
Ordinary business decisions can yield extraordinary success

Summary
- A company’s culture is not about grand vision statements and corporate discussions, but about day-to-day decisions that determine how work gets done by people.
Culture eats strategy for breakfast." This quote captures the role culture plays in an organization’s success, though in an incomplete manner. In high-performing organizations, purpose, strategy and culture are the three pillars of success. If purpose is the organization’s ‘why’ and articulates the reason it matters to the world, and strategy the ‘what’ that defines what the company must do, it is culture that determines ‘how’ work gets done by people in the organization.
There are many ways to build and communicate the culture of an organization. At the start of Marico’s journey, a systematic process was followed to build a common understanding of the desired culture. The first step was to create a draft note on corporate values, followed by detailed and participative discussions within top and middle management to decide on the desired culture. The next step was engaging the entire organization—through induction training, culture workshops or annual reviews—to reinforce its importance with all employees in the organization. The articulation of the desired culture was done in simple and understandable terms. For example, ‘open’ and ‘informal’ meant sharing information, using first names even for the founder, and, more importantly, placing very high value on ideas and results, regardless of the organizational hierarchy.
A process alone is not sufficient to build the desired culture. Of course, senior leaders play a critical role in championing corporate values and setting examples. Equally important are the ordinary decisions made every day that shape the culture of a firm.
Who gets hired and promoted?: Take Zappos, an online platform based in Las Vegas and known for its customer service. Its founder, the late Tony Hsieh, mentioned how Zappos used the ‘nice guy test.’ A large number of its candidates were from out of town; they were picked up for interviews by a shuttle service. At the end of the day, the recruiter would ask the shuttle driver about how s/he was treated. As Hsieh said in an interview, “Even if the candidate made a great impression in the interview but did not treat the shuttle driver well, we won’t hire that person." This is how culture comes to life.
How are goals set?: Some organizations believe in Michelangelo’s statement: “The greatest danger is not that we aim too high and we miss it, but we aim too low and get it." Consider SpaceX’s goal of enabling human exploration and settlement on Mars. No one can accuse it of falling short on the Michelangelo test. The primary role of goal setting is to motivate and stretch the capability of the individual to fulfil her or his potential.
Annual goal setting plays an equally important role. A leading Indian company set a target of improving costs by inflation plus 1 percentage point every year over a five-year period. The goal was set by a team of middle managers. The target was time-bound and forced the organization to improve its cost structure on an ongoing basis for annual benefits—in line with a culture of continuous improvement and result orientation. The result was EBIT margins going up from 15% to 21%.
How are meetings run?: Meetings reveal a lot about an organization’s culture, especially at a time when most people think they take too much time. Some cues provide a clue to the company culture: Are decisions made at meetings or outside? Are the right people called for meetings? Do senior people come in time for them? How are meetings conducted?
In many companies now, pre-reads are essential for a meeting and the focus of the gathering is on discussions and decisions, not presentations. Amazon has a six-page prose memo that everyone must read during the meeting itself. In one of his interviews, Jeff Bezos explained that this memo “is supposed to create the context for what will be then a good discussion" and group memo reading helps because “executives will bluff their way through the meeting as if they’ve read the memo because we’re busy and so you’ve got to actually carve out the time for [it]."
Which heroes are celebrated?: Patagonia is one of the most reputable brands for sustainability in the world. It has a culture of environmental activism and empowerment. Its leaders talk about a deep middle management culture and high sense of agency within the ranks. There are numerous examples of the company celebrating teams for taking decisions that put the environment first rather than short-term profit—whether in the sourcing of material or deciding where to set up a new warehouse.
How do we react to failure?: Reactions to failure speak volumes about a company’s culture. In some organizations, a setback results in an analysis that focuses on ascribing responsibility (and blame), while others do a similar diagnosis to identify what can be learnt from the same. The CEO of a large financial services group once told us, “I don’t care if my team makes a mistake, but I do get worried if they make the same mistake twice".
In summary, a company’s culture is not about grand vision statements. Instead, it is about the mundane and ordinary day-to-day decisions that create extraordinary success.
These are the authors’ personal views.