The Power of Ethos

In an article I wrote a while ago, namely “The 7 Forces driving an Organization”, I mentioned ethos being one of them.  It is not only the first force one should take into account, but also the most powerful.  Yet it is also the one force that is the most underestimated; actually the one force that is the most ignored.  We pay lip service to it, and then move one to the more pressing forces such as the environment, the competition, and the business model and strategies.  There is no doubt that these latter forces are important; should we ignore the powerful force of the ethos, however, the best business model and business strategies in the world will be to no avail.  It will be useless!  This does not stop us from ignoring the ethos; we are steadfast in our stupidity!

I had the pleasure and privilege of being exposed the past 2 weeks to 2 of our top motor vehicle manufacturers in South Africa.  They are both very successful, and both have global parents. The one aspect that I noticed about the two groups, was that their cultures were very different.  In spite of both being motor vehicle manufacturers, there was something different about the vibe of the 2 groups.  The 1 group was more conservative than the other.  They were focussed on the job at hand, and were definitely a bit more serious than the other.  It was not that the other group was less focussed on the job on hand, but there was definitely something different in the “aura” of the 2 groups.

I mentioned to a senior executive of one of the two companies that the people from his company were very serious, conservative, and focussed.  I meant it as a compliment.  He took it as such, and then made a comment that there were no dealers in the group, and that had there been, the vibe would have been different.

Reflecting on the past 2 weeks, I saw as confirmation that the ethos of a group consists of a number of factors, such as the following:

• The attitudes of the group.
• The values of the group.
• The mental models of the group.
• The world view of the group.
• The culture of the group.

It also struck me that these factors were determined by the composition of the group.  The comment of the senior executive about the absence of the dealers made a lot of sense when I thought about past programmes where dealers had been present.  The reality is that dealers and production people had vastly different driving forces, and such would have different worldviews and cultures.

The reality is that every organization has an ethos.  Some have an ethos that is positive, and leads to value-enhancing behaviour. The values of the people of the organization are aligned with the values of the organization itself, as well as the values of the respective stakeholders.  However, frequently the ethos is not aligned, and the end result is destructive behaviour.

These points make it abundantly clear to me that you need to be very careful as to how you compile your teams, and who you allow into your organization.

Why do I say this? Allow me to explain.

Another friend of mine is a senior manager at SABMiller.  Now we all know that the 2 aspects that drive the competitive advantage of SABMiller, are their low cost operating model, and the quality of their people, which again drives the power of their low cost operating model.  This friend of mine explained to me how much he spent on ensuring that the right quality people were appointed in his region, and that everything humanly was done to prevent bad apples from joining.  When I commented on the enormous amount of time he spent on this aspect of his job, he replied that he could not afford 1 bad apple in his organization, as that was all it would take to start the rot.  That, amongst others, would explain the comprehensive nature of the performance management system of SABMiller.

I have also personally noticed big differences in the ethos of the large companies in the insurance industry, the banking industry, the mining industry, the wine industry, and even the education industry.  The reality is that every company has its own ethos, driven by its own values, attitudes, behaviour systems, mental models, and worldviews.

In order to drive common behaviour standards that provide customer satisfaction, organizations need to ensure that there is a common set of values that bind people together.  When you group marketers, production people, HR people, finance people, and executives together, you need to understand that they by their very nature are all very different, and driven by very different purposes in their respective functional fields.  This is to be expected, and there is nothing wrong with it.  The marketer tends to live in a world of adhocracy with an external orientation, focussing on the client, quite willing to give the crown jewels away to satisfy the client. The HR person, with an internal orientation, would focus on people and organizational climate. And so we could go on.

In order to ensure that these different functions within an organization focus on something that would be sustainable and create value for all stakeholders, they all need to be drawn together in an organizational culture, with a strong set of values that binds them together in a “cult-like” manner.  Collins and Porras made this point abundantly in their powerful book, “Built to Last.”

Something I have been quite vocal about, is that organizations should not just accept people who have the same worldviews.  A worldview is a powerful driver of thought patterns and mental models, and as such could and does have a powerful impact on behaviour.  But having an organization where everyone has the same worldview can be disastrous.  The reason for this is that people with the same worldview see the world through the same lenses, understand the world in similar terms, and attach the same meaning to phenomena they notice in the environment at large.

This can be good and bad.  The good is that there is less conflict in such an organization, and decisions tend to be made more speedily.  The bad, which I think outweighs the good, is that the organizations tend to every bad on creativity.  For this you need different worldviews.  The difficult thing is to create a feeling of “togetherness” with people with vastly different worldviews. This is where the power of a set of core values comes in.  They are needed to ensure that people from different backgrounds, mental models, and worldviews are bound together in a group that are engaged and committed.

