What Can COVID-19 Teach You About Your Company Culture?
American novelist, James Lane Allen, said:
"Adversity doesn’t build character, it reveals it."
One of the few upsides to the COVID-19 pandemic is that it provides endless opportunities to stress test your company’s character. The challenges that you and your team face right now put up a mirror to your culture, highlighting its strengths but also laying bare its fault lines and vulnerabilities.
I studied organizations and teams that were hit the hardest during the pandemic to glean insights into the systems and cultures that enabled some of them to pivot, strengthen their business, and increase employee engagement while others struggle to survive or shutter.
Take Encore: It’s the UK’s largest musician booking platform and a perfect example of how culture helps a company recover from the pandemic’s devastating impact.
Founded by two musicians and computer scientists, the company used cutting edge technology to connect people with the perfect musicians for their events. It enjoyed steady growth and celebrated the best financial results on record at the beginning of 2020. But everything changed dramatically when the quarantine restrictions were put into place. Live performances were banned. Bookings dried up overnight. Musicians had no work and no income. Encore lost 90% of the revenue in a matter of days.
Seemingly against all odds, Encore managed to pull through, turning the potentially catastrophic disruption into an opportunity to pivot and serve the people it cared most about — musicians and those of us who find joy and connection in music. The company created a new, popular offering, personalized musical messages that allow customers to book a musician and create a customized music video for a relative or a friend. After it’s created, the recording is delivered electronically to the recipient. This new service helped Encore recover 40% of lost revenues while still in lockdown.
What is it about the culture of companies like Encore that helps them deal with the disruption and turn this crisis into an opportunity? What contributes to the outstandingly high levels of motivation and engagement during one of the most difficult challenges in their history? What makes them different from others?
After looking at dozens of companies in the past two months and interviewing some of their CEOs, I discovered that when it comes to culture, what was predictive of how they would fare during COVID-19 was their primary drive.
What is the primary drive?
The primary drive is an underlying force that influences your culture the most. It is your culture’s default setting. It coexists alongside other drives, but when the stakes are high and you are navigating uncharted waters, the primary drive takes over and ends up determining the course for your business.
I identified three distinct cultural drives in the companies I studied: survival, opportunity, and purpose. While there was a constant interplay and tension between them, one prevailed over others.
Survival-driven culture is often rooted in fear and insecurity. The underlying shared assumption is that nothing is entirely safe. People avoid expressing opinions, taking interpersonal risks, suggesting new ideas, and admitting their limitations. Instead, they spend their time and energy covering up their weaknesses, managing impressions, and playing politics. Hierarchy is rigid, and the most important decisions are almost always taken by senior executives who rarely look out of the windows of their ivory towers.
When a crisis hits, revenues shrink, and operations grind to a halt, survival-driven culture channels all its energy into finding ways to risk as little as possible and wait things out. Examples of tactics that survival-driven companies adopt include furloughing a large part of their workforce, reducing salaries and other overheads, and mothballing parts of their operations.
When survival is the primary drive of organizational culture, it can do more damage than good in the long term. Survival-driven cultures often dampen engagement and fail to tap into the collective wisdom that could help solve problems. This can lead to missed opportunities.
Opportunity-driven culture is mainly focused on commercial and financial success. Hustling, hard work, risk-taking, and competition are encouraged and rewarded. Opportunity-driven cultures tend to rely on personal heroics — they offer ample opportunities for people to “save the day” and “put out fires”.
Questions that you’ll often hear in opportunity-driven cultures are:
“How can we dominate the market?”
“What does the world need right now?”
The name of the game is identifying and implementing opportunities that lie at the nexus of existing capabilities, resources, and consumer needs. The “best” idea wins, and the best usually means the most profitable one.
When faced with Coronavirus-related restrictions, many opportunity-driven cultures managed to create new revenue streams. Some repurposed their production lines to churn out equipment and supplies currently in demand to maintain some output and revenue. Examples include stage building businesses that started producing standing desks for the growing WFH workforce, car hood mask companies that switched to making body bags, alcoholic beverage producers producing hand sanitizers, and commercial airlines switching to cargo-only flights.
Opportunity-driven cultures have advantages over survival-driven ones. However, they are not without weaknesses. Their main shortcoming is a lack of focus and inability to provide employees with a powerful sense of meaning. Additionally, they risk pivoting in a direction that might weaken their brand, shrink their market share, harm their employee engagement, and fail to produce long term results.
