The Ultimate Business Advantage Creating and Evolving a Great Business Culture

“The thing I learned at IBM is that culture is everything.”

Louis V. Gerstner, former CEO IBM

Today’s Journey…

To define the meaning of “organizational culture”

To highlight the building blocks of a dynamic and thriving “organizational culture”

To establish a framework for building and evolving your organization’s culture so it becomes your competitive advantage

What is Culture…

“Culture is your brand” Tony Hseih, CEO of Zappos

Culture defines an organization’s brand in the eyes and souls of its employees, customers and financial stakeholders…whether its greatness or mediocrity!

Culture represents the soul of an organization…it is your unique legacy… whether its greatness or mediocrity.

“Culture defines priority!” Howard Schultz, CEO of Starbucks

Culture can provide a compelling sense of purpose, passion, belonging, believing, acting and dreaming…or it can become a dumpster for all that is wrong

Culture can attract talent, retain talent and inspire talent, or…it can discourage and deplete talent.

Culture can inspire people do the right things because they believe it is right, not because they have to.

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Culture Codified…

The Building Blocks of a Great Organizational Culture…

A Shared & Compelling Purpose…

“When you discover your mission, you will feel its demand. It will fill you with an enthusiasm and a burning desire to get to work on it.” W. Clement Stone

Why the business does what it does…the “purpose” or “mission” of the organization represents the reason why the business is here

It is either the glue that binds people or the solvent that pulls them apart…Purpose binds the collective efforts of individuals to a common and captivating reason for performing…it provides a shared sense of identity and self worth

Mission Statement

To create one of the top Sushi restaurants in the world by providing consistently fresh, innovative healthy foods, using only the finest ingredients

To provide exceptional, professional and friendly service in order to exceed our guest’s dining expectations

To respect each person associated with our company.

Can you guess who they are by their

mission? "To provide the best customer service possible.“

Zappos

“To give people the power to share and make the world more open and connected.“

Facebook

“To organize the world’s information and make it universally accessible and useful”

Google

“We are committed to making a difference in people’s lives”

Sports Club/LA

“To provide an educational, entertaining, friendly and inviting, functional and innovative experience of uncompromising quality that meets the health and fitness needs of the entire family.”

Lifetime Fitness

“Building relationships and enriching lives”

ClubCorp

A Captivating Vision… “A Vision is truly the perfume of the mind” Karaoke Capitalism

It’s your organizational aspirations…Vision is the dream of the organization…it the journey and the ultimate destination for what you do!

It funnels creative energy toward a singular destination…Vision provides a compelling goal that channels the forces of an organization’s

It has the power to inspire…A vision inspires, motivates and energizes

Can you guess who they are by their vision?

"To make a contribution to the world by making tools for the mind that advance humankind.“

Apple

“Our vision is to be the earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online”

Amazon

“The Healthy Way of Life Company, we help organizations, communities and individuals achieve their: total health objectives, athletic aspirations and

fitness goals by doing what they love to do”

Lifetime Fitness

“We are the gold standard for sports, fitness and health clubs in the world”

Sports Club/LA

“To bring the private club experience to the world”

ClubCorp

Shared Core Values… “Values are magnets…values attract” Karaoke Capitalism

They are the beliefs that frame how a business acts…Values are the shared beliefs your organization has…they are the foundation for your identify

They align purpose and vision by driving attitude and behavior…Values are a tool that align the attitudes and behaviors of an organization…values drive attitude… attitude influences behavior… and behavior drives outcomes.

They establish synergy between different people and their organization…Values help create an environment of “like-minded” individuals.

Shared Core Values…

Can you guess who they are by their values?

“Customer obsession; innovation; bias for action; ownership; high hiring bar and frugality”

Amazon

“Deliver WOW through service; embrace and drive change; be passionate and determined; build open and honest relationships; be adventurous, creative and open minded; pursue growth and

learning and create fun and a little weirdness”

Zappos

Achieve; accountability; connected; high expectations; integrity; energize; versatility and enjoy”

24 Hour Fitness

Excellence; teamwork; service, talent, courage, integrity, flexibility, accountability, respect, performance, community, fun

Sports Club/LA

Artifacts & Traditions… “Traditions are guideposts driven deep in our sub-conscious minds. The most

powerful ones are those we can’t even describe, aren’t even aware of”

They are the physical manifestations of your culture…artifacts are the tangible physical reminders of your mission, vision and values

Hall of Fame New York Athletic Club, NY, NY Wooden Award – Los Angeles Athletic Club, Los Angles, CA

They are are the practices, rituals and standards that portray your organization…traditions codify who you are to employees and customers

World Class Games – World Class Fitness, Russia Gods & Goddesses Awards – Telos Fitness, Dallas, TX Star Service Awards – ClubCorp, Dallas, TX

Myths & Legends… Every company has its own language, its own version of its own history (its myths) and

its own heroes and villains (its legends) both historical and contemporary.”

Michael Hammer in Beyond Re-engineering

“Myths and legends dire hard, we love them for the extra dimension they provide, the illusion of near infinite possibility to erase the narrow confines of most men’s reality.” Hunter Thompson Myths are the “stories” that share your culture with everyone…they codify your history and

portray how you want your employees to believe and act…they generate “emotional buy-in”

“Legends die hard. They survive as truth rarely does.” Helen Hayes

Legends are the employees who exemplify your culture…they are the employees, past and

present, whose actions and behaviors serve as a role model for the organization…think: Steve Jobs at Apple Howard Schultz at Starbucks Robert Dedman at ClubCorp Red Lerille at Red’s Joe Cirulli at Gainsville Olga Sloutsker at World Class

Story Tellers… “Stories translate information into emotion.” Karaoke Capitalism

“Each time a storyteller clothed the body of the myth in their own traditions, so that listeners could relate more easily to its deeper meaning.”

