business is the driver of social change then once the culture going to be well we're going to find out what they've been there for mexican culture steve welcome thank you stan it's great to be here although excellent cultures what is that well we're a firm that specializes in using scientific data much like a doctor uses an m r i or an x ray to cut through the clutter of what's going on or organization or business get to what really matters fast and cause rapid change is they've the premise right is business actually the driver of social change well typically i would say that people are the drivers of self social change and when you put people together in a group then synergy happens and powerful things take place and it seems like businesses seem to be the misses and governments but businesses seem to be the environments where change can happen in an organization quickly because profits are tied to the change now where do you work we work all over north america primarily a little bit in europe latin america but for the most part the continental united states now you do work with with the companies and in the sense that the companies only work in north america well no we have clients in fact the largest number of our clients are global businesses our smallest client has eighteen employees the largest has over twenty  thousand and has a presence on every continent ok so the reason that i've asked you here is because of this primary with this one statement culture its strategy for breakfast at the peter drucker statement and you know this isn't hard core business that we're talking about today this indeed is about social change this culture really strategy for breakfast oh absolutely that's how absolutely oh well just take a look at a simple example of a family and my wife reminds me of this frequently in our family because we have a large one just imagine culture being a magnifying glass that's placed on the relationships that exist between people and their relationships of trust and caring and confidence and good things happen if their relationships mistrust or frustration or all the things that cause people stress then bad things happen and typically what happens in organizations of all types and sizes especially business because you know they're so tied to the to the profit meter for survival is that things start getting swept under the table because human beings don't necessarily enjoy embracing  conflict most of us would rather avoid it if we could and the problem we have way to have you watch the news about congress like i no comment no comment you know i man all parties  you said that things tend to get swept under the table what do you mean by that well congress is a great example so typically what happens is when it becomes about politics which in the business culture you would call that an approval culture everybody gets more emotional gratification in politics it's about numbers of graphic that reflect gratification when people get more emotional gratification out of being liked than they do out of doing what's best for the customer best for the employee base best for the stakeholders then sneaky corporate politics begin to breed and become alive and before you know it you know you could have an end enron if it goes on forever and probably everybody out there watching has who has ever worked at a large company has been gauged in corporate politics i'm not saying that they were starting it but you've been affected by it sure is is that what you mean by business culture just happens i mean it just happens and there's there's  different kinds of you know in the scientific instruments that we use that we're not developed by excellent cultures they were developed by you know scientists who specialize in these sorts of things are challenges to diac a demise in the scientific eyes the content much like a doctor does for their patients so that you can understand if you just eat a little differently and take this medication and exercise more good things will happen so what happens is this all happens below the surface much like an iceberg when you look at an iceberg on a cruise in alaska you know the everyone's up on a deck and a beautiful clear day and they say oh look at the iceberg well what they're really looking at is the top ten percent of the iceberg because ninety percent is floating below the water and it's that ninety percent below the water that in fact is driven by the currents and causes the iceberg to move and unfortunately what businesses are organizations who don't realize that culture each strategy for breakfast constantly do as they spend billions of dollars hiring tugboats to come and move the iceberg into a different channel only to find that when the ice the tugboats run out of fuel and go back to the  refuel the current takes over the ninety percent below the water moves the berber back to where it was before but if i'm going to change the culture of my company or if i'm going to impact the culture of my company i'm going to look at myself exactly exactly it was willing to do that i would say in light and c e o s are and c e o s that are passionate about moving their culture to the next level amazingly only ten percent of our clients are clients organizations who really need the help most of them are high performance organizations who have good cultures who are looking to move from good to great as in as in collins as work on good to great you know it's easier to turn a lousy culture into a great one than it is a good one but there are enough good leaders that are out there that pay attention to it that are looking for greatness and that's pretty much our sweet spot and i mean sure i understand as you say it's easier to turn a lousy corporate culture into a good one than it is to turn a good went into a great one because i have why is that well  because you just again look at look at the examples of humanity when you know look at diet and exercise what we were talking about before the show and my own life example you know i've been  leaner and healthier than i was before and we all know what it takes to be center in leaner and healthier but it's not what we know that makes a difference is what we do with what we know and most every organization that same type of phenomena you know exist it's not what we know it's what we do with what we