The Culture Myth

00:00:01: Think about the core values stated by your company.

00:00:05: Can you clearly see them in how people work together?

00:00:10: Do those values live and breathe inside of your company

00:00:13: culture?".

00:00:27: Hello, and welcome!

00:00:28: Culture eats strategy for breakfast.

00:00:31: You've probably heard this claim before.

00:00:34: It's still widely attributed to Peter Drucker.

00:00:38: He never said or wrote it But with this name attached to it, It became a popular statement To emphasize the importance of culture for companies' success.

00:00:48: Most people nod when they hear it but what does that actually mean?

00:00:52: Is there claim about A great culture eating good strategy ?

00:00:56: It almost sounds like Culture always trumps Strategy.

00:00:59: What often happens is People reading a grade or genuinely Good culture into this Claim A desirable one where we feel respected valued and heard With trust in leadership and integrity, a place with purpose meaning for work And the sense of belonging.

00:01:17: But is that really what it says?

00:01:19: Read it plainly and its only about coherence.

00:01:22: It only tells us That strategy & culture need to match.

00:01:26: If The Strategy Says Let's Move Fast and Break Things but the Culture pulls In the direction Of Careful Consideration – IT WON'T WORK!

00:01:34: Same goes For A Strategy That Ames To Deliver On Continuous Innovation but competes with a culture of fear where failure is not an option.

00:01:43: You see, the statement is only about matching.

00:01:46: whether they way people work every day matches what their business wants to achieve.

00:01:50: It doesn't say that the culture has be desirable or good one.

00:01:54: A reckless company strategy supported by a matching culture can just as successful As ethical business strategies delivered by corresponding organization And both fail when culture contradicts strategy.

00:02:08: So yes, you can have the best strategy in the world.

00:02:10: If your company culture doesn't support it both turn into competing forces.

00:02:15: Now what about timing?

00:02:17: A business strategy is usually considered at most important starting point.

00:02:21: However many founders overlook that Culture starts right there as well The moment they decide What their purpose of Their Business Is and when people start working together.

00:02:31: That's why Founders hold the strongest influence And responsibility for shaping It.

00:02:36: Think about Google's Sergey Brin and Larry Page.

00:02:39: They definitely shaped the culture Google became known for, but what happens later when new leaders come in?

00:02:47: And a new strategy hits an established culture.

00:02:50: Strategies shift as companies grow—as markets and industries change.

00:02:54: They can quickly move in very different directions.

00:02:58: Google has undergone major transformation with its growth from low-hierarchy highly people centric transparent startup to a more top-down controlled corporate culture with a stronger focus on costs and efficiency.

00:03:12: This didn't come without pain or criticism, change often carries both.

00:03:16: but the most important element many business leaders overlook is that it takes time.

00:03:22: An existing culture is slow to change.

00:03:25: trying to transform quickly to match new strategies like losing twenty pounds in one week That's the popular breakfast quote.

00:03:33: When companies push for this the existing culture will eat a new strategy.

00:03:37: It'll also put on some extra weight of friction and resistance, cultural transformations that work take that into consideration.

00:03:46: they understand where the business came from.

00:03:48: match strategy in Culture an Understand why people resist change.

00:03:53: most importantly leadership takes responsibility for The Work That Comes Along with it.

00:03:58: now coming back to my question From the beginning When you thought about the values and culture of your company, did you feel any gap?

00:04:06: If you felt a disconnect.

00:04:08: You're not alone.

00:04:09: The reality of most Company cultures is rarely reflected in any Of these statements About them.

00:04:15: what people actually experience Is downstream What the initial leadership shaped A culture driven by beliefs Values and modelled behavior from People at the top Sustained By learned and adopted Behavior of everyone who joined and the way the organization has been built.

00:04:33: When I hear of people feeling such gaps, it raises the following questions.

00:04:38: could be that in many cases culture doesn't get the same attention as business strategy?

00:04:43: Are the images presented on websites an employee handbook?

00:04:47: simply marketing is a desirable cultural like one.

00:04:50: Google was long celebrated for exception rather than norm.

00:04:55: there are far more examples great company cultures.

00:04:59: The business world has become much more transparent through news coverage, public rankings and platforms like Glassdoor.

00:05:06: We talk about culture but considering that it has been a business critical topic for decades how come there are gaps small-and large sometimes going as wide as total hypocrisy?

00:05:18: Just think of examples like Wells Fargo.

