The term is everywhere these days.
In our most recent webinar, we talked with Annette Franz, founder and CEO of CX Journey Inc., about the importance of culture and how to get started building it.
In this conversation, you'll learn more about the following topics:
- What culture is, and what is isn't
- How to create a service profit chain
- Tactics to change culture in your company
- How to measure the impact of culture
Companies Mentioned in this Webinar:
Blockbuster (Do not get 'Blockbustered')
If you'd like to watch the webinar, sign up for our downloadable, on-demand webcast here.
Taylor Pipes: Hello everyone, and welcome to today's Webinar, how to build a successful people-first culture. My name is Taylor Pipes. I'm the editor of Shiftonomics, Branch Messenger's weekly newsletter that covers all the important headlines and stories that shape the ever-changing world of hourly and shift work.
Today, we're really excited to have a special guest with us, all the way from beautiful California, Annette Franz. She's the CEO of CX Journey, an author, speaker, and a customer experience consultant. Today, we're gonna talk about what culture is, why it matters, and actional tactics you can implement that change culture in your own organization.
I'd like to start off with a pretty big question.
Annette Franz: Alright.
Taylor Pipes: This whole discussion is about something that's not tangible. It's often credited for some of the greatest business successes, while also blamed for some of its biggest failures. It's culture. Can you explain in your own words what culture is and why it's so vital?
Annette Franz: Well, I don't know if these are my own words, but I love this definition of what culture is. It is really values plus behavior. Culture is defined by your core values, but they have to, they can't just exist as a picture up on the wall. You have to actually model the behaviors and actually behave in accordance with those core values. That's what culture is to me.
Annette Franz: I also like Herb Kelleher for CEO of Southwest, his definition is really what people do when no one is looking. It's sort of your character. It's who you are. It's the soul of the organization, really. And it's what employees know that they need to do without having somebody tell them, because we've got this thing, as you said, a tangible thing in place, right?
Taylor Pipes: And Herb's actually really a great example, because he's really an advocate of the service profit chain. You could find him on planes, on tarmacs, in customer service roles.
Annette Franz: Yeah.
Taylor Pipes: I think that's a pretty unique opportunity to really exemplify what this all means.
Annette Franz: Absolutely. Absolutely. If you read any book about culture, if Southwest Airlines isn't mentioned in their I would be shocked.
Taylor Pipes: Culture's everywhere today, but at the same time, we're seeing a really interesting transition in the business world. There's a lot of stories we could talk about today, even. But, the maxim used to be companies exist to make money, maximize shareholder value, to do so, they had to acquire customers and constantly invest in those channels, that's marketing and sales. But, that's really shifting today.
Can you speak to a little bit about what you're seeing in that shift and why that's important to talk about?
Annette Franz: Yeah. Companies aren't really gonna stop making money. They are still technically in business to make money so that they can succeed and continue to do business. But really, I love Peter Drucker's definition of why a company is in business.
We're in business because, to create and to nurture a customer, right? When we focus on profits and shareholders, and making money, and those kinds of terms, we're really doing things very differently than when we're trying to build the business and grow the business, and succeed because of a great customer experience and a great employee experience. Building a business that way, it's much more successful.
And when we focus on the employee experience, drive is a great customer experience, and then the numbers will come, right. There's no setting aside, hey, we don't want to make money if there's no profit, it's just, they all have to go hand-in-hand, right?
Taylor Pipes: Exactly. Just a few moments before this Webinar, we actually saw Shep's most recent Tweet, and it just spoke to everything we're talking about. He basically said, "Recognize that everyone is involved in customer service, not just the customer service department. And it starts at the very top of the organization. Customer service is not a department, it's a philosophy."
Recognize that everyone is involved in customer service, not just the customer service department, & it starts at the very top of the organization. Customer service is not a department, it's a philosophy.— Shep Hyken (@Hyken) September 6, 2018
Taylor Pipes: And I think that's a really-
**Annette Franz: **Yeah.
Taylor Pipes: ...interesting way to describe all this. I mean, this is a challenging thing for companies to rap their head around. It's not tangible. But it's a philosophy, and I think that's a good entry point into this conversation.
Annette Franz: Yeah. I think it is too, absolutely.
Taylor Pipes: The Duke Fuqua School of Business released some really interesting research results about this. You've written about this, you've
Annette Franz: Yeah.
