The father of management theory, Peter Drucker, was supposed to have said: 

There's a growing body of evidence that organisational culture, rather than just being some woo-woo stuff that doesn't really matter, can have a direct impact on the bottom line. So what is culture and what can you do to enhance it in your franchise organisation?

The title of this article may sound disingenuous. But really, what use is culture if doesn't really matter to the performance of your business? Or is it, as some management gurus have suggested, the invisible glue that holds organisations together, trumping even strategy?

Culture is more important than strategy, according to the chairman of the Inspired Thinking Group, René Carayol, because “anybody can copy strategy but you can't copy culture”. He defines culture as “what happens when the CEO leaves the room” and “the way we get things done around here.”

  

“The most important thing about culture is that it's the only sustainable point of difference for any organisation,” he says. “So why would you leave it untended?”

Why indeed? But I've come across plenty of franchise organisations that have all the culture of a dish cloth.One of the reasons may be that culture, being difficult to define let alone measure, isn't well understood.

“When I talk to Wall Street ... never do you get people asking about the culture, about leadership, about the people in the organisation," says Stephen Sadove, chairman and chief executive of Saks, in a New York Times interview. “Yet it’s the reverse, because it’s the people, the leadership, and the ideas that are ultimately driving the numbers and the results.”

The question is, if culture is difficult to measure, how do you manage it? A culture survey conducted by Katzenbach Center found that 84% of executives said culture was critical to their business success, but only 55% thought their own cultures were managed effectively.

Culture comes down to three questions, according to Nilofer Merchant's article Culture Trumps Strategy, Every Time in the Harvard Business Review:

Merchant's description of culture is amongst the best I've come across:

“How we get things done drives performance. These issues of trust, conflict resolution, and co-ownership are foundational for how a team gets work done. Culture is the set of habits that allows a group of people to cooperate by assumption rather than by negotiation. Based on that definition, culture is not what we say, but what we do without asking. A healthy culture allows us to produce something with each other, not in spite of each other. That is how a group of people generates something much bigger than the sum of the individuals involved.”

Because of the broad geographic coverage and relationship-drive nature of franchising, it could be argued that culture plays a more important role in the performance of franchises than it does it many other types of organisations. So how can you create a culture that drives performance in your franchise?

Franchise culture develops with or without conscious effort. Most successful franchises have been founded with a purpose greater than simply making money, but that purpose and the culture that grows from it must be reflected in the beliefs and behaviours of everyone in the organisation, from the founder down. Yet surveys have shown that most franchise executives and franchisees cannot even define their franchise’s culture, much less figure out how to build it throughout the network.

Culture is not something that just is - like any growing thing, without proper care and attention, it will just wither away. Franchises such as New Zealand’s Hell Pizza grew quickly because its out-there culture gave it a strong point of difference from Domino's and Pizza Hutt, and was lived and breathed by the franchise founders and franchisees. But when the franchise was later sold, the new owners had no idea how to keep fostering that unique culture, and ended up selling it back to the founders for much less than they’d paid for it.

Hell Pizza was initially successful because they were picky about who they would accept as franchisees. But many start-up franchises make the mistake of taking on just about anybody. Australian physiotherapy franchise Back in Motion was founded with the vision of giving back to the communities it serves. “But we made some mistakes as a start-up as we were chasing credibility and viability,” says founder Jason Smith. “Sometimes you have to say no (to new franchisees), so you can then say yes to the right ones.” Back in Motion found that their culture attracted like-minded people who wanted to be a part of what they were doing, avoiding the need to spend vast amounts on franchisee recruitment.

  

A “tribal” culture is so important to Hawaiian coffee and smoothie franchise Maui Wowie that they involve all of their head office people in interviewing potential franchisees. “We take on people who fit into our culture,” says CEO Mike Weinberger. “One person can make a toxic atmosphere. They have to have the right mindset and fit in well. Our staff filters out the jerks.”

“It's not about you or me, it's about us” is an attitude that Jason Smith attributes as a big part of his success in building the 60-plus Back in Motion franchise network. “It stopped being just my brand when I brought you all in,” he tells franchisees, reinforcing the fact that culture might start at the top, but it is reinforced at every level. Remember that culture is defined as “how we do things around here” whether the CEO is in the room or not. In a franchise, that comes down not only to a common purpose and values, but also to the quality of the relationships within the organisation.

Great franchise organisations take their relationships with their franchisees up a further notch again. Sure, their cultures are defined by purpose, shared values, trust, respect and organisational fit. But they also treat their franchisees as partners in the success of the overall organisation, developing engagement and “ownership” where their franchisees are given a real say in the direction and development of the franchise. Even McDonald’s, which has been slammed recently for being dictatorial in its approach to franchise management, involves franchisees in its procurement and product development processes.