The Importance of Company Culture

One of my favourite books is a short read called ‘Staying at the top’ by Ric Charlesworth. I bought it when it first came out in about 2002. I was in my mid 20’s and nowhere near the ‘top’ let alone having to be concerned about staying there. But I was fascinated at the time with reading as much as I could about those who performed at the highest level and how their minds worked. Any book by Ric Charlesworth was at the top of my list.

For those not familiar with Charlesworth his achievements are as impressive as they are diverse. He played first class cricket for WA, was captain of the Australian hockey team winning a silver medal at the 1976 Olympics, he obtained a medical degree from the University of Western Australia before then commencing a 10-year career as a federal member of parliament. He later led the Australian women’s hockey team as coach to 2 consecutive gold medals at the 1996 and 2000 Olympics.

A genuine modern-day polymath.

In his book, Charlesworth emphasises that the real measure of success for a high performing team is not just to win or achieve a goal, but it is in sustaining that elite level of success over the long term. He points to values, teamwork, continuous learning, and resilience as needed to reach the top. But to stay there requires more. He talks about redefining the challenge, refreshing the team, avoiding recycling, and facing your foes. To me, that is everything to do with renewal and creating a sustainable culture.  

I think of the San Antonio Spurs, the New Zealand All Blacks, the Hockeyroos all incredible teams that not only achieved the highest level of success but maintained it for years. The common theme in these organisations is culture. It is perhaps the most important ingredient in the creation of sustained success. A great culture is at the core of great organisations.

The opposite is often true. For every one of those teams listed above, there are a dozen where success was only fleeting or followed by scandal and a dramatic fall from grace. The Australian Cricket team (2018) and the Essendon Football Club (2013) come to mind. Their success wasn’t built sustainably. Short term focus, the wrong incentives, corners cut, and bad habits set in. Something goes missing in the cultural fabric of those once great organisations. There are always signs but we tend to ignore them.

I also think these principles apply equally to business and the companies we invest in. In a data driven world where statistics, metrics and quantifiable results rule the business world, the quality of an organisation, their leaders and their culture are perhaps one of the most underrated aspects of identifying great companies. It is also one of the most difficult areas to assess.



This information is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different, and you should seek advice from an investment adviser who can consider if the strategies and products are right for you.