Corporate Culture

Here's why both your customers and employees will remain loyal if your company's culture is right.

It's back. (It never left!) Your employees crave it. Your customers will love it. (And the one who needs it most is you.)

Amy Miller has a secret. Granted, it's an open secret, not the kind she tries to keep. But to too many American companies and management experts--and, fortunately for Miller's business, to most of her competitors--it's a secret all the same.

Amy's Ice Creams, Miller's seven-store chain of premium-ice-cream shops in Austin and Houston, Tex., sells terrific products and gives excellent service. But that's where the similarity to other scoop shops ends. Visit an Amy's store--the one in Austin's Westbank Market, say, on a Friday night--and you'll see employees performing in a manner you won't forget. That's right: performing. They juggle with their serving spades, toss scoops of ice cream to one another behind the counter, and break-dance on the freezer top. If there's a line out the door, they might pass out samples--or offer free ice cream to any customer who'll sing or dance or recite a poem or mimic a barnyard animal, or who wins a 60-second cone-eating contest. They could be wearing pajamas (because it's Sleep-over Night) or masks (Star Wars Night); there might be candles (Romance Night) or strobe lights (Disco Night). They wear costumes. They bring props. They pop trivia questions. They create fun.

Miller obviously sells entertainment along with ice cream. That's her strategy. But her managerial secret--the real source of her competitive advantage--isn't the strategy, it's how she makes the strategy work. The real secret to her company's success is its corporate culture.

Culture? Competitive advantage? But corporate culture's been done, you say. Way done. (Isn't it something we believed in back when Reagan was president? Didn't it fade when Silicon Valley grew up, and fold when Wall Street grew imperious?) Everybody knows that success in today's business world comes from clinical, tough-minded stuff: a hot technology, savvy strategy and positioning, and brutal cost control (sorry, that's "business-process reengineering"). The competitive environment calls for hard edges now. And culture--all those beer blasts and Outward Bound excursions, all those golden retrievers by the water cooler--is so soft. So sentimental. One doesn't even see that sort of thing in commercials anymore.

Tell that to Miller--or to any of the dozens of other market-beating CEOs whose practices prompted this article. Culture's time, they argue, is now. Companies with clever, highly evolved cultures have an advantage precisely because of the particular challenges of the current marketplace. Culture helps companies compete.

The challenge for Amy's Ice Creams? An increasingly universal one: it must keep its stores from becoming just another commodity. Miller saw superpremium-ice-cream stores, once a safe niche, become almost as easy to find as espresso shops. Her way to differentiate her stores was to sell an experience with every triple-scoop cone. Her way to sustain that difference--to ensure you'd encounter the experience that sets her stores apart--was to create and nurture a culture that made that experience inevitable. She had to get the right people and get them to behave in the right way. And because their behavior needed to be inventive and unflagging and self-initiated, she somehow had to get them to know what the right way was, without being told.

That's what her company's culture accomplishes. It's also what smart, intense cultures do for many other hot young businesses--and, it turns out, for some of the country's more established entrepreneurial successes, as well. The right culture isn't just the product of what a founder willfully wants his or her company to feel like (though it can be that, too). Through the symbols and practices that give it life, the right culture solves a company's most critical competitive problems.

Out of fashion for a decade, corporate culture--as the examples here demonstrate--may be the best response there is to the business conditions that all company builders face right now.

Does your company have a corporate culture? Culture refers to the values, beliefs, and attitudes that permeate a business. It defines what the company considers important and what it considers unimportant. If strategy defines where a company wants to go, culture determines how--maybe whether--it gets there. Every business has some kind of culture, just because it's an organization of human beings. But most businesses never give the topic a second thought. Their culture is to do things the way they always have or the way everybody else does them.

A few companies, by contrast, have explicit, highly distinctive cultures--strong, focused cultures that stick out from the crowd like the Grateful Dead at a marching-band convention. They have mission statements and values that mean something, and that people take seriously. They have a set of overarching beliefs that serve as powerful guides for everyday action--and that are reinforced in a hundred different ways, both symbolic and substantive. You'll recognize the classic examples: 3M Corp.'s relentless focus on innovation, Disney's commitment to treating its theme-park customers as guests. Those cultural values inform every move and decision made by employees or managers at those companies. (And in the cases in which they haven't, you're probably looking at a former employee or manager.)

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