Can a Company Culture Thrive in Both Peacetime and Wartime?

Peter Drucker’s famous quote underscores the paramount importance of company culture in driving success. But what happens to this culture when a company shifts from peacetime—times of growth and stability—to wartime—periods of crisis and survival? How can leaders ensure that their company culture remains resilient and thrives, regardless of external circumstances?

Understanding Peacetime and Wartime in Business

Ben Horowitz, in his blog and book “The Hard Thing About Hard Things,” introduces the concepts of peacetime and wartime in business. According to his definition:

Peacetime in business refers to periods when a company enjoys a large advantage over its competitors and focuses on expanding its market. During these times, companies prioritize expanding the market and reinforcing the company’s strengths.

Wartime, on the other hand, occurs when a company faces existential threats. These threats can come from fierce competition, economic downturns, or disruptive technological changes. In wartime, survival becomes the primary objective, requiring a shift in focus and strategy.

Horowitz outlines the specific differences between peacetime and wartime CEOs:

“Peacetime CEO knows that proper protocol leads to winning. Wartime CEO violates protocol in order to win.”

Peacetime CEO focuses on the big picture and empowers her people to make detailed decisions. Wartime CEO cares about a speck of dust on a gnat’s ass if it interferes with the prime directive.

Peacetime CEO knows what to do with a big advantage. Wartime CEO is paranoid.

Peacetime CEO thinks of the competition as other ships in a big ocean that may never engage. Wartime CEO thinks the competition is sneaking into her house and trying to kidnap her children.

Peacetime CEO aims to expand the market. Wartime CEO aims to win the market.

Peacetime CEO strives to tolerate deviations from the plan when coupled with effort and creativity.  Wartime CEO is completely intolerant.

Peacetime CEO sets big, hairy audacious goals. Wartime CEO is too busy fighting the enemy to read management books written by consultants who have never managed a fruit stand.

Peacetime CEO has rules like “we’re going to exit all businesses where we’re not number 1 or 2.”  Wartime CEO often has no businesses that are number 1 or 2 and therefore does not have the luxury of following that rule.”

All of this leads to the question…

Can an organization build a resilient company culture that thrives in both peacetime and wartime?

From Words to Actions: Making Core Values Matter

The foundation of a resilient organization—one that thrives in both wartime and peacetime—begins with establishing the culture. Many people confuse culture with values displayed on the wall, but culture is not about what you say; it’s about what you do every day. It’s how your people operate, interact, and work. To understand and shape your culture, ask yourself these critical questions:

1. How is accountability established and maintained?
   Accountability starts with clear expectations. Define roles, responsibilities, and measurable goals so everyone knows what they are accountable for. When leaders model the behavior they want to see and take responsibility for their actions, it sets the tone for accountability throughout the organization. Encourage open communication to build trust and ensure everyone is aware of their responsibilities and progress. Regular, constructive feedback helps employees understand their performance and areas for improvement. Address issues promptly to prevent negative behaviors from becoming habitual and to reinforce a culture of accountability.
   
   

2. How is information shared within the organization?
   If information is power, how people share it defines your culture. Are people transparent, or do they hoard information? Transparency starts at the top. When executives lead with openness, employees are more likely to follow. Leaders must create a culture where knowledge flows freely and is accessible to all. Design your workspace to promote spontaneous interactions, whether through physical collaborative spaces or fostering an online environment that encourages sharing insights and updates. Regularly share strategic decisions and company performance openly to build trust and keep everyone aligned.
   
   

3. How are rewards given, and are they consistent across the organization?
   Align your rewards and compensation programs with the culture you want to foster. Clearly explain the reasons behind these rewards, showing how employees’ actions support company values. Emphasize the impact of these behaviors on the entire organization, not just individual departments.
   
   

4. Does your culture insist on the highest standards?
   High standards are teachable and self-reinforcing, creating a culture of continuous improvement. Set ambitious but achievable standards, and fix problems when they arise. High standards can be enjoyable; once you’ve experienced them, you’ll never want to go back.
   
   Building a strong and resilient organization begins with establishing the right culture through clear expectations, transparency, and rewards that reinforce the desired actions and behaviors. With this foundation in place, we will explore the specific strategies and adjustments needed for organizations to thrive in both peacetime and wartime environments.