00:05:21: the bank presented integrity at core value while fraudulent business practices ran throughout the organization.

00:05:28: And why do many people read right-past company culture and value statements these days?

00:05:33: Do we no longer trust

00:05:34: them?".

00:05:35: Donald Sahl at MIT studied five hundred companies, and their published values.

00:05:40: Then he measured whether they had any relationship to how their own employees rated the company on those same values.

00:05:47: What he found was a correlation close to zero In other words... The values of the wall weren't what reality worked in.

00:05:55: I call this episode the culture myth because what happened after culture became a serious business topic influenced the gap that many people feel today.

00:06:04: Let's take a short walk back through management history, it shows our business leaders approach culture.

00:06:09: when the topics first gained attention In the nineteen eighties American firms were losing market share to Japanese car makers and electronics companies.

00:06:18: They wanted to understand why?

00:06:20: The answer they found wasn't only technical advantages.

00:06:24: It was also how people work together.

00:06:27: Japanese companies promoted long-term investment in people, shared decision making involvement and teamwork.

00:06:34: They had a sense of the shared enterprise.

00:06:37: What followed that discovery Was a handful of books That turned this observation into movement And in search of excellence, lessons from America's best-run companies.

00:06:57: This book by Tom Peters and Robert Waterman to consultants at McKinsey was also published in nineteen eighty two.

00:07:04: their argument Was a direct challenge to the management.

00:07:07: thinking of that time?

00:07:09: Excellence they said came less from strategy and systems and more from people culture and actions.

00:07:15: These books genuinely shifted perspectives away from pure management By numbers more towards people and culture.

00:07:23: Peters and Waterman studied forty-three successful companies through a model they'd built with others before.

00:07:29: It later became known as the Seven S framework, McKinsey's popular organizational diagnostic tool.

00:07:36: Seven variables in total and shared values sitting at the center.

00:07:40: With it came the idea that culture was something you could define through these values.

00:07:46: What happened afterwards is the fate of many frameworks fragmentation and simplification for the sake of creating marketable products and services.

00:07:56: Many people embrace the idea that choosing the right values to define a company culture was a reasonable approach to forming one, if you've ever sat in a workshop discussing values to put on a wall this is where it mostly came from.

00:08:10: but culture is a bit more complex.

00:08:13: In nineteen eighty-five MIT professor Edgar Schein shed light.

00:08:18: He gave us an understanding of what a culture is really made off.

00:08:22: It became a map that explains how it forms, how it transforms why it resists and how we can influence it.

00:08:30: That matters because once we understand what culture's made-off in how its built leaders concede their responsibility as agency where they eventually hit boundaries.

00:08:40: The three layers of Scheinz model explain the anatomy.

00:08:44: You've probably come across its most popular illustration, a floating iceberg.

00:08:49: The tip is the first layer that we can easily see company branding dress codes and shared rituals.

00:08:56: First impressions people get walking into an office building shine called them artifacts right underneath the surface only visible when We look closer.

00:09:05: are these spoused beliefs in values?

00:09:08: This second layer Is what a company says it stands for the mission goals and business rules.

00:09:14: It stated principles, values.

00:09:16: over decades consultants and executives gathered in mission-vision value workshops picked words to define their culture and presented them through speeches and posters thinking they would turn into lived reality.

00:09:30: sometimes They did not because there were claimed but Because they will live.

00:09:34: yet we've all seen the other version integrity and trust on The wall while behaviors contradict both.

00:09:40: every day We believe people are our biggest asset in the handbook and cutting jobs while handing out massive dividends to shareholders.

00:09:49: There is no faster solvent for trust than leadership behavior, business decisions that contradict stated beliefs & values.

00:09:57: In moments when things aren't running smoothly When sticking to stated believes & values actually costs something.

00:10:05: That's why Decisions & behaviors reveal a lot of actual culture.

00:10:09: It's why Shine's third layer matters.

00:10:12: That third layer is the heavy base of The Iceberg, deep under the waterline out-of-sight even for people inside an organization.

00:10:20: He called this layer the basic underlying assumptions.

00:10:24: Think of someone joining a company Within few weeks.

00:10:27: they know whether to trust public announcements by management or what peoples say behind closed doors Whether best ideas win and everyone is invited contribute or whether other factors decide who gets hurt.

00:10:41: Nobody teaches new joiners that, it's certainly not in the handbook.

00:10:45: If they ask why things run that way They might get a puzzled look Or hear someone say That is how we work here.

