Archive for 'Company culture and reputation.'

Company Culture Valuable Intangible Asset

May 20th, 2016. Published under Company culture and reputation., Intangible asset focused company culture.. No Comments.

Michael D. Moberly May 20, 2016 ‘A blog where attention span really matters’!

A company’s culture, and its management, are two of many ‘intangibles’ that play increasingly pivotal roles in – contributions to (company) performance, retention, and sustainability, among other things. The credibility-validity of this perspective lie in the findings of numerous studies/surveys commissioned-undertaken by professional associations and academia not unlike a Society for Human Resource Management (SHRM), survey, circa 2012, which asked HR (human resource) leaders to identify significant ‘workforce management and staffing challenges’, which 770 respondents identified…

• employee engagement
• employee retention
• effective performance management
• employee recruitment, and
• company culture management

To some, this survey example, may appear dated, especially if considered in the context of today’s increasingly entrepreneurial and go fast, go hard, go global business environment. To be sure, the commonality of findings, replicated – validated through numerous other studies/surveys and, whether taken individually or collectively, are indeed instructive. Preferably, they have and will continue to influence business leaders and management teams to conclude that devoting time, energy, and yes, some resources to developing and sustaining a relevant-intelligent (company) culture will deliver measurable positive returns. So, no rocket science here, a company (sector relevant) culture is a prized and measurable achievement and powerful contributor to performance, competitiveness, value, and, of course, brand.

A company culture…whereby employees, management teams, c-suites, and boards alike, are collectively committed to sustaining a principled base of intellectual, structural, relationship, and competitive capital ala IA’s (intangible assets).

This reality manifests in the economic fact that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability today lie in – evolve directly from IA’s, of which company culture is a potent example. It’s certainly not a stretch then for experienced business leaders to also conclude that a principled and consistent company culture can, and frequently does, serve as a catalyst for internalizing and enhancing other IA’s among them being, employee engagement, retention, performance, as well as attracting – recruiting new employees.

What is a company culture…?
Based on the fine work of Dr. Edgar Schein, a company culture consists of progressive stages that observably emerge, that is, if one looks for them, i.e.,

• employees (collectively) recognize and begin to act on a shared system of values, norms, beliefs, and attitudes that defines and clarifies what is important.

• employees at all levels recognize they learn as they’re solving problems and, if the problem solving methodologies work well enough, employees will consider them valid and worthy of being taught and passed along to new employees, because…

• they represent the correct way to perceive, think, and feel in relation to addressing (internal, external) problems that their company routinely face, which, in turn, leads to efficiencies, competitive advantages, and reputational value, etc. (Adapted by Michael D. Moberly from the work of Dr. Edgar Shein)

For most companies, the initial step in developing a principled company culture involves…

• determining what attitudes and beliefs need to (should) be established, and

• having a clear understanding how those attitudes and beliefs can translate (become operational) as sector-business relevant behaviors on an enterprise-wide basis.

Transferability of company culture…
As aptly pointed out by Dr. Kenan Jarboe in his Athena Alliance monograph appropriately titled ‘Intangible Asset Monetization: The Promise and the Reality’, there are six factors considered by financial markets (i.e., asset buyers, sellers, and investors) with respect to determining the ‘suitability’ of an (intangible) asset. Of those six factors, one is an assets’ transferability. In other words, is a ‘company’s culture transferrable? Or is it so (company, business unit) specific that would make its replication and/or sustainability challenging should any base changes occur?

Unfortunately, the contributory value of a company culture seldom, if ever, appears on management teams’ conventional mba oriented dashboards, in part, I believe, because those dashboards remain largely focused on tangible (physical) assets vs. intangible (non-physical) assets, i.e., company culture.

Too, for some management teams, c-suites, and boards, a principled company culture, remains somewhat of a managerial, financial, and competitive advantage mystery in terms of understanding how best to utilize – exploit this increasingly influential and catalystic asset.

A much desired objective of course, is to build a resilient, self-perpetuating, and principled company culture that is readily scalable and supports development-acquisition of intellectual structural, relationship, and creative capital to consistently deliver measurable performance and returns.

Of course, building a principled company culture today, is seldom something which evolves exclusively in a top-down fashion and as such, it is seldom a characteristic wholly owned and executed by a management team or c-suite. Instead, a well-grounded and principled company culture provides permanence, depth, and confidence among employees and their abilities. (Jennifer King, Software Advice Blog)

Intangible Asset Strategist – Risk Specialist

December 29th, 2015. Published under 'Safeguarding Intangible Assets', Communicating Risk, Company culture and reputation.. No Comments.

Michael D. Moberly December 29, 2015   ‘A business blog where attention span really matters’.  

I begin with the principle that decision makers, management teams, boards, and strategic planners have a (fiduciary) responsibility to consistently insure their organization is positioned to provide the necessary stewardship, oversight, and management of the various IA’s (intangible assets) an organization has in play. This includes capabilities to…

  • identify, unravel, cultivate, bundle, utilize, and extract as much value and competitive advantage as possible from its IA’s.
  • monitor, inhibit, and/or mitigate risks to those assets which, if materialized, would undermine (asset) contributory – collaborative value, competitiveness, and materiality.
  • sustain control, use, and ownership of the assets throughout their respective value cycle.

