Not long ago, when PetroChem (the disguised name of a major established petrochemical company) acquired an energy upstart (call it Polymer Plus), the PetroChem leaders found themselves at a loss. They had pursued the acquisition in the first place because Polymer Plus had a more autonomous culture than PetroChem: Its formal rules and informal practices encouraged people to develop their own creative solutions to problems, even if those solutions went against the grain of established practice in the industry. PetroChem’s leaders had hoped that the company would get a cultural boost from acquiring Polymer Plus; their vision was that people across the merged entity would behave in more uninhibited and nimble ways. In short, they wanted the same kind of high-performance culture that they observed in the fastest-growing chemical companies.
But a few months after the acquisition’s close, executives at the now-combined PetroChem Plus were disappointed. The newcomers had assumed the rigid and process-focused culture of the original PetroChem. The new ways of behaving that had made Polymer Plus so valuable were being stifled. It was a classic “killing the goose that lays the golden eggs” story.
After this realization seeped in, the leadership team went back to basics on the culture front and began to ask: How would we like people to behave here? What would our ideal high-performance culture look like? They quickly aligned on what felt like a tantalizing model: Google. In short, they wanted their employees to be autonomous and innovative, just like those in the company that had pioneered the modern search engine.
But it proved almost impossible to put into place ideas borrowed from Google — such as encouraging improvisation, eschewing set processes, and releasing products and services as “trial and error” offerings that still contained bugs. Software industry dominance, it turned out, requires a different set of cultural values than what’s needed for industrial reliability and safety. These values include exhibiting consistency and rigor, avoiding shortcuts, and thoroughly testing and validating products before launch. Gradually, the company abandoned the ideas it had taken from its Google research, and began to look more closely at its own cultural situation. What elements did it need to strengthen to become a better competitor as PetroChem Plus?
Why copying culture doesn’t work
The desire among PetroChem Plus executives to emulate Google’s culture isn’t surprising. In fact, many companies have gone through similar exercises, responding to all the business press about Google’s success (and the success of other high-performance cultures). But supporting Petrochem Plus in becoming more “Google-like” would hardly have been advisable — or even possible. That’s because Google is a leader in a fast-moving industry in which disruption and reinvention are norms, not exceptions. Success in this industry requires a corporate culture that embraces risk taking, experimentation, and the celebration of fast failure. Those tenets are far less applicable in an industry that is highly regulated, because mistakes could be costly or even deadly. Could PetroChem Plus celebrate “fast failure” if it meant a deadly explosion at a plant?
PetroChem Plus’s problems were a sign that the changing conditions of its industry and its organization’s culture had to evolve if the company was to keep pace with, or pull ahead of, the competition. But culture, the prevailing way that people in an organization feel, think, behave, and relate to one another, cannot easily be changed. Those habits are too highly ingrained. However, important elements of a complex cultural situation can be gradually moved in the direction of its greatest strengths, almost as a living thing can be trained. PetroChem Plus’s leaders suffered from a lack of appreciation of their own company’s cultural values, those that were already ingrained that could help move the company toward its strategic goals. Fearing disruptive competitors and reacting by assuming they needed rapid, dramatic change — deciding that initiating any high-performance practices would do — they had tried to benchmark others, starting with Polymer Plus and then Google.
But benchmarking culture isn’t feasible. A benchmarking exercise is one of analyzing and copying the things another company does. (Companies can also benchmark their own current performance against past performance.) That won’t work for cultural elements, because every company’s cultural situation is as unique as a fingerprint. It incorporates emotionally resonant, deeply embedded perspectives and habits that have built up through years of challenges and experience; these factors can’t be easily separated from one another. Moreover, these elements have to fit the company’s strategy and core capabilities, or the company won’t be able to continue delivering value. The behaviors and emotions that should be emphasized in one company may be precisely those that would hold another company back.
For example, at PetroChem, the leaders sought to borrow a new behavior from Polymer Plus and Google: rapid launches of imperfect products, which would be improved later, after the product had been on the market. Unfortunately, this conflicted with PetroChem’s established strategic value proposition, which involved guaranteeing safety to customers. PetroChem traditionally had fully tested and vetted every new product before launch. The two behaviors didn’t fit together.
With this realization, the leadership team decided that their culture should be innovative and safe — the best of both worlds. But, like all other efforts involving trade-offs — wanting to hire the best performers but filling every open role within three weeks, or wishing to be the cheapest product on the market but having the highest luxury brand value — this could not work either. When people were told to find a way to be both innovative and safe, they shut down and went back to their old ways. In short, trying to have an ideal performance culture had put the company in a worse position than it was in when it started.
