FINANCIAL
Culture Can Kill
By Bill Snow
Every organization has a culture (good, bad or indifferent), and that culture is directly related to the actions of its leaders: The CEO, the VPs and the division managers. Understanding the role culture plays in an organization can be the difference between success and failure.
Double-Edged Sword
Every leader is under a microscope. Employees will take their cue from the actions of the leader, and the higher up the corporate ladder, the more intense the observations of others. A powerful reminder of the role of culture came at a recent luncheon in Chicago. When he was promoted to CEO of Comdisco, Nick Pontikes pointed out that the most noticeable change he experienced was the fact that every word he uttered was immediately parsed and dissected. As an example, he mentioned making a slightly off-color joke on the elevator to one of his top lieutenants, thinking they were alone. However, someone overheard the joke, and within minutes the entire company was aware of his comments.
Pontikes' experience perfectly demonstrates why it is imperative for a leader to understand the role of culture and look and act the part at all times. The actions of the leader and the resulting culture can be a double-edged sword. The good news: It is not difficult to inject a positive culture into an organization -- it simply takes foresight. The bad news: It is far easier to unintentionally inject a negative culture into an organization than to perpetuate a positive one.
Consequences of a Negative Culture
A recent Wall Street Journal article ("Insular Culture Helped Yahoo! Grow, But Has Now Hurt It in the Long Run," 3/9/01), described some interesting, if not chilling, consequences of culture. As the Internet boom kicked into high gear in 1998 and 1999, Yahoo "was besieged by companies begging to advertise on its site." With this success came an apparent haughtiness and a sense of entitlement to revenues. Yahoo was a "new economy" company, and the rules were being rewritten. Further, Yahoo's young executives only knew the "go-go" economy of the 1990s.
Thomas Evans, the CEO of GeoCities (acquired by Yahoo in 1999) warned his less experienced Yahoo counterparts, "Ad sales are cyclical . . . People hate you. You're arrogant and condescending. When there's a downturn in the market, they'll cut you first." These warnings were quickly rebuffed by Yahoo President Jeffery Mallet, who allegedly said, "You don't get it. You're old media."
In early March 2001, when Yahoo warned it was going to severely miss first quarter earnings and revenue projections, blame was placed squarely on the weakness of advertising sales, and CEO Tim Koogle and Anil Singh, chief sales and marketing officer, quickly announced their resignations.
Culture Can Be a Bully Pulpit
A weak leader is guilty of thinking too highly of himself, and often places himself "above a job." Since culture is a double-edged sword, if the leader exhibits a disdain for customers and "getting his hands dirty," so too will his employees. You might find yourself out of business quickly if you forget the very existence of your company (and salary) depends on someone, somewhere making a conscious decision to buy something.
It is easy for employees, buried deep inside an organization and frantically worried about completing some spreadsheet, to forget the true "drivers" of the business: Customers. When you couple this lack of customer focus with an arrogant, entitlement-based approach to revenues, you have a sure recipe for disaster. Worse yet, good times can mask, and even increase, these flaws. But good times eventually end, and an organization's poor culture can come back to hurt it.
This is where a leader can use the bully pulpit of culture and avoid these problems. Leaders should realize that they have a chance to shape how people act, the way they perceive their jobs and most importantly, the way they interact with clients. A customer-centric approach should inundate the organization, and the inundation should start at the top. The customer service lesson bares constant redundancy: People need to be reminded that the money comes from the customers.
In addition to watching every step, word and action, a great leader is able to maintain a personality and sense of humor. Great leaders effectively encourage their people, "It's not a crime to laugh and smile while on the clock." Accomplishment should be the first and most important goal, but setting an environment where people actually enjoy their work is tantamount to success.
An effective leader understands the importance of setting the right culture. They understand that they are under constant scrutiny, and they should consciously act to present an air of confidence, maturity, strictness, fairness, stability, decisiveness and honesty. They should not abuse their power. Leaders use their position to create a culture where employees understand what is truly important in the organization: Taking care of the customer.
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