Culture is the shared beliefs, values, customs, behaviors, and objects that characterize a group, society, or business and are infused from generation to generation and employee to employee.
Primary Implication
Yes, culture matters—even more important are the people in the business, yet what determines success or failure are the right numbers reflecting the results of business actions as reported on the financial statements.
Ultimately, every action an employee, manager, or owner takes will result in a number. Those who understand this develop the ability to lead by the numbers. They do this because the numbers are black and white. Either the intended result happened or not. The right people will rise to fix the problems keeping the business from realizing its full potential, whereas the wrong people will not.
Overview
The culture of a business encompasses all explicit and unstated assumptions, beliefs, knowledge, norms, values, attitudes, behavior, dress, and language. It defines acceptable or unacceptable, important or unimportant, right or wrong, workable or unworkable.
Peter Drucker said, “Culture eats strategy for breakfast.” Culture matters because it is the glue that holds everything together. Culture is represented by the shared values, beliefs, traditions, habits, and rituals that bind employees together to deliver a business’s products and services at a profit.
What gets missed by most small business owners is that culture exists whether you establish it or not. Company culture generally falls into one of two buckets over time based on how it is formed:
- By default as decisions are made, and actions taken in delivering products and services are shaped by those who control when and where the money is spent. Or a culture is shaped over time …
- By employee adoption of shared values, commitment to doing specific things in a disciplined way, and the holding of self and each other accountable when structure or systems are violated.
Substantial businesses become substantial through the 4 Ss involving strategy, structure, systems, and standards. Over time, the senior leaders of these businesses manage change across the 4 Ss to grow and evolve their company by becoming masters of their numbers, developers of their people, and ultimately nurturers of culture.
Most well-intentioned business leaders start weak when setting out to update the business by talking about the need for culture change before fully understanding the numbers that drive the business. When the change doesn’t happen fast enough, they start to bring in the “right people” before fully understanding what the “right people” look like because they don’t understand which actions shape the numbers and which don’t.
The “Achilles Heel” for most small business owners is their inability to work with their business numbers. Marcus Lemonis asserts, “if you don’t know your numbers, you don’t know your business.” The numbers of a business tell the story of what’s working in the business. Where is that business getting stuck? Wise business leaders use the business numbers to help them identify what they need to do differently.
The results of a business are reported through the numbers of the business. Invest a business’s cash inflow wisely, and you will always have access to the money needed to fund a business’s next scalability and sustainability move. Waste money achieving sales or overpaying your people, and you will become cash-strapped and limited in the moves you can afford to take to sustain your business.
Not understanding the numbers is at the root of most business failures. Too many businesses fail because they don’t use their numbers to know factually if “all is well?” The numbers will tell you whether this is a true or false statement.
The key to positioning your people for success lies in sharing the relevant data with them. It is only through the sharing of results reflected in the business numbers that people fully see the impact of their work on the overall business. Helping them see how they affect results empowers them to be and do their best.
Ultimately, a sustainable culture develops through the KPIs (Key Performance Indicators) a business chooses to monitor. Track the right numbers that establish success, and you impact employees’ work daily and weekly. The better benefit that emerges from consistently reported KPIs is what happens when it is missed. When people know their actions aren’t producing the desired result, you empower their creative energy to change the actions that shape the results of that KPI.
When you lead with the numbers, you position yourself to discover what customers value most, where your employees apply the most time, and what your most cost-intensive resources are. Fail to do this, and you will fail to build a sustainable business that is correctly scaled by strategy, structure, and systems—verified by the numbers, achieved by its people, and enabled by its culture.
Leadership helping their employees see how they contribute to business results is how you position your people to do their best. Successful business leaders connect the action to results to help develop their people. As they do this, they continuously reinforce what works in their culture.
Numerous studies of successful businesses have confirmed the importance of hiring the right people and putting them in the right positions. Ultimately, one business’s greatest advantage over another lies in its people. Assessing cultural fit is how a hiring manager knows if they are choosing the right people to get the work done—this is why culture matters.
The right person in the right position can only thrive if the culture is right. The strength of your culture is only as sustainable as your last hire. Bring in the right people, and you strengthen your culture. Hire the wrong person, and you will quickly spoil the strongest of cultures. Hiring managers will either choose the right person for the right position, or they won’t. It is the people who produce the results reflected in the numbers. This is why your people matter more than any other asset in a business. This is why high profitable businesses use systems to help them hire for cultural fit as much as position fit.
Yes, culture matters—even more important are the people in the business, yet what determines success or failure are the right numbers. Ultimately, every action an employee, manager, or owner takes will result in a number. Those who understand this develop the ability to lead by the numbers. They do this because the numbers are black and white. Either the intended result happened or not. The right people will rise to fix the problems keeping the business from realizing its full potential, whereas the wrong people will not.
