Culture as an Investor Magnet

How to turn your ethos into equity

With so much evidence of the causal link between strong culture and sustainable performance, it is surprising how few business leaders consider corporate culture to be a critical issue.

Yet, maybe it’s not so shocking, given where most CEOs’ time and energy is focused: on digital disruption and disruptive innovation, and finding the talent to turn these change factors into growth opportunities.

Also, there still exists an undeniable bias in business that culture is indefinable and unmeasurable and, therefore, immaterial.

Of course, it’s flawed thinking. But this misperception explains why corporate culture is so commonly overlooked; internally, in investment strategies and processes, and externally, in analyst’s and advisors’ investment reviews.

But things are changing. Quickly.

Driven by an increased appetite on the venture front, fund managers and investors are including culture in their assessment criteria when determining company value.

Warren Buffet, notable for his time-honoured practice of value investing, uses a disarmingly simple formula for selecting investment-worthy companies: Culture, plus leadership, plus trust, equals wealth.

So, what can you be doing to improve your culture in ways that add value to your business and that draw new growth partners?

Here are five principles to follow towards the creation of a strong, investment-friendly culture.

1. Work with what you’ve got

Corporate culture isn’t software. It’s not something you can update or replace with a newer, better alternative. Culture is alive. It’s what your company thinks and believes, and how it behaves and makes decisions.

So, take a good look at how all this is happening, currently. Consider appointing a team of culture change experts to assess your culture. They will bring what no-one else in your organisation can: Objectivity.

A comprehensive reading of your culture and its aspects – good and bad – will help you to develop a plan to improve it.

2. Involve everyone. Seriously, every one.

Traditional culture change models dictate that change begins at the top and trickles down through the rest of the organisation. This model is obsolete on several fronts. Increasingly, today’s organisations are flat in structure. There is no top.

This switch to distributed leadership is ushering in a new relationship with employees, where the focus is on self-management and self-direction.

So, by involving all employees in the conception and design of your organisation’s transformation, you unleash creative potential. The benefit of this creativity is that it is hugely energising. Positive energy can help transform people, teams and entire organisations. It is catalytic in breaking down resistance, while inviting participation and active involvement.

3. Articulate your organisational purpose and values

Developing company purpose is what Jacob Morgan, futurist and author of the groundbreaking book, The Employee Experience Advantage calls the ‘Reason for Being’. For Morgan, this Reason for Being replaces the company mission, and with good reason:

“Although mission statements may talk about what the organization is trying to do, they don’t go beyond that to make the leap from business to human.”

In developing organisational purpose, it is vital to define the values that will drive it. Because values arise from our experience of being human.

Again, ensure that this articulation process is inclusive. In an age when we welcome diversity at work – not only of ethnicity, age, gender, sexuality and physical ability, but also of culture, language and thought – having multiple inputs and opinions is going to produce a final version of your purpose and values that reflects your people. Perfect!

4. Launch a behaviour

Too often, change initiatives focus on the idea of change when, really, what brings change into effect, is behaviour.

So, return to your culture change assessment and identify one behaviour that stands out as new. If it’s not jumping out at you, simply ask yourself the question, ‘What are we going to do differently?’

The answer to this question reveals the behaviour trait that everyone at work should strive to embed into their day-to-day actions. So, let’s say, for example, it was found in your assessment that employees never question clients. That they simply action clients’ requests.

What emerges, in answer to the question, ‘What are we going to do differently?’ may be a behaviour statement, such as: ‘Ask more questions’.

Suddenly, culture can start developing around innovative, new behavioural characteristics, such as curiosity, collaboration and experimentation.

5. Go public

There’s a strange belief that organisational change should happen behind closed doors, away from public scrutiny. The implication being that something must be ‘wrong’ with the company for it to be undergoing transformation.

The fact is, human beings are drawn to change, instinctively. It fascinates us. Because transformation is powerful. Still, it’s important to understand that change is not an end in itself. It is a means to an end.

So, when you share the story of your organisational transformation, you invite stakeholders – and potential investors – to bear witness to your process of becoming.

It is the ultimate act of corporate transparency.

To return to Warren Buffet and Berkshire Hathaway’s formula for choosing investment-worthy companies: Culture, plus leadership, plus trust equals wealth, you simply can’t go wrong by going public with your transformation efforts.