Iceberg of ignorance hurts firms

I was recently asked to be a panelist at an event hosted by Hofstede Insights Africa and its Kenya partner, Priority Activator Consulting.

Its theme was Aligning culture and strategy – leveraging culture to drive organisational performance, a topic where I feel very much at home.

With us were around 30 CEOs who had been invited to engage with our panel, and the keynote speaker was Hofstede’s Group CEO Egbert Schram, who described culture as “the oil that lubricates strategy”.

His early background was in wildlife management, examining their behaviour patterns, which he subsequently applied to humans – always focusing on gathering and analysing data.

This led him to quote from a study which revealed that only 15 percent of CEOs feel their corporate culture is where it should be – as a result of which their organisations underperform.

One of the big causes is the “iceberg of ignorance”, where CEOs lack awareness of problems lower down in their organisations because they only engage with senior colleagues.

So the cascading downwards of what they perceive to be needed behaviour change fails to connect with the actual needs on the ground.

Culture is about how we relate to our colleagues, our work, and the external environment, he explained.

And he asked what excites us: enjoying life? Striving for the best? Something else? And where do our incentive schemes lead us: to achieving financial results? To deal with people issues? Then, who gets promoted, and why?

An expatriate CEO shared that in his home country, he was used to a much smaller power distance between levels. He has an open door, but too few of his people are relaxed enough to enter his office and express their views.

In hierarchical organisations, Mr Schram said there’s too much upward delegation – more so if the bosses are approachable.

And an emotional dependency on them may develop, including on non-work-related issues. So unless one empowers lower layers this becomes a bottleneck, preventing the company from growing.

Fellow panellist Catherine Musakali quoted Peter Drucker’s “culture eats strategy for breakfast” line, saying it surprises her how few boards include culture as a topic on their agendas.

This led me to describe my tweak of Drucker’s quote, where through the Balanced Scorecard approach I use in my strategy development work with clients I have them devise a culture strategy that feeds into the overall one.

Having said that, we find that companies which enjoy a healthy culture but lack a robust strategy do better than those with a great strategy but without a healthy culture.

Erick Ngala, the managing partner of Priority Activator Consulting, reinforced this point, emphasising that organisational performance is a consequence of its culture plus its strategy.

A lady CEO worried that women in leadership still have a hard time, with some of her people considering her to be “bossy”, to which she did not relate.

And another CEO felt he shouldn’t get too close to his people, otherwise, he would find it too hard to take disciplinary action when needed, or to deal with poor results and bad news.

My comment: when I arrived in Kenya in 1977 I was expected to be bossy and serious, to be feared. I defied that, with my default position being a cheerful one.

But people had to know that if the need arose I did have a big stick available. It took a while for my staff to come to terms with this “situational leadership” style… and some probably never did.

What is the role of the CEO in all this? What works and what does not? Does it vary depending on the size of the organisation? Is it different when going through a period of disruption?

These were the questions for this event. For me, CEOs are at the centre of a 360-degree ecosystem.

Above them are the shareholders with their values, represented by board directors; then other independent directors, among whom hopefully the chair.

It is the chair who should bring together a collective board perspective on culture, which is shared with the CEO and the senior management team – noting that the CEO is a board member too.

Critical to all this is the alignment between the chair and the CEO. Not forgetting the head of HR.