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This Kind of Culture Can Skyrocket Your Company’s Growth

Fast growth comes from solving customer problems better than rivals. Here are three tests that can help you create a culture that does that well.

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BY Peter Cohan - 09 Feb 2018

This Kind of Culture Can Skyrocket Your Company's Growth

PHOTO CREDIT: Getty Images

Between years at business school, I turned down a job at McKinsey's Manhattan office to work for a Cambridge consulting firm that specialized in corporate culture.

At the time, Japan's economic power was at its peak and Americans were wringing their hands because a Japanese company was buying Manhattan's Rockefeller Center. And the secret of Japan's success was thought to be its culture.

So the Cambridge consulting firm's business was prospering. Yet once I started work, I felt skeptical about the power of culture. My engineering mindset had trouble with something that seemed so amorphous. But after interviewing hundreds of CEOs, I am now convinced that culture can make a big difference in corporate performance.

Consider this example.

Austin, Texas-based IT security service provider, SailPoint Technologies was growing at 40% a year with more than $100 million in revenues. It was doing so well that last fall the company went public.

Mark McLain -- its cofounder and CEO -- created a growth culture based on four "Is" -- integrity, individuals, impact, and innovation. In 2016, this culture helped SailPoint achieve 100% employee satisfaction -- and a 42% increase in its customer count.

This raises several questions: What is culture? How does it affect a company's performance? How can a leader create a culture that spurs market-beating growth?

Culture is a set of values that leaders use to shape how people think and act. Leaders create culture by choosing an organization's values, publicly acting in ways that make those values clear to others, and using the values to hire, promote, and fire people.

A culture that spurs market-beating growth is based on the Loyalty Effect -- a set of principles described in a book by a former Bain partner, Fred Reichheld. The idea seems logical -- happy employees make happy customers and happy customers enrich shareholders.

More specifically, a business can grow faster and more profitability if its existing customers are so happy with the company that those customers will strongly recommend the company to other potential customers. Creating that feeling comes from delivering high quality products and great service -- and if a company employs talented people and keeps them happy, then customers are more likely to be loyal.

Those loyal customers are more valuable to the company and they help the company grow by providing great sales leads. What's more, unhappy employees tend to make customers frustrated -- so the customers and employees leave. That forces the company to spend more on recruiting new employees and marketing to get new customers.

SalPoint seems to have figured out a culture that contributes to its growth by making its employees and customers happy. But you can't simply copy SailPoint's culture. Instead you should figure out your own corporate culture based on three tests.

1. CEO believes in the values

The CEO of a company determines a company's culture. As a leader, your thoughts, questions, and actions are visible to your people. What you say and do shapes how ambitious employees think and act.

If the CEO truly believes in the right values -- ones that will attract talented people who are motivated to create industry-leading products and deliver excellent service -- then the culture is off to a great start.

2. Leadership team and employees are inspired by the values

CEOs must attract and motivate top talent that shares their values. If the CEO has been using her own values to hire a leadership team, then there is a good chance that the top team will share her values.

What's more, when members of the leadership team hire people for their departments, those values are likely to help select people who will fit within the culture.

3. Values drive conduct that creates and keeps happy customers

Of course if the CEO and the rest of the organization have the wrong values, the company will not grow. And failure to grow is not a good look for a CEO or a company.

As cloud-based data communications service Cato Networks CEO, Shlomo Kramer, told me in a January 2018 interview, fast growth comes from understanding customer pain and delivering a product that relieves that pain better than rivals.

A growth culture is based on valuing behavior that attracts people who can do this and are motivated to keep doing it better over time. If you 100% believe in such values, you ought to be able to act accordingly and attract others who find such values motivating.

That should put your company in the fast lane.

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