What Makes a Business Great: A Cult-Like Corporate Culture
This article is part of a series about What Makes a Business Great?
An organization’s culture serves several important purposes. It acts as the foundation of the organization’s internal and external identity. It plays an essential role in attracting and retaining talent. And it determines the degree to which an organization has alignment and engagement toward its goals. All these factors dictate how nimbly, efficiently and effectively an organization can operate.
Given the importance of culture to an organization, it should be no surprise that great businesses have distinct cultures. Current and former employees of great businesses will often describe those organizations as being “like cults.” The cult-like corporate cultures of great businesses share three primary characteristics:
Clear & Compelling Vision. A vision is made up of two parts, a purpose and a plan for fulfilling that purpose. A clear and compelling vision has an explicit and inspiring purpose, a convincing plan, and an enduring nature. To be truly inspiring, a business’s purpose needs to go beyond making money.
Amazon.com is a good example of a company with a clear & compelling vision. Amazon.com has a simple purpose that it states prominently and ubiquitously: Amazon.com strives to be Earth’s most customer-centric company. The focus on serving others and achieving superlative results make Amazon.com’s purpose inspiring. There is nothing in there about making money per se. Amazon’s plan for achieving its purpose follows immediately after: By giving customers more of what they want – low prices, vast selection, and convenience…The plan is convincing because the connection between executing the plan and achieving the purpose is clear. Furthermore, it is hard to imagine a future in which being Earth’s most customer-centric company by offering low prices, vast selection and convenience would not be relevant, so Amazon.com vision is enduring in nature.
Permeating & Guiding Ideology. An ideology is a system of values, norms, rituals and traditions. Great businesses have a distinct ideology that is both deeply held and ubiquitous. You do not need to ask about it. It is a fundamental and inescapable aspect of the company that punches you in the face. Employees devote a surprising amount of time reminding each other about it and leaders embody it. Some people will fit the ideology extremely well while others will not. The ideology exists to guide the organization toward achievement of its vision. A guiding ideology is strongly linked to behaviors that drive the performance of the business and plays a prominent role in decisions related to hiring, firing, promotion, compensation and punishment. Favorable results that come at the expense of ideological principles are punished and failures experienced while adhering to the ideology are at the very least tolerated. A permeating & guiding ideology provides members of an organization with the context necessary to move the organization more autonomously, efficiently and effectively toward its goal.
The “Freedom & Responsibility” ideology that underpins Netflix’s culture illustrates what a permeating & guiding ideology looks like. Netflix has defined its ideology extensively in slide decks, on its website and even in a published book. The “Freedom & Responsibility” ideology is an integral part of everyday life for Netflix employees. Ask a Netflix employee about his or her day, and you will hear examples decentralized decision making, giving and receiving candid feedback and the high performance standards to which all employees are held. These pervasive aspects of Netflix’s ideology are directly connected to achieving Netflix’s goal to “entertain the world.”
Zealot Employees. Zealot employees exhibit high levels of positive energy and take ownership of the company’s vision and success. Zealot employees have higher productivity and lower turnover than employees at other companies in the same industry. Factors that play a role in turning employees into zealots include:
Compensation policies that are transparent, performance-based and generous
A strong fit between the employees and the company’s ideology
A safe, well-equipped and fun work atmosphere
Clear and attractive opportunities for professional growth
Acknowledgement that is personal, proportionate, prompt and public
Appropriate levels of freedom and responsibility
Frequent and transparent communication from leaders and managers
Conclusion
Great businesses have cult-like corporate cultures that play an essential role in their success. Those cult-like corporate cultures share three fundamental characteristics:
Clear & Compelling Vision
Permeating & Guiding Ideology
Zealot Employees
If you found this interesting, please register below to join our distribution list. We aim to share only high quality, thought-provoking content, including extensive discussions of our investments. If you are interested in investing with Hinde Group, please let us know through our contact form.