Absent these operational capabilities to execute at will, organizations are placing the value, competitive advantages, and revenue their IA’s produce at risk to irreversible undermining, erosion, or going to zero! In these circumstances, the value proposition which an IA strategist and risk specialist (consultant) can deliver include…

  1. Providing guidance/strategies as needed, for extracting value, delivering competitive advantages, and measuring IA performance.
  2. Adding predictability to business transaction outcomes, projected returns, and exit strategies when-where IA’s are in play.
  3. Assessing asset stability, defensibility, and fragility in both pre and post transaction contexts.
  4. Conducting IA due diligence designed to sustain competitive advantages and fully exploit asset synergies, efficiencies, and contributory value.
  5. Reducing the probability that project-transaction momentum can be stifled by recognizing and mitigating circumstances that can ensnare and/or entangle IA’s in play in costly and time consuming legal challenges undermine/erode asset value and performance which adversely affect reputation ‘risk points’.
  6. Bringing clarity to IA ’suitability’ factors, i.e., recognition, valuation, separability, transferability, life cycle, and risk.
  7. Introducing valuation and reporting of IA’s and integrating same in asset development, organization governance, and new initiatives.
  8. Designing organizational resilience (continuity, contingency) plans that fully encompass essential IA’s to provide rapid recovery following significant business disruptions, disasters, or other risk materialization.
  9. Monitoring IA value chains, i.e., the inter-connectedness between the production, acquisition, and utilization of IA’s vis-a-vis their contributory-collaborative value, revenue and competitive advantage generation.
  10. Building a ‘company culture’ that’s aligned – converges with an organization’s IA’s, i.e., mission, objectives, and strategic plan.

Trust, Reputation, and Value Propositions

May 22nd, 2015. Published under Company culture and reputation., Value Propositions. No Comments.

Michael D. Moberly   May 22, 2015    ‘A blog where attention span really matters’!

Trust between employers and employees and companies and customers (clients, consumers, etc.) is an essential and very relevant IA (intangible asset) to most company’s profitability and sustainability, irrespective of sector. Through my lens, at least in business contexts, trust is embedded in – translates as relationship capital and reputation, additional key IA’s, and, as such, play increasingly significant roles in articulating, materializing, and sustaining a company’s value proposition. But trust, like many other ‘business’ terms, are frequently prey to individualized definition and translation.

Sarcastically, when I see – hear one, in a leadership role, take a podium to evangelize about the importance of trust, I find it prudent, to recognize who, for what purpose, and the context in which they are endeavoring to characterize trust. In other words, I often find expressions of trust to be circumstance and/or context specific, but sprinkled with sufficient commonalities tantamount to self-serving glue that allows the definition to retain a semblance of palatability.

Trust, like numerous other business terms, is receptive to being defined in a manner that reflects a speaker’s circumstance to casts them in a preferred (positive) light vis-à-vis their customers, clients, superiors, and/or consumers, something which I would advise Barclays, Citigroup, J.P. Morgan, and the Royal Bank of Scotland, aka “The Cartel” to not try waste resources to argue, for some time, once again.

Aside from the financial services sector, many of us remain inclined to feel that someone whom we presume possess perspectives and values similar to our own can, and should be worthy of our trust. Thus, we would likely be receptive to their overtures. More specifically, when I am engaged with individuals, in business and IA management-safeguard initiative, whom there there is evidence of shared commonalities, it’s likely I will be inclined – receptive to feeling they have my interests in mind.

That sense of course, emanates from another assumption which is, one’s present – past experiential commonalities serve as emotional entrées to trust. One might go so far as to suggest when we are surrounded by people whom we believe are like us, there will be a reciprocating inclination of trust.

Trust is a feeling, and thus a distinctly human experience says Simon Sinek. But, merely doing everything one has expressed – been interpreted as a promise you would do, does not robotically mean people will trust you. Instead, it more objectively translates that you may be reliable. To drill down further on this, most of us have friends who, by reasonable standards of assessment, could be characterized as not being particularly reliable or trustworthy, yet, because they are like us, we are inclined to trust them and remain friends, claims Sinek.

Trust is important because, when one is in the presence of individuals with shared beliefs, we are more confident – receptive to engage in some level of risk taking, experimentation, or exploration which, it’s likely we would not be inclined to do otherwise. After all, our personal – professional survivability and sustainability are, arguably dependent upon our ability to surround ourselves – serve with others with shared beliefs!

(This post evolved from NPR’s ‘Ted Radio Hour’ that aired on May 15, 2015, hosted by Guy Raz with a segment conducted by Simon Sinek, an adjuct to RAND Corporation.)

Company Culture, It’s A Necessity, Not A Luxury or Option!

October 23rd, 2014. Published under Company culture and reputation., Intangible asset strategy. No Comments.

Michael D. Moberly    October 23, 2014   ‘A blog where attention span really matters’!

Company culture is a valuable, but intangible asset…

Readers recognize that a company’s ‘culture’ is a valuable and operationally and strategically critical collection of intangible assets which can favorably or unfavorably affect brand, image, goodwill, structural capital, and competitiveness.

As the U.S. and other countries’ businesses began their emergence from the economic doldrums of previous years, the Society for Human Resource Managers (SHRM) commissioned a survey in 2012 which queried 770 human resource leaders about significant workforce management and staffing challenges which the respondents reported, in rank order, the following…

  • company culture management
  • employee engagement
  • employee retention
  • effective performance management, and
  • employee recruitment.

