Here's a puzzle for you. What organisation, an important player in the financial services world, defines its ‘cultural characteristics’ like this?

We want people with backbone, who judge situations carefully, are confident communicators and challenge the status quo.

We promote professional excellence and we demonstrate it in everything we do, by setting high standards and delivering on our commitments.

We're curious by nature. We want to learn and find out more, every day, and we explore the implications of our actions in detail.

We're already on the case, thinking ahead and acting with confidence.

We're a strong team that celebrates our differences and successes, and we show trust in our colleagues.

If you think about it hard enough, you'll probably get it. First you'll realise that these are not the characteristics of a commercial organisation, or one that serves customers. It could perhaps be some kind of educational body – all that learning and finding out more – but it's tougher and more challenging than that. A government department? Not enough accountability, and maybe a bit too hard-edged.

Have you got it yet? Here's a clue: it is in fact the organisation that has done more than any other to push culture up the corporate agenda, shifting responsibility for it from the HR department all the way up to the boardroom.

Well done, you're there. It's our industry's regulator, the Financial Conduct Authority. And while we can't say to what extent these characteristics are in fact consistently reflected in the day-to-day behaviours of its people, we can say that as an aspiration they work well. We feel happy to engage with a regulator with values like these.

Of course the FCA really does have to be seen to be doing everything it can to manage its own culture, having criticised so many of the firms it regulates and especially their senior managers so sternly for neglecting or mismanaging theirs. The FCA, indeed, has decided that bad culture was more responsible than anything for the financial crisis of 2008. Here's a quote on the subject from a speech given by Chief Economist Peter Andrew, in autumn 2016:

Culture is a priority for the FCA, one of our seven business plan priorities for 2016/17.

We believe that poor culture played a significant part in the financial crisis and that it is a root cause of many failings at firms. Thus culture is both a major driver and potential mitigant of risk. Our ambition is that firms' senior management lead and foster a culture that has the fair treatment of customers and market integrity at its core.

Hence the main aim of our major initiative, the Senior Managers and Certification Regime or ‘SMCR’, is to drive cultural change. It does this by making senior managers accountable and by applying baseline standards to all financial services staff.

The FCA wasn't in the chair, of course, during the 2008 crisis – that was its predecessor, the FSA. But anyone who knows anything about what went on during that extraordinary period will know that they aren't kidding when they talk about ‘poor culture’. To choose a single example from many hundreds available, here is former Goldman Sachs executive Gregg Smith speaking about the culture of the bank soon after his resignation in 2012:

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as ‘muppets’, sometimes over internal e-mail.

As we'll go on to discuss, there is an infinite number of positive variations in the way that firms may choose to define and express their culture (and Goldman Sachs have consistently claimed that Smith's claims were untrue). But we don't think there are any that include ideas like ‘ripping clients off’ or calling them ‘muppets’.

Actually, we must pause to wonder how an investment bank accused of behaving like this could have become, at around this time, the most successful, highest-paying and most highly-regarded institution of its type in the world. It is, let's be honest, a bit of a worry. Every word in this book is based on the premise that going forward, in the retail financial services market, firms will only achieve sustained success by doing the right thing by their customers. Admittedly this Goldman example, and all the many, many others from the world of investment banking during the crisis, is looking backward rather than going forward; and the worst offenders at that time were institutions focused mainly on corporate and institutional markets, not retail. But it does bother us, all the same.

There isn't any other chapter in this book where we introduce our thoughts on a topic by quoting enthusiastically from the FCA. But on the topic of culture, we think the regulator's point of view is so right on the money that we'll allow ourselves one more quote, this time from a summary of a speech entitled ‘What Is Culture in Financial Institutions?’, given in Hong Kong by CEO Andrew Bailey in March 2017. The summary says, in part:

A firm's culture emerges in large part from inputs that are its responsibility. It is for firms to ensure that their desired culture is consistent with appropriate conduct outcomes.

Absolutely. As an executive summary of this chapter, that works well.

Mind you, when it comes to famous and/or memorable quotes about culture, the FCA still has a way to go. In the world of management and business consulting, there are very few quotations that become seriously famous – so famous that literally everyone knows them. There's one on the subject of culture, from the management guru Peter Drucker. ‘Culture’, Drucker said, ‘eats strategy for breakfast’.¹

Anyway, one way or another, Drucker, the FCA and your authors are all saying that culture is very important. So how exactly does a company get one?

In UK retail financial services, few organisations' cultures are more admired than HSBC's remote banking arm: First Direct. So who better than their former Head of People Experience, Stewart Bromley, to talk about how you do it?

