While culture is often the most intangible, under-measured influence on competitive differentiation, there is no shortage of evidence it was a culture of bad risk pervasive in the international financial sector that plunged the world to the brink of economic collapse in 2008.
According to the U.S. Government Accounting Office, the 2008 financial crisis cost the U.S. economy alone more than $22 trillion. To get a sense of magnitude, consider U.S. GDP for one year totals approximately $13 trillion. Let’s hope the financial sector learned a hard lesson about bad risk culture from the crisis, but I’m not ready to bank on it.
Culture has been especially important to our business model in the new normal economy. While a culture of caring is in the DNA of a family owned enterprise, the typical paradigm of soft-ROI does not diminish our priority to transfer and sustain that culture as we grow.
The business landscape is littered with obituaries of companies that grew into cultures of hubris, bureaucracy, and personal agendas that eventually collapsed under their own bloated weight.
Keeping a culture of caring is no slam dunk. Beyond the obvious components of vision, mission, values and performance, it takes a relentless determination to keep what’s good and reinvest it in people. Preserving or achieving a great culture is not a wholesale, all-or-nothing proposition. Transformational change must strive to be precise and deferential.
While the jury is still out on whether the banks realize that rogue capitalism cannot be the defining characteristic of future success, it is culture that sets the ethics and context of all organizations. Rogue capitalism eventually destroys itself; a more ethical and culture-based approach to the ethos of organizations is the only path to sustainable success. And that is a good risk.
Richard J. Bolte, Chairman and CEO, BDP International