While I am confident readers’ and intangible asset strategists do not find these findings particularly revelatory, they are instructive. For example, when considered in the context that a ‘company’s culture’ frequently constitutes a convergence of intangible assets a full 90% of the survey’s respondents identified ‘company culture management’ as being (a.) important, or (b.) very important!  For company culture advocates like me no particular surprise there.

Issues to take note of…

One is, the surveys’ findings should prompt management teams and c-suites to recognize that devoting time, energy, and a modicum of resources to building – developing, and sustaining an effective and sector relevant company culture will, in most instances, deliver strategically favorable and measurable returns that contribute directly to a company’s value, sources of revenue, and sustainability.

Second, the surveys’ findings give persuasive credence to the view that a well managed and customer/client/sector relevant company culture, whereby employees, management teams, c-suites, and boards collectively recognize, respect, and are consistently committed to sustaining the necessary intellectual, structural, and relationship capital, i.e., intangible assets, can, with little doubt, elevate a company’s overall performance.

Third, integral to both of the above lies the globally universal economic fact – business reality that 80+% of most company’s value, sources of revenue, and ‘building blocks’ for achieving growth, profitability, and sustainability today lie in or evolve directly from intangible assets, one of which, of course, is the sustainability of a sector relevant company culture!

Chief Culture Officer

March 26th, 2014. Published under Company culture and reputation.. No Comments.

Michael D. Moberly    March 26, 2014    ‘A long form blog where attention span really matters’!

A principled company culture…

It’s certainly not a stretch then, to infer that a principled company culture can also serve as a catalyst for internalizing and enhancing other factors noted in SHRM’s survey, i.e., employee engagement, retention, performance, and certainly, recruitment of new employees

Society for Human Resource Management Survey…

Readers of this blog recognize that a company’s culture and its management, in a growing number of instances facilitated by a ‘culture officer’ can become a strategically significant and value contributing intangible asset.  A 2012 survey commissioned by the Society for Human Resource Managers, i.e., SHRM asked 770 human resource leaders to identify significant workforce management and staffing challenges.  The challenges the survey respondents identified were…

  • company culture management
  • employee engagement
  • employee retention
  • effective performance management, and
  • employee recruitment.

Interestingly, full ninety percent of the survey respondents identified ‘company culture’ management as being (a.) important, or (b.) very important!  Standing alone, I, and I am confident others, find this revelation instructive in many ways, one is, it should prompt management teams to recognize that devoting time, energy, and some resources to developing and sustaining an effective and positive company culture will, under most circumstances, deliver impressive, measurable, and beneficially strategic returns each of which can contribute to a company’s value, sources of revenue, and sustainability.

Equally important, in my view, the SHRM survey findings give persuasive and definitive weight to the view that a well managed and positive company culture, whereby employees, management teams, c-suites, and boards collectively recognize, respect, and are committed to sustaining a principled base of intellectual, structural, and relationship capital and values (intangible assets) can, with little doubt, elevate a company’s overall performance.

Integral to (1.) recognizing, and (2.) accepting this view lies the economic fact that 80+% of most company’s value, sources of revenue, and strategic ‘building blocks’ for growth, profitability, and sustainability today either lie in or evolve directly from intangible assets, one of which, of course, is a positive and principled company culture!

It’s certainly not a stretch to infer then, that a positive and principled company culture can, and in all likelihood will serve as a catalyst for internalizing and enhancing other findings – revelations in this survey commissioned by SHRM, i.e., employee engagement, retention, performance, and certainly, and recruitment of new employees, etc.

How do management teams know their company is exhibiting a positive and principles culture…?

Based on the excellent work of Dr. Edgar Schein, a company culture consists of progressive stages, and will emerge and start to become observable to management teams in the following contexts, i.e., evidence that…

  • employees (collectively) recognize and begin to act on a shared system of values, norms, beliefs, and attitudes that defines and clarifies what is important to them and their employer.
  • employee’s at all levels recognize they learn as they are solving (company) problems and, if the problem solving methodologies work well enough, employees will consider them valid and worthy of being taught and passed along to new employees, because…
  • they represent the correct way to perceive, think, and feel in relation to addressing (internal, external) problems that their company routinely faces, which, in turn, leads to greater efficiencies, competitive advantages, and reputational value, etc.  (Adapted by Michael D. Moberly from the work of Dr. Edgar Shein)

But first, the initial step that most companies must undertake insofar as developing a positive and principled company culture involves…

  • determining what attitudes and beliefs need to (should) be established, and
  • having a clear understanding how those attitudes and beliefs will be translated and ultimately operationalized by employees, preferably as consistent, positive, and principled behaviors that cascade throughout a company.

But, as aptly pointed out by Dr. Kenan Jarboe in his Athena Alliance monograph appropriately titled ‘Intangible Asset Monetization: The Promise and the Reality’, there are six factors considered by financial markets (i.e., asset buyers, sellers, and investors) with respect to determining the ‘suitability’ of an (intangible) asset.

Of those six factors, one is an assets’ transferability.  In other words, is a company’s culture transferrable?  Or is it so (company, business unit) specific/centric that it cannot be replicated or sustained through a market change, merger or acquisition, or significant economic downturn as is being experienced today?

Unfortunately, the contributory value of a principled company culture seldom, if ever, appears on management teams’ conventional mba oriented dashboards, in part, I believe, because those intellectual – managerial dashboards have not fully transitioned to the intangible (non-physical) assets side of a business or company, such as a company culture.

Too, for some management teams, c-suites, and boards, a principled company culture, remains somewhat of a managerial, financial, and competitive advantage mystery in terms of understanding how best to utilize – exploit this influential asset.

