Culture as a Capability

Intentionally Shape and Inspire Your Culture for Competitive Advantage

Having a great culture is not enough

We know it in our gut. Culture is critical. It’s the glue that unites us, it’s what emotionally engages us and drives our performance. It’s what makes us who we are.

This gut is spot on. Culture is an organizations biggest source of competitive advantage. Harvard research suggests that culture accounts for 50% of the variance in operating profit between companies, and an organization’s culture can’t be copied. Culture is your biggest performance lever.

But culture is also perplexing. How do we “manage” our culture? How do we evolve and strengthen it in a systematic way? What even is culture?

This questioning is understandable. Culture is experienced subjectively. It feels nebulous and elusive to conventional management. 

But this needn’t be the case. Culture, when viewed as a capability akin to strategy, planning, consumer experience, or R&D, becomes more tangible and “manageable.”  Treating culture as a capability enables a strategic and systematic approach to unleash its full potential. 

It’s not enough to have a strong culture; you need a capability to capitalize on it.

What is “capability”

Capability is a set of knowledge, skills, and resources that can put into practice to deliver results. A capability is an end-to-end activity with clear processes and supporting mechanisms. Examples might include brand building, strategy development, product innovation, or merger integration. Capabilities are a foundational building block of an organization. Most companies focus on a few core capabilities that they believe will help deliver their strategy. Prioritizing and developing capabilities provides an intentional path to competitive advantage.

There are three elements to a robust capability: 1) a model for how to conceptualize the activity, 2) an end-to-end process to put the activity into action, and 3) organizational elements to sustain the capability. Using innovation as an example, an organization needs a clear definition of innovation, a structured innovation process, dedicated roles, skill development and incentives to be able to innovate, and a set of KPIs and outcome metrics to track success. 

Culture as a Capability

Despite being subjective, culture can be approached as a capability.  Below is our approach using the four elements to create a culture capability (see Appendix for a visual):

Culture Model

The first step to demystifying culture is to define it for your organization. We define culture as how a group of people work together to achieve results. It’s made up of the 3 levels: what is said (stated purpose and values), what is seen (observable behaviors) and what is sensed (deeply held, unspoken assumptions). The essence of culture work is in defining the values and behaviors that will deliver your strategy, getting those behaviors understood and adopted at scale, and architecting the reinforcing cues to sustain the culture you want.

Process

As with any management activity, there is a process that can be followed to diagnose and evolve culture. It begins with Leadership alignment around an intention – what is the current state and your desired future culture. You then build momentum by catalyzing the change and creating and spreading early wins. Over time, the change becomes embedded by building it into core business processes, role modeling and story telling, and measurement. As an example, we helped a Global Fortune 500 company become more growth oriented by “Being Bolder.” The work started with a clear definition of what being bold looked like and how it fit into the company strategy. We catalyzed the change by putting 1,000 key leaders through Bold Week where they internalized being bold, practiced new skills, and made new team commitments. Early successes were showcased, and a set of Bold Behaviors spread throughout the company. Processes and incentives were then updated to embed the change.

Organizational Enablers

Any capability, including culture, needs to be nurtured. To sustain your culture, designated culture roles should be created. Leaders need to make commitments on how they will role model the desired behaviors and leadership team members should hold each other accountable to these. On-going manager skill training on how to shape and inspire culture should be created. Lastly, rewards and recognition programs should be evolved to reinforce these efforts. Building organizational enablers like these will ensure your culture consistently moves in the right direction. In the “Be Bold” example, the company CEO acted as the sponsor. I, and an HR VP colleague served as Enterprise Culture Leaders. All the Executive Committee members and Business Unit GMs made personal and team commitments for becoming Bolder. Managers were given coaching, and we built mechanisms to stretch thinking into the company’s core business processes. 

Unleashing people and results

Your culture is your greatest source of competitive advantage. But it’s not enough to have a great culture. You need the capability to unleash the potential of culture. Approaching culture as a capability demystifies culture and allows you to approach it strategically and systematically. Building a strong culture helps you achieve deep employee satisfaction and sustainable, profitable growth. And who doesn’t want that?