Winning With Culture, Part One

by Doug Claffey

How Top Workplaces Outperform the Competition

In the late 1990s, Peter Drucker claimed, “Culture eats strategy for breakfast.” Twenty years later, we take that a step further. Today, the best culture wins the trophy — and we have the evidence to prove it.

Over the past 11 years, Energage has surveyed 17 million employees in more than 50,000 organizations. Through this research, we’ve built a huge database of benchmark data. Here’s what we’ve learned.

Culture builds value

A brief look at value creation yields perspective into the powerful effect culture can have on an organization’s success. In 2009, the top five most valuable companies in the Fortune 500 included Exxon Mobil, Walmart, AT&T, and Johnson & Johnson.

Some of those organizations spent decades as top-valued companies, cementing their success with elaborate strategies. Exxon Mobil retained proprietary access to oil and gas. Walmart employed a winning supply chain strategy. For Johnson & Johnson, branding made the difference.

Fast forward to 2018. Four of those most valued companies have dropped from the list, replaced by Alphabet (Google), Apple, Amazon, and Facebook. Only Microsoft made the list of top five companies in both 2009 and 2018. How did these five companies reach the top? It’s not because of strategy. It’s because of culture. Each organization forged an intentional workplace culture that positioned them for success and created value.

While Microsoft and the like found a successful formula in culture, statistics show that other companies gambled on strategy and lost. Since 2002, roughly half of the Fortune 500 companies have disappeared. In addition, one third of companies over five years old with more than 250 employees fail or sell for below market value.

Bad culture attracts the limelight

With the advent of social media, companies can no longer hide a bad culture. Apps like Glassdoor provide a forum for employees to publish anonymous reviews of the companies where they work. Prospective employees take notice.

Just ask Uber, Enron, Volkswagen, or Wells Fargo how much bad press can hurt the bottom line. All these companies have made headlines for self-inflicted crises that severely impacted shareholder value. And in each case, culture was the number one culprit.

Get intentional about culture

The unique quality that differentiates Top Workplaces from the rest of the pack is that they proactively manage company culture. And as a result, these organizations outperform their competitors by an average of thirty percent.

Every company has a culture. After all, there is no such thing as a culture-less organization. You choose whether that culture is accidental or intentional. Companies that allow their culture to develop accidentally fall victim to the culture they inherit. Key personnel leave the company and newspaper headlines control the story.

On the other hand, successful companies take control of their culture. Rather than create elaborate strategies, leaders at top companies concentrate on building a culture that can deliver on business goals despite rapid change and stiff competition.

Unlock the potential of your organization

With all of this in mind, ask yourself: How healthy is your culture? Can you define it clearly? And if asked, would your employees describe it in the same way? Do you have the culture you need to support your goals?

Next, I’ll discuss the first step to unlocking potential: Measuring your culture. And yes, it can be measured.