A much desired objective of course, is to build a resilient, self-perpetuating, and principled company culture that is readily scalable and supports development of intellectual, structural, and relationship capital.

But, building a positive  and principled (semi-permanent) company culture is not something which evolves solely in a top-down fashion, nor is it a characteristic owned and executed solely by a management team or c-suite as aptly noted by Jennifer King (Software Advice Blog, June 12, http://www.softwareadvice.com ). Instead, a well-grounded and principled company culture provides permanence, depth, and confidence among employees and their abilities and capabilities!

Reader comments and inquires are always welcome at 314-440-3593 (St. Louis) or m.moberly@kpstrat.com

 

Investing In Company Culture Is An Investment In Intangible Assets!

January 10th, 2014. Published under Company culture and reputation., Design thinking., Intangible asset focused company culture.. No Comments.

Michael D. Moberly    January 10, 2014    A blog where attention span really matters!

David Lapin projects the next big wave of growth in business will come from businesses whose leaders and management team members know how to convert this low-cost intangible asset, i.e., company culture, into high bottom-line value!

Investing in building and nurturing a company’s culture is the wisest investment any business leader or management team can make!  Financially, it is a low-cost investment with a high probability of economic – competitive advantage returns.

A company’s culture is somewhat akin to a garden, that is, a culture will develop whether or not business leaders or management teams put forth the time and effort to actually design it.

So, like the garden analogy above, if a company’s culture is ignored or neglected, that is, absent regular management, oversight, and nurturing, it’s very likely it will continue to grow regardless, but probably not as intended or preferred and in ways which are not particularly helpful to the company and its mission.  Adverse examples of this include inhibiting innovation or manifesting as employee under-performance. Company cultures that evolve in this manner are said to be akin to an ‘invisible force’ that can not only undermine company – employee productivity but sap leader’s energy.

Cultivating a positive company culture…

Let there be no question, developing, cultivating, and sustaining a desired company culture requires thought, wisdom, time, and some intellectual curiosity and emotional investment to understand what motivates employees to perform consistently well, even beyond expectations.   I am respectfully confident there is no specific, one-size-fits-all methodology or strategy to achieve this, but there is ample anecdotal evidence and examples that ‘good to great’ leaders do pay attention to it.

As David Lapin pointed out in his research, an authentic (company) culture is something competitors will find challenging if not impossible to imitate.  And yes readers, company culture is an intangible asset which, in most instances, can be commoditized and converted to real value. In fact, David Lapin projects the next big wave of growth in business will come from businesses whose leaders and management team members know how to convert this low-cost intangible asset, i.e., company culture, into high bottom-line value.

The knowledge-based global economy has allowed many leaders and managers to acquire a better understanding and appreciation for ‘home grown’ intangible assets like intellectual, structural, and relationship capital and their potential for conversion as specialized commodities into value, revenue, reputation, and goodwill, etc.

Many would agree with the view that Southwest Airlines (headquartered in Phoenix, Arizona) is a prime example of a leaders’ ability to not only create a very open and transparent company culture, but also turn the intangibles emanating from this culture into commodities with substantial monetary value.

Southwest Airlines has long been a dominant player, particularly upon airline deregulation occurred in the U.S. and now in the ever shrinking (merging) U.S.-based airline industry. For SWA’s their growth was in part due to its operating culture built upon genuine efficiencies, e.g., flying only one model of aircraft, creating a no-frill travel experience, no food service or pre-assigned seating.  Ultimately SWA stripped most of these ‘tangible commodities’ associated with conventional airline travel.  In return, SWA’s customers received something of relatively equal value in return, at least in the eyes of their growing number of customers that is, a good flying experience underwritten by a culture embedded with intangible assets, i.e., joke telling entertainment from flight attendants coupled with a felt sense of care that apparently compensated for any loss of those ‘tangible commodities’, i.e., complimentary food and beverage service for one.

There are three well known secrets that underlie SWA’s travel experience and its overall financial success since its inception, i.e., (1.) the company and its leader, ala Herb Kelleher built a culture that incorporated the properties of fun, entertainment, and felt care became embedded in the company’s core, (2.) the culture had to feel authentic and genuine by passengers, and (3.)  SWA had to be able to convert its now intangible asset based company culture into tangible benefits, including market share growth which, as we know, it did.

Numerous business schools today use SWA and its founder Herb Kelleher as a case study of commoditizing a company culture and its intangible competitive advantages balanced with tangible operational efficiencies.

While SWA was investing in and building its intangible asset based company culture, numerous competitors were cutting financial corners that indeed reduced costs that frequently eroded their own culture. Kelleher and SWA, on the other hand, only cut those (financial) corners which the y presumably believed would have little or no impact on the culture they were building and a passengers’ overall travel experience. In fact, SWA continued to invest more in its culture even during periods when the airline industry, as a whole, was struggling. Kelleher and SWA management teams obviously recognized safe and on-time flights for passengers were, in essence, common commodities that competitors also provided to their passengers.

So, for SWA to be competitive in a deregulated environment, Kelleher and his management team purposefully built a company culture that would offer ‘intangibles’ that competitors couldn’t or wouldn’t.

The intangibles SWA’s culture began offering became well publicized differentiators that were embedded in the company’s values rather than directly in its products, processes, or structures. Products, processes, and structure, it’s said, Kelleher recognized could and would be copied, but intangible assets such as an authentic company culture cannot be readily copied providing it is genuinely embedded in company and employee values.

