Transmuting Company Culture into Financial Performance and Sustainability

Alchemy, a philosophical and proto-scientific tradition from the 12th century practiced across Egypt and Eurasia, aimed to transform base metals—common and inexpensive ones like lead—into noble metals, which are rare and valuable, such as gold.

Since 1982, I have led research teams in numerous performance improvement projects with various organizations, both large and small, across five continents, including for-profit (private capital and public capital) and nonprofit companies. We have examined and analyzed data from all angles. What we’ve discovered and repeatedly confirmed, is that designing and implementing an organizational culture is a relatively low-cost investment with an exceptionally high economic return—the closest management science has come to alchemy.

In business, tangible assets, those that are accounted for on the company’s balance sheet, and intangible assets, those that are not, are often interchangeable in the mind of the paying customer. 

Southwest Airlines, for example, is a famous alchemist. The company’s business model prunes off tangible assets – assigned seating, food, frills, and plane options – and replaces them with a highly valuable intangible asset – FUN. Other perennially high-performing companies that follow the same logic include Costco, Autodesk, Chubb, and Disney, and they have proved that they are master alchemists.

One such study looked at five companies that have among the strongest, most magnetic cultures and compared their performance to the prevailing stock indices over time. Here's what we found. 

Does your organizational OS need an update?

Culture is either shaped intentionally or allowed to develop on its own. Unfortunately, when left to develop on its own, culture often declines, becoming inward-looking, confrontational, reactive, monotonous, and overly concerned with maintaining organizational stability. Growth can be lethal to culture. Only through intentional design and constant vigilance can management establish and sustain an organizational operating system – a culture that is outward-looking, cooperative, proactive, flexible and invigorating. Similar to a computer's OS, which manages all hardware and software and their interactions, an organization's culture regulates the behavior of a company's workforce and its interactions with various stakeholders.