Finding your cultural strengths
If you can’t solve a company’s problems by importing a high-performance culture from elsewhere, how can you proceed? There is a way: by building on your own company’s cultural strengths, within its unique cultural situation, and finding the factors that will bolster and draw forth the commitment and emotional energy that employees are willing to give.
Start by taking an inventory of the business culture. Look at the traits people use to describe it, the aspirations people take to heart, and the behaviors that people habitually follow. (We often use a culture survey to accomplish this.) The inventory typically will find values and behaviors that resonate with your company’s purpose. For example, companies oriented toward innovation tend to have traits like these: a focus on external customers, metrics based on team performance, a high tolerance for risk, and an improvisational management style that accepts conflict, where the contributions from junior people often are highly regarded because they tend to be more innovative. Companies oriented toward safety will tend to solve problems by improving internal operations, hold people individually accountable for safety, and strictly adhere to a clear chain of command as well as set processes in order to reduce variance.
In short, many of the traits that are dominant at high-safety companies are the opposite of those that are dominant at high-innovation companies. When we ask a high-innovation company to become innovative and safe, not only are we asking for mutually exclusive patterns of behavior, we also are disrupting the sources of emotional energy that have traditionally bolstered performance. Does this mean that a high-safety company cannot become more innovative? Not at all. You have to find the cultural elements that bridge the gap between the company as it is and the company you want it to be — and if there are few cultural elements in common, then you also have to find the ways in which you can make the company better and more effective in its current cultural situation. In other words, you have to find ways to enable people to feel good about sustaining the critical behaviors that ensure safety as well as the ones that energize more innovative results.
You have to find the cultural elements that bridge the gap between the company as it is and the company you want it to be.
One company that has effectively embraced two seemingly contradictory aspirations is Southwest Airlines. Southwest is known for outstanding customer service, and also for being a low-cost airline. It developed a culture that allows it to excel at both by defining what customer service meant in its own context. At a customer-centric retail company such as Nordstrom, people expect easy returns and exchanges, but customers do not expect the same at Southwest. The airline will be friendly to passengers in other ways. When it is not possible to balance aspirations that are not natural complements, trade-offs exist — and your company needs to be deliberate and realistic about its goals.
Similarly, one reason high-innovation companies are emulated is that they attract employees. They make work fun. Can a company like PetroChem Plus do the same? It may not be able to have improvisational product launches, but it can create software systems that are easier to use and that waste less employee time; it can prune the number of approvals needed, especially those that are vestigial; and it can focus its product line so that employees gain the satisfaction of fully completing the projects they are working on, instead of having to rush to the next one. For the people at PetroChem, this could be more energizing than having foosball tables or rapid-fire “sprint and scrum” work sessions. In the end, an effective culture is one in which the elements that energize people are also those that support the organization’s strategy. These “cultural energizers” are specific to a company, its industry, and its strategic way to play, and cannot be copied.
That’s what the leaders of PetroChem Plus ultimately discovered. Over a period of several months, thinking not just about the culture but about their strategic goals, they realized that they would not achieve a good position by trying to become innovative the way Google had. Their strengths were in offering a disciplined, continually improving chemical operation that did not waste the time of employees or customers, and that offered other industries real-world solutions to materials-based problems. The legacy PetroChem employees could embrace the idea of continuous improvement, which fit well with their culture. The legacy Polymer Plus employees could adopt more discipline — which, in fact, they welcomed. Most important, all the employees needed to rally around a new shared identity after the acquisition. With these things in mind, the leadership team identified a set of common “best-of-breed” behaviors incorporating strengths from both sides. This became the true high-performance culture of PetroChem Plus — a way of life that no other chemical firm has quite been able to duplicate.
- Jon Katzenbach is an advisor to executives for Strategy&, PwC’s strategy consulting group. He is a managing director with PwC US, based in New York, and founder of the Katzenbach Center, Strategy&’s global institute on organizational culture and leadership. His books on organizational culture, leadership, and teaming include The Wisdom of Teams (with Douglas K. Smith; Harvard Business School Press, 1993) and Leading Outside the Lines: How to Mobilize the (In)Formal Organization, Energize Your Team, and Get Better Results (with Zia Khan; Jossey-Bass, 2010).
- Alice Zhou advises clients on culture and organization for Strategy&, PwC’s strategy consulting business. A manager based in Philadelphia, she is part of the Katzenbach Center, PwC's global institute on organizational culture and leadership.