strategy

Why Measuring The ROI On Culture Is So Damn Hard

We live in KPI-driven world.

Perhaps, more accurately, a KPI-obsessed world.

Miss your quarterly forecasts – even by one or two cents – and watch how quickly investors pounce.

Don’t show a continuous upward tick in your fully-optimized marketing campaigns, boy oh boy…

Missing a credible and substantiated “adoption curve” in your investors deck – ideally one that looks like a hockey stick – then be prepared for the quickest VC meetings in history. 

KPI’s are good.

They give us something to strive for, a yardstick to meet and exceed. Heaven knows we’re swimming in enough data to generate a million KPI’s for each and every business. And just wait until my IoT friends get their hands on you.

Perhaps that’s why I remain so perplexed when I hear debates about the ROI of investing in Culture and how hard it is to quantify the impact of Culture-building (or Culture-changing) activities.

Truth is measuring a Culture ROI is relatively easy – and getting easier every day.

There are great organizations, like Globant and Microsoft, with amazing tools that can measure utilization rates (always a favourite in places who still label departments “Human Resources”) levels of collaboration, how “integrated” new teams and new members are within your company, average turnover, retention, tenure, absenteeism etc.

The ability, and the fantastic Saas-enabled, shiny Dashboard-rich technology, is there. Fantastic news for those of us who earnestly believe you measure what matters. And what matters more than Culture?

The issue, if I can try explain it from my observations, is not that measuring the ROI of Culture is impossible or even difficult these days.

The issue is that measuring the ROI of Culture is uncomfortable.

COMMITMENT - Uncomfortable because it requires a leadership commitment at the very highest levels of an organization. A commitment of time, a commitment of resources, a commitment of real dollars into defining, creating and nurturing a culture that promotes the care and growth of your people.

NEW EXPECTATIONS - Uncomfortable because it forces you to confront and address the classic refrain “why train our people if they’re only going to leave us” and actually build an organization that rewards curiosity, risk-taking and employee freedom. That means letting go…just a little..and letting the good people you’ve hired step up.

That’s hard if you’re accustomed to command-and-control operating principals, no matter how outdated those may be.

SPEED - Uncomfortable because, unlike tweaking our Tech Stack and our latest SaaS subscription, we can’t immediately and efficiently optimize our people in the same way.

With gleeful exuberance we’ll invest Trillions of dollars in Enterprise software, digital transformation consulting and elaborate Customer-Experience journey maps for the promise of immediate growth. Unfortunately changing how our people behave and how they make decisions takes longer – and FAST is the prevailing business mantra of the day.

AND HUMANITY - Uncomfortable because it requires confronting your values and your humanity head-on.

As Newsfeeds are populated by advances (or techno-porn) of machine-learning, AI and automation – and the huge gains to be made from deploying those – it can be hard to remember that business is still inherently human. That, until Robots have wallets, you’re still relying on other human beings to imagine, create and BUY your products.

To create a Culture that inspires and invigorates other human beings means YOU have to be able to inspire and invigorate others.

And you can’t mail that part in.

I get how uncomfortable it is.

But any more uncomfortable than these KPI’s?

Only 12% of American workers believe they get effectively on-boarded.

Only 35% of senior executives believe their Culture is effectively managed.

One in 5 employees are actively sabotaging their current company.

The $3 TRILLION lost because of the excessive bureaucracy of organizations stifling productivity and innovation 

I am a marketing person at my core. I’ve spent my career helping organizations find and communicate what makes them different and unique. With every passing year I’m more and more convinced that products can be copied – and commoditized. Flashy new technology can be acquired just as quickly by your competition.

But only your Culture is truly unique. No other company has it - or can copy it.

Only your Culture can inspire and invigorate your people to overcome and thwart the inevitable disruptions coming to every sector in the years ahead.

Only your Culture can attract the world-class talent you need to thrive in the future. Whether you like it or not, top talent doesn’t have to settle for mediocre Cultures.

In the end, your Culture really is the only true sustainable competitive advantage you have.

What’s the ROI on that?

I wanted to thank my friend Cybelle Srour for inspiring this post. She was the boss that personified a genuine mantra of caring for and growing her people. Thanks Cyb!!

Mimicry Is Not Strategy

Quick show of hands if you’ve ever heard this in an off-site, Planning or Strategy meeting.

