputation. Encourage and motivate your employees to speak positively on your brand’s behalf. Not only will they help you find the right people to hire, but they can also help you bring in more customers.”

4) In another article (“5 Steps to Creating a Great Company Culture”), Marla Tabaka serves up some key points from a business culture expert on establishing a productive culture. The “vision thing” is highlighted: “Within all companies, groups of people need to know ‘what’ they are doing or delivering. Once they do all thoughts, decisions and actions can be aligned to it. This will help in creation and re-invention and is a guiding light or ‘North Star’ to follow and guide everyone connected to your company.”

The idea of assessing your business model is noted, to make sure that it aligns with “the wants, needs and demands of the customer” and “with all the possibilities and opportunities that the Information Age has to offer.”

Clarifying the company’s values also is mentioned. I particularly liked the example offered here, as it drives home how this relates to the company culture:

“For example, if your company isn’t the best at getting right back to people you wouldn’t want to state a value as ‘we communicate when convenient’.  You may want to create a value like, ‘timely communication’. That value would attract those that expect timely communication and over time, it will become self-managing, while helping your employees and company to reach their full potential.”

5) The point of Wall Street Journal piece could not be made any clearer than in the title “For Startups, Culture Shouldn’t Be Overlooked.” Assorted start-up mentors are asked about start-ups and culture, and offer interesting advice. That includes the following from Angela Benton, founder and CEO of NewME Accelerator:

“When working on a startup, culture is often the last thing that entrepreneurs think about. They tend to see it as insignificant or something they can put off until later. That’s wrong.

 “A startup’s culture has a direct impact on the type of product that eventually gets built, its brand and even its ability to raise money and generate revenue. Entrepreneurs need to take the time to really think about the kind of company they want to create because it can make the difference between success and failure.

 “Ultimately, the vision for a company will help an entrepreneur recruit the best and most authentic talent. This idea of “authentic talent” involves striking a balance between people who possess the skills that will help an entrepreneur accomplish his or her goals, and people who fit the culture, believe in the company’s vision and share its core values. Simply hiring based on skill and education can lead to recruits who may not gel with the rest of the team and who end up making a startup an unpleasant place to work. No amount of free massages, dry-cleaning and the like can cure that disease.”

It’s easy to think of “culture” as some management buzzword, but when properly understood, culture matters. And it pays for entrepreneurs to think about the culture they need to purposely establish in their businesses.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

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