In my recent article “The Seven Systems of Metronomics” I summarised the seven systems in the Metronomics Strategic Execution Growth System. This article is the first of seven individual articles that “deep-dives” into each of the seven systems. This first article is all about the cultural system.

The cultural system ensures that there is a clear and known culture in the business and in the team. It ensures the team is aligned with the company’s purpose and the handful of behavioural rules (cores and values) that guide and inform the behaviour within the teams.

The CEO is accountable for the culture of the business and they are represented as the foundations of the house. As the owners of the culture they must communicate and over communicate the culture of the business to all team members so that the culture is clear and known throughout the business.

There are four key concepts within the cultural system that ensures that this purpose and behaviour is maintained within team members. These four key concepts are;

•  Core purpose,
•  Core values,
•  Big Hairy Audacious Goal (BHAG™) and
•  Profit/X.

Core Purpose

Core purpose is about finding out and defining what your company stands for. Many companies look at the goods and services that they sell and assume that this is the company's core purpose, this is not looking deep enough.

In “Good to Great”, Jim Collins recommends that you should not be looking at what your company already does, instead you should be looking at what you could do and how this can enhance your company down the track. Your company should be able to adapt to any change without going against the core purpose. When it comes to defining your core purpose, Jim Collins provides 5 crucial questions to ask your team so that you can accurately articulate what your company stands for and understand what this purpose means within the workplace.

1. Your core purpose should always motivate the team and ensure that it inspires them to do their best work;
2. Similar to our core values (see below), your purpose should still be relevant whether that is 10, 50 or 100 years down the track;
3. It should help you and your team recognise what you aren't, but could be doing and thinking about how you may achieve this;
4. It should highlight what you shouldn't do within the company, what may not be right for you and your team;
5. Your core purpose must be truly authentic. There is no point in presenting a purpose that doesn't align with your business. Many companies crash as they fail to actually have a core purpose, or have one that doesn't agree with the nature of the company and its team.

Core Values

Core values are a crucial concept when it comes to understanding and emphasising your businesses’ cultural systems. Core values shape a clean and known culture within the business and amongst its team. These values should excite team members and drive their performance from the beginning.

Most people assume that all companies and members set their core values from an early stage and that all members are aware of what these values actually mean, that is not always the case. Many CEO’s and teams often forget to set this foundation for their businesses and find themselves struggling to resolve conflict within the workforce. It is important that these values are discovered early on to ensure that they are efficiently and effectively communicated right across the business. Jim Collins states that “it really matters to have core values, it really doesn't matter what they are.” By establishing core values, they become the foundation of the company, continuing to set the standards for attitudes and behaviours throughout the team.

The core values that underpin the business should not change much over time, they should be enduring. When it comes to actually coming up with these core values, Jim Collins stresses that it's important that you come up with the values that deeply resonate with you and your team rather than what you wish were true. Core values should shape the attitudes and behaviours of your team, and it's important that everyone actually understands what your discovered values are and how they should be implemented in your business.

Key tests for Core Values:

1. Are they alive in the business right now (do 80%-90% of the team live these values daily)?
2. Would you turn down revenue to keep to these core values?
3. Would you fire someone who (repeatedly violated) these core values?

If you can say yes to these three questions, you probably have the right core values.

BHAG

First defined in “‘Build to Last: Successful Habits of Visionary Companies" by Jim Collins and Jerry Porras’, the ‘Big Hairy Audacious Goal’ (otherwise known as BHAG™) is another key concept that allows businesses to develop their cultural system. The BHAG™ is introduced as a clear and concise target that businesses should work to reach that inspires teams to be productive and passionate about their work.

The BHAG™ should be clear enough that you and your team can get it right away . A BHAG™ is a challenge that seems so audacious that sometimes it may feel as though it can never be achieved, however this sense of challenge encourages the team to work hard to reach that finish line.  If you set a goal that is too easy for your team, it won't be a Big Hairy Audacious Goal, that is why we compare it to everest, it has to be a challenge to be effective, Many compare the BHAG™ to climbing Everest, everyone in your team should be onboard with the goal and the challenges associated with reaching your BHAG™. This goal is set in place as a method of guidance to the team, when you and your company are looking at what your next steps are, you must ensure that they drive you closer to your BHAG™.

Jim outlines several tests for a good BHAG™:

•  Is your BHAG™ clear and compelling?
•  Does it excite you and the team?
•  Does it connect to your Core Purpose?
•  Will it require a significant uplift in your organisation’s capabilities?
•  Will you be able to tell if you have achieved in in 10 - 25 years time?

A BHAG that passes these tests is probably a great BHAG™ for your team to pursue.

Profit/X

Profit/X is another concept from Jim Collin’s classic book, “Good to Great”; it is a concept that many people struggle to get their heads around as it can be pretty abstract. Essentially the X in your Profit/X is the thing that drives your business profitability.

The logic goes something like this, You want more Xs flowing through your business faster getting more and more profitable over time. If you can increase the number of Xs and increase profitability per X, your business profitability will rise exponentially over time.

OK let me give you some examples. Most airlines used to measure profitability with a measure called “Total Revenue per Available Seat Mile (TRASM)”, It just rolls off the tongue doesn’t it? South West Airlines challenged this industry default and made theirs simply “Profit per Plane”. Their rationale was simple, if they could maximise the profit for each plane (by maximising it’s time in the air and minimising it’s time on the ground), then the more planes they had would just increase their profitability. South West Airlines has been the most profitable airline in the world for most years in their history.

Another example is from the consulting industry. I work with many consulting and professional services businesses and when we first start working together, they often see their X as “Consultant”. Over time this often shifts to Project (so Profit per Project) and then to Profit per Client. So they work on building as many highly profitable clients as they can (acknowledging that there will always be smaller and/or less profitable clients). They shift their marketing, sales and operational focus to these different “Xs” as time passes.

So the Cultural System is the foundations of the business and also the Metronomics Strategic Execution Growth System. If you don't get this bit right, you are probably working harder on your business than you need to and you're probably not getting the results you want.

If you need help getting your cultural system in place as a foundational piece towards fulfilling your 3HAG, get in touch…

This article was written by Ged Roberts and Aoife Roberts.