00:10:53: This probably most common framing for real culture.

00:10:57: Underlying assumptions are what companies settled on over time.

00:11:01: People joining worked them out by watching How people treat eachother what really matters and gets rewarded, who gets promoted?

00:11:09: And who doesn't how openly people speak.

00:11:12: What's better left unsaid.

00:11:14: it clearly shows why culture can be built by producing a list of desirable values putting them on posters and demanding that People live By Them.

00:11:23: the Culture that runs an organization is underneath The visible and stated elements.

00:11:29: It's the current that pulls everyone inside it in A certain direction.

00:11:33: If leadership never made an effort to deliberately build and protect it, chances are that there is a gap between the third-and other two layers.

00:11:41: That's the gap.

00:11:42: many

00:11:43: experience.".

00:11:44: Etke Schein said, it manages you, and may not even be aware of the extent to which this is happening.

00:12:08: A look at car manufacturers' Toyota's culture shows quite well why it was never a soft topic or just about perks an employee-well being – It isn't something to take care off when business goes well!

00:12:20: As mentioned in episode What on Earth Is Purpose?

00:12:24: W Edward Stemming strongly influenced how Japanese companies approached management.

00:12:30: Three of his fourteen principles carry culture inside them as they describe working conditions.

00:12:36: Drive out fear, this is psychological safety as a key condition.

00:12:41: Break down barriers between departments.

00:12:43: He strongly advocated for cooperation and collaboration to avoid silos and politics.

00:12:50: Institute a vigorous program on education and self-improvement which represents the clear goal to invest in people.

00:12:57: Deming never provided a framework.

00:12:59: He taught principals to adopt and turn into practice.

00:13:03: Toyota built their overarching culture on only two core values, continuous improvement and respect for people.

00:13:10: We can hear Deming in both of them.

00:13:12: They weren't picked at a workshop but build onto how the organization has run for decades How leaders are selected and trained The way they teach every employee And how everyone is held accountable.

00:13:25: When something breaks, the question is never who did it.

00:13:28: Everyone is asked to explore why that happened?

00:13:31: That's how Toyota builds structural integrity for their culture.

00:13:35: People often think that alignment is all it takes but Alignment Is only about agreement.

00:13:41: everyone will not if a company states we give our customers The best service or collaboration is key To our success.

00:13:50: just take collaboration as A commonly stated value.

00:13:53: People joining take it seriously.

00:13:55: They expect collaborative behavior if that's what stated, but What about a business where collaboration is what stated?

00:14:02: and competition?

00:14:04: Is what gets rewarded?

00:14:05: people work That out pretty quickly And they will follow the reward system not the stated values.

00:14:11: Stephen Kerr described this already in nineteen seventy five In a famous essay called on The folly of rewarding A while hoping for B. Fifty years later, a lot of companies are still doing it.

00:14:24: It's a lack of structural integrity inside the organization and doesn't only sit in reward systems.

00:14:30: Similarly managers can ask people to take ownership and responsibility while exposing them to an environment of command-and-control.

00:14:38: This happens when culture is not an integral part how an organisation is built or managed.

00:14:45: Quite few founders I worked with completely underestimated this work.

00:14:49: The focus is usually put on Shine's first two layers, the artifacts and espoused beliefs and values.

00:14:56: A founder may say we have no hierarchy.

00:14:59: every voice has heard.

00:15:00: anyone can challenge anything.

00:15:03: that's true until it gets tested.

00:15:05: when the First Person who challenges meets a different response people will notice.

00:15:12: Doing only the surface-level work on the idea that a culture can be declared into being is what I call The Culture Myth.

00:15:19: It misses the important work of considering how it's actually going to be lived, led and built in to the organization.

00:15:27: That gap persists where culture continues to be treated as side topic or HR initiative when its disconnected from business operates Where leaders don't consider part their responsibility.

00:15:40: Culture IS leadership Now, if the shaping happens at the start and building the structural integrity that protects it is primarily the responsibility of top management.

00:15:51: How in where do you hold responsibility?

00:15:53: And have agency over culture?

00:15:55: think about your team doesn't?

00:15:57: It has its own culture?

00:15:58: The formation of subcultures Is a natural development for any group inside A bigger Group.

00:16:04: every Team Every department or group function forms a group Inside an organization Shine-named subcultures and even microculturs as categories of their own.

00:16:15: Your team is a group, it has its own three layers – Its own artifacts, beliefs & values And underlying assumptions.

