Beyond the Brand: Why Business Decision Makers Buy Into Strong Cultures

IN COLLABORATION WITH

Why Business Decision Makers Buy Into Strong Cultures

gyro.com/beyondthebrand

BEYOND THE BRAND:

2 BEYOND THE BRAND: WHY BUSINESS DECISION MAKERS BUY INTO STRONG CULTURES

FORTUNE Knowledge Group A NOTE FROM

I have lost count of the number of conferences I’ve attended where

people talk about changing the culture at their companies. But what

exactly does “culture” mean when it comes to making an emotional

connection with customers? The Merriam-Webster dictionary defines

culture as “a way of thinking, behaving, or working that exists in a

place or organization (such as a business).”

When people talk about changing culture, they usually mean improving

it and making it more remarkable. And too often these types of

declarations are made only after a company has experienced a setback.

In contrast, consider some of the world’s most successful businesses.

Those on FORTUNE’s lists of Most Admired Companies and Best

Companies to Work For (see p. 23) have a number of things in

common, most notably a strong corporate culture. Employees aren’t

the only people who benefit from such an environment; customers,

vendors, and shareholders (heck, even regulators) appreciate great

companies. They tend to do business with integrity. They inspire

high levels of trust. They strive for excellence.

IN THIS REPORT, WE LOOK AT SOME OF THE WAYS IN WHICH CORPORATE CULTURE AFFECTS HOW COMPANIES DO BUSINESS—IN PARTICULAR, THE WAY THEY DEVELOP LONG—TERM RELATIONSHIPS.

This builds on our 2014 report, “Only Human: The Emotional Logic of

Business Decisions,” in which we quantified the important influence

of emotional, situational, and cultural factors on business decisions.

Figuring prominently in those decisions is the goal of creating lasting

bonds with other companies in order to enrich business and improve

the bottom line. In the following pages, we examine the types of

company attributes that promote confidence and lead to these

important long-term relationships.

We hope this report will shed valuable light on the role of emotion and

culture in the way we make business decisions.

Eric Danetz

Publisher

FORTUNE

Eric Danetz

3BEYOND THE BRAND: WHY BUSINESS DECISION MAKERS BUY INTO STRONG CULTURES

There is nothing more powerful than the culture of a business for

establishing an emotional connection with the customer. It is more

powerful than a reputation for dominance and innovation, and it is more

powerful than the allure of short-term financial gain. These are the most

telling facts that we discovered when reaching out to more than 500 top

decision-makers.

Too often company culture is discussed but not properly nurtured and

elevated. Why? Because creating a successful culture is one of the

most difficult tasks a company can undertake. However, frequently the

solution is closer than it might seem—as this report reveals.

In the age of transparency, where anyone can find out anything about

any company, it’s up to businesses to safeguard their cultures.

It’s not easy.

THERE IS NOTHING HARDER THAN CULTURE BUILDING BECAUSE IT NEEDS TO BE AUTHENTIC AND IT NEEDS TO BE FOCUSED. Authenticity can be achieved by getting back to the

foundations, by rebuilding from the purity of the idea that started it all.

It’s worth it. People vastly underestimate the external value of culture.

They tend to focus on the internal benefits—the ability to keep people

and improve performance. But culture has huge external benefits. So

much so, that the vast majority of respondents in this survey say that

culture is the key factor not only in deciding whom to do business with,

but also how long the relationship will last.

As builders of cultures, our own included, we know that businesses

that apply an inside-out approach are the businesses that are winning.

This report offers tangible evidence and proof of this fact. Enjoy.

Christoph Becker

ceo+cco

gyro, the global ideas shop

Christoph Becker

gyro A NOTE FROM

FORTUNE Knowledge Group


WHO TOOK THE SURVEY?

The FORTUNE Knowledge Group, in

collaboration with gyro, a global advertising

agency, conducted a worldwide survey in

June 2015 on whether a sense of purpose

affects the way a company is perceived by

its corporate partners and whether it has

an effect on its business relationships. The

sample comprises 521 respondents, 40%

based in the United States, 40% in Europe,

and 20% in Asia. All are directors and

above, with 24% chief operating officers and

13% chief marketing officers. They all have

influence over key business decisions, with

26% in operations and production, 18%

in sales, 15% in marketing, and 13% in

general management. All of the companies

surveyed have annual revenues of $500

million or more, and 26% have revenues

of $1 billion to $10 billion.

