Picture this: smiling staff donning green aprons. A warm, buzzing atmosphere, filled with white-collar workers and students alike. Freshly brewed coffees, customized to your liking (a Caffè Misto with almond milk and one sugar, anyone?).
We’re of course talking about none other than Starbucks. It doesn’t take much to evoke an image of the beloved multinational coffee chain. The company’s strong branding and unique offerings have certainly contributed to its cool $132 billion valuation.
But that’s only part of the story. The key driver of Starbucks’ success is its culture. Just ask Howard Behar, the former senior vice president of Starbucks Retail and founding president of Starbucks International. He is largely credited with transforming Starbucks’ culture. When asked what the real secret to Starbucks’ success is, Behar says it’s the company’s people.
In fact, Behar wrote a book discussing the very matter called It’s Not About the Coffee: Leadership Principles from a life at Starbucks. In it, he says that “Without people, we have nothing. With people, we have something even bigger than coffee”.
Behar led an organizational cultural transformation in the company that saw employees and customers treated as human beings first and foremost, and not as labor costs and sources of revenue respectively. He believed that doing so would empower the company’s employees to give their all to their work and offer its customers a reason to return time and again.
While Behar has since departed the company, his legacy model of how to implement a culture change remains. Starbucks continues to put its culture at the center of all its operations. At Starbucks, ‘the customer is king’ isn’t just a meaningless adage, it’s part of the company’s DNA. A customer-focused culture influences everything from the rollout of its loyalty programs, to how employees engage with customers and one another. It even has the results to prove its emphasis on culture is working.
Likewise, rather than just pay lip service to company values around diversity and inclusivity, Starbucks actively hires people from diverse backgrounds and has committed itself to advancing racial and social equity.
Of course, they don’t always get it right. But there’s no denying Starbucks’ success can be largely attributed to its unrelenting drive to refine and champion its organizational culture. It simply couldn’t have grown from a humble shop that sold coffee beans to what it is today without doing so. All in all, Starbucks has effectively leveraged its organizational culture to distinguish itself from its competitors, create an environment where both employees and customers thrive and increase profits to boot.
This case study highlights the fact that business success is inextricably tied to establishing a robust and people-centered organizational culture. Simply put, if you want to ensure the success of your company well into the future, you need to proactively design a culture transformation roadmap.
While you may think that developing a strong organizational culture like Starbucks’ is out of reach for companies with less sophisticated operations or more modest budgets, this guide will show you how to execute a successful cultural transformation at any size or budget.
We’ll not only take an in-depth look at the links between culture and strategy but also provide you with a framework for how to facilitate successful culture change in your organization.
How culture fits into and enables strategy
There are no two ways about it: culture goes hand in hand with strategy. In the past, companies allowed their culture to trail behind their strategy concerns. They favored strategy to the detriment of culture, pursuing business objectives that were misaligned with their supposed values.
However, the old way of doing business is long gone. The most successful modern companies recognize the symbiotic relationship between culture and strategy. It’s no longer possible to get away with having company culture as an afterthought, as neither your employees nor customers will stand for it.
Culture enables strategy as it grounds it in something more weighty than dollar figures and numbers. In an article for Forbes, founder, and president of WebFX, William Craig, argued that when “culture is the forceful spirit and strategy is the instrument,” you start to cultivate something more meaningful than the company itself.
Craig explained that when business leaders align culture with strategy, the following begins to happen:
- Leadership becomes more accessible
- Employees think of themselves as an important part of a company that genuinely cares about them
- Customers’ needs actively inform your decision-making
The best part is that the impact of this alignment can be quantified. In his article, Craig points to a study that highlights that when the surveyed companies’ cultures and innovation strategies were “highly aligned,” they had 30% higher enterprise value growth and 17% higher profit growth than companies with low degrees of alignment.
To explore this point further, let’s go back to our Starbucks case study. As we touched on before, Starbucks has baked its culture into every facet of its strategy and business objectives. For example, one of the main features of Starbucks’ culture is openness. Though it wasn’t always like that. In the past, the company’s employees were not encouraged to speak up when they had questions or encountered problems. But, recognizing the importance of openness as a cultural value, Behar led a company culture transformation that actively encouraged open dialogue between employees and their superiors.
