Thursday, January 23, 2020

The X Factor of Great Corporate Cultures

Dictionaries define quiddity as “the inherent nature or essence of someone or something.” In our consulting practice, we’ve found quiddity a useful concept in representing an organization’s founding history and principles that align and anchor it internally, while also serving as a powerful marketplace differentiator.
If culture is “the way we do things around here,” quiddity is “why we do things the way we do.” Quiddity serves as a stable foundation for culture, which can evolve in positive ways but also drift dangerously off course. That’s particularly critical in organizations where culture is a linchpin of success.
When an organization understands, communicates, and celebrates its quiddity, it’s far better able to drive culture and all that culture impacts — from recruitment and training to branding, reputation, and beyond. As the nucleus of values shaping organizational culture and metaphorically bringing it to life, quiddity then activates the culture’s self-reinforcing loop in which the celebrations of its history, traditions, and successes further attract and reinforce the bond with its customers, partners, and employees.
Our work centers on Reputation-Driven Organizations (RDOs), firms which typically lack readily comparable products, or products difficult to evaluate until after delivery. Examples include large medical centers, law and accounting firms, engineering and construction companies, and colleges and universities. For such organizations, reputation can account for a quarter or more of market value, so when it goes astray or is threatened, the consequences can be significant.
Two aircraft manufacturing stories underscore the point in very different ways. Lockheed Advanced Engineering, known as the Skunk Works and initially led by Clarence “Kelly” Johnson, developed a quiddity based on Johnson’s strong personality, beliefs, and his famed “14 Principles” – reflected in hiring only the very best engineers and technicians, avoiding unnecessary bureaucracy and paperwork, insisting on staff reporting to top management to minimize politics and turf issues, and demanding total employee commitment to near impossible challenges.
Notwithstanding the toll it exacted on employees’ personal lives, the culture Johnson created resulted in delivering the US Air Force’s first jet fighter in under six months; building the SR-71, which in 1976 set the still-standing speed record for manned, air-breathing aircraft; developing the first stealth airplane, the Lockheed F-117, first publicly debuted in 1988; and winning the F-35 shootout against Boeing’s Phantom Works. The Skunk Works can-do attitude of meeting demanding and complex objectives, on time and ostensibly within budget parameters, exemplifies a corporate culture that continues to thrive well beyond Johnson’s tenure.
An equally venerable and innovative aircraft manufacturer, Boeing, has its own estimable list of “firsts” – including the first commercial jet airliner (the 707), the best-selling 737, the first widebody jet (the 747), the first jetliner developed by computer (the 777), and the first commercial aircraft widely employing composite materials (787). That’s in addition to some 13,000 patents held by the company. But two recent air crashes involving Boeing’s 737 Max demonstrate what can happen when culture becomes disconnected from quiddity. Pointedly, it wasn’t just the crashes themselves that so alarmed commentators and the public – every manufacturer, including competitor Airbus, has experienced accidents – but rather complaints about Boeing’s atypically substandard practices and blind adherence to the bottom-line, made public by industry experts, whistleblowers, and aviation journalists.
These reports suggest that a fundamental issue was the company’s departure from a 100-year-plus culture of evidence-based processes, quality, and safety espoused by founder William Boeing, in favor of an expedient focus on market factors. In fact, Boeing’s own enumeration of their 2025 goals seems to make this explicit:
  • Market Leadership
  • Top-quartile Performance and Returns
  • Growth Fueled by Productivity
  • Design, Manufacturing, Services Excellence
  • Accelerated Innovation
  • Global Scale and Depth
  • Best Team, Talent and Leaders
  • Top Corporate Citizen
“Design, manufacturing, services excellence” ranks as number four on the list, following three higher priority sales and profitability measures.
What Boeing’s problems underscore is that culture itself evolves, sometimes positively (as, for example, in response to more societally accepted practices such as gender, racial, ethnic, and other diversity) and other times negatively (as when a dominant focus on production, sales, or share value disrupt other critical priorities).
The value of quiddity – when made known and celebrated – is that it serves to anchor the institutional culture by maintaining a link to the organization’s roots and the shared narrative that unites internal and external constituents. For Lockheed’s Skunk Works, shared quiddity is what draws extraordinary contributions from its employees and keeps clients coming to them. For Boeing, ignoring its quiddity allowed the culture to drift in the face of severe external pressure, leading to consequential and possibly long-term damage in share value, sales, regulatory oversight, public trust, and reputation.
Derived from the firm’s history – its founders, its initial vision and practices, its innovations, its particular approach to or way of doing business – quiddity can also arise from more recent developments. For example, Apple’s resurgence after Steve Jobs returned as CEO has become an essential part of its story. More commonly seen in retail organizations, quiddity may also be developed from a manufactured image (ultimately expressed in a brand) that has little or nothing to do with the organization’s actual founding or history.
Bringing quiddity to the fore typically takes the form of a narrative or backstory, a celebration of founding principles, consequent achievements, and milestones. The backstory is first and foremost an internal narrative because it serves as the source of meaning with which employees can identify and represents an entity they can belong to with pride. For reputation-driven organizations, identity and belonging are critically important; unlike in many other kinds of organizations, their employees are often proxies for the product even though there may be actual deliverables – a medical procedure, financial plan, or college lecture, for example.
It’s this second element of the quiddity backstory – its dissemination to clients, customers, and the public – which helps cement the three-way bond between organization, internal constituents, and external constituents, a bond that fuels and sustains reputation. Consumer goods firms such as Nike, Apple, and Patagonia not only have unique quiddities but learned how to maximize their value in internal and external storytelling.
The point for executive leadership is simple: Even though most reputation-driven organizations may never require the continuous mass market advertising and PR exhibited by consumer goods firms or retailers, their reputations are built on perceptions of a positive culture. To ensure that culture remains anchored and aligned, articulating, celebrating, and communicating quiddity are vitally important adjuncts.