METHODOLOGY

SENIOR EXECUTIVES INTERVIEWED:

Bob Aiken

CEO, Essendant

Ashutosh Banerjee

Chief Marketing Officer for

Life Care Solutions, GE Healthcare

Heidi Browning

Senior Vice President, Strategic Solutions,

Pandora

Kate Healy

Managing Director, Marketing,

TD Ameritrade Institutional

Patrick O’Hara

Global CSO, gyro

John Stackhouse

Senior Vice President, Office of the CEO,

Royal Bank of Canada

Diane Vaccaro

Chief Marketing Officer, Kmart Apparel,

Sears Holdings

Kreg Weigand

Vice President, Internal Audit, Target


STAND FOR SOMETHING: Relationships are founded on values. When choosing a corporate partner, 59% of executives say that knowing what values a company stands for is much more important than innovation (22%) or market dominance (20%). Companies that succeed in developing long-term relationships prefer working with companies that clearly define what they stand for.

DIAL UP THE SOUL OF YOUR BUSINESS: A company’s original idea is often its best. Eighty percent of respondents agree that a company’s biggest idea is the one upon which it was built. And whether a company is old or new, all stakeholders—both internal and external—should have the opportunity to share in its sense of purpose. This survey suggests that the penalty for losing your culture and sense of purpose may be losing your customers.

LIVE BY YOUR MISSION: A mission statement is a guide to conducting business according to consistent aspirations and values. Eighty-one percent of executives feel that companies that are successful at building long-term relationships make a direct correlation between what they believe in and the way they conduct their business.

PUT YOUR CULTURE TO WORK: Approximately two-fifths of respondents believe a strong sense of purpose helps a company attract better-quality employees and enables employees to act more collaboratively, both internally and externally. And the benefits extend beyond the walls of the business: 89% of respondents agree that great companies build cultures that consistently create excellent customer experiences.

SHARE YOUR GOALS: Talk openly about aspirations and values. Eighty-six percent of respondents say they are sharing their company’s purpose and values with key stakeholders more than they did five years ago.

BE DIFFERENT (IT’S OKAY): Culture is an important factor in building a successful long-term relationship, but when corporate ties fray, it won’t be because of cultural differences. Much more damaging is losing trust (72%) or internal policies that prevented collaboration (69%). Only 14% say culture contributed to corporate relationships going bad.

KEY FINDINGS


In the age of transparency, a strong corporate

culture has become the primary driver of

long-term business relationships, according

to more than 500 global executives surveyed

by the FORTUNE Knowledge Group in

collaboration with gyro.

While companies increasingly rely on

massive amounts of hard data to improve

decision making, it is a remarkable truth

that soft factors like a business partner’s

values, mission, and message are often

the most differentiating. Whether for

GE, Google or TD Ameritrade, these

underestimated qualities have become

primary competitive advantages.

Our latest survey examining the role of

emotion in business decision-making

reveals that the majority of top executives

seek long-term corporate relationships

with culture-rich companies that stay

true to their founding purpose and are

not shy about sharing their values with

key stakeholders.

CORPORATE CULTURE: THE DECIDING FACTOR

Indeed, the power of culture to lure talent

and align corporate functions is well known.

BUT OUR RESEARCH FINDS THAT THE SAME ATTRIBUTES ARE EQUALLY LIKELY TO MAKE A COMPANY DESIRABLE TO WORK WITH AS TO WORK FOR.

These new findings build upon a

groundbreaking survey conducted by the

FORTUNE Knowledge Group in collaboration

with gyro in 2014 entitled, “Only Human:

The Emotional Logic of Business Decisions.”

It found that executives rely on intangible

differentiators (such as culture or reputation)

more than quantifiable differentiators as a

way of judging potential business partners

(see sidebar on p. 7). To dig deeper, we

focused specifically on culture’s true impact

on business decisions. Here are some

valuable insights about this oft-undervalued

part of the business equation.


In the age of big data, it is often assumed that the analytical and rational are the primary drivers of business decision making. Our 2014 survey, “Only Human: The Emotional Logic of business decisions,” found just the opposite. While a majority of senior business executives believe that data is an important tool when making business decisions, it is subjective factors and reputation that truly play the pivotal role.

