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Why culture matters

16 April 2021

Charles Sanford, Partner

What do the recent Greensill Capital[1] and Archegos[2] sagas, the COVID-19 vaccine rollout and the Suez Canal debacle[3] have in common? Responses on a postcard please, but I am willing to bet the concept of culture is a consistent thread.

The culture of organisations is a little like a supertanker: once set in motion, it takes a great deal of energy to shift course and even more to stop and reverse. Financial markets analysts spend a lot of time focusing on quarterly earnings, balance sheets and other key performance indicators. But culture is the driving force behind all of these numbers, the secret sauce – if you get it right at the outset, you're on track for a Michelin star.

A friend of mine, Jo Hilditch, recently interviewed[4] Kate Bingham, the UK's vaccine tsar, and asked her about the UK's success versus Europe. Bingham answered that the EU took a traditional procurement approach, spending time debating commercial terms and value for money, whereas the UK’s priority was to get as many vaccinated as soon as possible. Bingham stopped short of opining on why this direction, but I suspect the culture of the two political bodies has a lot to do with it. Bingham's own involvement demonstrates a willingness to adopt a private sector approach (she is an experienced venture capitalist) and she was given significant freedom, access and resource to make the magic happen. This contrasts with a government and committee-led approach which, whilst well-structured and orderly, does not have the benefit of nimbleness and dexterity. It's supertanker versus speedboat. 

The recent Greensill Capital and Archegos events also seem to speak to cultural issues at the core of the parties involved; the banks prioritising short-term gain over long-term reputation, the politicians perhaps doing the same. It would surprise me if the UK parliamentary investigation currently underway did not raise the culture surrounding the mechanics of lobbying as a key contributor to some of our senior ex- and current politicians' involvement. 

And the immediate cause of the Suez Canal blockage appears to be a stray gust of wind. However, an investigation is underway and compensation is sought by various parties including the Egyptian authorities, other delayed cargo carriers and the ultimate recipients of the Ever Given's cargo (they are likely in for a long wait following the arrest of the vessel pending investigation). Did the culture of the organisations involved lead to behaviours that prioritised speed over safety? Time will tell. 

Whatever the outcome, it is clear that culture is key. It is painful to observe large organisations getting it so wrong, not least because once you have several thousand staff, materially changing your culture is incredibly difficult. After all, you don't create electricity by incrementally improving the candle.

In our own organisation, there was tremendous effort and focus placed by our founding partners right at the outset on building a culture of client focus. As we continue to grow at pace, we have in no small part that foresight to thank, as well as the diligence of our people who put the client first in every task.

And it requires consistent focus. Gusts of wind are frequent in our industry and we must all maintain a steady hand on the tiller to keep the client at the centre of everything that we do.

[1] https://news.sky.com/story/greensill-how-did-the-david-cameron-lobbying-scandal-unfold-12275439

[2] https://www.ft.com/content/9137b765-5536-40dc-8823-1da2813aa533

[3] https://www.lgtvestra.com/en/news/how-far-reaching-will-the-suez-blockage-be/

[4] https://open.spotify.com/show/5tz09HKK5aE3Tq9QoncklS?si=Z5oATihnSDm7ZrnRztcl2A

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