Company culture has a 'smell' - here's why that matters

You can try and understand a company before you join, read up on all the GlassDoor reviews to try to contemplate what it will be like, but it’s only when you walk through the door and submerge yourself in the organization that you’ll fully sense the ‘smell of the place’, as I describe in my upcoming book 'The Phoenix and the Unicorn' (out March 2020).

The smell of Fontainebleau in the spring

That ‘smell’ refers to the late Sumantra Ghoshal, an incredibly gifted Professor of Strategic and International Management at the London Business School, who sadly passed away way too early, at the age of 55 in 2004. He was one of the top thinkers of his time, and he will always be remembered for his legendary speech at the World Economic Forum (WEF) in Davos. Ghoshal was born in Calcutta, the capital of India’s West Bengal state, an incredibly vibrant and dense Indian megacity. He had also spent years teaching at INSEAD, the French business school that is situated in Fontainebleau, a splendid, densely forested area South of Paris.

In his famous WEF talk, Ghoshal compares the fatigue of downtown Calcutta in the summertime, with the freshness of the Fontainebleau forests in springtime. He brilliantly describes how each environment causes a very different energy and distinct type of behavior. If you’ve never seen his talk, just Google “The Smell of the Place”, and watch the 8-minute video right now:

Unfortunately, the quality of the video comes from a pre-Youtube era, but its content is still very valid today. One small excerpt:

“Go to the forest in Fontainebleau with the firm desire to have a leisurely walk, and you simply can’t. The moment you enter the forest, there is something about the crispness of the air, about the smell of the trees in spring, you want to jog or catch a branch or DO something… Most companies, particularly large companies, have created downtown Calcutta in summer inside themselves and then they complain.”

Ghoshal claims that most workplaces today are unfortunately NOT like Fontainebleau in the spring, but much more like the very hot and humid Calcutta in the summer: the energy is low and people are tired and constrained. He argues that in these workplaces, the conditions that sap energy are driven by “Constraint, Compliance, Control and Contract.” Workers feel Constrained by their organization and the processes that govern them. They sense they are primarily there to Comply with the rules, planning cycles and budgeting systems, that their ‘boss’, management and infrastructure is primarily there to Control them, and that their job is merely a Contractual obligation. Clearly, these values don’t create the right context for people to proactively create change, take initiative, or cooperate towards the Day After Tomorrow.

At the opposite end of the spectrum, lies Fontainebleau in the spring. This is where leaders create conditions that trigger employees to reach for higher goals, where the energy is high and people are intrinsically motivated and excited. He argues that business leaders must create a context that values “Stretch, Discipline, Trust and Support.”

This is an environment where workers are Stretched to do more rather than less, are Self-Disciplined in their engagements and commitments, see their leaders as mechanisms to Support them, and can operate creatively in a system of Trust.

Now, what is very clear is that culture is not a mono-dimensional concept. You can’t put it on ‘one’ axis and then plot companies from left to right. There are many different facets that make up the complete ‘culture portfolio’ of an organization, and that define what ‘smell’ it gives. Just like you can’t plot humans on a mono-dimensional axis to rank their abilities.

Culture is a web

One of the clearest mechanisms to understand this phenomenon is the template developed by Kevin Scholes and Gerry Johnson, who have co-authored some of the leading textbooks on corporate strategy in the last twenty years. Their model of the ‘Cultural Web’ and its 6 vectors still proves to be a very elegant way to explore the dimensions and complexity of corporate culture.

Stories and Myths

Organizations are characterized by stories. These are the narratives that cover pivotal moments and legendary people inside and outside of the organization. Who are the super-heroes and -heroines of the corporate narrative, and who are the villains? What are the plotlines and the cliffhangers? Leaders like Jeff Bezos, with his huge charisma and his “two pizza team” or “customer at the table” discourse, are experts at shaping and stimulating company culture through these recognizable and appealing stories.

Rituals and Routines

Companies are characterized by patterns of systematic behaviors that they perceive as completely ‘normal’. These rituals and routines will determine what ‘should’ happen in particular situations. They can be positive (like the best practices of a customer service department), neutral (like who can fly business class) or negative (such as elements like sexism or bullying). A positive example could be the empowerment of customer service employees at Zappos, who can control their own time and budget to better please customers. A negative could be that of the gender discrimination problems that surfaced at Uber in 2018.

Symbols

Remember the symbolism of a ‘corner’ office before we had open workspaces? Or the inflatable unicorns or ping-pong tables in a ‘typical’ startup environment? Symbols can extend all the way to the branding of an organization, perfectly demonstrated by the ‘uniform’ that Steve Jobs wore during the later years of his life, the same outfit nearly every single day: a pair of blue Levi jeans, grey New Balance sneakers, and a black turtleneck designed by Issey Miyake. A repetitive approach that has since been copied by many wellknown entrepreneurs, like Mark Zuckerberg and his grey t-shirt and ex-Theranos Elisabeth Holmes and her black turtleneck. These cultural symbols are not just about logos and fonts, even clothes – up till what the employees are allowed (or not) to wear – are never ‘just’ clothes inside companies.

Organizational structure

Every organization has an ‘official’ hierarchy and structure that drives and influences its culture, but the ‘unwritten’ power of some particular people, teams or even entire departments is just as, if not even more, influential. Structures come in all shapes and colors, and it’s safe to say that today, corporations are often more like networks than hierarchies. As I wrote in one of my other books, ‘The Network Always Wins’, the unofficial social power within a network can be even more instrumental than the ‘org chart’ to understand a corporate culture.

Control Systems

This part is about the systems that control the organization: financial management, rewards and retribution or quality-control structures. Rewards, for instance, have a fundamental influence over a company’s culture: if management rewards efficiency, compliance and perfection, this will suffocate the long-term experimental messiness that goes hand in hand with innovation. Some companies operate in heavily regulated environments, of course, and they will install more control systems than others. On the other hand, the many examples of the likes of Enron and Lehman Brothers clearly show that this is not an absolute guarantee.

Power Structures

This is where the ‘real’ power lies inside the company and which people have the biggest influence on decisions, operations, and strategic direction. Who decides, who defines the strategy and what are the power mechanisms that drive evolution inside the organization? Formal power structures (supervisory boards, audit committees, the role of CEO and chairman) are often visible and clear, but, here too, many ‘informal’ power structures (from the control of a founder, or the implicit role of trade unions) can be just as important to describe the company’s culture.

Sumantra Ghoshal did take two extremes to describe corporate cultures: the Fontainebleau springtime and downtown Calcutta summertime. But what’s the smell of your organization? How do the different dimensions of your ‘cultural web’ - from the stories and the symbols to the power structures, controls, the organizational structure and the rituals and routines - measure between those two extremes?

Imagine that you are a fresh young talent that enters your organization for the very first time: what would that smell reveal about you and your ambitions? And what would you need to do to adapt any of those dimensions, should they prove to turn out as stale as day-old bread?

So, at the beginning of this brand new year, I want you to think about this, and make this one of your New Year resolutions: how can you make sure that your company culture smells (even) better?