Storytellers communicate the myths of the culture by “expanding” on facts and providing simple, yet inspiring messages about what the organization expects of each and every employee all the time.

Story tellers are the champions, cheerleaders and historians of your culture.

Executives, leaders and managers are the most important storytellers in an organization, but not the only ones

A Storytellers Story A Club

A club is a haven of refuge and accord in a world torn by strife and discord.

A club is a place where kindred spirits gather to have fun and make friends.

A club is a place of courtesy, good breeding, and good manners.

A club is a place expressly for camaraderie, merriment, good will, and good cheer. It humbles the mighty, draws out the timid, and

casts out the soreheads.

A club is one of the noblest inventions of mankind.”

Five Steps to Creating a Culture that Sticks… a Case Study

“If you do not manage culture, it manages you and you may not even be aware of the extent to which it is happening.”

Edgar Schein, Sloan School of

Management, MIT

“The only thing of real importance that leaders do is to create and manage culture.”

Edgar Schein, Sloan School of Management, MIT

Step #1: Match Culture and Strategy

“A strategy that is at odds with a company’s culture is doomed”

Katsenbach, Steffen and Kronly, HBR 2012

“Culture will trump strategy every time”

Katsenbach, Steffen and Kronly, HBR 2012

Before embarking on a strategy understand whether it aligns with the culture…ask yourself and your team, “Will the culture support the strategy”…if not something has to change!

Strategies: Hyper-growth in maturing market

Develop new revenue sources

Streamline the organization

Cultural Hurdles: Bureaucratic, Autocratic , Siloed, complacency

Challenge: to established empowered teams, to become more transparent, to spark innovation, to install ownership and accountability for performance

Step #2: Focus on a Few Critical Shifts in Behavior

Ask the question… “If we had the kind of culture we aspire to in pursuit of the strategy we have chosen, what new behavior would arise”

Remember…“If you look hard enough, most of the time you will find that you already have small groups of employees who practice the cultural behaviors you desire”

What behaviors were most affected by the culture, both positive and negative…

Positive: Pride in company

Passionate talent

Desire to be the best

Negative: Siloed and no trust of others

Lack of communication and transparency

Lack of innovation

The small changes which we made visible to everyone…

Open door, regular sharing of information

Creation of intercompany teams

Establishing framework of trust by trusting without question

Step #3:Honor the Strengths of the Culture

“Seek out the strengths and share stories that illustrate and acknowledge these strengths”

Our Strengths:

Pride

Passion

Tenure

Industry leaders

How we shared stories: Monthly stories on internet

Traveled to clubs and share stories

One story at every meeting at every level

One-on-one storytelling with cultural leaders

By honoring those who exemplify the culture

“Leverage the passion of those employees who get it…make them role models”

Steps we took:

Identified an executive leadership team

Established a culture leadership council

Established a change team

Involved teams in meetings and traveling to the clubs to support change

Cultural council established mission, vision and values and took accountability for making it live

Rewarded the role models, both individually and collectively

Step #4: Integrate Formal & Informal Intervention

Some Formal Intervention Strategies taken…

Codified the culture with a mission, vision and values

Created physical tools to share the mission vision and values such as screen saver on every computer, coffee cups for each employee, pens with the motto, posters in the club and a culture page on the internet

Established transparent metrics and then a competition for the clubs based on those metrics

Had formal kick-off meetings to introduce the culture

Discussed the culture in monthly letter from the CEO and in the quarterly general employee meetings

CEO and members of the culture council visited clubs and told stories

Created leadership committee, innovation committee, culture leaders and change committee

Some Informal Intervention Strategies taken…

Council members became role models

Unexpected recognition for employees who modeled the culture

Created cross-functional work groups

Social outings for the leaders

Executive committee became the key influencers

Right gossip was encouraged

The Formal Cultural Foundation

The RFG Mission …Our Purpose

Building on the traditions of Russian Sports and Dance culture , we will create for every club member an environment that stimulates them to lead a healthy life style, raises their self confidence, and helps them achieve personal success.

The RFG Vision…Our Dream

To be recognized by the world community as leaders of the global fitness industry and for providing the world’s best in member service, technological fitness innovation, and staff professionalism.

The RFG Values

Quality…creating and delivering the best all the time

Creativity…being innovative in our ideas and the manner of our delivery

Leadership…as individual’s, as clubs, as a company and as part of the global industry

Intellectuality…the best methodologies and technologies

Team Spirit…together everyone achieves more…no fiefdoms, only unity

Unity with the Member…enriching and rewarding relationships with the members

Step #5: Measure & Monitor Cultural Evolution We are what we repeatedly do. Excellence then, is not an act, but a habit” Aristotle

What should be measured and monitored…

Business performance…KPIs

Critical behavior…what are people exhibiting

Milestones…outcome of and process toward goals

Underlying beliefs…attitudes

What we measured, monitored and recognized…

KPI’s weekly, monthly and quarterly (usage

%, member survey scores, employee survey scores, sales, EBITDA margins, revenue %)

People’s behavior (360 feedback, quarterly

evaluations, observation, involvement, etc.)

Milestones (outcomes of initiatives and also process

of initiatives)

Attitude & beliefs (observation and outcomes)

In Conclusion…

Culture represents the heart and soul of an organization…it is the brand, the roadmap, the final measurement stick of greatness or mediocrity

Great cultures are built on a common mission, vision and values, supported by legends and tradition, and carried forward by storytellers and leaders.

“A people without knowledge of their past history, origin and culture is like a tree without its roots.”

Author unknown