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What Can Nonprofits Learn about Culture from Panera and the NYPD?

By Will DeKrey

“Culture eats strategy for breakfast.”  This oft-repeated quip of Peter Drucker has become an important reminder of how important people are to any organization’s success.  Without people, an organization is simply a set of ideas, hypothetical processes, and latent materials.

As with any type of organization, organizations that have set their sights on solving social problems at the magnitude they exist must intentionally build their culture to support the types of values, norms and behaviors that move beyond transactional services to transformational change. At Community Wealth Partners, we’ve conducted extensive research on the cultural similarities among efforts that have realized transformational change, from the anti-malaria and anti-tobacco movements to the norm-building “designated driver” campaign and the dramatic reduction of NYC crime in the ‘90s.

Our chairman, Billy Shore, recently dug up an interview with the CEO of Panera Bread in which the CEO, Ronald Shaich, describes how Panera’s culture has given the restaurant chain a competitive business advantage.  Panera has experienced tremendous success and growth over the past decade, reframing what’s possible in the restaurant industry, growing from 262 stores and $200 million in revenue in 2000 to over 1,500 stores and $1.82 billion in revenue in 2013 despite the recession.

What’s striking is that the culture of this disruptive and fast-growing restaurant chain parallels what we’ve discovered among the transformational social efforts and movements we’ve studied, especially the approach to building culture that Bill Bratton instituted in NYC.  Under Bratton’s watch (1994-1996) in NYC, murders fell by 47%, felonies by 39%, and theft by 35%.  Public confidence in the NYPD rose from 37% to 73%.

What are these cultural similarities?

1. A tendency to seek difficult problems with idealistic tenacity.  As Panera’s Shaich explains, “we do the tough stuff with optimism and mastery. In our kind of industry, it’s always easy to follow the conventional wisdom. But I like things that are difficult.”  When he took the helm of the NYPD, Bill Bratton focused extensively on transforming the culture of the New York City Police Department. Bratton started with the Department’s leadership: “Getting the right people on the bus is key. I took the 7 leaders of the NYPD and asked them by how much they thought we could reduce crime.  Most of them ventured to say we could do 1, 2, or maybe 3%.  I ended up getting those people off the bus.  Instead, I put people on the bus who thought we could at least get crime down by 10-15% and that were frustrated that they could not do more.”

2. A collective mindset that emphasizes discovery as much as delivery.  At Panera, “We have not fallen prey to what happens in so many large companies: they let their “delivery muscle” — in effect, how they get work done — completely outweigh the “discovery muscle” of trying to innovate and find new ways of doing things. The delivery muscle, of course, feels rational, people feel much safer with it, and you can analyze it… it’s very good for incremental change. But when you are talking about companies that find new patterns, that have discovery, it’s about leaps of faith. It’s about trusting yourself. It’s about innovation.”  Within the NYPD, prior to Bratton’s tenure, the overall culture had fallen into bureaucracy and lassitude, with patrol officers and precinct commanders seriously constrained from decision-making and expected to simply deliver arrests instead of discovering opportunities to reduce crime.  Under Bratton, the Department shifted to (1) encouraging precinct commanders to exercise creativity in approaching local problems, (2) evaluating what the data told them about the effectiveness of certain tactics in specific situations and then (3) identifying opportunities to apply what they learned in one precinct to another.  The team reviewed statistics on arrest activity against crime rates and if arrests were not deterring crime then they would experiment with an alternative strategy.

3. A prevalent orientation towards “the whole” over specific functions or programs.  Describing the type of culture that exists among competitors and which Panera strives to avoid, Shaich remarks, “Another problem with focusing on delivery is that people start seeing the business only through their functional perspective. Then you see what ends up happening: nobody owns the whole. I am always blown away by the fact that in some organizations, everybody can say no and nobody can say yes.”  Within the NYPD, Bratton sought to spread the ability and opportunity to see “the whole” across the entire department, moving away from the top-down beauracracy in which only those up top could see the big picture.  Bratton decentralized the NYPD, empowering middle managers to act with authority and creativity.  He stymied the old-boy-network approach to promotion that had been in place and instituted a reward system that incentivized strong, proactive policing focused on “the whole” of reducing crime and not the function of catching individual criminals.

What should organizations seeking to create transformation keep in mind?

It’s critical to intentionally build culture— values, norms and behaviors—within organizations, and among close collaborators, working to transform a social problem. In transformational efforts, the risk of failure is much higher, especially set against the backdrop of a world that rewards short-term success and penalizes investments that won’t pay off until the long-term. This requires a special set of leadership skills and a culture oriented towards discovery, holistic thinking, problem-solving, and idealistic tenacity.

Will DeKrey

About Will DeKrey

As Manager of Networks & Knowledge, Will DeKrey oversees the curation, synthesis and sharing of knowledge within Community Wealth Partners and with external stakeholders in order to advance our collective understanding of how to solve problems at the magnitude they exist. Prior to this role, Will served on the consulting team at Community Wealth Partners. Will was a 1st Place Winner of the National Conference on Citizenship’s 2012 Civic Data Challenge. See Will's full bio

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