The common thread among companies that pivoted successfully during the pandemic is their unwavering commitment to a purpose larger than profits or growth. It’s not hugely surprising — when everyone rallies around a meaningful cause, the organization can cut through silos, bureaucracy, and egos, unleashing its potential and thriving amid uncertainty.
Encore’s purpose is to support musicians to earn money. The CEO, James McAulay, told me:
“We do this because we believe that musicians make the world a better place.”
This is Encore’s credo — the main belief that gives serves as a unifying force for the team. Encore’s team brainstormed ideas from the onset of the pandemic, asking: “How can we find new ways to help musicians earn a living during a lockdown?” As a result, they came up with a creative solution that none of their competitors was able to identify. While Encore lost 90% of its revenues at the onset of the pandemic, the company was able to bounce back to 40% while still in lockdown.
Or consider ArtNight, a Berlin-based company used to offer live workshops in five European countries, serving tens of thousands of people annually and offering them experiences ranging from art to baking.
ArtNight was able to pivot because it kept asking: “What would be new ways of bringing people together for shared creative experiences?” They came up with a new online format where people meet others and learn together under the guidance of professional art teachers, mixologists, and bakers. The new format helped ArtNight reach a larger audience and enabled customers in remote areas to connect with others and experience art in ways that were not possible before. ArtNight lost 95 % of its revenue on the onset of the pandemic but already claimed 50% of its pre-pandemic income.
Or Sittercity, an online platform based out of New York that connects parents with babysitters. The team kept obsessing about: “How can we make childcare work during a lockdown?” As the CEO, Elizabeth Hartz told me, they focused on serving instead of selling. The team came up with a virtual sitter format that engages with a child and supports parents with homeschooling through a video platform. It’s not easy to find an effective way to engage children virtually. Many similar companies threw in the towel, finding it impossible to provide their services within the social distancing guidelines.
Does purpose really drive results?
At first, focusing on the organization’s purpose during times of crisis might seem counterintuitive. For many companies, the link between purpose and financial results seems blurry or non-existent. While the majority of CEOs agree that purpose is important for business success, only 34% of business leaders surveyed by PwC use purpose as a guidepost in decision making within their organization. And yet, there are plenty of examples of companies that pivoted successfully during the pandemic while staying true to their raison d’être.
Deloitte found that purpose-driven companies witness higher market share gains and grow on average three times faster than their competitors while achieving higher employee and customer satisfaction. During the last financial crisis, B Corps (companies that meet strict standards for social and environmental performance) were 63% more likely than other businesses of a similar size to make it through the downturn.
Reflecting on how your company and your team has navigated the crisis will give you a good indication of what your primary drive might be. Shifting towards a purpose-driven culture is a long-term endeavor but it is possible, irrespective of your starting point. Here are three steps to prepare the ground and start your journey.
1. Clearly define your overarching purpose
Your purpose answers the all-important question: “Why does our company exist?” For Encore it is to support musicians to earn money, for ArtNight to bring people together for shared experiences and for the Sittercity to make child care finally work. You need a purpose that is authentic, one that you are prepared to commit it because it’s meant to be something that will drive every decision you take.
2. Engage employees in creating their own purpose
Sometimes the overarching purpose can feel abstract, especially when you are a part of a large organization. The companies that live their purpose make sure that teams, departments, and individuals within their organization have reflected on and articulated the purpose for their team and even the individual roles within the team. Simon Sinek refers to it as a “nested why,” Aaron Dignan as a “fractal purpose”. The idea is to identify why a team or a role exists and how it contributes to the larger goal. A fractal purpose is supposed to serve the overarching purpose, not to compete with it.
3. Translate your purpose into your essential intent
Greg McKeown suggested a game-changing idea of an “essential intent” in his best-selling Essentialism. Essential intent is a goal that is more specific than your purpose statement and more inspiring than quarterly goals. As McKeown says in his book, when we create an essential intent, we make the “one decision that makes 1,000 decisions.” Here’s an example of an essential intent statement for Encore during the pandemic: “Create and successfully deliver a digital offering that will be a source of income for every musician in our network.”
Of course, these three steps are just the beginning of a journey towards an authentically purpose-driven culture. But you have to start somewhere. Further down the line, you’ll be glad you did. There is more and more evidence that purpose is a vital enabler of superior results. It deserves to become the primary drive of your culture and a central guide of your business strategy — especially in turbulent times.
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Originally published on The Startup