Three comprehensive research projects demonstrate that culture drives business performance.
They ALL point to the same conclusion:
Sustaining performance is not predicted through a strong culture, any one "culture personality", a great strategy, a great CEO, or great timing and luck.
Organizations who sustain great performance over time have three common traits embedded throughout the entire organization that make it possible for them to adapt and execute:
- Leaders who provide crystal clear vision and mission (far beyond being financially related).
- Leaders who manage change (aka, risk) as a positive and necessary function of business (vs. developing risk-aversion)
- Leaders who know how to meaningfully engage all employees and create deep pride, accountability, and ownership for the vision and mission (versus "paycheck entitlement" mentality).
Culture-Performance Research Summary
Kotter and Haskett:
- Comprehensive research in 1992 detailed in "Culture and Performance" ;
- Compared adaptive and non-adaptive cultures;
- Adaptive outperformed non-adaptive competition by 756% net income growth vs. 1%;
- Similar contrast shown in several other key performance measures.
Collins and Porras:
- Reported in groundbreaking book in 1994 "Built to Last";
- Comparative study of visionary companies with "second-best" competitors, and general market companies;
- Visionary companies outperformed the general market by a ratio of 15 to 1 in stock returns (from 1926 to 1990).
Denison:
Most direct research on culture-performance link, by Dan Denison of University of Michigan;
Links culture to 7 business performance measures;
Currently 3000 companies in the database;
Average ROE for high culture scores was 21% versus low culture scores 6%.
Similar results for other performance measures
