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The Iceberg That Sinks Organizational Culture Change

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Most people are aware of the incredible power that company culture has in making or breaking a company.

While the concept of culture seems qualitative and fuzzy to many entrepreneurs or managers, the research on the impact of culture on organizations is very clear and data-driven. Companies with highly-engaged employees have low turnover, high productivity, more satisfied customers, and higher profits.

To sum it up culture’s potential impact more succinctly, management guru Peter Drucker famously put it a different way: “Culture eats strategy for breakfast.”

The Pitfalls of Culture Change

The benefits of a strong company culture are many – and it’s no surprise to see companies all over the world aspiring to build world-class cultures within their organizations at almost any cost.

The problem is that company culture, just like the culture that permeates through society, is based on hidden sets of assumptions, social norms, traditions, and unwritten rules that represent the way things actually get done in a company. As a result, decision makers often underestimate how challenging cultural change can be.

Today’s infographic comes from executive consultant Torben Rick, and it uses an iceberg analogy to show why organizational culture change sinks so many ships. At the top of the mass, there are visible indicators of a culture – but underneath is a bigger, invisible mass that holds all the ingrained cultural assumptions that are extremely difficult to affect.

The Iceberg of Organizational Culture Change

As Torben Rick puts it, the iceberg represents “the way we say we get things done” in contrast to the deeply-ingrained “way that things actually get done” within an organization.

In other words, for managers to positively affect cultural change, they not only need to address the top of the iceberg (vision, mission, values, etc.) but they must also make inroads on the bottom of the iceberg, which makes up more like 90% of a company’s actual culture.

Unfortunately, transforming these underlying perceptions, traditions, and shared assumptions is the real hard part of the exercise, and it can take many months or even years to see the results of such initiatives.

How to Build a Strong Company Culture

Cultural change cannot happen in one week of meetings, or through a few memos sent from higher ups. To effectively shape the bottom of the iceberg – those deeply-ingrained beliefs held throughout the organization – change must happen over a longer period of time where leading is done by example, and employees have the support they need to grow.

The following infographic from ZeroCater offers six ways to help get you started in building a strong culture.

How to Build a Strong Company Culture

As you embark on your voyage to build a stronger company culture, remember that organizational change is more complex and ingrained than it initially seems.

The amount of companies that are successful in these endeavors is far fewer than the amount that have tried – and this iceberg of organizational culture change has sunk many ships over time.

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Business

How to Take the First Steps in Scaling Your Business

What are the roadblocks to achieving scale? We look at these growing pains, as well as the steps needed to get past them in scaling your business.

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How to Take the First Steps in Scaling Your Business

Most entrepreneurs are hungry to bring their company to the next level.

Whether they operate a family-run business or a rapidly evolving tech startup, there is always another milestone in sight. Business owners want to their companies to make an impact with their customers and communities, and they want to keep honing their craft.

But with 27.9 million small businesses in the United States alone, there is no shortage of competition for the same pieces of the pie.

How can you take steps in scaling your business, and do what your competitors are not willing to do?

Roadblocks to Scale

Today’s infographic comes to us from Brunner Consulting, and it breaks down common roadblocks to scaling as well as potential solutions to the problem of decision fatigue.

To begin, we’ll look at a poll of U.S. small business owners, which gives perspective on the challenges most often faced by companies with fewer than 10 employees:

  • Profitability (50%)
  • Hiring new employees (48%)
  • Growing revenue (41%)
  • Cash flow (38%)

Unless a business has deep pocketbooks or is venture-backed, there are several obstacles here that may prevent companies from scaling successfully.

A lack of profitability is an obvious limitation, but it’s also clear that revenue growth, cash flow, and adding new employees can be growing pains that may derail any long-term plans.

Decision Fatigue

Why is scaling your business so challenging?

It’s because most types of businesses are not really scalable to begin with. The only sustainable way to scale for most companies is to grow revenue while decreasing operating costs, and for many traditional small businesses (i.e. bakeries, restaurants, hardware stores, consulting, etc.) this can be incredibly difficult.