Taylor Pipes: I was wondering if you'd kind of talk about that a little bit.
Annette Franz: That was an amazing piece of research. I loved it. I was looking at it again this morning, 'cause I hadn't looked at it since I wrote that piece, and I thought, wow, the research that they did ... It's interesting, as I was reading that, I was thinking about a webinar that I did yesterday where we talked, or I talked, about the CX perception gap, right? Which is, 90% of executives believing that they deliver a superior experience for customers and only 8% of customers agree, right? Oh, I'm sorry, it's 80% and 8%.
As I'm reading this research, which was done among, I think they interviewed around 1,400 CEOs, so I had to kind of put it into that, filter it a little bit with that. But, even so, it was still very fascinating, some of the findings that they had. For them to say the CEO drives the culture.
A lot of people will disagree and say, oh, you know, it's a grassroots effort, the employees have to do that. The employees build the culture. And it's, really, it's a top down and it's a bottom up too, I mean, obviously the leadership team has to model the behavior. They have to really sort of, they have to define those core values and then model the behaviors accordingly. But then, there is that sort of grassroots groundswell as well, where the employees have to jump in and sort of take it from there, but, if the executives don't model it, it's really a problem.
But yeah, the research was really interesting. Some of the findings were amazing. The fact that, this one was a really cool finding to me, was the fact that a lot of mergers and acquisitions are actually questioned or don't happen because there's not a culture fit between the two companies, and they didn't really realize that, that CEOs, or whoever's involved in that process really think about that twice and say, "Hey, well, it's not a good culture fit, so we're not gonna acquire this company."
I thought that was really interesting. There are a lot of other great findings there as well, and trying to do this off the top of my head, culture is like a top three value driver for the business, and just some of the findings around culture and the impact that it has on the employee experience and everything that leads on from there.
This is a very, very cool report. If you haven't seen it, I would highly recommend downloading it and reading it, because it's awesome.
Taylor Pipes: I want to touch on one of the stats, and it was to me, the most, one of the most interesting. More than 90% of the executives said the culture is important at their firms. 70 per- said, culture is among the top five things that make their company valuable. But, at the same time, only 15% of those CEOs identified that they were, that culture was where they needed it to be. That's a really huge disconnect there-
Annette Franz: Yeah.
Taylor Pipes: ...for something that's in a top five driver of value for a company.
Annette Franz: Yeah, absolutely. Yeah, exactly. It kind of goes back to that CX perception gap too. It's like they think it's important, or they know it's important. They know they need to do this, but they just don't take the time. And I think the reason that they attributed to that was exactly that. And they needed to spend more time focusing on really developing that culture.
Taylor Pipes: One of the other interesting-
Annette Franz: And they hadn't done that.
Taylor Pipes: No. And one of the interesting things in there, and I think you're seeing at a lot of brands these days is talking about how to advance company's value and profitability through the things you can effectively tackle from your organization.
Annette Franz: Right.
Taylor Pipes: Of the four things I mentioned, they talk a lot about creativity and innovation, which is really unique. Why is that important for a company to talk about, and how do you exactly have that conversation from the executive cabinet all the way down?
Annette Franz: Yeah. It is. I think that, just recently I shared a quote, and I'll probably mess it up, but it's something along the lines of, best practices are not, don't stick to best practices. Don't benchmark yourself against something.
We don't have the things that we have today, in terms of the technology and the very cool services, think Uber, think Netflix, think of those kinds of things. If there weren't cultures that were all about creativity and innovation and thinking differently and doing things differently and evolving how we, basically how we live, other than how we do business, but how we live.
Annette Franz: Yeah, absolutely, I think imitation is boring. Innovation is where it's at, and I think more and more companies are finding that. There is this, if you think about Blockbuster, right, Blockbuster never really thought that Netflix and those streaming services, even RedBox, they never thought that they were true competitors, they didn't look at it that way. And look, look where Blockbuster is, right?
If you're stagnant, if you're not constantly innovating and thinking about better ways and more efficient ways and different ways, and listening to the customer and really understanding what their needs and their pain points and they're, problem's they're trying to solve as you're innovating, you're gonna get 'Blockbustered,' basically.