know that makes a difference and it's really easy to get comfortable with success a lot easier to get more comfortable with success than it is with failure and if you look at any of the let's say from years ago in the search of excellence books the research that tom peters did all of those stories are not about good companies that achieve greatness they're about companies that are on the verge of disaster and if everyone's going to lose their job and you know the wealth is at your door so to speak it's a lot easier to make change happen than it is if you've had five good back to back years and things are heading up is it true that business culture b line results oh absolutely how so well take a look at any company microsoft for example great company great growth pattern tremendous success changed the whole planet for the better one of my colleagues was the former global director of sales and marketing for microsoft and became so frustrated that she resigned her position to become an outside consultant because it was so much easier for her to get change implemented as an outsider than it was as an insider and has actually had more success you know as an outsider than insider because in large the larger the company the more tendency there is for silos to emerge where it's just a whole bunch of individual teams and profit centers are a very good thing peter drucker kind of invest in profit centers as well but would tell you that profit centers have some good some bad and some ugly the good is it helps you focus on what's really important to a more minute detail in your business but the bad news is this when a competitive culture emerges that is more passionate about beating each other than they are the real competition like congress  congress there you go you know where it becomes more about beating the other guy than it does doing which right for the stakeholders and that's that's humanity you look at an n f l football team the culture that's in place in the preseason is everybody competing for the position now if you tried to take that culture to the playoffs you would not get past the first game because the culture has to change and in the process of the culture changing everybody comes together and it becomes more about the in the guys on the other side of the line than it each other and that's what happens in businesses of all sizes now you don't have to have a tens of thousands employees like microsoft to have a culture of silos or a competitive culture it can happen in a culture of a dozen people so that was my next question that does what you're talking about with regard to business culture and driving social change and changing culture to affect bottom line results doesn't matter the size of your company so it could be you know a two or three five a family could be a family i mean just look at the dynamics that take place you know in a family as children grow up and as a child becomes a teenager and different focus points and different pressures from the outside and different changes are required now you work with largely with global company well mostly our sweet spot is mid market to fortune five company does we're talking about a business culture here does the does the culture of that's that's different from the west with say you've got a company that is doing business and here in north america but it's also doing business and mexico was a mexico as well as a large in the united states does that matter and what you do doesn't matter in the corporate co if it does matter but not to the extent that most people would think it matters so for example based upon all the research that's been done and again the reason our process works and has worked well for over thirty six years is because it's grounded in science it's grounded in science it's grounded in the data that influences science not somebody is bright idea that they just came up with it doesn't have any research behind it so in essence so just take a look at companies in latin america for example where we've worked latin americans by way of the national culture are more familial then folks in the united states the family is the family unit is more important and in the context of the family unit you have the father figure male dominated father figure more impactful in the business culture in latin american cultures than here yet but to a certain effect however there are four driving factors that if you look at these four make an impact in every business on the planet the first one is achievement a successful culture is about people who are all about setting an a high performance culture is about people who continuously improve and they're passionate about always getting better the third the scientists call humanistic encouraging that's a culture where people care more about human beings as fellow human beings then about what can you do for me or what's your job description or your function and the fourth the scientists call affiliated which is about team in a high affiliate of culture a crisis arise in the people the huddles to solve the problem and a low a feeling of culture a crisis arise and they run the silos so if you look at those four dominant driving factors they make impact no matter where what nation you're on what  country culture is what the language is those are pretty much the drivers although there are some subtle differences when i was going to harvard business school and their their culture study it's not adapt their culture versus adapt a culture and i know this may sound prophecy oriel here but as you as you hear this think about their own place where you work or think about your own family so all right non adaptive versus adaptive what is well to really smart professors at the harvard business school in the late eighty's and early ninety's john heathcote did a study and it was kind of a landmark study in the field of culture you know peter drucker bless him passed away a few years ago but he knew it years ago from his research yet in the current times the first time that anybody really studied what impact this culture have on the financial side of the business was at the harvard business school in late eighty's early ninety's i mean the book is still available today john kotter again test gets called corporate culture and performance or listen closely and will give you the cliff