Operating in Peacetime: Embedding Core Values into Everyday Practices

Integrating Values into Daily Operations
During peacetime, when companies enjoy growth and stability, embedding core values into every facet of daily operations is essential. These values should be the foundation of decision-making processes, standard operating procedures, and routine tasks. For example, if innovation is a core value, employees should be encouraged and incentivized to propose new ideas through structured innovation programs such as hackathons or internal pitch competitions. Similarly, if customer obsession is a core value, regular customer feedback sessions should be integrated into weekly team meetings across all departments to ensure customer insights directly influence every aspect of the organization.

To ensure values are actively practiced, weave them into daily interactions and routines. Encourage leaders to spotlight and reward behaviors that reflect core values during regular check-ins and team meetings. Use real-world scenarios to show these values in action and make them a part of performance reviews. This approach ensures that adherence to core values becomes a key criterion for advancement and recognition throughout the company.

Leadership’s Role in Reinforcing Culture
Leadership is pivotal in embedding core values. Leaders must model the behaviors they expect from their teams, visibly adhering to and promoting the company’s values in their actions and decisions. This goes beyond speeches and memos—leaders signal and shape the culture through their own actions and behaviors. Role modeling starts at the top and must be authentic, reflecting one’s own values. Leaders should connect their personal purpose and beliefs with the company’s purpose and culture. Additionally, they should provide clear and actionable feedback that ties back to core values, helping employees understand how their actions contribute to the company’s culture and success. This not only reinforces the desired culture but also motivates employees by showing that these values are recognized and celebrated at the highest levels.

Hiring for Cultural Fit
Hiring and onboarding are crucial stages where a company’s culture can either be reinforced or diluted. During the hiring process, it’s essential to evaluate candidates not only for their skills and experience but also for their alignment with the company’s core values. In Amazon’s early days, Jeff Bezos emphasized the importance of setting a high bar in hiring by introducing three key questions during the interview process to ensure both cultural and talent fit:

• “Will you admire this person? If you think about the people you’ve admired in your life, they are probably people you’ve been able to learn from or take an example from. For myself, I’ve always tried hard to work only with people I admire, and I encourage folks here to be just as demanding. Life is definitely too short to do otherwise.

• Will this person raise the average level of effectiveness of the group they’re entering? We want to fight entropy. The bar has to continuously go up. I ask people to visualize the company 5 years from now. At that point, each of us should look around and say, “The standards are so high now — boy, I’m glad I got in when I did!”

• Along what dimension might this person be a superstar? Many people have unique skills, interests, and perspectives that enrich the work environment for all of us. It’s often something that’s not even related to their jobs. One person here is a National Spelling Bee champion (1978, I believe). I suspect it doesn’t help her in her everyday work, but it does make working here more fun if you can occasionally snag her in the hall with a quick challenge: “onomatopoeia!”

Continuous Reinforcement and Adaptation
Maintaining a strong culture demands continuous reinforcement. Regular activities that remind employees of core values—such as recognition programs that highlight individuals or teams who exemplify these values—are essential. Team-building exercises and storytelling sessions where employees share their experiences of living the company’s values also strengthen our culture.

However, reinforcing culture isn’t just about positive reinforcement—it’s also about addressing behaviors that run counter to our values. When an individual’s actions contradict the company’s principles, such as a self-serving attitude in a team-oriented environment, leaders must act swiftly. Confront the behavior promptly and, if necessary, take more serious steps. Ignoring these situations sends mixed messages and undermines performance and engagement. This is especially true when the offender is a high-profile individual, but prioritizing the organization’s welfare is essential to avoid larger issues later.

As the company grows and evolves, leaders must stay attuned to changes in the business environment and actively seek employee feedback. Implementing feedback mechanisms like surveys, focus groups, and anonymous suggestion boxes helps us understand cultural perceptions and identify necessary adjustments. Regularly review and update cultural initiatives to ensure they continue to support the company’s goals and values, driving both performance and employee satisfaction.

