4 Drivers of culture

May 26, 2011 | Governance, Leadership

Culture is most often defined by repeating Michael Porters assertion that “culture is the way we do things round here”. However, this leaves the question of  what drives the way things are done. From my observations over many years, there are a number of elements:

  1. The way the boss acts, what he/she does, and the way it is done. People watch and listen, take their cues from the boss, and any inconsistency will be noted. When a boss says that employees are our most important asset, then fires a bunch of people simply because the numbers are down, that will have an impact on how much weight those left put in the “people are….” statement.
  2. What are the prevalent behaviour patterns in the place? Is it “blokey”, is being at the desk 9-5 important or is it the work done that counts, what are the accepted norms of dress, and so on.
  3. How is performance measured? Is it formal, 2 way, do performance reviews drive improvement strategies or result in condemnation, is it individual performance, group performance, or both, and so on. The old saying, “you get what you measure” is most often right.
  4. What “actions” (for lack of a better term) are encouraged? Is initiative rewarded for its own sake, or is conformity demanded, how does the place react to news, (good or bad), does it welcome change, and so on.

These four drivers of culture are an expression of the “values” of the enterprise. They describe the sorts of things that define the character of the enterprise,  and create the foundations for getting things done in a commercially sustainable manner that is consistent with the expectations  all stakeholders.

Intellectual capital and return on assets.

Aug 17, 2009 | Governance, Management, OE, Strategy

Return on Asset calculations as a realistic basis of performance measurement for many firms is rapidly going out the window.

On one hand we do the financial calculations, based on the accounting notion of tangible assets in the business, whilst on the other, saying that the primary assets of the business walk out the gate every night and go home.

This  paradox should radically change the ways we measure the return on assets, it creates the need to find ways to consistently measure Intellectual Capital, not an easy challenge, but one that Directors and management need to start grappling with.

Consider, physical assets depreciate with use, but intellectual assets appreciate with use, so perhaps there is a measurement matrix in there somewhere, but probably fashioned by psychologists and anthropologists, rather than accountants.