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Changing corporate culture in a complex world
Thoughts on why culture matters in promoting innovation and achieving success
August’s theme is the importance of corporate culture in a complex world
Corporate culture is a foundational part of any organization, yet often ignored
Understanding corporate culture is a challenge for new and remote employees
The same organization will likely have different corporate cultures over time
Leaders have the greatest ability to shape culture but must concentrate on it
The allure of the 4-hour work week
When deciding on what the next steps to take in my career journey should be after 25+ years in government and corporate America earlier this year, my wife Dani recommended I read The 4-Hour Workweek by Tim Ferriss. The book came out in 2007 and was an instant bestseller, remaining in that position for several years. I had initially resisted reading the book as the title and author struck me as unserious; just another self-promoter who could safely be ignored. However, upon her recommendation I proceeded through the first half of this year to read the book and reflect on it. (There have been much debate, pro and con, on the book over the ensuing years; here is a recent reflection and summary in The New Yorker by well-known author Cal Newport in 2021.)
Ferriss’s style is irreverent to say the least. He enjoys controversy and is more known for his productivity “life hacks” than his general philosophy of “lifestyle design” as Newport points out. Yet this concept of lifestyle design is the most powerful idea in the book: Ferriss is most effective when challenging the basic construct of working a regular 9-to-5 job for decades in the hopes of saving enough money to one day enjoy a retirement that is far off in the future. The 4-Hour Workweek challenges basic notions of productivity and self-importance and provides an alternative view that I would sum up as a “work-to-live” mentality rather than a “live-to-work” mindset that many possess, particularly high achievers seeking more responsibilities, higher pay, and bigger titles. In a way, The 4-Hour Workweek provided an early glimpse into our work environment of today with more entrepreneurs, gig economy workers, and The Great Resignation fully upon us.
The ebb and flow of corporate culture over time
In my experience, corporate culture is vitally important to all organizations. Many people recognize this, yet the intangible and sometimes ephemeral nature of culture makes it hard to define or quantify its impact. My belief in the importance of corporate culture stems primarily from my 20 years working at USAA, a large financial services firm that focuses on serving U.S. military members and their families. USAA was recommended as a great place to work when I moved to San Antonio, Texas where the firm is headquartered back in 1998. I was fortunate enough to work as a temporary hire for 6 months that year and later returned in 1999 as a full-time hire. At that time, the firm was quite paternalistic with most senior leaders having joined the firm after serving as high-ranking military officers. Teams were called “units” and the firm took care of employees as well as it did its customers (called members). USAA at that time was not particularly creative, did not publicly advertise, and most career promotions were based on years of seniority with the firm. Employees rarely left and it was not uncommon for people to stay with the firm for 10, 20, 30 or even 40 years.
The dot-com bust and collapse of the stock market in 2000 along with a change in the CEO led to many changes at USAA which ultimately led to the first-ever mass layoffs at the firm in 2001 since its founding in 1922. The firm had become overly reliant on making profits based on investment returns, not operations: changes needed to be made quickly and one of the biggest was the introduction of project management as a discipline. The culture changed in a short amount of time and results followed. It remained a paternalistic, top down corporate culture but there was much more urgency and importance placed on operating results: it was no longer a “country club” mentality.
After several years of success, the firm ran into more challenges in the late 2000s as the largest base of potential customers shifted from active duty officers to the children and grandchildren of former military members. These prospects did not have the same connection to the military as their parents or grandparents. To adjust, USAA began advertising and growing its marketing efforts to be more public facing. At the same time, a new CEO came on board and the firm began encouraging innovation by employees through hack-a-thons, ground up ideation, and building relationships with startups. It was a “golden age” during my 20 years at the firm.
USAA began to change again in the mid-2010s with another CEO. Several years of record growth changed both the composition of the customer base as well as the employee base: more people were hired from outside the firm and there were fewer promotions of careerists, especially those who had begun their careers working in the call center and climbed the career ladder inside the firm with limited outside work experience. At one point, half of the employees had been with USAA less than 3 years, a far cry from the late 1990s. The corporate culture at USAA changed as well: the company became more like a traditional large financial services firm and less unique. The culture was professional, yet continued to be conservative with an emphasis on hierarchy. Titles were extremely important: insiders knew the difference between a “Product Management Director” and “Director of Product Management” even though to outsiders, the only difference was the ordering of the words.
I left USAA in 2019 but friends and former colleagues report today that the corporate culture continues to change under the latest CEO. One notable aspect is that, like many organizations, recent new hires at USAA came aboard during the pandemic and have been working remotely, not in the office. While they are excited about their new role and the company’s mission to serve the needs of military members and their families, several new hires at USAA I have met have expressed confusion to me about aspects of their work. When I shared my experiences working at the firm and views of the corporate culture (good and bad), I sensed that I turned a light on for them: experiences that previously did not make sense start coming into focus. These newer employees are able to connect the dots better once they understand the corporate culture.
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Corporate culture “sucks you in or spits you out”
Corporate cultures do not always change with a new leader, but this is often when they do change - for better or for worse. New leadership provides an opportunity to change aspects of the corporate culture in areas where change is needed, but there is a limited window of opportunity before employees grow cynical and start tuning out efforts by these leaders to make changes. While I was at USAA, there were certainly aspects of the corporate culture that remained relatively constant over the tenure of several CEOs, while other aspects changed radically depending on the new leader in charge. On a couple of occasions, an outside firm was brought in to formally evaluate the corporate culture and design training and change management to intentionally change certain parts that were deemed negative and holding the firm back.
Efforts to meaningfully change the corporate culture of a large enterprise like USAA were time consuming and involved, especially for leaders and frontline managers. Ultimately, all employees must be involved and repetition and consistency are essential to build real and lasting change in your corporate culture. When there is a gap in training or “say-do alignment” is lacking, employees are quick to see hypocrisy and chalk up culture change to lip service rather than genuine attempts to improve. Crucially, in my time at USAA, the mission of the organization never changed - but how the organization operated did and the values it espoused and rewarded did as well.
A former USAA colleague of mine summed up the effect of corporate culture well many years ago: his quote was “our culture will suck you in or spit you out”. This quote has always stuck with me and is true of any organization, large or small. Curating and shaping corporate culture can be one of the most impactful initiatives you can embark on to improve your firm, promote innovation, and better prepare for the future. This month’s Forestview newsletter will go deeper into the importance of culture and provide ideas to help you focus and improve upon your culture to attract and retain talent and enhance your innovation efforts.
What are common characteristics of employees who succeed in your firm? What are common traits of those that do not? What about those who leave you? Are you “spitting out” the right people or losing talent that you want to retain? Do different groups of employees work well together or do you have cliques within your firm that make it hard to effectively collaborate?