Why Culture Matters

Many years ago, as a new owner of a small (under $1 million revenue) wire harness company, I found myself sitting with about a dozen other wire harness manufacturers in the conference room of a major construction equipment company. We had been invited to attend a presentation by the connector and terminal supplier that had just been chosen by the construction equipment manufacturer as its preferred provider of future designs.

One of the other harness firms, let’s call it Big Guy Harness (BGH), had several individuals in attendance who over the course of the presentation conducted themselves rudely and arrogantly. I later learned those fellows were the top management of BGH, a company many times larger than all the other wire harness suppliers to the construction equipment industry combined.

My company, Monona Wire Corporation, was doing only a minuscule amount of business with most of BGH’s customers. But as construction equipment manufacturers reduced their supplier base to a more manageable level (no one needed 14 harness suppliers), they did so by more diligently measuring performance. BGH, remaining aloof because of its years of supreme dominance, started to fall short of rising performance standards and began losing customers and encountering financial problems. Meanwhile, my company was fortunate to achieve performance levels that enabled us to gain market share, some of it at the expense of BGH––once 1000 times our size.

With my front row seat as an observer of BGH’s decline, I received a lesson in what not to do. While failure, or success, is rarely a result of a single factor, you can often point to a root cause.

At the root of the fall of BGH was its dismissive, inflexible culture.

The lofty attitude I had witnessed in the conference room permeated the company’s key personnel, which manifested in performance issues, opening the door for competitors that were providing customers with more responsive performance. As BGH lost market share while still failing to address their culture issues, its financial performance spun out of control. Before long, despite its history of market leadership and revenue that had dwarfed its competition, BGH ceased to exist.

Over the decades since, I have had the opportunity to observe the strengths and weaknesses of many wire harness companies––with the clear relationship between success and culture always apparent. And a company’s culture always starts at the top.