A question I have struggled with for a considerable time, is whether an organization has a worldview, given that I am of the opinion that the worldviews of its people should be as diverse as possible.  And I have come to the conclusion that it does.  In the same sense that an organization has a persona of its own with its own soul or psyche, it has a worldview.  The question that now goes begging is what does the worldview of an organization with employees with different worldviews look like?

I do think that such an organization has a worldview that is broad and expansive, that it is inclusive, and that it states that we tolerate different worldviews.  It also states that we accept that people differ, and that we can grow our power by embracing diversity.  It is not narrow or restrictive, and is not exclusive. It is accommodating, and can be quite powerful.

You need to know what your organization’s ethos is about.  This is so as it will determine what you will see in the environment, and what meaning you will attach to it.  It will determine what kind of vision and mission you will be able to pull off.  Some people can live with a vision such as that of Starbucks, i.e. “to inspire and nurture the human spirit; one cup, one person, and one neighbourhood at a time”, or that of Adidas South Africa, “our passion for sport makes the world a better place.”  Others, however, need a much more mundane vision such as “to be the leading retailer or provider of…”

You ethos will also determine what kind of business model you will be able to pull off, what kind of business strategies, and what kind of operating model.  As a matter of fact, you will be able to go and recruit people with the right ethos to ensure that you can be the world’s lowest cost beer provider, as SABMiller is doing!

However, you also need to understand the ethos of your client!  How can you serve your client if you do not know what drives them, what gives meaning to their life?  Seth Godin made the point very eloquently in his book, “All marketers are liars.”  In this he states that marketing is about telling a story.  You need to ensure that the story you tell taps into the worldview of the client, because if you do not do this, the client will not believe your story and you will have wasted time, money, and effort!

This is what happened when SAB tried to relaunch Lion Lager with a blue and silver tin!  It did not connect with the worldview of the beer drinkers of what Lion stood for, and the beer failed.  I have been a teetotaller since February 1983, but have not forgiven SAB for that momentous mistake!  Every time I watch a Lion advertising video clip on YouTube, I get quite nostalgic!

One can also say this is what happened to Checkers just before Shoprite bought it.  Pick ‘n Pay had been telling a story for a number of years, and the marketing efforts of Checkers were falling behind as people were more in tune with the story of Pick ‘n Pay.  Strangely enough, the wheel has gone full circle, and today Pick ‘n Pay is struggling to connect with the worldview of its customers, while the Shoprite group is using Checkers very creatively to take customers away from Pick ’n Pay.  The recent financial results of Pick ‘n Pay tell a story which should be of some concern for its shareholders.

Organizations that are obviously doing a great job about connecting with the worldview of their customers, are organizations such as Apple, Hyundai, Rolex, Mercedes, BMW, Toyota, and BMW, to name but a few.  In the world of wine, why would some people be willing to pay a lot of money for wines such as Meerlust Rubicon, Spier Private Collection (now 21 Gables), Springfield, Backsberg, to name but a few?

I have written about the efforts of Perdeberg to create a wine called Rex Equis.  This wine is aimed at a price point, and thereby customer, far above what they normally serve.  The question that remains to be answered is whether the story Perdeberg will tell / is telling, is connecting to the ethos of the customer in such a way that they believe that Perdeberg is capable of producing such a great wine, or will they think the emperor has no clothes on?!

That is not to say that you only connect to the worldview of the customer if they are willing to pay a lot of money for your product.  Wineries such as Du Toitskloof Cellars sell great quality wine for the price points they sell at.  They have also tapped into the need for wine that has been produced ethically by means of their Fairhills joint venture with Origin wines.

You also need to understand the ethos of your competitor.  Given that the ethos drives what you see in the environment as well as your reaction to these phenomena, you need to understand the ethos of your competitor in order to understand what you can expect of them.  In order to survive, you need to be able to understand the possible future moves of your competitor.  To do this well, you need to understand the personalities involved, and their worldviews, mental models, and value systems.

When you stack up against Whitey Basson and his team at Shoprite, you know you are setting yourself up for a fight.  You know Whitey will move aggressively, as he has done moving into Africa a few years ago, and as he has just done by developing an additional 69 stores in preparation of the invasion of Walmart.

When you read the memoirs of a Jannie Mouton of PSG in South Africa, you again read about someone who is aggressive and who does not know the word of capitulating.  You know he will grow and expand aggressively.  I have not met his son, but being Jannie’s offspring, I have no doubt in my mind that he will be equally aggressive and determined.

So, if you want to take on these fine gentlemen, be forewarned that you will need to be ready for a fight.  My understanding of their ethos tells me so!

In conclusion, it is imperative that you need to understand the power of the ethos, whether it is yours, those of your clients, or those of your competitors!  This can also be said for the ethos of your suppliers (will they be loyal?), your JV partners (can you trust them to honour their side of the agreement?), and your shareholders (will they remain committed or will they sell out at the first chance of a profit?).

The one thing you cannot do is to ignore the power of ethos!  Be warned!

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