Simply, 'culture' is the 'collective personality of an organisation'.
Every company has a culture, be it strong or weak, but there is always an inherent culture. A company's culture consists of the shared values, beliefs, traditions, outlook and behaviours that employees use on a daily basis while they are at work.
A strong culture determines how well employees describe their work and workplace and how they see themselves as a part of the company. A culture defines the way a company values and treats its people, customers, partners and clients. When you are creating a culture, you are creating a norm/standard of what are we all and must be focused on.
Company values and culture are two separate things. Culture is the key character of an organisation that is made up of its core values, principles and beliefs that are nested within and that should never change. This combined set of values and principles defines the unique character of a company.
There's a 'fundamental company culture', for example the culture at Google, and then there are sub-cultures of various departments/SBUs/international offshoots that may deviate a bit from the original but are ultimately a subset of it. They are:
A Company's Aspirational Values: The values that a company hopes to achieve.
A Company's Perceived Values: The values that a company's employees interpret or regard in a particular way.
A Company's Practised Values: The values that a company's employees actually practice.
Dr. Cameron Sepah outlines 'company culture' as 'whom you hire, fire and promote': According to him, the gap between Aspirational and Practised Values is diagnostic of how much your company's culture needs to improve.
Why have an influential company culture?
People are loyal to it: People, policies and strategies change with time, trends, new people or situations beyond control, what doesn't change is the core culture. Apple Inc. has been through its hay-days and rough weather, but what has never changed at Apple is a culture of secrecy, constant product innovation etc. while focussing on the philosophy of 'Think Different'.
Culture puts people at the forefront: Your people are most important for your company and almost everything revolves around them. The consumers (B2C), clients (B2B) and partners/stakeholders take the second spot.
Culture provides resilience in tough times: What helped SouthWest Airlines during the 1991 fuel crisis was its strong employee-centric culture and what's hurting Uber currently is its weak culture.
Your culture is your brand recognition: After hiring, the next step to instill the culture is a cultural on-boarding program. Everyone who's is hired must go through the same on-boarding program, irrespective of department, geography or designation.
A strong culture sparks innovation: It helps organisations to create great things and solve problems. It helps gamble on its people's vision, over creating 'me too' products. Xerox's culture failed to realise and inspire the team that built 'Alto' to take this initiative to the next level, believing that it is unlikely that a person outside the computer science research community will ever be able to buy an Alto.
They only realised their mistake in the early 1980s after Apple's Macintosh revolutionised the PC market via its bitmap display and the mouse-centric interface, both originally created by the team that built those for 'Alto'.
A strong culture celebrates failure and inspires people: When one of your core teams makes a near fatal error publicly, what do you do as the chief of one of the most valued brands in the world?
You back them.
Microsoft launched a Twitter bot by the name of Tay (officially, Tay.ai), in an attempt to advance how AI communicates with humans in real time. Things took a vicious turn when hackers and others caused Tay to begin spewing racist and profane comments.
Tay was shut down just 16 hours later, followed by an official apology from Microsoft. Satya Nadella sent this to the Tay team:
"Keep pushing, and know that I am with you ... (The) key is to keep learning and improving."
He also urged staffers to take the criticism in the right spirit while exercising 'deep empathy for anyone hurt by Tay.'
A weak culture can decimate an organisation: Integrity, communication, respect, excellence... these were the values inscribed on its lobby. Then what killed Enron? It went bankrupt from fraud and its leaders went to prison due to a fragile culture.
Cultural mistakes are more damaging than strategic mistakes: What is hurting United Airlines is its weak cultural value system and not its business strategies about how to treat its customers.
A strong culture helps accept and transition a 'change wave': Blackberry, a hit product range from Research In Motion soon became history, as its key people failed to see, realise or perhaps accept the change wave that came along with the launch of the first iPhone and Android OS. Google, however, was swift to realise and accept that wave, make changes within and hence today approximately over 80 per cent of new smartphones run on Android (or just over two billion).
A strong culture cannot be copied: When Marissa Mayer moved from Google to lead Yahoo, she took some cultural elements of Google along and tried to reinforce some of them in Yahoo, which was fair. Yahoo was going through a crisis and it desperately needed a breath of fresh air.
Both Yahoo and Google operate in more or less similar industries and Google's strategies (example - new age/millennial-focused product acquisitions plus letting companies maintain autonomy and independence in many scenarios) worked for Yahoo with Tumblr etc. However, the Google culture couldn't be copied as Yahoo had its own set of key principles and values that defined its core character since its inception.
Culture is your best retention and recruitment tool. Need we say more? Employees do not just leave their jobs; they leave people and a weak culture.
Reference Points and Readings: Blitzscaling with Jeff Weiner - A Stanford University class by Reid Hoffman, Blitzscaling with Brian Chesky - A Stanford University class by Reid Hoffman, Joe Tye - 12 Reasons Culture Eats Strategy for Breakfast, Wikipedia - Xerox Alto, Dr. Cameron Sepah: Your Company's Culture is Who You Hire, Fire, & Promote, Satya Nadella's Email to Microsoft Employees.
(The author is Managing Director, Offshore, Mirum Agency, a WPP company)