EQ Lab Blog The toxic myth of 'culture as shared values'

Written by Geoff Marlow The plausible believability of a tenacious falsehood..."These are my values. And if you don't like them, I have others." - Groucho Marx A recent Google search for 'culture as shared values' returned these top hits:"High Performing Teams Start with a Culture of Shared Values""Why Employees Need Shared Values to Be Fully Engaged""All workplace cultures should have a deeply held set of values that are shared by those working and living in it.""Shared values are developed by the organization's leadership and then adopted by the other members of the organization"."Positive Shared Values Equals Positive Culture" Given the above, you'd think that amongst the dozens of organisations I've had the privilege to poke about in throughout Europe, Asia and the US over the past 35 years, the best performers would be living proof of the power of shared values.Quite the contrary.In fact, the organisations that trumpeted their shared values most loudly were the ones whose cultures were most toxic to innovation, agility, and adaptiveness.This ought to be no surprise, given how many high profile organisations singularly fail to live up to their supposed values.But the myth of culture as shared values persists. Enron's shared valuesEnron won Fortune's 'America's most innovative company' award for an unprecedented six years (1996-2001) and the 2000 Financial Times 'energy company of the year' gong.London Business School Professor Gary Hamel was fulsome in his praise for them in his book 'Leading the Revolution' (Harvard Business School Press, 2000)."Enron hired contract originators who were bold, hungry, and creative. They were assigned a territory and/or a specialty, but their real assignment was simply to find ways to make money". Unfortunately, they found ways to make money that were illegal, then tried to cover their tracks, despite 'shared values' of Integrity, Respect, Communication and Excellence.When this finally came out in 2001, Enron collapsed in a $65Bn wipeout - up to then the biggest corporate value destruction in history - due to persistent fraudulent behaviour at the highest management levels. 1 McKinsey's shared valuesTop management consulting firm McKinsey, who invented the notion of 'culture as shared values', were themselves fined an eye-watering $573,000,000 for helping "turbocharge" (their word) opioid sales in the US amid a crisis that's contributed to more than 450,000 deaths. 2This grossly unethical conduct occurred despite McKinsey's 'shared value' of "high ethical standards". 3Note that McKinsey were retained advisers to Enron CEO Jeffrey Skilling at an annual fee of $10,000,000. Skilling, himself a former McKinsey consultant, was sentenced to 24 years in prison for conspiracy, insider trading, false statements, and securities fraud. 4If McKinsey, the people who cooked up the 'culture as shared values' approach in the first place, can't make it work - neither for their clients nor themselves - then why does anyone believe it?But 'culture as shared values' isn't just believed, it's widely accepted as self-evident truth. Plausible believabilityWhat is it that keeps this almost religious belief in 'culture as shared values' so vibrantly alive and accepted as axiomatic in the ongoing organisational discourse?The problem is that 'culture as shared values' has such highly tenacious plausible believability - due to two mutually reinforcing psychological dynamics.The first dynamic operates inside-out, based on projection. We project our experience of the power of our own personal values into the organisational realm in a leap of logic that's deceptively easy to do, and devilishly difficult to avoid.The second dynamic operates outside-in, based on introjection. We introject the mental model of culture that captured the organisational consciousness 40 years ago when it was first introduced. 5 The inside-out dynamicThe value of shared values just seems so self-evidently true - doesn't it?The leap from "my personal values are what drive me" to "therefore shared values must be what drives an organisation" is so effortless it's hardly ever questioned.This projection of the personal onto the organisational is particularly plausible if you've done the inner work to clarify your own personal values and try to apply them conscientiously in your day-to-day actions and interactions. 6The profound impact of living one's own personal values provides a powerful incentive to leap to the conclusion that the same must apply to organisational values.And having made this leap, the believability of 'culture as shared values' seems sufficiently self-evident to warrant no further scrutiny.But here's the problem. Personal values are exactly that - personal to you as a unique individual. They're not the same as someone else's values.And the statistical probability of everyone in the same organisation sharing the same values turns out to be vanishingly small... In 2012 the University of Zurich (UZH) published research identifying nineteen core human values they found consistently represented across cultures. 