New Policy Can’t Lead Culture

Why New Policy
Isn’t the
Best Way to
Lead Your Organization’s Culture

Ever heard the saying, “Culture eats strategy for breakfast/lunch”? It’s commonly associated with Peter Drucker, a respected leadership guru.

This quote perfectly highlights how culture is a double-edged sword. In a negative light, the best planning and strategy can be constrained (or ruined) by a poor culture working against it. On the other hand, culture may be a company’s only competitive advantage when evolving and adapting to the market.

A Forbes article by Wes Gipe drives this point home:

“A strong culture can be a sustainable competitive advantage—if not the only sustainable competitive advantage—because it cannot be duplicated, unlike a product, price point, or delivery system.”

Culture matters. How can we influence it?

The obvious answer is to create new policies to incentivize desired behaviors (those that align to our beliefs and values) and reduce detrimental behaviors (those we think are negative or harmful).

We do this all the time, whether as organizations or in our personal lives. Want employees to collaborate more? Introduce a teamwork award. Want your kids to finish their chores on time? Institute a new chore tracker and rewards system. Want to motivate yourself to exercise? Commit to only watching your favorite TV show while on the treadmill (a tactic that behavioral scientists call temptation bundling).

We have the best of intentions when we do this. Yet, creating new rules to change behavior can actually suboptimize culture. Sometimes new policy can lead to unforeseen consequences and cause the opposite behaviors you intended.

For example, governmental leaders wanted to curb obesity and the consumption of unhealthy food, so they created policy requiring fast food restaurants to display calorie counts for their menu items. At face value, this would provide individuals with more insight into their food and allow them to make better choices.

However, the policy had some unintended consequences when put into practice. Around 15% of people did use the information to purchase food with lower calories. However, another 10% of people purchased food with higher calories. (Read about it here and here.) Turns out, sometimes people just want the most value for the price they’re paying. The policy didn’t change that desire.

So, what does this mean for you and your organization (and that new culture policy you just instituted)? Consider these seven factors to positively influence culture without causing unintended consequences:

1. Balance.

It’s easy to create a culture that responds to every issue or opportunity that is top of mind. However, this can lead to overcompensating and overly focusing on one area. Consider how you might take a balanced and holistic approach to the organization as a whole.

2. Long-term perspective.

The importance of your daily, weekly, and even monthly priorities can make things feel more urgent or important than they actually are. Embrace the possibility that issues will go away, evolve, and arise over time. How might you help guide your organization over that long-term journey?

3. Context and transparency.

Many rules and policies are based on information only “those at the top” have and understand. Giving individuals simple rules to follow rather than the detailed information needed to act seems simpler, but it can lead to suboptimization. Consider how to provide context and transparency so people can make informed decisions.

4. The whole picture.

In Lean manufacturing, avoiding suboptimization means seeing the whole (or looking up and downstream). While culture certainly isn’t a production environment, it (and the behavior of individuals) has inputs and outputs worth considering in context and out of isolation. Have you considered the inputs and outputs of your organization’s behaviors lately?

5. Diverse insights.

Gathering diverse insights from your teams and organization helps you avoid creating policy that suboptimizes the culture. Do you manage by “walking around” or taking time to understand various perspectives? How do you involve others’ insights in decision-making?

6. Principles.

You can remove bureaucracy from your organization by being principles based (rather than policy based). Sharing principles keeps the organization aligned and empowers people closest to the problem to make decisions. Where can you replace rules or policies with guiding principles that help individuals adopt similar mindsets?

7. Reality.

At the end of the day, nothing will be perfect. When we realize perfection is a mirage, we can focus on the reality of things and keep moving forward. How can you celebrate success, learn from your experience, and continue to iterate and try new things?

Your culture can be a powerful differentiator for your organization. Incorporating these factors can help you influence and shape your culture to be your organization’s best competitive advantage.

Have questions for Zac? Give us a call at (859) 415-1000 or drop us a line in the form at the bottom of this page.