Corporate Culture: A Competitive Advantage

By Cathy Yarbrough, Contributing Editor
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Corporate culture is no longer a back burner issue relegated to the HR department. According to several surveys, CEOs are becoming increasingly aware of the impact that a company’s culture can have on the bottom line. In the 2013 Culture and Change Management Survey, conducted by the Katzenbach Center at Booz & Company, 60 percent of 2,200 senior executives worldwide ranked a company’s culture higher than strategy and operating model in order of importance. Another noteworthy survey, sponsored by the Corporate Executive Board (CEB), found that 93 percent of more than 200 CEOs said that an organization’s culture directly affects financial performance.

CEOs increased awareness of corporate culture’s role can be traced to a series of studies over more than two decades. Among the first and most important was the comprehensive, critical analysis of more than 200 companies that was conducted by Harvard Business School professors John P. Kotter, Ph.D., and James L. Heskett, Ph.D. Their landmark study determined that corporate culture is a strong predictor of financial performance and was published in 1992 in the book, Corporate Culture and Performance.

Companies with corporate cultures that emphasize “doing the right thing” for clients have a competitive advantage in the marketplace, said James Hamby, Ph.D., VP for business development at Ash Stevens, a leading provider of global contract pharmaceutical drug substance development and API manufacturing services. “Many of our new clients said that they came to us because their previous CMOs cultures had changed from a focus on clients to a focus solely on profits,” said Dr. Hamby. During the decade ending in 2010, Ash Stevens’ sales tripled from $6 million to more than $20 million.