Any company can build its own culture; one that is unique and innate to its people and strategic objectives. But when a company tries to copy another company’s culture they quickly find it difficult, if not impossible to replicate.  Numerous SWA competitors have tried, over the years, to imitate those SWA, but, most all fell short, generally it’s assumed, because they were unable, for whatever reason, to embed it in company – employee values.

Admittedly, I never had the opportunity or pleasure of making Mr. Kellehers’ acquaintance. I did however regularly fly on SWA in it earliest days, not for its’, at the time, emerging culture, rather because (a.) it was less expensive, and (b.) I didn’t mind its business model of securing gates at first generation airports, which in many instances were actually closer to city centers’.

Professionally speaking, I’m unclear whether SWA’s company culture, which in my recollection became obvious and noticeable, from a passenger perspective, beginning in the mid-1980’s and continuing through much of the 1990’s.  Was this culture a well thought through component of Kelleher’s ‘grand plan’, or was it like most other company cultures which appear and grow by accident or merely good luck?  Frankly, what makes me slightly skeptical is the now common relationship between intangible assets and company culture only slowly acquired traction in business operations following the publication of the Brookings Institute’s report (study) on intangibles in late 1990’s.

There is absolutely no question that Kelleher was the ‘dynamic’ driving SWA’s rapid growth and passenger satisfaction, which in part was due to the company culture that evolved.

This post was inspired by David Lapin’s book ‘Lead by Greatness, Character, Success’ published by Avoda Books, 2012.

Comments regarding my blog posts are encouraged and respected.  Should a reader elect to utilize all or a portion of my posts, full attribution is expected and appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance or business transaction.  I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com.

Creating A Company Culture: A Necessity, Not A Luxury!

January 9th, 2014. Published under Company culture and reputation., Fiduciary Responsibility. No Comments.

Michael D. Moberly    January 9, 2014    ‘A blog where attention span matters’! 

Imagine a person from another planet turning up at a funeral here on Earth. Without having to be told, he would know that a funeral is not an appropriate place to tell jokes. This, Professor Michael Tushman tells his class at Harvard Business School, is the meaning of culture.

But culture does more than inform employees what attitudes and behaviors are expected of them. Culture reflects a company’s soul and is responsible for generating human energy.

I have written this post with the intent that it respectfully encourages business leaders and management teams to recognize the importance of creating a company culture that converges  intangible assets, particularly its intellectual, structural, and relationship capital.

Every company has a culture…

Whether by accident or by design, it is highly likely every company has a culture, says Dr. Phillip E. Atkinson in his paper titled ‘Creating Culture Change’.

However, in most instances, Atkinson suggests, a company’s culture is frequently a matter of accident or, simply luck.  Unfortunately, in numerous instances, Atkinson found, a company’s culture may not match its strategy, its business plan, or its commercial intentions.  In other words, a company culture may actually be counter to its needs.  Further, Atkinson suggests, and I agree, it is not unusual to observe a company culture that actually drives clients and customers away because its focus is primarily internal to the exclusion of being sufficiently external (customer, client) oriented.

Examine company culture for…

As conveyed countless times throughout this blog, a well designed, configured, and balanced company culture that genuinely reflects each relevant component of a company’s mission can be a very valuable intangible asset that delivers competitive advantages in multiples. It’s prudent then for business leaders and management teams to assume an obligation, if not fiduciary responsibility to periodically examine and assess their company’s culture for (a.) balance, (b.) match, and (c.) resilience.

There is ample evidence, along with just plain business sense, that for numerous companies globally, success, measured as elevated value, expanded sources of revenue, opportunities for growth, profitability, and sustainability, etc., flow from an agreeable and well executed company culture.

Key components of an effective company culture…

The key components of this type of company culture are that it respectfully harnesses, exploits, and utilizes its intangible assets which I describe as ‘contributory value’ assets, i.e., intellectual, structural, and relationship capital.  In most instances, these and other intangibles are accepted, shared, and ultimately embedded in company practices and processes.

A resilient company culture…

A company cultures’ resilience is indeed important, and a facet that should not be taken for granted or otherwise overlooked. A cultures’ resilience translates as how receptive and readily adaptive it is – can be to the increasingly nuanced types of global, multi-partnered, and multi-cultural business transactions that are common in a manner that elevates the probability that the outcomes – results will be favorable and meet or surpass projections.

A well designed and executed company culture, recognized as a culmination of intangible assets, will deliver superior performance, providing, of course, resilience and sustainability have been prominently embedded along with a balanced internal – external orientation that reflects the company’s mission and achieves competitive advantages relative to its respective (industry) sector.

However, company cultures’ require working in ambiguous and perhaps subjective arenas, relative to how (company) beliefs and values eventually surface as accepted processes, practices, group dynamics, and ultimately expected behaviors.

This culture has to change…

Atkinson appropriately asks, how many times has the phrase ‘this culture has to change’ been uttered by business leaders and management teams?  To be sure, in recent years we have heard this phrase often relative to the global banking crisis, the recent exposures about the media, publishing of Edward Snowden’s revelations, the continued poor performance of educational systems, and the list certainly does not end there.

Respecting Atkinson’s near term as well as over-the-horizon research regarding company culture, it’s certainly not challenging to infer a significant percentage of company cultures are not, or they are ineffectively, aligned with a company’s mission, the various transactions it becomes engaged, or its purpose. Surely, at some point, business leaders and management teams will recognize that it does not require publicly embarrassing revelations and/or investigations that produce substantial and long lasting reputation risk to recognize that in a number of instances, remedial (company culture) action is necessary and is the absolute correct thing to do.