Like Starbucks, you shouldn’t see culture as a barrier to strategy. Rather, you should consider change management and cultural transformation to be a driver of strategy that results in more values-aligned decisions, growth, and greater authenticity.
Actionable steps to culture change
So what steps can you take to shift your organization’s culture? We’ve outlined a number of implementable strategies and methods for achieving cultural change.
Conduct a frank and fair analysis of your existing culture
To create an effective culture change framework, you’ll need to understand what you’re working with first. To this end, it’s crucial to conduct a frank and fair analysis of your existing culture.
Start by critically observing the types of behavior that are apparent in your company. Then, reflect on the types of behaviors that could help your culture to thrive. As you’re doing this, remember to not only focus on what’s not working, but also what is working. There will likely be parts of your existing culture you should maintain or even enhance.
Even if you believe a complete overhaul of your company culture is necessary, it’s useful to retain some aspects of your existing culture in your culture transformation plan. Doing so will send a powerful message to your employees and customers that your culture transformation strategy is an evolution, rather than a complete rewrite of history. In short, try to bolster your strengths and address your weaknesses when crafting your cultural transformation strategy.
Involve your employees in the process
In order to pursue an effective culture change plan, you will need to involve those at the heart of it: your employees. While management will need to take charge of driving the process, the direction should be informed by your employees’ experiences, behaviors, and values.
To ensure their voices are heard and championed, you’ll need to reach out to them via a range of formal and informal methods including anonymous surveys, interviews, and open discussions.
You’ll need to assure them that it’s safe to be candid when sharing their views. They’ll be rightly cautious to speak out, particularly when it comes to criticisms of company culture, so go the extra mile to make it feel safe to do so.
One of the many benefits of embarking on employee-informed cultural transformation in business is the opportunity to identify employees whose behavior already reflects that of which you’re aiming to replicate. Those employees will be highly valuable when it comes to mapping out organizational culture and change in your business.
It’s also vital to involve employees at all levels to contribute to your culture transformation framework. If your CEO, executives, and board members aren’t on board with facilitating cultural change, it will be a difficult task to convince others to be. Successful organizational culture shifts require all hands on deck.
Work out the type of culture you want to cultivate
Once you’ve analyzed your existing culture, it’s time to define the type of culture you want to cultivate. Think about the behaviors and values you want to be adopted across your entire organization. Take the time to consider the impact that pivoting to certain behaviors and values would have on your employees, customers, and business as a whole.
To get this right, you’ll need to go beyond vague descriptors. If your end goal is to figure out how to change a team culture and have those changes embraced company-wide, you’ll need to be precise in defining what behaviors and values are desired, and which ones are not.
Take a long and hard look at your policies, rules, metrics, and incentives
If you want to foster transformation and culture change, you’ll need to thoroughly examine how your existing policies, rules, metrics, and incentives fit in with your ideal cultural transformation plans.
Everything from your hiring practices, to how you compensate employees, to your retention strategies will need to be re-examined with this new lens in mind. You’ll need to ask a lot of tough questions about the current state of your culture and be prepared to challenge long-held assumptions about the ‘right’ way of doing things.
For example, let’s say you want to shift to a culture that actively supports women to pursue leadership positions. Some questions you could ask about your current culture include:
- Do current policies around promotion encourage or discourage women to pursue leadership positions? How so?
- How is the performance of those in leadership positions measured? Is it fair?
- Is it possible for women to envision themselves succeeding in leadership positions? Why or why not?
- How do parental leave and other policies, rules, and incentives impact this?
- Who are the women currently in leadership positions? What do they have in common?
- Do women currently in leadership positions feel supported to succeed?
- What barriers do women in leadership positions, and those who want to be, currently face?
- What mechanisms are in place to ensure women in leadership positions can thrive?
- Are there certain characteristics that are valued when promoting someone to a leadership position? How does this compare to those ascribed to men in leadership roles?
- Are there any gender biases that may impede women to seek or stay in leadership positions?
- Are there some departments that attract more women than others? Why is that?
This may seem like a lot of questions to ask. But in order to understand what needs to change about your culture, you’ll need to develop an understanding of the interplay between your current culture and strategies and work out how to effect culture change in an organization.
