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Culture is a System

culture does not trump systems in business they support each other

“Our number one priority is company culture. Our whole belief is that if you get the culture right, most of the other stuff like delivering great customer service or building a long-term enduring brand will just happen naturally on its own.” 
Tony Hsieh, zappos.com

Which matters more in a business: healthy culture or good systems? The fashion these days (think Zappos or WestJet) is to give the nod to culture.

Gerber's E-Myth on the other hand, suggests a good system is the same as a good business. Culture doesn't play much of a role.

The trouble is not with the answers, it is with the question. The question implies one can even exist without the other. They can't. In a thriving business, culture and systems support each other. 

Not only is a successful and sustainable 21st century business impossible without great systems and a healthy culture, each is impossible without the other. You cannot create and sustain a great culture without great systems; you cannot execute great systems with 3-star consistency without a great culture.

Great Systems

Systems supporting a Great Performance in business have five features.

  1. They are consistent across the enterprise. They are driven by the mission and vision for the business, and they shape external behaviour (i.e. marketing) as much as internal behaviour (i.e. operations).
  2. They support profitability. Systems should demonstrably contribute to the profitability of the business. Those elements of the systems that can't show a clear role in supporting profitability, should at least not erode it.
  3. They support sustainability. This test is identical to that for profitability: systems should not just contribute to the sustainability of the enterprise, but meet triple bottom line tests of supporting social and environmental sustainability.
  4. They are documented. If it isn't in writing, it's not a system.
  5. They generate and sustain a healthy culture.

Great Cultures

Cultures supporting a Great Performance in business have seven  features.

  1. The culture is consistent across the enterprise. Walking the talk is valued. Hypocrisy and double standards are not tolerated. The values the organization claims as part of its external brand, are consistent with values held internally.
  2. They improve retention. Companies with superior cultures have better employee retention rates than competing businesses.
  3. They support the growth of "intrapreneurial" behaviour at every level of the organization. This means a greater emphasis on quality outcomes than specific process; an encouragement for taking creative risks; and a tolerance for mistakes arising from taking those risks.
  4. They support sustainability.
  5. They support profitability without compromising values. When the profit motive comes into conflict with values it triggers a review. The only acceptable outcome of that review is a restructuring such that neither profitability nor the ethical basis of the culture are compromised. This might mean a complete realignment of the business model.
  6. They are documented.
  7. They are the source of innovative, profitable, and sustainable systems.

Where Systems Intersect with Culture

Examples of where systems and processes intersect with culture include:

  • Recruiting
  • Training
  • Positive feedback systems
  • Pay for performance systems (bonuses and profit sharing)
  • Employee reviews
  • Promotions
  • Safety
  • Communication systems and technologies (including intranets, email policies, etc)
  • Consistent and accessible policies and procedures (including up-to-date documentation, wikis, etc)
  • Waste-minimization and efficiency programs
  • The role of pilot programs, edge projects, and "skunkworks"
  • Environmental stewardship
  • New technology role-outs
  • Ongoing cross-functional team reviews of overall performances

Want to learn more? Download our free blueprint for growth: It Works Like This - The Story of Your Business!

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