The Link Between Culture and Outperformance

Culture and Long-Term Outperformance

Culture lies at the crossroads of my investment-finance career path and a personal intention to create positive impact through for-profit companies. Along my journey, I've repeatedly seen culture emerge as a key driver of exceptional performance. 

I've also discovered two crucial insights about culture: it can have the greatest positive impact on people in companies, and it can be the greatest determinant of an organization’s long-term success. But, it came with a challenge—culture was impossibly fuzzy and hard to define.

In many companies I’ve worked for, employees were happiest and most innovative when given the freedom to be autonomous, creative, and part of a welcoming team, yet the practices to support this were buried in institutional knowledge and managers’ individual styles.

I saw that culture worked, but the finance skeptic in me needed to prove it with data, and understand what the repeatable playbook looked like. After a decade of exploring third-party research and experimenting within my own teams, I’m convinced that culture drives outperformance and that having a playbook is possible.

Data-Driven Culture Playbook

Let’s first look at the data from the most iconic longitudinal studies of the last 20 years—data that demonstrates culture doesn’t just achieve modest, correlative, garden variety outperformance; it drives real whopper, country mile, undeniable results.

• The Great Places to Work Top 100 Companies have outperformed the market by nearly 4x over 24 years

• Jim Collins’ Good to Great companies delivered 7x market returns over 15 years

• Will Thorndike’s The Outsiders achieved 20x market returns over 20 years 

There’s also plenty of data showing that employees are happier and more productive in great cultures:

• Retention: High-retention companies perform 30% better than the average public company

• Diversity: Companies with greater gender and ethnic diversity grow revenue 3-5x faster and have 25-36% higher profitability

• Innovation: If you’re driving stronger revenue growth, profitability, and market returns, you’re innovating and winning with customers. Companies that master innovation in a people-driven economy produce 2.4x higher profits 

Those are mic drop numbers. Awesome—how do you produce them? Here’s the three main chapters of the playbook:

1. Supporting individual motivation

2. Creating shared purpose and belonging within teams & organizations

3. Building a flywheel to do both consistently

There’s a lot to dig into, and we’ll spend the next post diving into specific plays.

Winning Cultures in Sports

But because there are many sports fans in the Azlin Software network, let’s pull back and use two recent sports examples to show the power of positive culture on results. Sports is a wonderful canvas to study because of the frequency of events and measurable results.

Exhibit 1 - The 2024 Los Angeles Dodgers secured their second World Series win in 4 years and the first “real” non-Covid shortened season win in nearly 30 years. Since nearly going bankrupt financially and organizationally a decade ago, a new ownership and management team came in to build a long-term focused machine. Yes, the results have been great, and yes, they have a large payroll (though there are plenty of examples in sports where big budgets do not lead to success). But listen to what they said in the wake of winning:

• Manager, Dave Roberts: “The players, their families, coaching staff, training staff, this trophy belongs to everybody.”

• President of Operations, Andrew Friedman: “There were a number of fingerprints, the scouting department, player development, analysts.”

• All Star, Mookie Betts: “There’s so much love in this clubhouse, that’s what it was, it was love that won this game for us today.”

Love, gratitude, and the participation of a broader community drove the success of the team on the field.

Exhibit 2 - The 2024/25 Notre Dame Fighting Irish football team and Head Coach Marcus Freeman. Freeman has built the Notre Dame football program on principles, deep relationships, and love. That has created a well-documented positive culture and incredible resiliency. Enough to land the Irish in the National Championship game after a shocking early-season home loss to middling Northern Illinois.

Both teams have produced great outcomes amidst significant adversity by building human-centered systems at their core.

Culture wins. I can’t wait to come back and talk about how.

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