7Given that most organisations list around five core values, the probability of two individuals sharing the same five out of nineteen is 1 in 11,628. 8That's a lot of interviews to find someone with the same shared values... My colleague Dr Richard Claydon came across a company that offers clients a list of 500 core values to choose from. As Richard points out: "If it's true that there are 500 core values, you'd have to interview more people than have ever been born in the history of humanity to find somebody who randomly picked the same five shared values..."I did the maths.It works out at 1 in 255 billion people. 9 As the above numbers demonstrate, the idea that an organisation could ever be populated by people who all share the same values is patently ridiculous.Not only that, but an organisation populated by people who shared the same values would be disastrous, as these examples (using the UZH definitions) demonstrate :For creative work you need people high in 'Self-Direction Thought/Action' - which UZH define as: "Freedom to cultivate one's own ideas and abilities / determine one's own actions". But in the same organisation you also need people high in 'Conformity-Rules' - which UZH define as: "Compliance with rules, laws, and formal obligations". Based on Professor Hamel's analysis above, Enron clearly had too much of the former and not enough of the latter.Ambitious, growth-focused organisations tend to be driven by people high in what UZH call 'Power-Dominance/Resources' - defined as "Power through exercising control over people / control of material and social resources". But to stay ethical, the organisation also needs people high in 'Universalism-Concern' - defined as "Commitment to equality, justice and protection for all people". Their $573M fine for boosting sales of opioids suggest McKinsey possessed precious little of the latter to offset their renowned abundance of the former.In a future-fit culture where sense making, decision making & action taking must become ever more tightly coupled, rapidly and repeatedly iterated, deeply embedded and widely distributed throughout the organisation, there's a need for less 'Power-Dominance' - "Power through exercising control over people' and more 'Universalism-Tolerance': - defined as "Acceptance and understanding of those who are different from oneself". If everyone had the same values there'd be none of the diversity essential for innovation, agility, and adaptiveness. 10 But even with all that, the belief that an organisation's culture ought to be its shared values is so psychologically sticky it's still tempting to ignore the facts. The outside-in dynamicTo understand how McKinsey came up with the 'culture as shared values' myth, we need to go back to how organisational culture became a thing in the first place.Interest in organisational culture began around 40 years ago in the wake of Japan's resurgence from defeat in WWII to become the world's second largest economy - aka The Japanese Miracle. 11Corporate America was reeling from this onslaught and had no answers.Nor did the mainstream consulting firms they'd always relied on.McKinsey were already on the back foot, having lost their historical dominance of the strategy consulting market to Boston Consulting Group (BCG), to whom clients were defecting because they saw BCG as smarter than McKinsey. 12McKinsey couldn't let this insult go unchallenged and launched two research projects aimed at recapturing the 'intellectual high ground'. 13One project sought to challenge BCG's growth-share matrix whose notions of cash cows, stars, dogs, and problem children had done so much to change thinking about strategy and earn BCG their 'smarter than McKinsey' reputation. The second project, prompted by the recognition of differences between American and Japanese culture, was to see if they could dig up some new ideas from the different cultures of other countries.So, McKinsey packed off a then unknown Tom Peters on a five-year global study tour.Peters says McKinsey did this because they were "bedevilled by the frequency with which clever strategies failed to be implemented effectively".He points out that "McKinsey's arsenal mostly consisted of "strategy" and, secondarily, "structure". All that was not to be cured with a scintillating strategic plan was to be dealt with by re-arranging the boxes on the formal organization chart." 14He says his boss, Bob Waterman, "wanted our work to be constructed in a way that would help the average McKinsey-ite take a shine to issues of organization effectiveness. (Which was, after all, the point of the exercise.)" 15 McKinsey's '7S' modelWaterman invited Tony Athos, a Harvard Business School professor and Richard Pascale to spend two days with him and Peters in San Fransisco where they cooked up McKinsey's infamous '7S' model.The '7Ss' included the three 'Hard Ss' of