How to make your culture a source of competitive advantage

If you’re looking to grow your hospitality business, you won’t be short of advice from people telling you how important it is to get your culture right. 

And everyone you talk to will have an opinion. 

There will be a whole crowd of people telling you there’s “just one thing you need to do…”. The only snag is that none of these people will agree on what that one thing is. And if they’re a consultant, coacher or supplier… you can be sure the one thing you need is the thing they’re selling!

There’ll be a host of others who want to tell you about another company with a great culture that you should try and copy.

And there will be doomsayers telling that you have to bottle up and protect your culture at all costs, or you’ll become a depressing, faceless corporate.

They’re all wrong.

So in an effort to cut through all this noise, we thought it’d be helpful to share Youda’s perspective on culture in growing hospitality businesses, why it matters and how you can get it right. 

There’s some theory in here, some practical tips and hopefully it’ll give you an appreciation for why we’re building in the way we are and what we think is important.

So let’s start by trying to precise about what we’re talking about… 

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What is culture?

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There’s no right answer to this (there’s no ‘Pope’ or world authority on organisational culture who gets to set the definition for everyone else), but there are plenty of bad answers out there. I get particularly irritated by definitions that include a + and = sign!

At Youda, we follow a definition of organisational culture from a chap called Edgar Schein. In his view:

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“The culture of a group can be defined as the accumulated shared learning of that group as it solves its problems of external adaptation and internal integration; which has worked well enough to be considered valid and therefore to be taught to new members as the correct way to perceive, think, feel and behave in relation to those problems. This accumulated learning is a pattern or system of beliefs, values and behavioural norms that come to be taken for granted as basic assumptions and eventually drop out of awareness.”

Organizational Culture and Leadership; Edgar Schein (2017)

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Let’s try and translate that from business guru to plain English…

Think back to the birth of your business, when you first opened as a street food stall, food van or single site operation.

At that point in time, you basically had two problems you had to fix if you wanted to survive:

1. How do I get my team to work together effectively?
2. And how do we engage successfully with the outside world? (Customers, suppliers and investors)

When you’re a new business you just get on with it. You try stuff. If it works you stick with it. If it doesn’t work, you try something else.

Over time the more something seems to work, the more integral it becomes to your culture. You stop questioning it or being particularly aware of it and starts to become a basic assumption or norm about ‘the way we do things around here’.

When new team members join your company, these cultural norms define what they need to notice,   think, feel and do in order to be accepted as a member of the group. Or to put it another way, what they need to ‘fit in’ with your team and feel like they belong to your company.

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Seeing your culture in practice

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Imagine I joined your restaurant as a new employee. I’m a few days in and I’m on the floor when I spot a dirty table on the other side of the restaurant.

I have to make a choice. Do I go and grab some blue roll and the spray, or do I pretend I didn’t see it and get on with something else?

If I decide to ignore the table, bit one of the more experienced team members sees and then picks me up on it by saying “Matt, that table needs a wipe, do you mind…” then cleaning tables is one of the things I need to do to fit in.

But if I clean the table and one of the more experienced team members comes across and says “Hey Matt, chill, you’re making the rest of us look bad” or if I see everyone else consistently walking past dirty tables and no one cares… then cleaning tables isn’t a cultural norm of your business.

Your culture is the amalgam of all the unwritten rules that shape people’s behaviour.

It’s something that lives in everyone’s heads. 

And that means…

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You can’t control your culture

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This is one of the things about organisational culture that leadership teams can really struggle with. And it’s understandable. As a leadership team you get used to deciding the plan that others then execute on. You can decide what your strategy is. You can define your brand. You can determine the budget. You have some sense of ‘control’ over this stuff.

But leaders can’t ‘control’ or ‘change’ culture in the same way. Culture is something that emerges from people’s interactions. It’s not something you can determine.

So as a leadership team, you can have a nice away day and decide to change the values you have written on your office wall, but that won’t change the culture in your business. 