notes the cliff notes version so in essence what these two brilliant harvard professors did was they studied two hundred seven firms for eleven years these were wall street firms so all of the data was you know publicly available and from all different industries in the question that they asked was what impact does the culture have on the financials of the business and they measured the financial performance performance and revenue sales they measure hiring people growth they measured shareholder value what happened in the stock price and they measure profitability and what they found was in the study two hundred seven firms over eleven years that there are basically two  of cultures that emerge they call them adaptive non adaptive and what's really interesting is that while the adaptive cultures exceeded the voluntary one would expect that they would change being you know the dominant factor they exceeded it such a phenomenal rate that it really really set the pace you know for example the adaptive cultures outperform the non adaptive cultures in revenue and sales well now keep in mind the not adaptive cultures over eleven years increase their sales their revenues about ten percent a year yet the non adore the adaptive cultures compared to the non adaptive outperformed them for the want well  let's define this less what is a non adaptive culture and what is an adaptive culture inside of business well the most the most the simplest answer is adaptive cultures adapt to the changes around them and make the most of them and not adaptive cultures resist and they resist either passively with head nodding and smiling and thumbs up kind of leadership like you see in congress or they resist aggressive like you like the guys out on the streets who are angry about this and they're carrying signs around but they they resist they don't adapt they don't find ways to collaborate to partner to work together to solve problems to make a difference because and if they might act like it if they're a passive defensive culture so  like a company with a bunch of yes men you know middle managers or kind of seeming just there to collect a payout that would be called a passive defensive culture and a yes man culture is a head nodding smiling everything's beautiful boss but deep down inside there's different things going on how do you identify that you go when you're hired by a company to come in and say you know help us get to the next level well there are some we use science there are some brilliant brilliant scientists that over thirty years ago the university of michigan developed a set of instruments that have now been around for over thirty years and used all over the globe and you know literally you know tens of thousands maybe hundreds of thousands of organizations and companies now and millions of people so the data is out there that will tell you now the great news of that series of instruments is there a statistically valid and scientifically accurate they never miss the bad news is there are so loaded with academe and science that it takes you know just like the medical profession you know you want science you want data you want scientific accuracy but you don't want to go to your doctor and get a bunch of medical jargon you want to get what you need to fix it we're going to do to fix it and i mean that's the job that that our coaches play is taking the data and then helping business leaders understand it relate to it and strategize around it and make a difference but if a non adaptive company on average was making ten percent a year that's not bad well it's not bad but when you look at when you look at the rest of the numbers the non adaptive people you know hired thirty six percent more people but the adaptive cultures  outperform that seven times shareholder value so imagine investing your four hundred one k and getting a seventy four percent return over eleven years compared to the adaptive guys got a nine hundred one percent return oh that is a little  fellow much different you know much different now the big number the why why the huge difference between one hundred one percent seventy four percent because when you look at the bottom line the profitability the non adaptive cultures collectively collaborative being normal bad c e o s bad the board of boards of directors at exactly i wouldn't call them bad i'd call them naive nobody wakes up in the morning and says i want to go to work today and make all of my people angry you know really yet the recent gallup poll tells us that once again two years later october to october seventy percent of the american workforce is disengaged in their job this year there's a new new statistic in gallup's data eighteen percent say they literally hate their jobs and the most common reason for hating your job is you hate your boss and no one wakes up in the morning saying ok my goal today is go to is to go to work and cause all of my people to hate me and perform at their lowest because they hate me ok so you've set me up here who are some of those bad guys i think that's coming on and then you know a couple of examples like for example in the harvard study many of the firms that were in that study are in business today for example the non adaptive culture retailer was kmart what's kmart doing today you know closing stores merging with sears to come out of bankruptcy the adaptive was wal mart and look at the comparison between kmart and wal mart same business almost the same products homogeneous products but different cultures the adaptive for example the non adaptive let's say airline was western airlines now delta what's delta doing today merging with northwest to come out of bankruptcy the adaptive airline everybody knows with southwest  so the adaptive versus non adaptive is all about you know no word better describes it than the culture of the organization the shared beliefs the heartfelt attitudes not the printed values but the values people carry in their hearts and  like all those sorts of things as peter gregory said that's what he strategy for breakfast is this what you're talking about academia trying to put a label on bad behavior well i don't think so i think academia tries to solve problems in an academic sort of way and bad behavior is the default for the human race you know we all when we all do things well or not at