Even if you come up with a scalable business model, there is yet another obstacle that can prevent your from growing the right way: decision fatigue.

In a growing and evolving company, entrepreneurs can’t do everything – and when they try to make every big and small decision, it affects the quality of those decisions. It can lead to being unnecessarily risk averse, maintaining the status quo, or even avoiding decisions altogether.

Scaling Your Business: First Steps

For a business to grow, there has to be more than one decision-maker.

There are two main routes to this:

1. Delegate Responsibility
In a typical small business, employees find and diagnose problems, while owners focus on solving them. However, by delegating these day-to-day decisions to employees, it frees up owners to work on the big picture items that can fuel growth.

2. Play to Your Strengths
Entrepreneurs can’t do it all, so it’s best to play to your strengths. To do this, outsource business departments that are outside of your wheelhouse. Often those may include things like bookkeeping, marketing, customer service, or website design.

Decentralizing decision-making is one of the first steps in scaling your business – and no matter how you do this, it frees you to focus on the big problems.

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The World’s Best and Worst Places for Ease of Doing Business

In some countries, launching a business is easy. In others? It’s a hassle that is littered with bureaucracy, corruption, and a lack of basic services.

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The Best and Worst Places for Ease of Doing Business

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

When it comes to supporting new businesses, not all jurisdictions are created equal.

Whether it’s the basics, like hooking up electricity and registering the business, or more complex regulatory hurdles, your location can impact the success of your venture in a big way. What makes a country business-friendly, and where are the most hassle-free places to open up shop?

The Ease of Doing Business ranking, by World Bank, breaks countries’ complex regulatory ecosystems down into quantifiable components. The resulting index and ranking system is a global look at who’s making it easy to do business, and which countries are struggling.

A Global View of Doing Business

The visualization below looks at the score (0-100) of 190 economies around the world, as well as a spread between high and low scoring factors in the subindices. While two countries may have the same score, one might have a much wider “spread” which points to outlaying successes or serious challenges in their regulatory framework.

Luxembourg, for example, ranked number one in the Trading Across Borders factor, but 173rd in Getting Credit.

Note: click the graphic below of the full list to expand to a higher resolution.

ease of doing business chart data viz
View a high resolution version of this graphic.

Of the 190 economies covered in the report, New Zealand comes out on top for the third year in a row. Singapore and Denmark round out the top three.

The United States, whose ranking has been slipping in recent years, came in at 8th spot.

This ranking offers up some surprises, such as Macedonia and Georgia, which are both in the top 10. Georgia makes it easy to start a new business, and has the lowest number of procedures to get the process going.

Afghanistan had the biggest year-over-year score increase after making big strides in enhancing the legal framework for businesses.

Rwanda is ranked at a very respectable 29th place – the only low-income economy to crack the top 50.

Building the Index

The data for the ranking is compiled from over 12,500 expert contributors in 190 countries who deal with business regulations on a daily basis. The final score is based on the average of 11 factors:

  • Starting a business – Procedures, time, cost, and minimum capital to open a new business
  • Dealing with construction permits – Procedures, time, and cost to build a warehouse
  • Access to electricity – Procedures, time, and cost required to obtain an electricity connection for a new warehouse
  • Registering property – Procedures, time, and cost to register commercial real estate
  • Procuring credit – Strength of legal rights index, depth of credit information index
  • Protecting investors – Indices on the extent of disclosure, extent of director liability and ease of shareholder suits
  • Paying taxes – Number of taxes paid, total tax payable as share of gross profit, and hours per year spent preparing tax returns
  • Trading across borders – Number of documents, cost, and time necessary to import and export
  • Enforcing contracts – Procedures, time, and cost to enforce a debt contract
  • Resolving insolvency – The time, cost, and recovery rate (%) under bankruptcy proceeding
  • Labor market regulation – Flexibility in employment regulation and aspects of job quality

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