00:16:22: That's what your Team Culture Is Made Of.

00:16:24: The question is What Shapes It?

00:16:27: There are two influencing forces One runs through you the other Through the team.

00:16:33: Every leader carries Beliefs About People.

00:16:35: Those beliefs shape the environment they create for Their Team.

00:16:39: Let's take an example of two leaders, each carrying a different belief.

00:16:44: Leader A believes people deliver more when they compete and are incentivized that without something to chase They won't give their best.

00:16:52: So this leader will focus on individual results.

00:16:56: Recognition goes to whoever delivers the best And it gets reinforced with public praise.

00:17:01: The message for this team becomes Individual performance over team contribution.

00:17:07: Leader B believes that people mostly want to do good work and contribute to the teams' and company's success.

00:17:13: This leader will focus on what people achieve together.

00:17:17: Recognition goes towards each person contributes to the whole.

00:17:20: The learning for this team is, Success Is a Team Effort.

00:17:25: Everyone is expected to bring their best.

00:17:27: They create two very different environments.

00:17:30: Both can be successful if they match how business runs And How People Want To Work.

00:17:36: That's the first force.

00:17:37: What you believe becomes the conditions your people work inside.

00:17:41: Reflecting on those beliefs is important!

00:17:44: If you want to work in this, tune into an episode called The Beliefs Running Your Leadership.

00:17:50: The second Force Is The Group's Behavior.

00:17:53: Schein described how culture forms as joint learning of a group.

00:17:58: Learning happens through repeated experience.

00:18:03: Some of that is how the group solves problems and builds success.

00:18:06: A lot of it also lives in day-to-day interactions.

00:18:11: It's about how decisions get made, How much people help and support each other.

00:18:16: What happens when someone disagrees?

00:18:18: Shared rituals And overall behavior.

00:18:21: The Group tries a way to be together.

00:18:24: If it works & People can live with it They'll do it again!

00:18:27: what gets repeated becomes whats expected.

00:18:31: This is how we work here.

00:18:33: So one force, it's the environment you create even if you just copy what is common in your organization or would work somewhere else for You.

00:18:42: The other Is What The Group Learns.

00:18:44: Inside this Environment.

00:18:46: Both Forces Shape Your Team Culture Now...What Does A Leader Actually Do To Influence It?

00:18:52: Shine Name The Following Leadership Actions As Key Influences.

00:18:56: First Its What We Pay Attention to And Measure.

00:18:59: Then How We React when something goes wrong, the way we allocate resources.

00:19:05: What we deliberately model and teach.

00:19:08: what gets punished or rewarded?

00:19:10: who will promote higher and let go?

00:19:12: When I first read this list i felt pretty overwhelmed.

00:19:16: all of us is running whether i'm paying attention or not.

00:19:19: it made me realize that spotlight leaders stand under And what they're measured against.

00:19:25: It taught Me The Importance Of Awareness Consistency in my behavior and awareness for what's pulling me in other directions.

00:19:34: My behaviour matching my words, and practicing what I teach.

00:19:39: Even today i still consider this to be one of the biggest challenges not just for leaders.

00:19:44: We all have our inconsistencies.

00:19:47: building awareness helps because those actions only shape the culture we want if people trust us And trust needs consistency.

00:19:56: That's how you shape a team culture on purpose.

00:19:59: Beyond your own team, you have limited influence.

00:20:02: You're still part of the bigger culture Under an organizational setup that you didn't design and can simply rewrite.

00:20:09: There is clear ceiling to how far your team culture can hold against influences around you.

00:20:15: Protected where it can Be honest with your team about their environment they are in But without any commentary which turns into us vs them or that criticizes other teams.

00:20:27: It's tempting, especially when your team is successful.

00:20:30: Let the results speak.

00:20:31: instead People will notice.

00:20:33: and where it starts to spread let it Just keep following in mind.

00:20:38: Even a well-built team culture doesn't stay strong on its own!

00:20:42: It holds because you & your team Keep showing up for it Especially on days of inconvenience Or when costs something Like letting someone go who simply does not fit A team culture is not unshakable.

00:20:57: Every person joining or leaving has an influence, but a leader's the strongest which brings us to the distinction between newly formed and inherited teams.

00:21:08: If you're in position of building your new team You have close-to clean slate.

00:21:13: Nothing has been learned yet.

00:21:15: There are no this how we work here because there isn't shared history Which means every decision and observable behavior carries a lot weight A first mistake or recognition of success, the handling of disagreement.