Sixty-five percent of the 720 executives surveyed say subjective factors that can’t be quantified increasingly make a difference when evaluating competing business proposals. In many ways the deluge of data is making it more important to emphasize intangibles. In fact, 62 percent of executives say it’s often necessary to rely on “gut feelings” and that soft factors should be given the same weight as hard ones.

OF EXECUTIVES SAY IT’S OFTEN NECESSARY TO RELY ON “GUT FEELINGS” AND THAT SOFT FACTORS SHOULD BE GIVEN THE SAME WEIGHT AS HARD ONES.

62%HARD TO QUANTIFY, BUT DIFFICULT TO MISS


-

EUROPEAN RESPONDENTS PLACE LESS EMPHASIS ON WHETHER A BUSINESS PARTNER IS WIDELY ADMIRED.

EUROPEAN

NORTH AMERICA13% 7+ %

WHEN IT COMES TO EMOTIONS IN THE WORKPLACE, NORTH AMERICANS ARE MORE LIKELY TO REPORT THAT OVERRIDING PERSONAL FEELINGS ARE PREFERABLE.

EUROPEAN

NORTH AMERICA9- % 10+ %

REGIONAL DISPARITIESHow respondents from around the globe rated themselves compared to the survey average:


North American respondents feel better about their ability to build long-term relationships compared to those from Europe and Asia Pacific regions (7% more than average rate themselves very good or better). North American respondents are also sharing company values a lot more (7% more than average) than their Asia Pacific counterparts (6% less than average).

European respondents place less emphasis on whether a business partner is widely admired (13% less than average) compared to those in North America and Asia Pacific (both 7% more than average).

When it comes to emotions in the workplace, North Americans are more likely than average (+10%) to report that overriding personal feelings are preferable, while Europeans are less likely than average to prefer this approach (9% less than average).

When comparing respondents by job title and function, CMOs rely more heavily on gut instincts for decision-making than do COOs (+13% versus -11%).

People in IT and finance are sharing their values a lot less than average (-14%).

NORTH AMERICAN RESPONDENTS RATED THEMSELVES ABOVE AVERAGE AT BUILDING LONG-TERM RELATIONSHIPS COMPARED TO ASIA PACIFIC.

ASIA PACIFIC


ASIAN-PACIFIC RESPONDENTS ARE LESS LIKELY TO SHARE COMPANY VALUES THAN NORTH AMERICAN RESPONDENTS.

ASIA PACIFIC



Businesses seek out cultures they can buy into.

The choice to do business with one company over another is driven by many factors. A corporate partner can open markets that would otherwise be closed. Its strong brand can produce a halo effect for its suppliers. But one of the most important drivers is culture, in all its complex manifestations (see below).

STAND FOR SOMETHING

10

>1 FOUNDING IDEA. Every company starts from an idea that inspired the founder or founders to establish the enterprise.

>2 VISION OR MISSION STATEMENT. What is the purpose of the organization? The company’s mission statement seeks to answer this question.

>3 VALUES. The company’s values are at the heart of its culture. They should be apparent to every employee and every business partner.

SIX INGREDIENTS OF CORPORATE CULTURE

Corporate culture is hard to measure, but it is omnipresent. It’s what makes each company unique. Corporate culture consists of six elements:

>4 PRACTICES AND PROCESSES. Do decisions require many layers of approval, or do managers enjoy a high degree of autonomy? Business practices and processes help to determine, and are an expression of, a firm’s culture.

>5 NARRATIVE. Every company has a history, but not all build a strong story around it. Often, the richer the narrative, the stronger the culture.

>6 PEOPLE. Employees, customers, suppliers and owners embody the culture and also drive it.


SIX INGREDIENTS OF CORPORATE CULTURE

VISION OR MISSION STATEMENT

FOUNDING IDEA

VALUES

PRACTICES AND PROCESSES

NARRATIVE

PEOPLE

12 BEYOND THE BRAND: WHY BUSINESS DECISION MAKERS BUY INTO STRONG CULTURES12

OF EXECUTIVES SAY THAT KNOWING WHAT VALUES A COMPANY STANDS FOR IS MUCH MORE IMPORTANT IN CHOOSING A PARTNER THAN INNOVATION (22%) OR MARKET DOMINATION (20%).

