Viewpoint: The Ultimate Competitive Advantage

Frank X. Powers, president, Dudnyk
Frank X. Powers, president, Dudnyk

For many years employee happiness, agency vibe and the concept of corporate culture had been soft or “squishy” items for me to sell to our board as worthwhile investments. It wasn't that they were considered unimpor­tant—they were important, but they were difficult to quantify and too easy to take for granted.

I was convinced that culture can and does influence the bottom line in a positive way. But it wasn't until I came across Bob Burg and John David Mann's It's Not About You, in 2011, that I became certain that emphasis on culture was not only the right approach to take but that as an agency leader I also needed to help shift the board's focus and corporate appreciation to preserve and foster a unique and creative culture.

I did some research, seeking data to support the hypothesis that a strong corporate culture with fulfilled, happy employees equals additional profits. I found this data in the work of Harvard Business School Professor Emeritus James Heskett, author of The Culture Cycle: How to Shape the Unseen Force That Transforms Performance. Heskett had the same hypothesis but, luckily for me, he had done the study. In it he proved that “as much as half of the difference in operating profit between organizations can be attributed to effective cultures.”

Heskett calculated the economic importance of culture by means of these four Rs: referrals, retention, returns to labor and relationships. This was exactly what I had been looking for: an applicable equation. I finally had in my possession a formulaic method that might convince the board that investing in employees would increase profits.

But an even more powerful statement from Heskett was this: “Culture is the most potent and hard-to-replicate source of competitive advantage.” In looking back, I realize that I have always been proudest of our agency's culture, which has allowed us to thrive in a highly competitive industry for more than 22 years. Though we've certainly been disciplined in our commitment to unique approaches for business development and technological innovation, prospective employees and clients always comment on the intangibles that shape Dudnyk. Our agency feels different because our people actually like working together.

Much of our success, I believe, has come about by investing in culture—that is, by providing employees with ample training and compensation and by taking an interest in their development (both personal and professional), rewarding tenure, acknowledging accomplishments and making them feel valued. Senior staff members tend to stay on at our agency. They in turn nurture the young talent we hire, teaching them our way of doing things.

In my view, culture serves as the most differentiating competitive advantage a company can create—and there's nothing soft about that.

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