He says it begins with defining values:

First Direct was the first place I'd worked which had a truly well-defined value system that drove all the culture of the business. The founders of the business had really set it off on the right trajectory. Mike Harris and his team had done a fantastic job – the way their value system was originally defined was with a bunch of people in a room thinking, what are the values? They basically set up a bunch of values that were defined in a way that would drive behaviour.

They ended up with four values, but what happened was that we did a big survey among the people experience team and their customers and we realised there was more to the brand than the four values they had defined. So we redefined the value system using six values that really did orientate the behaviour.

Then it's a question of using the values to drive hiring decisions…:

‘We hired on values, yes, the whole hiring process was designed around those values. Because the thing about values is that if you hire on them, then your culture will to a large degree look after itself, assuming you hire appropriately. It's inherent in how everyone behaves and talks to customers – you know, it's just who you are. It's an identity rather than a belief system, right?’

…and taking every opportunity to reinforce the culture in the environment:

‘We changed everything, from the signage in the building to the words if you forgot your pass as you came in – it said ‘oops. forgot my pass’. We designed new processes and new policies. We redesigned the employee value proposition. And at that time, my job was both people experience and customer experience, because the idea is that if you own both bits, you can create this really tight bond – people are it, rather than just knowing what it is’.

And then one of the biggest parts of keeping it alive is to embed the whole subject of culture in your appraisal system – and not just as a detail or an afterthought, but as a core element of the process:

‘In our appraisals we mapped people in two dimensions – the what, which is all about what you contribute, and the how, which is about how you do it. And the how is all about values and culture. We measure both those things, and they're equally weighted, so you can be brilliant, but if you're not on values then you're a bit rubbish, right? And if you're completely on values but not delivering, then that's just as bad’.

In this account, one of the most intriguing elements is the very first one – where that initial take on the organisation's intended values and culture comes from. At First Direct, they came quite simply from the business's founder, Mike Harris, and his initial core management team. Thirty years or so later, what drives the business today still flows very directly from the personal convictions of the individual with the original vision for the business'.

Stewart Bromley has since gone on to become Chief Operating Officer for Atom Bank, and the approach here has been a bit different:

‘At Atom, we wanted a culture that tied in very closely to our customers, so we did a whole bunch of research into that target customer group, who are usually described as millennials. And what you find is that millennials have a very distinct psychology, and a whole bunch of psychological cravings that underpin that psychology, and we defined a value system that directly appeals to those cravings. So even our value system is based on the cultural needs of our target group, right?’

Provided the people in the organisation, from the top down, are willing to live the values, it doesn't really matter where they come from. Whether they represent personal convictions or customer needs (or even ‘cravings’), they can provide the basis for something distinctive and valuable.

Note, however, the use of the notorious weasel word ‘can’ in that last sentence. Relying on Stewart Bromley, with his First Direct experience, for an account of how to build a culture is like asking Gordon Ramsay how to cook an omelette, or Laura Trott how to ride a bicycle. It looks easy when they do it. But when you come to think about what happens in other companies, you realise how easily things can go horribly wrong. Very few firms set out to develop cultures as toxic as Goldman Sachs (even Goldman Sachs probably didn't set out to develop a culture that toxic). But somehow it happened anyway. How come?

We suggest that when culture does go horribly wrong, it usually goes wrong from the top down – like a fish, as the saying goes, it rots from the head. We can think of a whole bunch of different ways that bad management can lead to bad culture:

1. Just faking it. In the same way that organisations can fake their sense of purpose (see last chapter), it's perfectly possible to promote a culture that everyone knows full well has no connection with reality. When this is the case – and it often is – the evidence isn't hard to spot. The business, and especially the senior people in it, keep on behaving in ways that are entirely at odds with the alleged culture, and it doesn't seem to be getting them into any trouble. Off the top of our heads, we can immediately think of:
   • a firm that allegedly valued openness that unhesitatingly fired a whistleblower;
   • a firm that claims to put its customers first, but that only rewards and incentivises sales success (actually we can think of several of these);
   • a firm that celebrates diversity and equality of opportunity, but has a Board made up of eight middle-aged white men;
   • a firm that says it stands for empowering its customers, but is lagging far behind its rivals in delivering online functionality;
   • a firm that claimed to have put its past bad behaviour behind it, but was then found trying to cheat its customers out of their PPI compensation.