our best that we wish that we had and  t when you have the next one culture which is what our process is all about you have people around you who coach you encourage you and bring you in a positive way to help you stay on track much like  wife has done for me for the last forty plus years i can always count on her to tell me where i'm missing the mark and where i need you know to improve and that's very valuable now again there are cultures that have  people that provide that kind of data that they get punished for telling the truth or even the truth as they think it is and when you have people that fear telling the truth because it's bad politics it's just  formula for disaster just a question of how long we talked earlier about a different kind of culture not not a business culture but the culture that we live in and how some of the businesses that you deal with deal with multiple cultures that being the case  rainmakers we have dealt with people for years who have been in a really strongly male dominated society and are the things that you're talking about or they adapted to that society as well  well everybody can change if they want to change and they know how to change but when you look at you know male dominated societies let's face it every society was a male dominated society before and it's only recently that  has identified that women and men are different and women have value that can be added to a corporate and i meant that men can't just because of the nature of the differences in how we think how we process our mental capabilities our physical differences and you know in the sweet spot of high performance is and what we can do together and what we can do when we get you know much like an athletic team you know what can we do and we all pull together towards a common goal and set our differences aside you don't have to be a science scientist or have a ph d to understand that at the same point time i have i have sat across the table from c e o s and in two minutes you can tell that c e o s ego will not allow for collaboration is that non adapt culture or is that again just bad behavior i would say it's it's naive in ignorance had the opportunity to listen to a very prolific productive c e o the other day speaking to a group of other o s and he started he started his comments with the statement that top down management is dead really is you know in a millennial generation where kids are brilliant and have technology appendage to their body not just a tool you know nobody has to put up with bosses that lead that way anymore unless of course you're in the military and the what happens if i don't is you get shot or you get court martialed and even the military has done tremendous made tremendous changes in leadership and and moving away from the top down everybody one person knows it all strategy other companies out there with top down strategies today lots of them and ok which was lots of well without naming any i would say just you know look at the news you know look at the news and look at what's working and what's not working is so big that they don't want to hear feedback that's the first sign of trouble are there industries and i'm pointing at financial services that are are fraught with the more kinds of more non adaptive in adaptive cultures  it's not industry specific it's more leadership specific and attitudinal specific recently we've seen a lot of news about you know the  financial services industries simply because you know our of the focus on the economy and all of a sudden the magnifying glass came on folks and started going deeper and looking at the truth that used to get ignored and then we had a lot of implosions so i would say from the research that i've seen it's not industry specific i mean leadership is about people not about industry now there are some certain types of industries that you know to survive to succeed require different focus and different application but if it's a people driven business which most are even technology firms are people driven businesses i mean watch apple now that steve jobs has passed on i mean nobody knows where they're going to be or what's going to happen or what the next level but he wasn't a nice man and he wasn't you know he built the culture of high innovation where people were afraid to get into the elevators and intimidated because of his brilliance and because his leadership style yet in that particular industry where it was all about more about the technology than the people who produced it it worked and it worked exceedingly well but now that that particular person and personality is passed on the future remains to be seen what's going to emerge that builds the next generation of apple so is it and is going to emerge in a fashion that causes people to gel together to be all that they can be to set an achieve goals to care about each other as fellow human beings and be a team or is it going to be one that is full of sneaky corporate politics where people smile smile at each other to be nice and stab each other in the back to get to the top of the ladder but nobody talks about and example at least from the public standpoint for me the who was looking just on the outside who doesn't know anything and it appears to me that google has a very collaborative culture yes that they seem to in fact there was a lot of evidence about that about a year ago or an executive a leader in amazon left amazon went to google and published a spreadsheet on social media that differentiated between the amazon culture and the google culture and there was a whole lot of you know back and forth debate that took place as a result of it don't know if any legal challenges came out of it but yeah google has seem to have built within the technology space a culture that hits those for sweet spots that we talk about converse lee you have companies like amazon that aren't known for having great culture in those areas but they're very successful because for the moment it's more about the technology than it is about the people and in some cases that might go on but you never know when you know what to ask our guest a favor there we have an hour or maybe even two hours worth of questions left but we have about fifteen seconds so stay away stay with us for one more show i'm looking forward to ok we're going to have part two com