Thriving in Wartime: Adjusting Culture in Times of Crisis

Shifting Focus and Strategy
In wartime, when a company faces existential threats, adapting the culture to focus on survival is paramount. This often demands a shift in strategy and priorities. Leaders must clearly communicate the urgency of the situation and the critical objectives that need to be achieved. Even in a crisis, the company’s core values should steer these strategic shifts, ensuring decisions remain aligned with the organization’s fundamental beliefs. This may involve prioritizing certain projects over others or reallocating resources to areas vital for survival.

Decision-Making Under Pressure
In wartime, decision-making must be swift and decisive. Leaders need to make tough calls quickly, often with limited information. This doesn’t mean abandoning our core values; it means applying them in ways that support rapid and effective decisions. In uncertain times, leaders can make bold decisions quickly by following five key principles:

1. Pause to Gain Perspective: Take a moment to step back and gain a broader view. Wayne Gretzky’s advice to play where the puck is going, rather than where it is, illustrates this strategy. By pausing, leaders can ask critical questions to anticipate future developments, avoid knee-jerk reactions, and ultimately make faster, better-informed decisions.

2. Broaden Decision-Making Involvement: Resist the temptation to limit decision-making and visibility to top leaders. Include diverse viewpoints in the decision-making process. A “fishbowl” model, where decision makers and key experts discuss while others observe and contribute, can lead to smarter decisions without sacrificing speed.

3. Identify Key Small Actions: Anticipate various scenarios and focus on small decisions that could have significant long-term impacts. Small actions taken today can yield substantial benefits in the future.

4. Create a Coordination Hub: Establish cross-functional teams to focus on strategic decisions, reducing distractions and ensuring tactical decisions are made by the appropriate people. This structure helps leaders stay focused on critical issues.

5. Empower Resilient Leaders: Select leaders who have shown resilience, made tough decisions, and communicated candidly. Encourage these leaders to make decisions with incomplete information and prioritize the organization’s welfare over personal popularity.

Maintaining Morale and Engagement
In times of crisis, keeping employee morale and engagement high is both challenging and crucial. Transparent communication is essential; employees must understand the challenges we face and how their contributions make a difference. Regular updates from leadership can help keep everyone aligned and motivated. Additionally, leadership must consistently monitor the mental health of their teams and adapt flexibly to help employees manage stress and stay engaged. Recognizing and celebrating small wins boosts morale and reinforces a sense of progress.

Long-Term Resilience: Preparing for Future Challenges

Building a Culture of Resilience
Resilient organizations not only recover from disruptions but also transform them into opportunities for sustainable growth. This adaptability is cultivated through a systems mindset that emphasizes agility, psychological safety, adaptable leadership, and a cohesive culture. Companies that build resilience can better navigate economic downturns, talent shortages, and supply chain challenges, securing a lasting advantage over competitors. Research shows that resilient behaviors, such as knowledge sharing and performance reviews, are linked to improved financial performance and reduced bankruptcy rates.

To build a culture of resilience, organizations should focus on three key areas:

1. Agile Structures: Create agile frameworks that enable rapid decision-making and adaptation. This involves establishing clear decision-making authorities and promoting dynamic decision-making processes that allow for quick pivots in response to changes.

2. Adaptable Leadership: Promote leaders who not only react to crises but also coach their teams through changes. These leaders should foster new behaviors and develop capabilities that support both immediate responses and long-term resilience.

3. Investing in Talent and Culture: Focus on attracting and retaining top talent by investing in a supportive culture that emphasizes psychological safety and continuous learning. Encourage innovation by creating environments where employees feel safe to take risks and share ideas.

Ultimately, resilient organizations prioritize leadership development and treat disruptions as opportunities for positive change. By embracing agility, empowering teams, and fostering a culture of continuous learning, these companies can enhance their competitive edge, fuel investment, and achieve long-term success in an ever-evolving business landscape.

Conclusion

Building a resilient company culture is essential for thriving in both peacetime and wartime. As Peter Drucker wisely noted, “culture eats strategy for breakfast.” By embedding core values into daily practices, fostering an inclusive mindset, and treating change as a continuous movement, leaders can ensure their organizations remain adaptable and strong. Continuous learning, proactive adaptation, and clear communication are crucial to maintaining this resilience. With these strategies, companies can navigate challenges, seize opportunities, and achieve long-term success in an ever-changing world.