59% “It is worth making short-term financial sacrifices to cultivate long-term relationships.”

- Kate Healy, Managing Director, Marketing,


In this survey, we have asked what characteristics of corporate culture executives prefer when building a business relationship. Remarkably, 59% of executives say that knowing what values a company stands for is much more important in choosing a partner than innovation (22%) or market dominance (20%). Notably, 62% of companies that say they are very good at developing long-term relationships prefer to do business with companies that clearly define what they stand for.


“We immerse ourselves in the culture of our corporate partners.” - Ashutosh Banerjee, Chief Marketing

Officer for Life Care Solutions, GE Healthcare

Ashutosh Banerjee, Chief Marketing Officer for Life Care Solutions at GE Healthcare, offers a very personal way of thinking about corporate relationships. “We always like to think of it as similar to a marriage; it’s all about mutual benefit and about being content with each other. As long as both partners see value in the relationship, it will continue, but you have to work to understand each other and communicate regularly. We immerse ourselves in the culture of our corporate partners,” he says.

Building lasting connections to other companies entails staying loyal in bad times as well as good. In the early 2000s, TD Ameritrade Institutional was regarded as the custodian for smaller financial advisers. By continuing to support their growth when markets were difficult, TD earned important, loyal partners that have returned the favor. “Our customers have stuck with us when we have had hiccups,” says Kate Healy, Managing Director of Marketing at the company. This mirrors survey results. Sixty-nine percent of respondents agree that “it is worth making short-term financial sacrifices to cultivate long-term relationships.”

13

OF THOSE WHO ARE GOOD AT DEVELOPING LONG-TERM RELATIONSHIPS VALUE KNOWING WHAT A COMPANY STANDS FOR.

62%


Harking back to the founding idea is

a key differentiator.

Building a culture may seem difficult, but going back to what a business was created to achieve can provide a solid foundation. According to 80% of respondents, the biggest idea of a company is often the one upon which the business was built.

Healy says TD Ameritrade was able to bring in more financial advisers in challenging markets because “we have accessibility and humanness the other firms don’t have. We realized it’s a differentiator that we could take advantage of.”

As inspiration for this idea, she cites Simon Sinek, an author who has popularized the notion that successful companies clearly know “why” they are in business. His TED talk “How great leaders inspire action” has received 23.5 million views. In it, Sinek says: “If you don’t know why you do what you do…how will you ever get people to vote for you, or buy something from you, or, more importantly, be loyal?” TD Ameritrade’s leadership team spent an entire day looking back on the evolution of the company since its founding in Omaha, Neb., in 1971 and asked: “Why do we do what we do?”

DIAL UP THE SOUL OF YOUR BUSINESS

“We got into this business to challenge the traditional financial advice model, because we truly believe the American consumer deserves better. To meet their goals they need an adviser that is transparent, objective and puts the client’s interests first. Because of that, we have created this business to support the financial advisers that support the consumer,” says Healy.

Since its inception in 1892, GE (consistently one of FORTUNE’s Most Admired Companies — see p. 23) was built on innovation. “If we stay true to this initial idea and keep it strong, we can make sure our culture flows from the idea,” says Banerjee. But how can a $149 billion conglomerate stay nimble? “One way is to immerse ourselves in startups’ culture,” he says, adding that GE executives regularly spend time with startup companies “to shock ourselves when we see what the outside world is doing and learn from them to see how we can adapt and improve.”

EXECUTIVES WANT TO DO BUSINESS WITH COMPANIES THAT LIVE BY THEIR VALUES. Given the fact that every culture is unique, the founding idea often represents an untapped opportunity for companies to distance themselves from the competition.


Conduct business according to your

aspirations and values as a company.

Tying day-to-day operations back to the

“why” is powerful. Eighty-one percent of

executives feel that what companies believe

in and the way they conduct their business

correlates directly with building successful

long-term relationships. After all, the values

that a business promotes end up governing

decisions made on the ground. A company’s

mission statement is the most precise

articulation of those values, and there’s

consensus that a strong, purpose-driven

stance matters. Ninety-eight percent say

having such mission statements is beneficial,

and more than half of these hope “more

companies will be purpose-driven in the

future.” Less than 2% say it is a distraction

from things that matter to the business.

