Bob Schultek
Author of 
The Gauntlet

There are a multitude of models used to assess the sustainability of a business. Most evaluate strategy, performance, market growth potential, customer retention probability, governance and the management of human resources.

In a dynamic, competitive market, where customers believe they can find all they need on the internet, and where a competitive advantage built on technology cannot long be sustained, it’s an organization’s culture and people that constitute its most sustainable competitive advantage.

Harvard’s James Heskett argues that “Culture can account for up to half of the difference in operating profit between two organizations in the same business. Shaping a culture is one of a leader’s most important jobs; it can be ignored, but only for so long and at one’s peril.”

The culture of a business is a significant contributor to its success, but evaluating culture can be challenging, involving more qualitative than quantitative metrics. As a result, during a typical acquisition due diligence process, inadequate cultural assessments are the norm as most effort is invested in evaluating more easily measureable parameters. The consequences of a deficient appraisal of cultural impact on the business are significant – a greatly prolonged integration of the acquired organization, wasted time, energy and money, and irreversible damage to the acquired company’s culture that often reduces its contribution to the combined organization.

To improve the assessment of cultural impact, consider three factors:

  1. Purpose: How does the business make a difference in its market? Why does it exist, and what would be lost if the business disappeared? Is there alignment between the company’s purpose motive and its profit motive, i.e. are the operating functions aligned to support the purpose and business development?
  2. Customer Relationships: How does the business define its core customer and value proposition? How does it contribute to its customers’ success? What unique strategic benefits/value does the business produce for its customers? Are customer relationships sustainable – are transactions incremental (providing the best deal) or strategic (solving short-term problems that support customer goal achievement and long-term growth)?
  3. Culture in Action: Does the company define expected behaviors, monitor the consistency of their demonstration and coach for improvement? How is the investment of discretionary effort inspired to drive change? How are new employees welcomed? How do the people act in meetings – is shared accountability and continuous improvement encouraged? Why do the people in this business choose to invest their talent and energy working for this company?
Customers learn about an organization, and decide to entrust their business to it, based on the credibility of the company. But they choose to retain their relationship with a business based on its culture of reliability, commitment to customer success, and dedication of its people. The sustainability of any business begins with its commitment to retain profitable customers; the organization’s culture enables the building of enduring customer relationships.

What defines your organization’s culture?
How do you measure your culture’s impact on your success?
By |March 21st, 2018|Grolistic, Growth & Leadership Insights|0 Comments

About the Author:

Bob has more than 30 years of service as a senior sales and business development executive, CEO and business owner. His expertise includes customer-partnered business development, strategic planning, sales management, customer service, operational alignment, lean process analysis and improvement, quality assurance, and performance management. He has worked in the energy, medical device, bioscience & pharmaceutical, discrete and process manufacturing, packaging and distribution, communications and information technology, and business-to-business service industries.

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