     To be honest, although it's fun thinking of examples like these there isn't much to say about them. Everyone working for these firms knows that their values and culture are bogus. And increasingly, people outside – especially their poor bloody customers – know it too.²

2. Window dressing. This is effectively a variation on faking it, and a particularly cynical one where the idea is to fill the shop window with attractive values that appeal to customers and staff, while behaving behind the scenes as badly as you think you can get away with. Google, though not a financial services firm, comes to mind. Everyone knows the firm's cultural centrepiece, that resonant slogan ‘Do No Evil’: there may be room for debate about whether the company's elaborate international tax avoidance strategies could fairly be described as ‘evil’, but not much doubt when it comes to their long-standing advertising sales model which can have the effect of channelling money from major brands to the You Tube channels of terrorists, racists and pornographers.
3. Sabotage. This comes a couple of notches down from outright fakery, but is still deeply unhelpful. It happens when someone important – often someone very important – knows perfectly well how their firm defines its culture (and indeed may have participated in creating the definition), but decides that because they're very important, some or even all of it doesn't apply to them. It's when the culture is built around mutual respect, but this person is always late for meetings. Or when it stands for fairness and equality of opportunity, but this person's kids all come in on a placement while other people's somehow can't be accommodated. Just little things – but little things that say we don't really mean any of this.
4. Mixed messages. Perhaps another notch down again, this is often what happens when cost-cutting programmes nibble away at cultural strengths. Of course we want our customers to enjoy an excellent experience in a way that suits them…but for cost reasons, we're going to have to start closing the call centre three hours earlier.
5. Underinvestment. Similar, but more systematic. Since we cut down the number of desks in the call centre, call waiting times and abandoned call numbers are rising month by month. But we still stand by our customer service value.
6. And finally, and perhaps the odd one out, culture of the month. In today's world of mergers, acquisitions, restructures and rebrandings, some people working in financial services firms are finding themselves reimmersed in new values and new cultures on more or less an annual basis. Frankly, in the circumstances, it's only human nature to let out an audible groan on receipt of the next invitation to an important new values workshop.

But the truth is that while any of these errors and misfortunes can have a terrible effect on culture, probably the most difficult challenge is neither an error nor a misfortune.

So far we've discussed the issue implicitly, at least, in terms of smallish, youngish, start-uppish businesses, such as First Direct and Atom Bank, where building a strong culture is quite possible provided that nothing terrible happens.

The majority of people in financial services don't work for firms like these. They work for great big complicated long-established firms, based in many locations, organised into many largely autonomous business units and with a heavily siloed history that has resulted in very little trace of cultural glue helping to hold the whole thing together. What then?

Well, to repeat a point we make in other chapters of this book, to put it in plain English, you're a bit buggered. In the same way that we don't think it's possible to build a really strong and cohesive brand across businesses like these, and we don't think it's possible to create a really strong sense of common purpose, we don't think it's possible to build a truly distinctive culture. Business like these are too big, too fragmented, too political and simply too diverse: it's pretty much impossible to imagine what a distinctive culture could be like, beyond some kind of extremely lowest-common-denominator value like ‘being helpful’ (which, as it happens, was until very recently the core of the culture that big, fragmented, political, diverse RBS Group was seeking to establish).

That's why – as, again, we say in those other chapters, notably chapter 17 – as marketers, we favour an approach that breaks these behemoths down into manageable units, and builds appropriate cultures in each of them.

As we know from our own experience, this can work. By coincidence, both of your authors had a great deal to do with the MORE TH>N direct insurance business at the time when it was being carved out from its parent group Royal & SunAlliance (now RSA). It was a remarkable experience.

MORE TH>N was based in RSA's big operations centre down in Horsham – it occupied the second floor – and the very large majority of its people were long-standing RSA people who had transferred across. But in an extraordinarily short period of time, MORE TH>N built a culture that was as different from RSA's as you could possibly imagine. Under the leadership of its MD Adrian Brown and its marketing director Mike Tildesley, MORE TH>N rapidly established itself as a business that – culturally at least – stood for everything that RSA didn't. It was young, it was hugely energetic, it was positive, it was eager to learn and improve and develop. If you were blindfolded and dropped down into various floors and departments in that large RSA office, you'd know in seconds when you were on MORE TH>N's floor – there was a buzz about it in complete contrast to the stodgy stillness of the other floors.

All of this was in sharp contrast to another ‘brownfield’ startup within a big company. A couple of years earlier, one of your authors had a good deal of experience with Barclays' ‘alternative’ investment brand b2. This wasn't a success, and after a couple of miserably unsuccessful years it was wound up.

There were several things that MORE TH>N got right and b2 got wrong, but one that clearly stood out was that while MORE TH>N was staffed by people who were committed to the business and bought into its culture, the b2 team were part-timers – the large majority working for Barclays in the mornings, so to speak, and b2 in the afternoons. This was hopeless. It meant that at best, there was no distinctive culture at all – and at worst, there was a desperately confused group of people, never sure which hat they were supposed to be wearing or which values they were supposed to be espousing at any given moment.

