How to Operationalize Culture in Four Phases
In M&A circles, I’m hearing two key drivers that make a business worth buying: recurring revenue and culture.
What’s most interesting is how these two drivers are typically discussed in separate conversations. They shouldn’t be.
Recurring revenue is built on a promise. Every month’s customer renewal comes from a frontline employee delivering on that promise. That’s culture.
In organizations, the gap between recurring revenue and culture lives between what leadership intends and what employees experience. The moments that matter—where the company values show up or they don’t—are happening without operational guardrails.
Gallup research found 8 in 10 employees don’t feel strongly connected to their organizational culture. (1) That disconnect is evident. According to DHR Global’s latest research, executives were 2.5 times more likely than entry-level staff to view their organizational culture as well-defined. (2)
Culture is the set of shared beliefs and behaviors that define how people operate inside and outside the company. Cultural definition and alignment start at the top. Having an origin story and defined values isn’t enough. Culture is demonstrated by leadership in what is said, how they conduct themselves, and what they recognize.
DHR’s findings emphasize this point. Only 36% believed their company culture was well defined and drives performance. Instead, it found 46% of respondents said their company culture was reactive and inconsistent across teams, while 15% said it was vague and not actively shaped by leadership.
Most companies integrate culture into a few processes such as onboarding, performance evaluations, and recognition. Leaving it intangible and up to interpretation instead of being operationalized. Operationalization is a way to embed culture in the rhythms of the organization.
There are four phases to this work: Diagnose, Map, Build, and Embed.
Diagnose. You need to understand what the current beliefs and experiences are in order to make shifts to where you want them to go. This can only be accomplished through deep listening throughout the organization.
Map. Build an operational framework that ties the customer or service journey with the behavioral definition from your purpose, vision, mission, and values. This becomes the foundation of the next phase.
Build. Build operational guardrails into how the business runs, tied to the customer or service journey and to the existing KPIs. This creates predictable expectations from the boardroom to the frontline and into the community.
Embed. This is where the talk becomes the walk. Strong touch points, modeled behavior and language from leadership and a strategy for keeping the framework alive as the business grows.
For companies who have done this work, recurring revenue becomes more predictable for the frontline employee and the C-suite. Companies with the strongest cultures—those that make the Fortune 100 Best Companies to Work For List have 8.5 times higher revenue per employee than the U.S. market rate. (3)
The value of a recurring revenue investment is only as good as the due diligence of the deal. While the recurring revenue gets counted monthly, the promise behind it gets kept daily by everyone inside the organization—frontline to boardroom. Does everyone in your organization understand their role in delivering on the promise?
This article was written by a human. The perspective is mine—based on my questions, observations, and experience.
I use AI as a thought partner to challenge my thinking, identify gaps, and surface perspectives I hadn’t considered. Anything that comes from AI goes back through me. I push back, verify, and decide what gets included. I only use data from primary sources. They are clearly identified in my writing with links for you to dig in. Before publishing, I run my final draft through AI again for spelling and grammar. Typos and grammar mistakes still happen. I'm not perfect and neither is AI.
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