Building a winning culture
By Paul Rogers, Paul Meehan and Scott Tanner
Paul Rogers is a partner with Bain & Company in London and leads Bain’s Global Organization Practice. Paul Meehan is a Bain partner in Tokyo and leader of Bain’s Organization Practice in Asia. Scott Tanner is a partner in Bain’s Melbourne office.
Copyright © 2006 Bain & Company, Inc. All rights reserved. Editorial team: Paul Judge and Elaine Cummings Layout: Global Design
Building a winning culture
A company’s key to success is in its heart and soul.
Why has Dell been able to outperform its competition consistently over the past decade? Strategy, certainly. Operational discipline, without a doubt. Talented people, of course. But when asked in an interview with Harvard Business Review what best explains the company’s spectacular success over the years, Dell founder Michael Dell and CEO Kevin Rollins focused on something else. “While Dell does have a superior business model,” said Rollins, “the key to our success is years and years of DNA development that is not replicable outside the company.” Added Michael Dell, “Culture plays a huge role.” They’re hardly alone in their belief that culture is at the heart of competitive advantage, particularly when it comes to sustaining high performance. Bain & Company research found that nearly 70% of business leaders agree: Culture provides the greatest source of competitive advantage. In fact, more than 80% believe an organization that lacks a high-performance culture is doomed to mediocrity. (See Figure 1.) At a time when enterprises can stretch around the globe, culture is the glue that holds a complex organization together. It inspires loyalty in employees and makes them want to be a part of a team. It motivates people to do the right thing, not just the easy thing. At companies with winning cultures, people not only know what they should do, they know why they should do it.
Yet, while business leaders recognize culture’s crucial role, our research also indicates that fewer than 10% of companies succeed in building a winning culture. According to a Bain survey of 365 companies in Europe, Asia and North America, even those firms that manage to foster high-performance cultures often find them hard to sustain. The best companies succeed, we found, on two dimensions simultaneously. First, every winning culture has a unique personality and soul that cannot be invented or imposed. Based on shared values and heritage, the company’s character needs to be discovered from within. Second, winning cultures usually embody six high-performance behaviors that are common to all high performers—but only to high performers. (See Figure 2, on page 2.) Neither element is enough by itself to sustain a winning culture. A company can have a strong personality and soul, but still underperform if it lacks the values and behaviors that motivate people in the organization to do the right things. Similarly, high-performance behaviors pursued independently can shift an organization into permanent overdrive and sever the connection that employees feel with the enterprise. It’s the combination of both elements that produces a winning culture.
Figure 1: Starting point
Leaders who believe their culture is a source of competitive advantage
Believe it is changeable and 65% believe they need to change it
Believe that an organization that lacks a high perfor mance culture is doomed to mediocrity
But fewer than 10% succeed in building one
Source: Bain Survey n = 365 companies in Europe, Asia and North America
A distinctive personality
The personality of an organization is often taken for granted. Often the values of the founder are instilled in the organization and shape its culture going forward. “We try harder” at Avis, or “Always low prices. Always,” at Wal-Mart are foundational values that have become ingrained into the very fiber of...