Here’s a riddle…

What is the one asset that every single business on the planet has, the thing that has been proven to directly affect a firm’s financial performance, productivity, and rate of employee turnover, yet senior leadership often gives it little attention or consideration?

That asset is a firm’s culture; it’s the unsung hero that drives business success or, on the flip side, sets the firm up for failure. Yet, many, many firms seem to be totally unaware of it and its impact.

I suspect that this is due to a few factors:

•  Business cultures are strongly tied to the personalities and values of the senior leadership. Just as it is hard for individuals to see themselves objectively, so too is it hard for senior leaders to objectively see how their personal attitudes, values, and behaviours impact on the firm as a whole.

•  Culture seems to be this shapeless, fuzzy quality in total opposition to the “if you can’t measure it, it doesn’t exist” approach to business.

•  Culture is also hard to change once the business is up and running and it’s policies, practices, and systems are set in.

The problem is culture does exist whether or not it is recognised or worked on, and it’s making an impact whether or not it’s being measured.

In fact, several studies over the last ten years have all found that the companies with adaptive corporate cultures and strong leadership practices that reward hard work and innovation financially outperform those that do none of these things.

Consider the famous online retailer, Zappos. Much has been said about the company’s exceptional customer service, relentless innovation, and intense focus on employee happiness and development. The company’s strong culture has paid off in staggering year over year profit increases- even as other online and offline retail companies struggled through the dotcom bubble and a global recession. Recently, Zappos projected an operating profit of $97 million for 2015- that’s a 77.9 percent jump from the $54.5 million in profits in 2014.

What Makes a Great Culture?

At its most basic level, a business’ culture is an invisible web of expectations and attitudes. These spoken and unspoken rules shape our attitude and behaviour and rub off onto partners and employees.

Though cultures can vary, businesses with healthy, positive cultures tend to share some common characteristics. They strive towards some purpose and set of values that aim to make the world a better place. They highly value and respect their customers, partners, and employees, and they encourage leadership from everyone in the firm.

When businesses are focused on improving people’s lives- both inside and outside- they stand a greater chance of outperforming their competitors and achieving long-term financial success. To repeat, there is a very strong correlation between financial performance and a business’ ability to tap into fundamental human emotions, hopes, values and a greater purpose.

But that’s not all. Firms with great cultures are able to straddle two opposing, yet vital businesses drives- the need for production on one side and the need for innovation on the other. The result is that these firms are then both adaptive and productive. If client needs or attitudes change, for example, the firm’s culture itself almost forces people to change their practices to meet those new standards.

These ideas are particularly important to architecture and design firms on so many levels. Architects and their teams must be in tune with clients’ tastes and trends as well as the communities in which these projects are happening. They need to be motivated, passionate, and happy with their roles, or else prospective clients will pick up on their dissatisfaction. This doesn’t just happen by itself, you need the right culture and systems in place to foster it.

But, how do you go about building the right culture from the ground up? What can you do if your firm has already been operating for a few years, and you realise that things need to change?

I’ll get to that in my next article…