Taylor Pipes: 'Blockbustered,' it's true. And another current example of that is, there were some findings published about BonTon today, this past week, and abut what they didn't do-
**Annette Franz: **Okay.
Taylor Pipes: That caused some of there failures. And I think the one consistent thing that was coming up in the research was that they didn't innovate and they were indecisive from the executive cabinet, couldn't decide where to put the corporate headquarters, whether it was in Pennsylvania or Milwaukee.
Taylor Pipes: That's a retail-
Annette Franz: Oh my gosh.
Taylor Pipes: A large retailer that has been swept aside while the Amazons and the other companies that understand how to adapt in a really dynamic world are changing.
Annette Franz: Well, that's the struggle for retail today, right? They've all got to figure out how they're going to, I don't want to say compete with Amazon, Amazon has a very unique business model and they've purposely built their business the way that it's built, but they need to innovate as well. Again, go back to listening to your customers and understanding what their needs are, their ping points and those kinds of things, and how do you build a better experience? What are the things that people love about the Amazon that you can also incorporate.
That goes back to a great point, that culture can't be imitated either. You've gotta figure out what is your culture, what is the soul of your organization going to be like and then build it from there. But again, and retailers need to really listen to their customers and figure out, yeah, they've gotta innovate and not imitate.
Taylor Pipes: Yes, and do it often, and don't wait.
Annette Franz: Yeah. I think well, and that's the problem, right? Like going back to the Blockbuster example, right, they waited, right? They didn't think that Netflix or RedBox or any of the other, that streaming services were competition, and that they waited, and here they are. And so many other retailers, the same thing's happened to them, especially lately.
Taylor Pipes: That's a really good segue point. I'd love to talk about how tactics can be advanced in a company. For the people that are listening to us, what are some of the things that they can do to advance culture and change culture within their organizations?
Annette Franz: First of all, the foundation of that is your core values, I'll just keep saying that, because it is. You're gotta have those core values in place. And then you've got to model those core values. Really, core values, again, are nothing without the behavior.
You've got, the executives need to model it. Employees then need to live it and breathe it. It's all about, I'll start with hiring. Hire the right people. It's so true when people say hire for attitude, train for skill, right? Culture fit is no joke. You've got to hire the right people and get the right people on the bus. I think that's a huge thing.
Really tightly tied to that too is you've got to be willing to hire, fire based on those core values and you've, I've seen it happen and I've seen it not happen. When it's not happening it's not pretty, right? And incorporate those core values into your performance reviews, because they're gonna be the way for you to evaluate your employees going forward.
Another thing that I think is, and I'll use the term service leadership here, is that leadership, as they're modeling those behaviors, they've really gotta put employees first. They've got to put the needs of others before theirs. Going back to Southwest Airlines and their core value, or one of their principles is serve at heart, right? That's all about putting others first, putting the needs of your employees, putting the needs of your customers before your own and making sure they have a great experience. That's part of it as well.
But, you're gonna have, actually gonna have fewer policies and rules in place throughout the organization, because if you've got a solid culture, people know what they need to do, right? You're gonna have fewer, like, you can't do this and you can't do that. You've gotta do this, and don't wear jeans, and all of those things, it's all gonna sort of even out and make life a lot easier if you've got that culture in place.
Everything that you do around the employees is gonna be based on core values, so rewards and recognition and those kinds of things. There are a lot of different ways. And then leaders can get out and start to listen to employees more and talk about the core values and talk about examples of how people are living those core values and living and breathing the culture, and rewarding and recognizing and appreciating people for doing that.
Taylor Pipes: You mention in one of your articles, don't let your culture, quote, rock from the head down. I wonder if you could-
Annette Franz: Right.
Taylor Pipes: ...now that you've sort of laid out the tactics, can you explain what that means?
Annette Franz: Well, it's based on the saying, fish rot from the head down, right? I haven't actually watched a fish rot, so I'm assuming that's what happens, but ... Culture rots from the head down as well, and again, it's what I've been saying here, is the leaders have to model it. They have to model the behaviors, and they're not exempt from living and breathing those core values, right?
When your leaders, apparently according to this research by Duke Fuqua that the CEO sets the tone, right? Your CEO becomes your chief executive officer, the chief culture officer, the chief customer, the chief people officer, he's everything, or she's everything, right? Because people look up to your CEO and if they feel like the CEO is on a pedestal and that he's not from all of these things, then they're like, well, why should I do that?
