Regardless of industry, size, or intent, all business ventures are, at their foundations, people-driven endeavors. As such, they often fall into the same deadly organizational and managerial traps. When left unchecked, these problems can taint a company’s culture, stagnate its development, and even prevent it from pursuing future growth. Any business’ ability to perform for its consumers and shareholders is inextricably linked to its ability to perform for its employees; if they aren’t supported structurally and culturally, that company will not be able to deliver on its potential.
As a serial CEO, I’ve spent over three decades converting underperforming ventures into profitable businesses and have seen the damage that organizational issues can cause firsthand. The fields I’ve worked in span the gamut from industrial to medical to consumer goods manufacturing — and yet, I found that despite their seeming differences, many of the problems the companies I led struggled with had roots in the same two structural and organizational issues.
Lack of Innovation and Structural Support
“If it ain’t broke, don’t fix it” isn’t an axiom that applies well to business.
All ventures need to seek continual improvement if they want to remain ahead of the competition — if they don’t, they’ll inevitably be outmoded and left behind. When consumer expectations evolve, business conditions change, and competitors innovate, companies need to develop new processes that can handle the change — not cling to old or outdated methods that can’t adequately address current needs.
Counterintuitively, however, many leaders fall into the trap of assuming that because certain methods or processes gave them an edge in the past, it will continue to boost them to success in the future. Ironically, this way of thinking can lead to organizational stagnation or even business failure if leaders are unable to see and address the inefficiencies in their seemingly tried-and-true processes. As one business researcher writes in an article for the Harvard Business Review, “In trying to dig themselves out of a hole, they just deepen it.”
Companies that struggle with organizational stagnation should adopt the perspective that every process — regardless of how efficient or effective it might seem at the time — can improve. Consider lean manufacturing as a case study for this mindset. Rather than cling to inefficient processes, these operations do everything they can to minimize wasted time, effort, and resources without sacrificing productivity. They aren’t afraid to get rid of inefficient processes or implement changes for the sake of improved efficiency or quality; those measures only increase their employees’ potential to achieve more. Toyota manufacturing guru Shigeo Shingo might have created the “lean” philosophy specifically for manufacturers, but the benefits of having an innovation-centric approach to organizational development certainly apply across industries. Every business can and should be continually improved — the only question is how.
Lack of Positive Workplace Culture
Even the most efficient processes fall short if employees aren’t engaged in their work. A business’s culture has a significant influence on the business’ performance as a whole, and is often easier to experience than describe; as one writer for Forbes describes, “You can “feel” culture when you visit a company, because it is often evident in people’s behavior, enthusiasm, and the space itself.”
For all its intangibility, though, a well-established positive culture can have a concretely positive impact on business performance. Researchers for a 2015 study found that cultures with high levels of engagement, adaptability, and consistency saw 26% less turnover, 15% greater employee productivity, and 30% greater customer satisfaction levels than low-engagement cultures.
Businesses success hinges on having a positive culture — and yet, establishing one can be remarkably difficult. As business researchers Boris Groysberg, Jeremiah Lee, Jesse Price, and J. Yo-Jud Cheng wryly point out in an article for the Harvard Business Review, leaders “may lay out detailed, thoughtful plans for strategy and execution, but because they don’t understand culture’s power and dynamics, their plans go off the rails. Culture eats strategy for breakfast.”
A strategy might be set by C-suite executives, but culture blends the formal intentions of top leadership with the experiences and feelings of lower-level employees. If the expectations of company management are miscommunicated or conflict with the frontline experiences of the employees, the mismatch can spark resentment or even disengagement across the business as a whole.
Regardless of industry or business intentions, leaders need to ensure that they are in touch with their employees’ needs and experiences, and that their expectations are both clear and fair. Communication should occur smoothly between levels, across departments, and within teams to minimize misunderstandings and frustrations. Above all, the company’s atmosphere should be positive, supportive, and growth-centered; employees should feel safe within an environment that values continuous learning, sets time-limited but manageable expectations, offers ongoing constructive feedback, and appreciates a shared commitment to improving. If a struggling venture can redefine its culture to provide these supports, it stands a far better chance of engaging and boosting work contributions among its employee base.
Businesses are, without fail or regard to industry, people-centered endeavors. If companies lack the organizational support or cultural direction that those within working within it need to innovate and grow, they will inevitably fall into poor performance.