How Good Company Culture Can Go Bad

Here’s a sentence I never thought I’d write.

One of the best hours I spent this week was with our Governance, Risk and Assurance Team.There – I said it.Joking aside, the relationship between governance and innovation is an important one. As I wrote in my last post – for an organisation to support innovation the culture must accommodate the risk and uncertainty that accompanies it.A culture of risk aversion is a culture that limits innovation. The bedrock of innovation is experimentation, and this requires a relaxed attitude to failure. That failure though has to be well governed, to make sure you don’t flagrantly waste money or harm organisational reputation.If your innovation efforts are to be taken seriously, and to scale and spread, you need to have a mature approach to risk. At Bromford, a member of the Governance team sits on our weekly Design Group, jointly agreeing every new concept we test.The session made me reflect on how the organisational cultures I promoted last week , can become so constraining that they start to promote the wrong behaviours.

Can good cultures go bad?

A lot of organisational assessments (Best Companies etc) seem to hold teamwork, cooperation and shared purpose up as a kind of holy grail.However, innovation often thrives because of diversity and discord. “The idea that will get you fired” is often the best one to explore.Strong cultures are a positive – but there’s a tipping point. A point where conflicting opinions can get stifled rather than being actively cultivated.Phrases such as “That’s the way things get done around here” or “That person isn’t really a (insert company name) sort of person” are red flags you’re reaching that point.In The Three Box Solution by VG Govindarajan he proposes a simple test to assess the size of the challenge in forgetting your organisational past.

Here are some of the questions:

We primarily promote from within

Our culture is homogeneous

We have a strong culture

Employees have a long tenure

We rarely recruit from outside apart from entry level positions

When people are recruited from outside, we have strong socialisation methods

We have a track record of success

We don’t mess with success

The senior management team has a long tenure and has also worked primarily in our sector

VG asks us to answer the questions scoring 1-5, with 1 representing ‘strongly disagree’, and 5 representing ‘strongly agree’. The higher the score the bigger the challenge.I ran my own organisation through this and found we score pretty highly. As VG teaches us – this is not cause to throw our heads into our hands and despair. Rather it’s about surfacing awareness of the weight of our history – and the chains we may need to break to move forward.This history can lead to what Donald Sull called active intertia, which is when managers get stuck in a rut so that when an entirely new situation arises they revert to old responses. Active inertia, Sull says, is “management’s tendency to respond to the most disruptive changes by accelerating activities that succeeded in the past”.These can become cultures built around an excessive drive for performance at all costs, where status is more important than relationships based on equality, challenge and collaboration.Related: How Technology Is Changing Our Conversation

How can we mitigate against this? In the session this week we discussed the following activities:

Keeping teams curious. Encourage them to go out and explore the wider world beyond the office door. Maintain a high degree of customer closeness and never believe your hype.

Maintain relationships with people who actively disagree with you. This means embracing misfits – not rejecting them from “your” culture.

Go beyond your sector and generally avoid the places your peers gather. People are working on the same things as us across the globe and we won’t solve things on our own. We are desperately inward looking as sectors.

Encourage informal teams to work on cross cutting problems. More work in innovative organisations is accomplished through informal teams than formal ones.

Have the right set of organisational design principles that ensures your company is joined up and consistent. However this needs to be capable of challenge , so the way we do things around here is constantly under scrutiny and capable of iteration.

Contained in our own personal and organisational histories are thousands of assumptions. Assumptions that we live by everyday.Organisational DNA can become so baked in that we don’t even question what we are doing.A crucial part of keeping a good company cultureis about challenging our assumptions about why we do what we do, how we do it, and who does it.Everyday.