Really, it begins with leadership showing the rest of the organization what that culture means and how we act and how we behave and what's right and what's wrong and those kinds of things. What I think, actually, a quote they say in that article, what's good for the goose is good for the gander.
It's really, nobody is exempt from those core values and living the culture and breathing the culture and it really is set from the top and is viewed by employees, and the leaders, not just the CEO, but all of the leaders in the organization don't behave in accordance with the core values, then there's a problem.
Taylor Pipes: On that note then, how can a company go about measuring the impact of its culture? You've mentioned employee reviews internally. What are some of the other tactics that companies can use to gage whether or not culture is working and resonating?
Annette Franz: This is an interesting one, and you can do culture climate surveys and those kinds of things, but it was interesting that it captured some of the things that Duke Fuqua said in their research, some of the ways that they measure, or say that CEOs and organizations measure culture. Again, I'm gonna do this from memory, but one of the things that they looked at was age and tenure of employees, which was really interesting. I thought age was interesting, because, but they were looking at sort of generational and diversity and all of those kinds of things.
One of the things they mentioned too was Glassdoor reviews, right, what are employees saying about the company outside of the company. That's actually a really huge thing when it comes to measuring culture. Are your employees proud of the company that they're working for, right? And how does that reflect out into the world?
External communications, what is the CEO saying? How is the CEO communicating outside of the organization to the outside world about the organization? Internal communications, how are they communicating to employees? Again, is it in accordance with the core values? Is it part of the, again, they're living and breathing the core values.
I'm trying to think of what some of the others were that they mentioned, but there were things that weren't, like I said, you could start with a culture or a climate type of survey, but these were other things that were sort of not necessarily numbers driven and metrics driven. But, it was more sort of qualitative and what are people saying external, from inside to the outside? And what are people who are now outside saying about what they experienced when they were on the inside?
I thought that was really interesting.
Taylor Pipes: We actually have a question that just came in about that. Have you seen more companies care about their culture since company review sites like Glassdoor have taken off? I'll give a quick example. I worked at a company and Glassdoor, and their strategy was genius about this, because we were getting reviews about our organization and it suddenly became an immediate effort in the company to talk about how we viewed culture from the inside out.
Have you seen this change? Has this been a instigator of change for companies?
Annette Franz: I don't know if it's been an instigator of change. In the experience that I've had with clients that I know who go oh shoot. We've got three stars or we got two stars on our Glassdoor, we need to ... I think it does impact them, because when that kind of information gets out there in the pubic domain, people don't want to work for these companies, they don't want to buy from these companies, it's huge. Some of them still look at it and go, oh, I don't really care. But I have seen a couple of clients who said, "You know what? We need to take this to heart and we need to fix this."
It's almost like the sort of reputation management that companies have been using around the customer experience. But it's the same for your culture as well. Yeah, absolutely, I have seen that, and it's a mixed bag, unfortunately. Some take it seriously and some don't.
Taylor Pipes: And well, as we all know what, in the new consumer existence, the first thing consumers do is they start to look for feedback by other people, and that's a guiding choice, and it's the same for employment as well, unfortunately, and that stuff doesn't go away.
Annette Franz: Absolutely. Absolutely, they trust strangers more than they trust the CEOs. They trust strangers, strangers in terms of word of mouth, recommendations, reviews, whatever, more than a company's advertising. So yeah, absolutely, it's huge.
Taylor Pipes: Yeah. Let's kind of ramp-down here. I wanted to ask you, I know you probably have, you've mentioned a few examples, Southwest, but can you give me an example of the company you think gets culture the most? What's your, at the top of your pillar?
Annette Franz: Hands down, it is Zappos. It is Zappos. Tony Hsieh purposely built this company the way that he built it, with the culture that he built it with. They've got these 10 core values. They've got, they've written a book about it. They write a culture book about it every year. They ask their employees to talk about what is this, and that culture book is available to anybody on the outside. I actually have one from several years ago, 'cause I wanted to see it. I wanted to see what it was all about, and they do it every year.
They have tours of their company. They actually spun off a, because of the book, spun off a consulting firm that is all about delivering happiness and building these kinds of cultures. I really think any time I talk about great culture, you've seen the pictures. I mean, the employees look like they're having a blast.
They're living their core values. Hands-down, Zappos is my number one choice there.