From there, you can start to see what’s working and what isn’t. By reflecting on these facets, you’ll have the insights you need to make appropriate changes to your existing policies, rules, metrics, and incentives. You may find that you need to completely scrap some that are too cumbersome to tweak and implement new ones instead.
Improve your hiring practices
“They ticked all of the boxes in terms of skills, but I don’t think they’ll be a good culture fit for our company.” We’ve all heard this line in some iteration or another. While the practice of selecting candidates who reflect a so-called culture fit in your company is often well-intentioned, it’s ultimately counterintuitive to promoting a healthy and diverse culture.
By emphasizing the need to find a culture fit, you’re unwittingly promoting unconscious bias. Unconscious biases hurt your recruitment process, sometimes resulting in stereotypes about gender, race, and other factors overshadowing the skills and the ability of a candidate.
The consequences of this are far-ranging. The most obvious one is that candidates who would otherwise be suitable don’t get a proper look in. Unconscious biases can also impact profitability and innovation, as diverse organizations are more likely to experience greater growth and promote out-of-the-box thinking.
So if you want to learn how to change employee culture, stop focusing on finding a culture fit. Instead, shift your focus to finding and nurturing talent with similar core values.
One way to do this is to practice blind hiring. Blind hiring is an increasingly popular hiring practice that involves “obscuring identifiable characteristics from a candidate’s application that are not related to their experience and job skills needed for success”.
The reason it can be so impactful is that it helps to make your hiring practices based on merit. By implementing more inclusive hiring practices, you’ll be working to foster a more forward-thinking and diverse culture.
Take diversity and inclusion seriously
Want to foster a work culture that genuinely embraces diversity and inclusion (D&I)? Including a D&I statement on your job ads or having a page on your website that talks about how much your company values it is a start.
But talk is cheap. Unless you follow through on implementing meaningful D&I initiatives, you’re doing little more than virtue signaling. If you’re serious about promoting diversity and inclusion, you’ll need to take it a step further. Fortunately, there is plenty of research on D&I best practices that you can turn to if you’re unsure of how to go about it.
Don’t expect an overnight transformation
Organizations that pursue cultural transformation may become disheartened when they don’t instantly see the changes they’re striving for. Just like any other type of organizational change, meaningful cultural change is a concerted and ongoing effort that takes time.
Your employees, executives, and customers will all need time — and convincing — to shift their behaviors and ways of thinking. This is particularly true if you’re dealing with a deeply ingrained culture that has long resisted change. As such, it’s important not to throw in the towel if things are moving slowly or in the wrong direction.
Well-executed cultural transformation requires a willingness to constantly iterate until you get things right. Don’t be afraid of missteps. See them as an opportunity to learn and improve upon next time.
How to measure cultural transformation and its ROI
Discovering how culture change happens and cultivating a healthy company culture may appear to be a somewhat trite concept to some business leaders. The intangibility of company culture can make it seem like it’s difficult to quantify, so it’s easy to dismiss the impact it has on a company.
However, cultural transformation is indeed measurable. In fact, it needs to be measured, not only for the sake of accountability but also so you have the data to examine the ROI for your efforts.
So how exactly do you measure it? You can use both formal and informal measures including:
- Evaluating whether any adjustments to your existing policies, rules, metrics, and incentives have worked to support your culture change framework
- Analyzing employees’ uptake to new culture-based policies, rules, metrics, and incentives
- Assessing the impact that any cultural transformation initiatives have had on your business’ KPIs
- Taking note of changes in employee behavior and attitudes using research methods such as surveys and informal discussions
- Assessing whether the milestones you set effectively promote your culture goals, and if not, why not
Improving your organization’s culture isn’t just a task to tick off a checklist. As Starbucks has shown, cultural transformation can lead to quantifiable business success. At Starbucks, employees and customers aren’t just seen as means to an end, but as valued individuals who make the company what it is. They’ve coupled this cultural philosophy with meaningful initiatives and changes that can be measured.
Following in Starbucks’ footsteps doesn’t need to be a pipedream: this guide has highlighted the precise steps you can take to encourage cultural transformation in your own organization.
Remember, meaningful cultural transformation takes time and effort, as well as a genuine drive to promote a healthy culture. It’s never easy to acknowledge that how you’ve been doing things is in need of a shake-up. But once you do the hard work, you’ll be rewarded.