A Playbook for the Culture Agenda: Why, What, and How

Author:

Dave Ulrich

Rensis Likert Professor, Ross School of Business, University of Michigan

Partner, The RBL Group

dou@umich.edu

The study of culture is not new. In a classic book, anthropologists A. L. Kroeber and

Clyde Kluckhohn identified 164 definitions of culture . . . in 1952!

The study of organizational culture has also received enormous attention with the

classic maxim: “Culture eats strategy for breakfast.” Although Peter Drucker did not

actually say it, he and many others have clearly supported this notion, with many books

(over 100!) in recent years entitled “Culture (fill in the blank______)”:

• Code
•  Wins
•  Decoded
• Is King
•  Map
• Question
• Playbook
• By Design
• Renovation
•  Change
• Rules
• and so forth

LinkedIn has even recently identified the top 10 voices on company culture.

With so many recent ideas about culture, let me offer a simple playbook for today’s

culture agenda to help business and HR leaders navigate the culture issue: Why culture

matters, what culture means, and how to create or change a culture.

Why Culture Matters

Research shows and corporate directors, financial auditors, and business executives at

Davos believe that “culture” matters and is an increasing challenge in today’s

organizations, particularly with hybrid work when people may not be face-to-face.

In the COVID world—when many employees worked at home often isolated from each

other—cultural and social cohesion has declined, often leading to lower employee

experience scores and increased mental health challenges.

Everyone readily accepts that organization “culture” exists and has impact. Toxic

cultures have dysfunctions of hostility, mistrust, selfishness, scarcity thinking, and

insensitive leaders who lower productivity, employee retention, strategic reinvention,

investor confidence, and customer satisfaction. Abundant cultures have the opposite

positive effect. Creating the right culture will enable organizations to flourish and win in

the marketplace.

What Culture Means

As noted above, “culture” has many definitions, even in organization settings. Let me

suggest three historical waves of looking at organization culture and an emerging fourth

wave (see figure 1).

Wave 1: Culture as values and behaviors. Individuals and organizations have values

that shape behavior. These values can be identified as an organization’s culture, and the

behaviors may be tracked to determine the cultural type.

Wave 2: Culture as systems or climate. A company culture shows up in how

information, decisions, diversity, accountability (and other processes) are managed.

These systems determine the climate of an organization.

Wave 3: Culture as patterns or norms. Anyone entering a company recognizes that

unspoken rules or expectations of how work is done. These patterns become accepted

ways of working.

All of these three waves of culture (values, systems, and patterns) focus on what

happens inside an organization. In some nomenclatures, they are the “roots” of the tree

and are embedded in stories, history, and rituals, both spoken and unspoken. These

internal definitions of culture thrive when employees are together to share values, work

processes, and experience common norms.

Wave 4: Culture as identity in the marketplace. An emerging view of culture is to

ensure that it is the “right” culture, which means that the culture inside an organization

Culture Playbook, p. 3

creates value for stakeholders outside (customers, investors, and communities). In this

outside-in view, culture is about the value of the values to a customer or investor and the

extent to which internal systems and norms increase customer share, investor

confidence, or community reputation. This outside-in view of culture is less about the

underlying roots off a tree (which are often difficult to change) and more about the

leaves of the tree, which metaphorically change in different seasons.

This outside-in view of culture integrates purpose, values, and brand to create the

“right” culture, the one that creates value to all stakeholders. In this cultural focus,

employees creating value for external stakeholders matters much more than how

employees work. Culture change begins by identifying what an organization is trying to

be known for in the marketplace. Then we make that external identity real to employees

inside the organization (figure 2).

Figure 2: Culture from the Outside-In

How to Create or Change a Culture

My colleagues and I have been involved with numerous culture change transformations.

More often than not, they start with laudatory rhetoric but then fizzle with few

sustainable changes. When we have seen culture transformation succeed, it starts with

the business case for culture (why culture matters), then uses the outside-in definition

of culture (what culture means), then gets implemented in five steps (see figure 3).

Step 1: Define the desired culture. Ask internal leaders and external customers what

your organization should be “known for” to be effective. This identity becomes

synonymous with the desired brand that encourages customers to buy and investors to

invest. Work to create a high unity (over 80 percent) on the answer to this question.

Culture Playbook, p. 4

Figure 3: Five Steps to Implementing a Culture Transformation

Step 2: Build an intellectual, top-down agenda. The desired culture needs to be

communicated over and over and over again. This shared cultural message may appear

in internal speeches, town hall meetings, social media, bulletins, and other

communication mechanisms. Simple and redundant messages shape an intellectual

agenda of what the desired culture should be.

Step 3: Encourage a behavioral, bottom-up agenda. Cultural ideas and messages flow

down—behaviors and actions flow up. Ask employee groups throughout your

organization what they can do more of or less of to make the desired culture real in their

day-to-day activities. Cultural messages change employee behaviors.

Step 4: Design and deliver a process, side-to-side agenda. Culture gets woven into

organization process around people (hiring, training, paying), strategic decision making,

resource allocation, and other governance choices. The organization processes should

reinforce the desired culture.

Step 5: Create a leadership brand. We have proposed that the right leadership

competencies should be aligned to promises made to customers, creating a leadership

brand. Employees often do what leaders model, and when leaders think and act

consistent with customer expectations, their work reinforces the desired culture. We

have encouraged firms creating advertising programs to allocate a percent of this

external marketing budget to internal leadership training on the same issues.

These five steps are not a perfect script for the culture change agenda, but they suggest a

simple (not simplistic) playbook to approach culture change that creates value for

customers and turns cultural aspirations into daily actions.

Culture Playbook, p. 5

Implications

So what does this culture playbook suggest?

 Don’t just talk about culture ideals, tie them to customer and investor value so

that culture has marketplace impact.

 Don’t just diagnose what is happening with culture but offer guidance about what

should happen to create the right culture.

 Don’t measure culture with rhetoric but with results from employees, strategy,

customers, and investors.

 Don’t let culture become an abstraction but a set of concrete and integrated

activities built around intellectual, behavioral, and process actions.

 Don’t hesitate to make sure that leaders at all levels think, act, and feel consistent

with the desired culture.

Net lesson: The culture playbook matters and is an agenda worth pursuing!