Taylor Pipes: They've single-handedly, the work they've done, infrastructure wise, in Las Vegas has been absolutely astounding, what they've done to revitalize it.
Annette Franz: Oh yeah. Oh yeah.
Taylor Pipes: It's incredible...
Annette Franz: It's amazing.
Taylor Pipes: We've got a few questions I'd love to-
Annette Franz: Yeah, make sense of it.
Taylor Pipes: How can a CEO spread culture or the values all the way down to the frontline workers? At Branch, we really deal with a lot of frontline, hourly workers, and I'm curious if you have any thoughts on that.
Annette Franz: Well, it doesn't really matter who it is, whether they're frontline or they're hourly, or they're back office or they're executives or whoever they are, whether they're here in the US or they're global, right? This is sort of the message that I've been trying to convey throughout our conversation here, is that the CEO sets the example, right? The CEO sets the culture. The CEO and his executive, I keep saying his, it could be hers as well, her executive staff, could, they've all got to live and breathe these core values and behave the way that they want their employees to behave.
I think that one of the things that I'd like to see is when they get out of the ivory tower and they go and talk to their employees. I think if they go and talk to them, and find out how they are. Who are you? Find out more about their employees, and show that they care about them, ask them about their personal lives, not just about hey, do you have all the tools and everything you need to do your job, but how's your day going? How's your wife? How are your kids? What are they doing? Do you have any pets? Those kinds of things. And you know what, don't BS, actually truly, honestly, from the heart, ask those questions and really care.
I mean, don't view your employees as cons in the wheel. They are not cons in the wheel to your success. They are a part of this company just like you and you need to care about them every single day. I say get out of your chair and go and talk to your employees.
Taylor Pipes: Yeah. One final question. Is implementing the wrong core value better than not trying to implement any core value at all?
Annette Franz: Ooh. I have a question back for you. How do you get to the wrong core value, right? I mean, the process, when you're setting, when you're defining your core values is, I want to say it's relatively rigorous and most companies will go through a rigorous process where it's, first of all, especially in a startup situation. It's the founders saying, okay, well these are my personal values, right? This is, these are the things that I believe in. These are the things that I would like to see us grow this company with.
And then they take it out to some key employees to get their input and feedback as well, not necessarily going out to everybody, but it's gonna go out and get some feedback from either other executives or employees within the organization. I guess my question is how do you get to the wrong core values?
Taylor Pipes: That's a great, that's a-
Annette Franz: You know, so ...
Taylor Pipes: That's a great question.
Annette Franz: If you've done it right, if you've done the work right, you will have the right core values. And then, you know what? I don't have a problem, some people say you set your core values and that's it. I don't have a problem with updating your core values down the line, because if you're ... I'm working with a company, a 50-year-old company, right, that when they originally set their core values, and I'm working with them because we're trying to improve the employee experience and improve the customer experience, and their core values aren't bad, they just don't reflect the work that we're trying to do and how we want to shift the culture going forward. That's why we're updating them.
I don't have a problem with that. I hope that answered your question though.
Taylor Pipes: It does, and I think it makes sense. If you think of a company as an entity and a living, breathing, dynamic thing, these values are gonna change. I mean, I think one of the contemporary examples of that is a company like Nike or something. If these companies, their dynamic, and they get that the world is changing around them, and their values may also adjust internally or externally.
Annette Franz: Yeah.
Taylor Pipes: I think that's a great, great point.
Annette Franz: Exactly. I don't think you're gonna stray from your core, I think there are always gonna be a set of, but you may want to add some or you may want to tweak some. You may want to redefine the behaviors that are acceptable. It's interesting that you bring up a company like Nike, or there's Uber, or some of these other companies that have, you know, have core values in place. But, the problem is that they probably aren't living them and why they're getting the press that they're getting today.
It's time to go back and say, okay, are we actually living them or do we need to tweak them.
Taylor Pipes: Yeah. Alright, Annette, thank you very much for taking the time to talk with us today. You can follow Annette on her website at www.CX-journey.com and learn about all things CX related. I want to take the time from all of us at Branch to thank you very much for talking with us today about this topic. Really enjoyed it.
Annette Franz: Thanks so much for having me. Thank you.
Taylor Pipes: Alright. Thank you very much. Thanks again, folks. Bye-bye.
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