A mission statement encapsulates the

reason why a company is in business and

its purpose. It’s easy to lose sight of the

purpose, so it pays to be reminded of it.

Some companies such as Royal Bank of

Canada (RBC), however, don’t use the

phrase “mission statement,” but build

their navigation around purpose and vision.

“Purpose” is why an organization exists and

“vision” is what they are trying to achieve.

LIVE BY YOUR MISSION

“Companies make choices every minute

about whom they deal with, and the best

ones to work with are those you are aligned

with in terms of values. It’s a good way of

filtering potential corporate partners,” says

John Stackhouse, Senior Vice President in

the office of the CEO at RBC.

That’s why Pandora, the streaming music

service, lives by six principles (see p. 16)

crafted by the founders. “People here are

proud to be working at Pandora and want to

share the reason why they are here,” says

Heidi Browning, the company’s Senior Vice

President, Strategic Solutions. “The secret is

you have to live and breathe the principles;

the moment the company doesn’t stand

behind them, they are meaningless.”

“Companies make choices every minute about whom they deal with, and the best ones to work with are those you are aligned with in terms of values.”

- John Stackhouse, Senior Vice President in

the Office of the CEO at Royal Bank of Canada

15


Companies can enjoy a competitive

advantage when they live by their principles.

In the survey, 89% of respondents agree

that great companies build cultures that

create excellent customer experiences.

Diane Vaccaro, Chief Marketing Officer,

Kmart Apparel, Sears Holdings says

it’s useful to go back to these founding

principles regularly: “It is the North Star

that helps set objectives for an organization.

When we talk about transformation at Kmart,

the core principles are the same, but the

language and nuances could change as the

environment does.”

As Vaccaro notes, this does not mean that

companies should be stuck in the past.

Patrick O’Hara, gyro’s Global Chief

Strategy Officer, believes that challenging

the mission statement can itself be a useful

management exercise. “Disruptions

come so fast that companies can’t afford

to be complacent.

PANDORA’S SIX PRINCIPLES Crafted by Co-Founder Tim Westergren

WHAT’S GOOD FOR THE LISTENER IS GOOD FOR THE ADVERTISER

WE ARE ONE TEAM

WE TRUST EACH OTHER

WE BELIEVE IN THE POWER OF HUMILITY

WE BELIEVE IN THE POWER OF PERSONAL

WE VALUE MUSIC AND THOSE WHO MAKE IT

17BEYOND THE BRAND: WHY BUSINESS DECISION MAKERS BUY INTO STRONG CULTURES 17

89%OF RESPONDENTS AGREE THAT GREAT COMPANIES BUILD CULTURES THAT CREATE EXCELLENT CUSTOMER EXPERIENCES.

We see that while the values and purpose

of a company shouldn’t change, sometimes

the mission might need to be reconsidered

in the context of marketplace inflections

and disruptions.”

In mid-2015, RBC was in the process of better

articulating its corporate values as well as the

purpose of the company. This had not been

done at RBC before, despite its 151-year

history. Why now? In part, because RBC’s

leaders found that clients, employees and

communities were increasingly calling for

clear sense of purpose.

The new language will spotlight RBC’s strong

global growth plans as well as the need to

be flexible and innovative amid these rapidly

changing times. “The core values are the

same,” says Stackhouse. Through the process,

however, the mission “becomes crystallized

and strategic. The way we approach the

mission is sharper because the world is

changing so much.”

“While the values and purpose of a company shouldn’t change, sometimes the mission might need to be reconsidered in the context of marketplace inflections and disruptions.” – Patrick O’Hara, Global CSO, gyro


Purpose has operational benefits.

All stakeholders—both internal and

external—should have the opportunity to

share a company’s sense of purpose. In fact,

41% of respondents believe that A STRONG SENSE OF PURPOSE HELPS A COMPANY ATTRACT BETTER QUALITY EMPLOYEES.

One who firmly agrees is Kreg Weigand, who

spoke in his role as a partner, Risk Advisory

Services, at KPMG, before joining Target as

Vice President of Internal Audit in August

2015. “If a company is not communicating

its mission, then it will miss out on the next

generation of rising stars, because the

best people won’t want to work there,” he

says. “People have to feel connected to the

organization and feel that there is a larger

purpose overall. If you want them to be

passionate, they have to be aligned with

the mission.”