Because the culture of your business is socialised learning. It’s kind of like a wiki that sits in everyone’s heads. And as we’ll explore later, your actions as a leader are just one of the influences on what people think.

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Why is culture so important in hospitality businesses?

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The people who work on the front line of your business have to make hundreds of little decisions every day. 

Let’s take a really practical example.

I’m on the floor of your restaurant. I can see a dirty table that needs cleaning on one side of the room. And on the other side, I can see a customer who seems to have a problem with their meal… but maybe it’s nothing…

What do I do? Do I go over to the customer or to the dirty table?

Now one of the factors that will influence my decision are my personal preferences. If I feel more comfortable talking to people than cleaning tables, I’m more likely to engage with the customer and visa versa.

But the culture of the team is also likely to be a big influence my behaviour. 

If the company culture prioritises cleanliness above service, then if I ignore the dirty table, my teammates are likely to pick me up for ‘shirking’. 

And the ‘operating system’ of the business will probably reflect and reinforce these cultural norms. So there’s likely to be a secret shopper audit or something similar that assesses and incentivises standards around cleanliness. It’s therefore going to be a priority for Managers who are going to try and coach and communicate how important it is.

Over time, if I want to ‘fit it’ and feel like I’m being accepted by the team, my behaviour is going to start conforming with these social norms, because psychologically it feels very uncomfortable for us to stand out from the crowd.

What doesn’t happen when one of your front line team members faces one of these micro dilemmas… is that they don’t stop and think about it. They don’t rationally deliberate on the implications of your company strategy and brand values. They don’t use their slow brain. They go with their gut. What feels like the instinctively right thing to do. Often that’s: “what’s the way we do things around here”. 

So it’s your culture (jumping back to the definition above the “behavioural norms that come to be taken for granted as basic assumptions and eventually drop out of awareness”) that really shapes the human elements of your customer experience.

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How to influence your culture

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So if you’re a hospitality leader that’s really interested in how you deliver a great customer experience, that’s on brand and at scale… you need to get serious about how you can influence your culture.

And in our view, there are four factors that have a big influence the culture of a growing hospitality business:

1. The personality, behaviour and values of your founders and leaders
2. Events
3. Meta cultures
4. The system or context in which people work Workplace Systems

Looking at each in turn…

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1. The personality, behaviour and values of your founders and leaders

Founders are undoubtedly the biggest influence on the culture of early stage companies. When you first opened, people came to work for you. They bought into your passion, your ethos and your vision for what the company could be. You coached them. Moulded them. Recognised and reinforced the things you wanted see happen.  

Which is why young companies tend to ‘inherit' their values from their founders, in much the same way as parents pass on their values to their kids. 

And the influence of founders and early leaders can stretch way beyond the initial growth phase of a company. Virgin Atlantic still seems to reflect Branson’s personality. What Steve Jobs thought was important, still influences the product design at Apple. And McDonald’s still powers along with the persistence and drive of Ray Kroc.

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2. Events

As soon as you start a company, stuff happens. Challenges and opportunities you didn’t anticipate. 

You respond to them. And if works you’ll tend to stick with it. The more it works, the more ingrained it becomes as a cultural norm that defines ‘the way we do things around here’.

My favourite story about how influential ‘events’ can be on the culture of a business is Honest Burgers. One of their company values is ‘simplicity’… but Tom, Dorian and Phil didn’t set out to create a simple business.

What actually happened was that they got offered their first site was in Brixton Market. It was a tiny  space. I reckon it’s less than 15m³. They didn’t have space for a coffee machine or a fridge for desserts. So they just served burgers and chips. Jay Rayner famously reviewed the chips as “edible crystal meth” and pretty soon there were customers queuing round the market.

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3. Meta cultures

In this context, we use the term meta culture to refer to cultural norms that extend across companies. So different countries have different cultural norms about work. Regardless of what industry they operate in, you’d expect a Japanese company to operate differently to a Swedish, French or American company.