Before those of us who are strong company culture advocates jump into this fray, it might be a good idea to bring more clarity about precisely what company culture actually is and how it can be built, shaped, installed, nurtured, monitored, and sustained.

Remember, a company’s culture is an intangible asset…

Admitted, there remains confusion, even among the higher echelons, about company culture and how to recognize it warrants changing to be better, more relevant, and actually fit or merge with the economic fact that today, 80+% of most company’s value, sources, of revenue, and ‘building blocks’ for growth, profitability, and sustainability either lie in or evolve directly from intangible assets, which company culture is a prominent one.

A company’s culture should be or become the driving underlier to company’s forward movement, Atkinson suggests.  More specifically, a company culture consists of its infrastructure and the proverbial glue that connect employees and processes (structural capital) to generate positive outcomes and results while being aligned with the business plan and vision for the future.

So, for 2014 and beyond, it’s important that business leaders and management teams recognize, whether by accident, design, or luck, their company already has a functioning culture in place.  The assessment that must be performed however is whether that culture meshes with the company’s strategy, business plans, and overall commercial intentions. a company.  If not, often with slight modifications, managerial nurturing, and time, the existing culture can be re-oriented to better connect with a company’s needs.


This post was inspired by the excellent work of Phillip A. Atkinson, particularly his 2004 article titled ‘Creating and Shaping a Performance Driven Culture’.

Company Cultures: Their Future Must Accommodate Intangible Assets

January 8th, 2014. Published under Company culture and reputation., Intangible asset focused company culture.. No Comments.

Michael D. Moberly     January 8, 2014    ‘A blog where attention span matters!’

I assume many readers of this blog are like me, that is, we only periodically give the notion of ‘company culture’ much genuine thought.  But, if asked, we could readily utter a sufficient number of adjectives, adverbs, and nouns that, once organized, would paint a fairly detailed operational portrait of our employer that would reveal the intricacies of our employer’s (company) culture.

I respectfully suspect however, individuals who are unfamiliar with my blogs’ overall mission may omit from their (company culture) descriptive’ the fact that company culture is a powerful and generally valuable intangible asset.

So, while we may understand how a company culture should be conveyed, many of us may not realize how important company culture has become in today’s businesses, as a valuable contributor – underlier to sources of revenue, competitive advantages, and overall sustainability.

In their new book titled Rise of the DEO: Leadership by Design, Maria Giudice and Christopher Ireland explain their view of the importance for companies to have a ‘design executive officer’ in the place.  Of the six defining characteristics which Giudice and Ireland believe DEO’s should possess, I believe a particularly relevant one is being a ‘systems thinker’ which they define in the following context which I have taken the liberty of adapting somewhat…

“despite their desire to disrupt and take risks, DEOs understand the interconnectedness of the work environment as a whole, that is, they recognize each part of the organization (probably) overlaps and influences other parts of the organization. They also recognize unseen connections, that surround what’s actually visible within acompany which helps give their disruptions intended, rather than chaotic, impact and makes their risk taking more conscious…”

More specifically, Giudice and Ireland suggest that business leaders who actually understand the transformative power and influence of a company culture (design) and embrace and engage its characteristics will lead in times of change.  Thus, as noted countless times in this blog, the economic fact that 80+% of most company’s globally, their value, sources of revenue, and ‘building blocks’ for growth, profitability, and sustainability either lie in or evolve directly from intangible (not tangible) assets, constitutes change, and leading that (economic, business) culture change is not merely important, it’s a necessity!

In many respects, Giudice and Ireland’s 2013 book, Rise of the DEO: Leadership by Design, describe, the qualities, many through examples, which they believe ‘a new breed’ of business management team leaders should possess which I do not disagree insofar as have a ‘design’ for purposefully identifying, unraveling, and engaging their intangible assets.  In other words, elevating the operational familiarity of the current, as well as the on-coming generation of company management teams to the sometimes disruptive strategies necessary to fully utilize and exploit their intangible assets.

This post was dually inspired by Marissa Brassfields Ridiculously Efficient’ blog post of December 24, 2013 and the authors Maria Giudice and Christopher Ireland for their very intriguing 2013 book titled, Rise of the DEO: Leadership By Design.

 

  • This blog post, as usual, is researched and written by me with the genuine intent it serve as a useful and respectful medium to elevate awareness and appreciation for a wide range of issues related to intangible assets within the global business community.  My posts are not intended to be quick bites of unsubstantiated commentary.
  • Comments regarding my blog posts are encouraged and respected.  Should a reader elect to utilize all or a portion of my posts, full attribution is expected and appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance or business transaction.  I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com.

Company Culture Due Diligence

January 6th, 2014. Published under Company culture and reputation., Due Diligence and Risk Assessments. 1 Comment.

Michael D. Moberly    January 6, 2014    ‘A blog where attention span matters.

 A company initiating, or even contemplating, a merger or acquisition would be well served today if a company culture analysis was included in their overall due diligence strategy!

The reason, as conveyed here many times, is that increasing percentages, i.e., 80+% of most company’s value and sources of revenue either lie in or directly evolve from intangible assets, which company culture is one.  It’s correct to assume then, that a substantial factor in the rationale if the initiating company’s seeking an M&A evolve around merging or acquiring particular intangible assets which the target firm already has in place and collectively exist in the form of intellectual, structural, and relationship capital.