This is an example of a tangible benefit

derived from seemingly unquantifiable

factors (see sidebar).

PUT YOUR CULTURE TO WORK

MEASURING THE BENEFITS OF A STRONG CULTUREOne reason why corporate culture is not paid as much attention as other factors is because it seems hard to quantify. But it is possible, as Harvard Business School Professor Emeritus James Heskett argues in The Culture Cycle: How to Shape the Unseen Force that Transforms Performance (Pearson FT Press, 2011.)

“Organizational culture is not a soft concept,” he says. “Its impact on profit can be measured and quantified. Culturally committed employees are more likely to remain in an organization, leading to lower hiring costs, higher productivity, stronger customer loyalty, and better sales,” he says. His research shows that, overall, up to half the difference in operating profit between companies can be attributed to strong cultures.

19BEYOND THE BRAND: WHY BUSINESS DECISION MAKERS BUY INTO STRONG CULTURES 19

“Demonstrating a shared value and belief

with customers can be a powerful driver to

brand preference, which ultimately drives

sales,” says Bob Aiken, CEO of Essendant,

the fastest and most convenient solution for

workplace essentials. “Clear communication

of your organization’s purpose provides a

bond that increases the brand value with

existing and potential customers.”

For example, the Essendant Charitable

Foundation is led by a board comprised of

associates from across its businesses and

operating locations. “While an organization’s

purpose-driven culture can be exhibited

in a number of ways, the central element

is that the program or service is not

driven by product revenue, but is instead

measured in social reward,” says Aiken.

“Essendant’s approach to purpose is driven

by the passions of all of our stakeholders —

including management, associates, and even

customers — to ensure that the company’s

contributions are authentic and beneficial to

all involved.”

What’s more, 41% agree that a strong sense

of purpose enables better internal and

external collaboration. Kmart buys from a

wide variety of apparel manufacturers that

contribute toward its multi-billion dollar

annual revenues. If they don’t collaborate

closely, orders will be delivered late, and

Kmart might miss fickle consumer trends.

Vaccaro says the factors that lead to good

collaboration are “a culture of trust and

transparency and a seriously defined

purposefulness in setting objectives

together.” She adds, “There are a lot of

soft factors involved, but if both sides are

not crystal clear on the deliverables, the

relationship can go off the rails.”

Soft factors can also have an operational

impact. “We have seen how gyro clients like

HP, BlackBerry and John Deere are using

sustainability to impact the bottom line by

encouraging employees and partners to

seek out better, more efficient ways to run

their operations. What used to be window

dressing is now part of the infrastructure,”

says gyro’s O’Hara.

It has become clear that businesses are

interested not only in profit, but also in

purpose. THREE-FIFTHS OF RESPONDENTS PREFER TO DO BUSINESS WITH COMPANIES THAT ARE INTENT ON DOING WHAT’S RIGHT EVEN WHEN IT DOESN’T NECESSARILY MAXIMIZE REVENUE.

“Demonstrating a shared value and belief with customers can be a powerful driver to brand preference.” – Bob Aiken, CEO of Essendant


All stakeholders should have the opportunity

to share a company’s sense of purpose.

Companies recognize that sharing their

principles can be good for business. That

is why they should talk openly about their

aspirations and values. This can be a source

of pride. Indeed, increasing numbers of

companies see the value of telling people

what their business principles are. Eighty-six

percent of respondents say they are sharing

their company’s purpose and values with

key stakeholders more than they did five

years ago. COMPANIES THAT ARTICULATE THEIR PURPOSE CAN BUILD GOODWILL IN THE MARKET AND STRENGTHEN THEIR CULTURE.

The digital world demands transparency,

particularly channels such as Facebook and

Twitter. The immediacy and uncontrived

nature of social media makes it an important

tool for communicating corporate culture

to external audiences. Indeed, 86% of

respondents have increased their use of this

medium to reach out to new collaborators.

SHARE YOUR GOALS

“Social media has a huge effect on corporate

culture because it allows business to be

human and sometimes even adds a bit

of humor to interactions with customers,”

says Healy. When John Stackhouse was

Editor-in-Chief of Canada’s Globe and Mail,

before his current job at RBC, he observed

the powerful effect social media had on the

newspaper. “It is a wonderful challenger to

corporate mores, especially on transparency

and on speed. Companies are required to

respond to the public’s concerns, questions,

and challenges transparently and quickly,”

he says. “If you don’t, you will be savaged.

