Culture Sank The Titanic, Not An Iceberg

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As businesses look to navigate the treacherous waters of disruption, the Titanic can teach us a lot. It was not the iceberg that led to the downfall of the ship; rather, it was a culture of overconfidence and narrow-mindedness.

As boards navigate the treacherous waters of disruption, the Titanic can teach us. It wasn't an iceberg that led to the ship's downfall, but rather culture.We all know how the story ends – the “unsinkable” 52,000-ton vessel Titanic, hull torn and ultimately broken in half, resting at the bottom of the ocean. Presumably we also all know the reason: a collision with a massive, and unexpected, iceberg. The real truth that matters more than ever for today’s companies is the Titanic was doomed from the start due to a flawed corporate culture.

As businesses look to navigate the treacherous waters of disruption, the Titanic can teach us a lot. It was not the iceberg that led to the downfall of the ship; rather, it was a culture of overconfidence, narrow-mindedness, and a lack of balance between innovation and risk of the company and its leaders, who did not acknowledge the intrinsic flaws in the ship’s design, the dangerous conditions the ship was sailing into or the safety of its passengers.

Protecting a business from a similar fate requires leaders to invest in a culture that enables the company to achieve its strategic objectives. It is impossible to know exactly where an industry is heading and what icebergs lie ahead. However, by creating a strong culture with the right behaviors and reinforcement elements, companies can set themselves up to take on and predict a variety of challenges.

Reinforcing the right behaviors helps companies achieve greater success in these transformative times. The Titanic was a superb ship that pushed the boundaries of what was possible at the time. But for every step forward in terms of engineering, the corporate culture that surrounded the technical advances created and propagated unnecessary risks. This is still happening in many companies today with the continual introduction of digital solutions, while the culture remains stationary, leading to similar and sometimes worse outcomes.

Failing to evolve the culture not only opens companies up to external/customer problems, it can expose internal ones as well. People are no longer sitting idly by in a toxic or demotivating culture. They are speaking up and letting their voices be heard, which has resulted in shocking revelations, like those of the #Metoo movement and habitual executive misconduct. This is leading to decreased long-term value and a mass talent exodus. Creating a healthy and inspiring culture does not require a moment of truth. It is something companies should continuously work toward.

Red sky in morning, sailors’ warning

Corporate cultures predetermine and reinforce the behaviors and decisions leaders and employees exhibit and make, all of which have consequences – both good and bad. In today’s transformative era, a focus on culture is critical to keeping up with the pace of change which can include:

• Challenging the status quo and embracing innovation from all levels of an organization

• Fostering a culture of continuous learning and improvement

• Connecting people across the organization

Culture is not as intangible as once thought, and in fact, it can be measured and evolved. All the behaviors employees exhibit and everything they experience in the organization, from decision-making, to structure, rewards, performance management and other experiences, influence the culture. By asking a series of questions related to these experiences, companies can enable people to live the right behaviors, work differently and accomplish new and amazing things.

How easy is it for an employee at any level of the organization to bring forward and pursue a new idea?

For many companies, this answer is a long one. First, a manager has to approve sending the question upstairs, then it has to go to a director to approve. Then the proposal needs to run through legal; a committee needs to draft a funding plan; then the CFO needs to sign off on that funding, and on and on.

With a process like this, it is a wonder anyone ever bothers. Too much red tape disincentivizes employees by impeding forward movement and discouraging bold thinking. To facilitate a culture of innovation, companies need to de-layer and remove as many obstacles as possible, and instead encourage an environment of testing and learning.

Where do most of the new ideas emanate from within the company?

A perfect answer to this question is “all over the place!” For many businesses, however, the source of innovation is limited to senior leadership, and that is a bad sign. Innovation should be happening “in the halls” at all levels of the organization and in the trenches with customers.

Companies must put in place processes to allow ideas to generate from anywhere. Whether it is a “shark tank” like competition, where employees present their ideas to an executive level committee in a fun way to get funding, or an idea submission portal where all employees vote on the best ideas, what matters is that employees from all levels are encouraged to speak up and see their ideas put into action.

What role does the customer play in your company?

If customers and clients aren’t involved in the evolution of your business strategy, chances are your strategy is wrong. Putting the customer first starts with establishing a culture that emphasizes people first. Set an example by listening to and addressing employee feedback, and your employees will take the same approach with customers. This is accomplished simply by leaders “walking the halls.” Holding skip-level sessions, where junior staff meet with their “manager’s manager,” is another great way for executives to connect with the front line. Finally, spreading stories of the impact every employee is having on their customers also helps to encourage this customer-centric approach resonates. 

Culture is a lifesaver!

Chances are you can relate to some of these challenges. If so, it’s time for a gut check and an honest conversation about the role of culture in your business. It is likely your culture is overdue for an evolution in which you harness the strengths and replace the weaknesses to align with the evolution of the business.

A culture evolution aligned with the business strategy will:

1. Foster innovation from all corners of the company

2. Incentivize the behaviors that are in the best interest of the employees and the company’s long-term health

3. Keep even the biggest and most well-established companies hungry and curious

4. Attract and retain the very best recruits during a war for talent

5. Satisfy the demands of institutional investors, who have stated a commitment to culture due diligence to achieve a company’s long-term value

In summary, culture has the power to propel and keep a business at the top – or sink it. In today’s business world, focusing on the human element of your company will invigorate you to take on any icebergs that come your way head first – and make progress instead of becoming a romanticized failure. Innovation and disruption are NOT guarantees of avoiding the threats of an iceberg. In fact, they are table stakes. Culture can enable your people to work with you rather than for you. Culture is the difference between experiencing an inevitable 20th Century failure – and celebrating 21st century success. Imagine what all those lives lost on the Titanic could have accomplished had they been shielded by a culture of inclusion and initiative versus denial and avoidance. Now imagine what your organization can accomplish by getting the culture right for you.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Neither EY nor any member firm thereof shall bear any responsibility whatsoever for the content, accuracy or security of any third-party websites that are linked (by way of hyperlink or otherwise) in this article. The views expressed are those of the author and do not necessarily represent the views of Ernst & Young LLP or any other member firm of the global Ernst & Young organization.

Read more: Successful Corporate Governance Comes From Personal Self Governance

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