From an operational perspective, intellectual and structural capital constitutes the knowhow and processes which collectively underlie the revenue, competitive advantages, and efficiencies, etc., being sought.  So, in M&A transactions, acquiring unimpeded use and control of these valuable assets becomes the underlying starting point for achieving the projected (desired) transaction outcomes.

Unfortunately, for the uninitiated, a target company’s culture, as well as other intangible assets, may be overlooked, dismissed, or even deemed irrelevant to a transactions’ projected outcome.  It’s equally unwise to assume, should a proposed transaction, i.e., M&A, strategic alliance, etc., be favorably executed, that the sought after intangibles can be necessarily (individually) separated, extracted, and  exploited apart from a company’s culture. Today, transaction management teams are obliged to understand that are intangible assets quite indivisible from its culture, particularly intellectual, structural, and relationship capital which are generally embedded in various operational processes and integrated throughout an enterprise,.

Transaction management teams again, would be well served to recognize a company’s culture as being an invisible (intangible) temperament and/or attitude that connects and bonds companies, employees, and stakeholders together, says Grant McCracken, one, among several prominent company culture specialists today, specializing in the intersection of commerce and culture, i.e., where company culture sits at the intersection of anthropology and economics.

So, from McCracken and others’ work in this arena, we see perspectives emerging, that company culture is being likened to an ‘internal version of a company’s brand’.  That’s largely attributable to a broader recognition of the reality that company culture generally encompasses a company’s mission, its vision, its values, and its intangible assets.

Clearly McCracken understands how an effective (company) culture can impact a business, e.g., “culture is a company’s last mile” he often emphasizes as he makes a very compelling case that a company’s culture is marketing’s newest version of the proverbial ‘silver bullet’.  Certainly, no disagreement here!

But, before embarking on a company culture analysis, says Monica Mehta a writer for Profit and Profit Online, the target company should be distinguished on several cultural dimensions often conveyed as dimensions between two extremes as Ms. Mehta has portrayed so well here…

So, there should be less resistance to including company culture analysis as an integral component to transaction due diligence.  In my view, each of the dimensions above apply to corporate cultures, and can serve as effective starting points for culture assessment and due diligence. It is important to realize, as Ms. Mehta points out, there may be no, necessarily right or wrong (company) culture at the analysis stage.  The initial key is that due diligence teams are operationally familiar with the characteristics and features of their own company’s culture.
In Ms. Mehta’s example, the following can be observed with respect to Company #1…
  • it is engaged in public manufacturing with a strong western, primarily U.S. oriented, business culture.
  • the nodes confirm the company has an individualized (work ethic) orientation overall wherein employees have the opportunity to work in a meritocracy fashion.
  • is very rules-oriented, i.e., there is a process for most every function or task.
  • due in part to its public nature, the Company #1 has a relatively short-term focus, e.g., new business strategies need to pay off – produce a return on investment within each fiscal year.
  • tends toward a (McGregor) Theory Y perspective, wherein managers assume employees are (self) motivated to perform well providing their efforts are duly and appropriately recognized., i.e., the bonus program, based on over-performing on the goals, can be found on the company’s intranet, next to all other procedural descriptions
  • is relatively internally focused, and plans its business using a traditional – conventional budget scheme.
  • benefits from the best practices of performance management, i.e., a top-down strategy for task implementation, coupled with openly shared feedback with a ranking of the best-scoring people in sales.

On the somewhat opposite extreme, Company #2 would likely not be as successful because Ms. Mehta suggests…

  • it has been a family-owned business for multiple generations with senior management knowing most of the employees, many of whom have worked for the company their entire professional lives.
  • the next generation of ownership is growing up and the company needs to secure their future too.
  • the culture of the company is externally focused which suggests it can only survive in the market by sustaining its extreme customer focus.
  • of the company’s decision-making process, i.e., senior management ask for input only from a few trusted employees, and then the family will make a decision with information eventually being shared with the staff, but usually verbally and in informal meetings.
  • while the company has performance indicators, they are mostly aimed at how the company is performing in the eyes of the customers.
  • rewards are not directly tied to performance during a specific period, rather the family rewards loyalty and provides bonuses when deemed necessary.

In closing, while I am a strong advocate of company culture due diligence, standing alone, culture alignment does not guarantee a successful and profitable transaction, i.e., M&A.

For example, if Company #2 is realizing losses, perhaps some elements of the performance management practices of Company #1 need to be adopted.  Conversely, if Company #1 is experiencing a substantial growth phase, key people (and their respective intellectual, structural, and relationship capital abilities) need to be retained to manage that growth with these individuals becoming part of the company’s inner circle of strategic thinkers and decision makers.

Thus, the insight that a company culture analysis (due diligence) would bring to transaction oversight could ultimately set a strategic path how (culture) performance management should be conceived and implemented. But, transaction management teams should also recognize that (culture) performance management it can work as a measurement mechanism that drives employee behavior.

So, if there are particular aspects of a target company’s culture that appear undesirable or otherwise may impede a transactions projected milestones for success they may warrant change.

Otherwise if there is too much…

  • of a group focus, individual performance indicators may be useful, or
  • of a long-term focus, short-term targets may help, or
  • if relationship (capital) focus turns into nepotism, more uniform reward processes may be needed.

