Why Leaders Need Culture-Based Management

April 8, 2020
Posted in Execution
April 8, 2020 Jamie Notter

A colleague asked me a great question the other day:

What’s the biggest thing leaders are NOT seeing when it comes to culture?

These days, I think most leaders understand the importance of culture, and that wasn’t as true a few years ago. So they’re seeing culture now, which is a good thing, and some are even getting proactive about intentionally shaping and designing their culture. They’re going beyond putting core values posters on the wall, and focusing on a consistency among the words, behaviors, processes, and structures to make the culture is generating the behavior that will drive the success of the organization.

While I am glad leaders are seeing culture, however, they are still treating culture as something external to the management of the organization. Culture is something they work on in addition to the “real” work of management (strategy, finances, leadership, etc.). So here’s what most leaders are not seeing yet:

Culture is most effective as the core of a management system, rather than a component part.

We call this culture-based management. All management systems have a core concept that drives them—a central idea or approach that shapes the design and implementation of all the other component parts of the system. For many organizations, the core of that system is structure. The division of labor and authority inherent in the hierarchy is the driving force behind all the other parts of management. That’s why budgets are drawn up within departments, that’s why silos are so hard to bust, and that’s why so many people claim that culture is always driven from the top down. When structure is the core, the other parts of your management system will be defined in terms of structure.

But not all organizations default to structure as the core. We wrote about W.L. Gore & Associates back in our first book, Humanize, because they had a very interesting organizational structure. There are only 2 titles across the entire enterprise: Leader and Associate. And my favorite part is that the title of Leader is given to you by the Associates (and also taken away by them). The saying at Gore is that if you call a meeting and people show up, you’re a Leader. If you call a meeting and nobody shows up, then you’re an Associate. Gore values decentralization because it supports their commitment to innovation. Their culture of innovation is driving everything they do. That’s an example of culture-based management.

Culture-based management is still the exception, rather than the norm, but most of the organizations that practice it, from my perspective, are what we call “positive deviants.” Like the case studies in When Millennials Take Over, these companies are doing management very differently—and running circles around their competition in the process. Their success makes sense to us. Of all the components of a management system, culture seems to have the tightest grip on behavior, hence the “culture eats strategy for breakfast” mantra. So if you put culture at the core, and align it properly with what makes you successful, it ends up having a multiplier effect, making the other parts of your management system more effective.

Most of our consulting work starts with culture design—making sure your culture is intentionally and tightly aligned with what drives your success. The more advanced work then focuses on culture-based management, integrating culture into the rest of the system. As we move into the 2020s, we think this work will become a primary focus for leaders who want their companies to stand above the rest.

Photo by James Wainscoat on Unsplash