00:21:29: What happens when someone challenges you?

00:21:31: I'd put it like this once twice culture a behavior we don't stop becomes a behavior that's allowed.

00:21:39: what reward becomes a behaviour That's wanted.

00:21:43: most managers have no idea how fast their team works that out.

00:21:47: Culture carries the dilemma of fast adoption and slow transformation.

00:21:52: The approach is to be deliberate about the culture you want to build.

00:21:56: Now, an inherited team... ...is a harder job!

00:21:59: Here learning has already happened….

00:22:01: …the culture is there.

00:22:03: whether it's good one or not doesn't matter.

00:22:06: Leaders often don't realize that what they mostly get to see in this team.. ..is tip of iceberg.

00:22:12: You can partially observe second layer through what team members articulate as beliefs and values but you have no visibility into the assumptions and learnings that shape a team's culture.

00:22:23: Whatever you want it to be, where take your team next?

00:22:27: will either support or compete with what is already there!

00:22:31: If its supporting & building on whats there ,you are in an easier path.

00:22:36: Shaping an existing culture requires same consideration of deliberate moves as forming new ones But takes more time.

00:22:44: Trust Is Your Starting Point.

00:22:46: So what if you inherit a team that doesn't work, with the culture that needs to be transformed and not just shaped?

00:22:53: That's the hardest path.

00:22:55: And it requires experience.

00:22:57: Transforming an existing culture is as challenging for individual leader As it is for whole business area or company.

00:23:05: If face such challenge You need know what your getting into.

00:23:09: This team also has a way of working together.

00:23:12: It isn't producing the right results, but it's what is holding them together!

00:23:16: Let say part of this is that they keep mistakes and problems quiet.

00:23:21: Nobody flags anything or admits when things go wrong.

00:23:25: If you're asking to do an exact opposite You are causing fear & anxiety.

00:23:30: Shine name two fears That influence people in change situations.

00:23:34: He called first learning anxiety.

00:23:37: It's what keeps people from adopting new ways of working.

00:23:41: Losing power or position, being incompetent for a while Getting punished for lower productivity While learning Losing your identity through doing things differently Or losing you place inside the group.

00:23:54: This list makes it fairly obvious why People resist change.

00:23:59: The cost-of-change is personal For every team member.

00:24:03: The second fear Is called survival anxiety The sense that people won't survive if things stay as they are.

00:24:10: That individuals or the team, Are not going to make it.

00:24:15: Both fears interact.

00:24:17: Shine's point was that People move when second fear grows bigger than first.

00:24:22: When survival anxiety is stronger then Fear of learning and changing Which leaves you a choice.

00:24:29: You can grow this second fear Through pressure targets & consequences Or lower the first.

00:24:35: A lot of managers reach for the second fear because it looks like a faster way, using their authority to push people towards change.

00:24:44: Lowering learning anxiety is the slower job.

00:24:47: Some of that runs through the same actions.

00:24:50: What you pay attention too.

00:24:51: How do react when something goes wrong?

00:24:54: what gets rewarded and what get punished?

00:24:56: The rest is modeling Being open about your own mistakes & learning Practicing what you teach.

00:25:03: It's why building trust and psychological safety are so foundational.

00:25:07: Culture work is leadership work, it moves through the whole organization.

00:25:12: your starting point is always a level that you can control an influence.

00:25:17: what happens above that level does concern you to the degree that it impacts your team's work which brings us back to AI adoption.

00:25:25: I believe there has never been moment when working on culture has mattered more than now.

00:25:30: AI is probably the biggest shift for any organization.

00:25:34: Because this isn't just about bringing in new technology, it's changing how we work entirely!

00:25:41: Look at what we're actually asking people to do – We ask them to work in a way they haven't worked before… To use a technology that most don't even understand... ...to learn and adapt while their reading that this technology replaces jobs like theirs.

00:25:56: That both of shine fears at once The fear of changing and using AI, And the fear what happens if they don't.

00:26:03: How you handle this for your team... ...and wherever you have influence is your responsibility!

00:26:08: It's your decision to build psychological safety inside your team To really listen and understand whats working & whats not.. ..And model a behavior that lets your team navigate this transformation well.

00:26:21: In the coming reflection episode we'll look at practices that help you.

00:26:25: So stay curious.

00:26:27: Stay tuned.

00:26:28: Thanks for tuning into the New Work Playbook, where work gets better because people matter.