Many organizations don’t like social media

or don’t get it, but it’s a very good window on

corporate culture.”

“Social media has a huge effect on corporate culture because it allows business to be human and sometimes even adds a bit of humor.”

- Kate Healy, Managing Director, Marketing,



If a firm does business only with like-minded

companies, it has no opportunities to learn.

Exposure helps it stay fresh by forcing the

company to question its assumptions. Far

from corroding a business relationship,

differences can hold it together. GE’s

Banerjee says: “The best way of doing that

is to go out to meet different companies with

different cultures to share our own purpose

with them and see how we can change.”

BE DIFFERENT (IT’S OKAY)

21

WHEN CORPORATE TIES BREAKRESPONDENTS SAY WHY RELATIONSHIPS FRAY:

14+ %INTERNAL POLICIES PREVENT

COLLABORATIONCULTURAL DIFFERENCES

71%LACK OF TRUST

When corporate ties fray, dissimilar

cultures aren’t blamed for failure. Lack

of trust (71%) or internal policies that

prevented collaboration (69%) are viewed

as much more damaging. Only 14% say

culture contributed to significant corporate

relationships going bad.

Corporate culture is a powerful way for companies to differentiate themselves.

69%


“A simple test to a really deep relationship is that we had bumpy moments and had to sit and talk with [Taco Bell] about our challenges, and together we solved those problems.” - Heidi Browning, Senior Vice President, Strategic Solutions, Pandora

22

14%A SMALL PERCENTAGE SAY CULTURE CONTRIBUTED TO CORPORATE RELATIONSHIPS GOING BAD.

However, it’s critical to get some things

right from the start. Stackhouse says RBC’s

purchase of City National Corp., a bank

based in Los Angeles for $5.4 billion, “was

the result of a conversation that took place

between the two CEOs over the course of

two years and came down to shared values.”

Conversely, it’s hard for two companies to

get along if their values differ significantly:

RBC’s acquisition of Centura Bank of North

Carolina in 2001 failed a decade later

because RBC and Centura were not aligned

in terms of vision and how to get there.

The survey shows that financial headwinds

and day-to-day friction are not necessarily

reasons for failed business relationships.

Executives can overcome these difficulties;

they are not deal breakers. In fact, an

honest difference of opinion can clear the

air and enhance trust. One of Pandora’s

strongest relationships is with Taco Bell,

which has advertised on the music service

for more than four years. But it has not all

been smooth sailing. “Our relationship is

even stronger, and they thanked us for

our honesty,” says Browning.


Business decision makers buy into

strong cultures.

At a time when trust and reputation are

so highly valued yet in such short supply,

companies have a responsibility to consider

the best ways to develop strong corporate

relationships that will last. Executives need to

reprioritize their company’s most important

assets to take full account of the human

factors that are important for cementing

long-term relationships.

Many companies pay lip service to the

idea that their employees are the source

of their greatest strength — but culture

building goes beyond having the right talent.

Excellent employees need to be connected

CONCLUSION

by shared aspirations. Founding principles,

mission statements and shared values

can bind people and customers together

and serve as a catalyst for long-term

business success.

Executives are human. Business decisions

are as much about buying into an idea as

buying a product, and the most powerful

idea of all is the one on which a business is

built. By using this idea to establish a strong

culture and share it externally, companies

can attract the kind of business partners

who will remain loyal for years to come.

THE ANNUAL BENCHMARK OF REPUTATION AND CULTURE: FORTUNE REVEALS THE MOST ADMIRED COMPANIES AND THE BEST COMPANIES TO WORK FOR

FORTUNE’s Most Admired Companies 2015 FORTUNE’s Best Companies to Work For 2015APPLE GOOGLEGOOGLE THE BOSTON CONSULTING GROUPBERKSHIRE HATHAWAY ACUITYAMAZON.COM SAS INSTITUTESTARBUCKS ROBERT W. BAIRDWALT DISNEY EDWARD JONESSOUTHWEST AIRLINES WEGMANS FOOD MARKETSAMERICAN EXPRESS SALESFORCEGENERAL ELECTRIC GENENTECH COCA-COLA CAMDEN PROPERTY TRUST

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