“We want to be the Apple of X”

“Can you give me a NIKE-style version of Y?”

The reference point is always the latest envogue organization, talked-about creative piece or Fast Company magazine article.

For a while the catch-phrase was “We’re the UBER of Z” but considering the recent departure of UBER’s CFO and their VP of Global Vehicle Programs, as well as a raft of scandals, the bloom has come off that particular corporate rose quite significantly. 

Just to see how prevalent this particular scenario is, I turned to my old friend Google to run a few tests. In short I wanted to test my WWSJD or WWEMD hypothesis – “What Would Steve Jobs Do?” or “What Would Elon Musk Do?”

How to innovate like Apple returned 772,000 results.

How to innovate like Tesla, 1,510,000 results.

And the lowly shark? 396,000 results. Evidently I'm missing something here.

Interestingly, or amusingly, in those searches one of the top 5 results was an article written by Realtor.com - which speaks volumes IMHO.

Trust me, I get the appeal of trying to pries the wisdom of Jobs, Ives, Bezos, Buffet, Munger, Musk, Welch, Gates, or even Kalanick, free and leveraging that for your own organization. Who wouldn’t?

Truth is, you can’t.

One of my favourite thinkers on innovation Greg Satell frequently refers to this as “cargo cult”thinking which is such a wonderful metaphor. The term comes from reports following WW2 that certain South Pacific groups had constructed elaborate runways, airport structures and even fanciful outfits in an attempt to summon the god-like aircraft they’d seen drop supplies to the US Army during the war. Essentially these villagers were blindly mimicking behaviours and actions they’d witnessed and were (erroneously) concluding that they merely needed to do exactly the same and they too would reap the same rewards. 

More recently I was discussing the very hot topic of how organizations can build an innovation culture with two of my favourite Kiwis Darren Levy and Neil McGregor. Their point, made in classically blunt New Zealand fashion, was that it was impossible. More to the point, there was no magical “innovation culture” that merely required a convenient 10 step process to manufacture and deploy. Quite simple your organization has the culture it has. Your role as leaders is to determine the aspects of your own unique culture that are impeding innovation from occurring and address those. It certainly wasn’t about doing what Apple does (or did when Steve Jobs returned) or printing off the top 10 secrets for entrepreneurial success.   

That’s just not Good Strategy

Richard Rumelt, affectionately referred to as “the Strategists’ Strategist”, is even more direct in his classic book “Good Strategy. Bad Strategy”. In it he derides most strategic plans as nothing more than laundry lists of desirable outcomes. For Rumelt, good strategy means a willingness to recognize and define a challenge and having an executable and realistic plan to address that. Sounds straightforward and remarkably obvious but Rumelt’s point is that so few organizations are willing to do that and rely more on CEO charisma and vision than a honest evaluation of challenges and building a coherent plan to tackle them.

To quote him directly, “A good strategy defines a critical challenge. The purpose of a good strategy is to offer a potentially achievable way of surmounting a key challenge” 

Quite simply it’s unlikely, even impossible, that the critical challenge facing Apple or Tesla or UBER or Facebook is not the same critical challenge facing you.

Even if you are miraculously grappling with a huge war chest of cash you need to spend, plans to integrate your solar business with your car business, an imploding unicorn or the ire of brands and businesses over viewability and appropriate content, chances are your business is not a cookie cutter of those titans.

Your leadership isn’t the same. Your partners, suppliers and vendors aren’t the same. Your contracts and negotiated deals aren’t the same. Your employees, your culture and the levels of employee passion and engagement certainly aren’t the same. 

Let’s be honest, even those organization’s principal competitors don’t face the same critical challenges as them. WalMart’s challenges in beating Amazon in the online space aren’t the same. What Ford and GM need to galvanize within their employees and their culture is day and night from what’s required of Elon Musk and his marauders over at Tesla to win in the arena of electric-powered or autonomous vehicles.

Trust me I get the appeal.

These organizations and CEO's have created enormous wealth, global prestige, accolades and fawning customers. Which CEO or leader wouldn’t want their name whispered with the same reverence and envy?

You still have to do the work.

On your own unique organization.

On your own unique critical challenge.

On your own unique achievable way to surmount that challenge.