This post was inspired and adapted from work authored by Monica Mehta in a February 2009 piece in Profit and Profit Online.

This blog post has been researched and written by me with the genuine intent it serve as a useful and respectful medium to elevate awareness and appreciation for a wide range of issues related to intangible assets within the global business community.  My posts are not intended to be quick bites of unsubstantiated commentary or information piggy-backed to other sources.

Comments regarding my blog posts are encouraged and respected.  Should a reader elect to utilize all or a portion of my posts, full attribution is expected and appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance or business transaction.  I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com.

 

 

 

 

 

Company Culture, Reputation and Financial Performance

January 3rd, 2014. Published under Company culture and reputation.. No Comments.

Michael D. Moberly    January 3, 2014    ‘A blog where attention span matters’!        

This blog post constitutes a respectful summary of what I believe to be very fascinating research conducted by Dr. Sylvia Flatt and Dr. Stanley J. Kowalczyk that conveys enlightening linkages between…

  • company culture.
  • reputation, and a company’s
  • financial performance.

Today, there is, in my view, an absolute necessity for business leaders and management teams to possess – retain a strong sense of personal – professional inquisitiveness in order to stay abreast of trends, and equally important, strategically relevant applied (academic) research.  When the latter is examined through intellectually receptive lens, valuable kernels of contributory value are routinely found which are not merely time bound or ‘buzz word’ trends, rather they often bring operational and nuanced clarity to issues and/or challenges that warrant board, c-suite, and management team attention.

In this regard, allow me to introduce readers of this blog to a comprehensive piece of research related to company culture, reputation, and company’s financial performance which I have taken the liberty of respectfully summarizing and commenting.

As readers know well, ‘company reputation’ is an intangible asset.  However, more company management teams need to devote time assessing various strategies to…

  • leverage their reputation to create (strategic) competitive advantages that will distinguish their company from others which operate in the same sector.
  • converge all intangibles to favorably influence their company’s culture, reputation, and ultimately, it’s overall financial performance and even sustainability.

But first, a broadly agreed upon definition of culture is warranted, i.e., (company) culture consists of…

           a system of shared values (defining what is important) and norms that define appropriate attitudes and behavior (Chatman and Cha, 2003, p. 21). 

Thus, it’s easy to surmise that a strong and well managed (company) culture can actually influence a company’s financial performance because the shared and strongly held norms and values embedded in the company culture, serve to increase behavioral consistency among employees which in turn can, and should lead to…

  • enhanced coordination and control.
  • improved goal alignment, and
  • increased employee effort (Sorenson, 2002, p. 70-72).

Relatively few researchers have empirically tested the relationship between company culture and reputation, as Flatt and Kowalczyk have.  Their research allows them to put forward a very interesting and certainly (business) relevant perspective about how company culture can be an important (intangible) predictor of reputation.  Flatt and Kowalczyk demonstrate this relationship by engaging 104 companies (as part of this research project) in which, among other things, they found that (company) culture…

  • not only enhances financial performance (as indicated by other research), but also is positively related to reputation itself, thus
  • reputation functions somewhat as a mediator between culture and financial performance.

Flatt and Kowalczyk’s paper extends prior research in this arena by…

  • examining the direct and indirect effects of culture and reputation on financial performance, and
  • tests if reputation actually mediates the effect of culture on financial performance.

Please note that financial performance is included as a dependent variable to gauge whether culture and reputation contribute to a firm’s value creation for a competitive advantage(s).

Flatt and Kowalczyk admit however, while there is fairly broad support that financial performance is a predictor of reputation, less is known about what other variables may also be predictors of (a strong, positive, and possibly resilient) reputation (e.g., Sobol and Farrell, 1988; Fombrun and Shanley, 1990; Brown and Perry, 1994; Hammond and Slocum, 1996; Roberts and Dowling, 2002).

Fombrun (1996) states that “a company’s reputation sits on the bedrock of its identity, i.e., the core values that shape it’s…

  • communications,
  • culture, and
  • decisions (p. 268).

A company’s identity, in turn, is closely aligned with its…

  • character,
  • personality, and
  • culture (Fombrun,1996, p. 277).

Therefore, core cultural values, such as…

  • credibility
  • reliability
  • trustworthiness, and
  • responsibility.

                              are at the core of the perceptual representation of a company’ reputation (Fombrun, 1996).

Thus, (company) culture provides the context for how a company’s identity is formed and articulated in relation to its cultural context (Hatch and Schultz, 2000, p. 25).

The continued quest to identify various and key variables that are consist predictors of a company’s reputation is essential, because without this insight, neither academic researchers nor company leadership and management teams will be able to advise companies about strategies to enhance their reputation to achieve competitive advantage and increase their financial performance.

This post was inspired by research conducted by Dr. Sylvia J. Flatt, University of San Francisco College of Professional Studies and Dr. Stanley J. Kowalczyk Department of Management College of Business San Francisco State University in a paper they authored and submitted to the Reputation Institute Conference in 2006.     

This blog post has been researched and written by me with the genuine intent it serve as a useful and respectful medium to elevate awareness and appreciation for a wide range of issues related to intangible assets within the global business community.  My posts are not intended to be quick bites of unsubstantiated commentary or information piggy-backed to other sources.

Comments regarding my blog posts are encouraged and respected.  Should a reader elect to utilize all or a portion of my posts, full attribution is expected and appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance or business transaction.  I always welcome your inquiry at 314-440-3593 or m.moberly@kpstrat.com.