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Why Culture Is the Key to Competitive Advantage

“Anybody can copy your strategy. Nobody can copy your culture.”

Strategy is made but culture is painstakingly built, as René Carayol explained during our annual InTheBlack conference in Los Angeles last year.

Carayol is one of the world’s leading business gurus specializing in leadership and culture. He’s worked closely with leaders like Sir Richard Branson, Ko Annan, and Colin Powell, and draws from his own unique experiences on the boards of the biggest British and American organizations, from Marks & Spencer and Pepsi to IPC Media and the Inland Revenue.

Here are some of his most valuable insights into how to create competitive advantage through a carefully crafted culture.

Cutting Through the Noise

The marketplace is becoming continually crowded and it’s making it more difficult to cut through the noise. Disrupters big and small are changing the rules of engagement and evaluation and rewriting the rules of winning.

As a result, you don’t have to be a big company to cause disruption, and culture, once barely acknowledged as an aspect of a company, is now a discerning characteristic. Whether you’ve actively noticed it or not, company culture is on the rise worldwide.

Delta’s culture emphasizes empathy for customers, humility, and respect for the competition. Its strong company culture is credited for not just saving the airline’s consumer satisfaction scores but actually increasing those scores after a computer outage resulted in a day of worldwide grounded flights year.

First Direct, a small British bank, made waves when it established policies promising that a human voice would answer every customer service call within three rings. It now has the least customer turnover in the UK.

Zendesk is creating a world-class internal culture based on their operating premise that happy employees mean happy customers. They’re proving this to be true as a leading cloud-based customer service software.

Crafting Culture

The rules have, indeed, changed dramatically. Culture is now a key differentiator, and yet the way many companies operate, hire, and invest in their internal leadership is not keeping pace. According to Carayol, 80% of companies do not intentionally craft their culture and this is impacting the talent companies are able to recruit.

BlackLine CEO and Founder Therese Tucker sheds light on the importance of proactively and intentionally structuring culture, saying, “Vision is always around the product, and you’re supposed to hire people who share the product vision – but that can result in employees who undercut others and play games. It’s okay to define the culture as far more than just a product vision.

“This is a very important piece, not just the hard and fast things that make up your corporate goals. It’s the human piece. You want the best people and you get them by offering the best environment.”

Carayol concurs with Tucker’s stand on this, and says, “Strategy is great. But the culture is the driving force of the organization, led by the behavior of leaders. Not what they say. What they do.”

Redefining the Art of Leadership

This shift is redefining what leadership looks like within the corporate world as well. The challenge down and support up model is no longer working, and has actually flipped into a challenge up and support down approach.

Carayol’s definition of leadership reveals the impact culture has on the structure of a company: “Leadership is not management. It’s how you energize your people towards your vision. The key word is energize. Not tell. Not command. Not control. Energize. And here’s why we obsess about it: leadership is the art of more than the science that management says is possible.”

In the best organizations, employees lead at every single level. “In actual fact, those closer to the point where we touch the customer or the client, that’s where we need the most leadership,” says Carayol. If culture drives a company, the behavior and values of a company’s leaders drive the culture, and this influence is so powerful it can be felt right down to the bottom line.

Today’s competitive and fast-paced business landscape calls for innovation on every level, and this is elevating the importance of collaboration. Leaders still need to set a vision, but they must take a collaborative approach to ensure the vision is both inspirational and creates buy-in with their teams.

Create Your Culture

It’s never too late for an organization to begin crafting their culture. This won’t happen overnight, but committing to this investment will have impacts that reach far beyond happier customers. The energy shift will ripple across the company, improving the quality of work, boosting employee engagement and productivity, reducing stress and healthcare costs, ultimately resulting in higher retention that saves the significant cost of turnover. And this is what creates true competitive advantage.

You may be wondering where to start.

According to Carayol, culture begins with how you hire and ends with believing in your people. Investing in leaders at all levels is also key – great leaders build up other leaders.

René Carayol’s 7 Steps for Changing Culture:

  1. Hire for attitude as much as skills
  2. Provide “something to belong to”
  3. Acknowledge effort and wins
  4. Nothing is ever achieved without enthusiasm
  5. Circumstances change, values don’t
  6. Finished beats perfect
  7. Trust your people

 

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