Industries and professions also have meta cultures. That’s why the culture of companies in sectors like banking, law, accountancy etc tend to have more in common with their competitors, than sets them apart.

Often the influence of the meta culture is so profound, it’s hidden from view. 

When you opened your second, third and fourth stores… what did you do? You almost certainly hired a store manager. Why? Because every hospitality company employees a General Manager to run a unit. You probably never considered running it as a self-managing collective!

Similarly, you get to 8 to 10 sites… what do you do? You hire an Area Manager. Why? Because every hospitality company hires multi site managers when they get to this point.

Meta cultures aren’t necessarily a bad thing. It’s hard enough to start a company without trying to re-invent the wheel. 

But it’s helpful to be aware of the meta culture. Particularly if you think it’s anachronistic and no longer makes sense. And especially if you think you can break away from the meta culture in a way that allows you to stand out from the crowd and gives you a competitive advantage.

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4. The system or context in which people work

As you get bigger, the system or context in which people work tends to become more and more influential on your culture.

What you measure. Who reports to who. How you set goals and review progress. How you make decisions. Who gets hired and fired. Who gets recognised, promoted and rewarded. 

All this ‘people management plumbing’ influences what people understand they need to notice, think, feel and do in order to survive and thrive and the company.

The trouble is… lots of this stuff gets built out without much real thought or intentional design. So your culture ends up being determined by stuff you’ve copied and pasted from elsewhere and more often than not, by the constraints of your HR tech provider.

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So how do you create a culture that gives you a competitive advantage…

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1. Get the foundations right

In my 15 years of experience of working in the People and Culture space, there’s one lesson that really stands out — you can’t have a great culture without operational excellence. If you’re constantly firefighting, if your ways of working are clunky, if people don’t have what they need, when they need it… you just won’t ever create the space for people to develop the human-to-human connection and relationships that characterise a great culture.

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2. Be brave enough to be different

In today’s market, you need an employee experience that helps you attract, engage and retain the best people. And you want a culture that helps you translate this into a great customer experience and business performance. You won’t achieve that by just copying what everyone else is doing and going along with the crowd. 

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3. Test your gut

Good hospitality leaders have an instinct for when they need to challenge the status quo. Great leaders have the discipline to test their hypothesis and to learn from the data. 

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How Youda can help you create a great culture at scale

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1. Be purposeful in how you design your employee experience so you can nudge the culture you want

With Youda you can design your people management practices to run exactly how you want them so that every employee experience reflects your brand, your story, your strategy and your values. Youda enables you to translate the vision you have for your culture into the reality of your people’s day-to-day experience so everything feels coherent, on brand and people aren’t getting mixed messages about ‘what we need to do to fit in’.

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2. Create time and space for the human

The magic of hospitality is all about human connection. So let’s get rid of all that boring HR admin that’s eating up people’s time. With Youda you can automate any logic based process from onboarding new employees, to absence management, performance management, feedback, shift swapping… you name it, we can automate it! And you can also use our AI to make sure your people can access the information they need for themselves, so you’re no longer being pestered by all those questions about ‘what’s the policy for x’, ‘how many days holiday entitlement do I have left’, ‘what’s the recipe for y’. The result is a more consistent, instant and responsive experience for your people. And your managers, People Team and Leaders can get off their laptops and can spend time with your teams and customer and can focus on the work that actually moves the business forward.

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3. The ability to demonstrate the ROI‍

At the heart of Youda is a clever bit of AI called causal inference. Over time, as you generate more data about your people’s behaviour, we can help you start to make predictions on things like flight risk. And we can also help you identify the causal relationships between your investments in people and business outcomes… so for example, you’ll be able to work out whether the training you’re providing people is actually having an impact on people’s behaviour and the performance of the business.

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If you'd like to learn more about Youda and how we can help you turn the aspirations you have for your culture into the reality of your employee experience, please book time for a quick demo.

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