Corporate culture creates context for an organization. It establishes a set of values and defines acceptable rules of behavior within a company. Particularly in times of crisis and transition, the cultural elements of any business will be tested, and most of the time, the CEO’s behavior the the primary influence on the culture.
Early stage companies typically adopt the values of their CEO; their culture is defined by that CEO. Because of this tendency, regardless of the maturity of a company, when there is a major shift in leadership there will usually be a shift within the corporate culture as well. Hopefully the shift will be positive, but that’s not always the case.
Many people wonder how does culture come about? Is there bad and good culture? How is it captured? How is it implemented?
Bill Bock, CEO and President of Silicon Labs, has lived in three very different corporate environments. At Convex he formed the opinion that culture is CEO-based. At Tivoli, Bill witnessed a startup team trying to manage senior, large-company employees when IBM acquired the company; ultimately the team became integrated in the IBM culture. And at HP, when the first non-homegrown CEO took over, there was a passive resistance.
Fundamentally, corporate culture is developed and discovered as you go. However, people think of rules of behavior as fundamental, and Bill believes the best companies try to capture and identify their culture. Crises such as financial failure, scandal and leadership failure are a test for the true culture of an organization: is the culture lived out even when something goes wrong?
During his talk, Bill offered three examples of companies with seemingly strong cultures that failed in moments of crisis:
1. In the case of Enron and Arthur Anderson there was a cover-up mentality within the organization. They hid what was actually going on rather than accepting responsibility.
2. During the financial crisis in 2008, the Lehman Brothers showed a culture of greed. Strong values weren’t driving financial organizations in that time period. In fact, many people still believe strong personal ethics are a barrier to career advancement on Wall Street.
3. British Petroleum and the Deepwater Horizon oil spill exemplified a culture of profit vs. safety. BP cared more about making money than ensuring their operational practices were safe. Some wonder if is this culture is surfacing today at General Motors.
How did culture play a role in these examples? Did the culture of each organization cause the crisis? As a CEO, Bill emphasized that you should constantly ask yourself what you are doing that could put you in a trap, and adjust accordingly.
After Bill’s talk, the group discussed is today’s typical focus on short-term performance, such as quarterly earnings, and the resulting pressure that often has terrible effects on company culture. One of the most toxic ideas is doing something “for the good of the company,” which can lead to illegal and immoral activity. Bill shared that good culture will step in the way when leaders try to force the company to do something wrong; when an executive tries to get the company to do something wrong and the company says “no,” the culture has worked.
The CEO Summit is an ongoing series designed to support Austin-area CEOs in strategic, high-impact areas of their business. These invite-only events bring together CEOs from ventures of all stages to share tips and unusually candid advice based on real experiences.
For the first CEO Summit, held this spring at Austin's Capital Factory, we asked six executives to share their insights on CORPORATE CULTURE. Successful corporate cultures are key in attracting and retaining the best talent, promoting innovation and driving performance. As the stewards of corporate culture, CEOs must understand better than anyone else what promotes great culture, and what doesn’t.
The CEO Summit is organized by the Entrepreneurs Foundation of Central Texas, and is made possible through the generosity of companies like Rackspace and the Capital Factory.