Much more recently, by the way, another big bank found another way to create a cultural vacuum, again experienced by one of your authors. In today's cost-conscious climate, many big institutions are enormously reliant on contractors and temporary staff, especially when it comes to special projects. Here, there may have been 40 people or so working more or less full-time on the project – an online investment service – of whom no more than a small handful were on the bank's payroll. And just to make sure there was no chance at all of any cultural commonality emerging, they were based in at least six locations across the UK, continental Europe and North America. It would be interesting to see what Stewart Bromley would make of that.

Time to move on. So far, we've approached this discussion of culture at a rather abstract level, on the semi-explicit basis that there are good cultures (liked by everyone, including firms' staff, customers, the FCA and us) and bad cultures (not liked by any of the above); and provided your organisations has one of the good ones, then all is well.

However, for those of us with a marketing orientation, that's not quite good enough. There is a word that we've thrown in a couple of times and should now consider more carefully: ‘distinctive’.

As marketers, we think this word is crucially important to our particular involvement with the whole subject of culture. As marketers, we worry when we hear others with a stake in the subject – sometimes in general management, sometimes in HR – discuss culture in terms that sound to us alarmingly generic.

In retail financial services, there is a value set, with clear implication for culture, which no-one is going to disagree with. It's characterised first and foremost, of course, by a commitment to putting the customer first: it always emphasises the importance of doing the right thing, and working as a team on a basis of mutual respect: there's usually something about innovation, and something about transparency, and that dreadfully vague and hollow word professionalism often makes an appearance. What could possibly be wrong with that?

Well, nothing, except for that all-important point that no-one's ever going to disagree with any of it. Building a culture that's really fully rooted in these values isn't at all easy. But if 12 organisations, or 50, or 100, were able to do so, they'd all be pretty much exactly the same as each other.

And it's for this reason that as marketers, our first responsibility in the development of culture is, of course, to make sure that our firms tackle the task in a way that is ruthlessly and uniquely focused on our most valuable asset, which is to say our brand. With apologies for the longish quote, here's what customer experience expert Vanessa Hamilton, of Smith + Co, has to say on the subject:

After 15 years in the customer experience business, there's still one sentence that makes me want to run for the hills. ‘We need a service excellence programme for our front-line staff.’ You don't! You've probably implemented many perfectly good service excellence programmes in the past. What does that tell you about the impact they had? And about the difference they've made?

That's because generic service training doesn't connect your people to your brand. It doesn't help them to understand what your brand stands for, and why that matters. It doesn't help them to explore how they can really bring your brand to life for customers through their actions and behaviours.

If you want your people to deliver an experience that differentiates your brand from competitors, you have to create a branded experience for them too.

Without jumping ahead to our chapter on brand (although it starts on page 216, if you're determined to), creating a properly differentiated, branded service experience , reflecting a deep-rooted, differentiated, branded culture is something that our industry isn't yet very good at.

There are at least two reasons for this:

1. Few financial services firms are very good at creating differentiated brands or propositions, because few firms care much about developing or maintaining a sustainable point of differentiation
2. There are few financial services firms where marketing and HR people work closely enough together.

Here and there, you can find a handful that tick both boxes. Among larger firms – well, medium-sized anyway – Direct Line has made considerable progress towards establishing a brand that's focused on fixing its customers' problems, and at the same time worked hard to start building a culture that actually embodies this value. But this level of integration is still highly unusual. Much more commonly, if, say, a brand is reflected in high-profile advertising, the integration will extend to the home page of the website and no further.

The thing is, distinctiveness at the level of both brand and culture depends on daring to be different – on doing something that's idiosyncratic, maybe even a bit peculiar, but hey, that's how we do things here. (It's not too difficult to find examples in experiential sectors outside financial services – we're sure you'll know the classic case studies, from IKEA to SouthWest Airlines to Zappos to Geek Squad, as well as we do.)

This particular issue, we should make clear, is definitely not one where the smaller, younger players seem to be outperforming. On the contrary, we'd say that in sectors where large numbers of young startups are emerging, brand and cultures are looking extraordinarily generic. There's a wave of so-called robo advisers, for example, offering online investing and all standing for ease, transparency and simplicity. And a wave of challenger banks all built around highly customisable apps. And a wave of remarkably similar-looking insurtechs. We assume that a lot of these young businesses aren't expecting lengthy lifespans – they're only here for a short while before selling out to a big institution that finds it easier to buy than to build, and at that time they'll almost certainly rebrand anyway. But still, the lack of differentiation at any level is dispiriting. Putting in a bar or table tennis table or allowing people to wear casual clothes doesn't make you differentiated. And don't get us started on bean bags.