I admit corporate cultural change is not straightforward – it sounds attractively compelling and impactful – however it’s intangible, the returns are uncertain, and it requires a consistency of effort that many performance-focused executives struggle to sustain. Nonetheless, I don’t think that is a reason to engage in the activity-driven, “posters and parties”- style approach that prevails in the corporate world. As long as we are busy producing posters, speaking passionately at leadership conferences, and agonizing over which five words will express our deepest beliefs most precisely, it’s not likely we’ll make much progress. Is there an alternative? I believe that there is – and it means not doing culture change “initiatives.”
Change Logic isn’t in the “culture change business.” I get up every morning to help senior managers drive sustainable performance. It just so happens that changing culture is a fantastic way to achieve that. Here is my six-point plan for changing culture without the culture change initiatives.
1. BE A ROLE MODEL, NOT AN ADVOCATE
Three years ago, I got a call from a financial institution in the West of the United States. ‘We are wondering if you can help us’ the caller said, ‘we recently launched our new corporate values and after a few weeks we had to remove the posters we put throughout our offices because they were defaced by employees.’ There was such a gap between what the values stated – honesty, integrity, helpfulness, customers, achievement, collaboration (choose any 3) – and what employees actually experienced that it was offensive to them.
The senior leaders of this organization had rushed to solve a problem they believed their employees had. However, they hadn’t stopped to examine how their own behavior created expectations that were entirely contradictory to what they had written in their executive team offsite. That didn’t make it a bad idea to decide what they believed as a collective group, or that the values themselves were wrong. It just meant that the shadow values that they didn’t talk about were much stronger than these aspirational statements about how they wished to behave. We are all entitled to have aspirations, but if we are asking others to change, we owe it to them to demonstrate that expectation in our own actions.
A common pitfall for leaders is ignoring the sacred cow; the key issue that symbolizes the past stands in the way of change. Sometimes this is a key executive that delivers results, but breaks the values of the new culture. In other cases, a company seeking integrated solutions fails to address the formal and informal rewards that support a culture of product silos. Understanding and addressing these issues is critical to success, as the former IBM Chairman and CEO Lou Gerstner wrote ‘nothing can stop a cultural transformation quicker than a CEO who permits a high-level executive…to disregard the new behavior model.’
2. OBSESS ABOUT LEADERS AND DETAILS
In our executive education classes, we show a short video of a real divisional CEO asking two hundred assembled colleagues to assess the corporation’s progress toward demonstrating its five recently articulted new values. Amid a sea of red and green voting cards raised overhead by the participants, the executive gets the audience to laugh somewhat derisively at the largely negative assessment. Nine out of ten people who watch this video find his behavior flippant and dismissive of the values and their importance to the company. The leader appears to the them as insincere.
I know for a fact that this leader is not a bad person or a poor executive, but his behavior undermined the entire values project in just a few brief minutes. He carelessly allowed his own skepticism of the values to leak out to the entire organization.
A leader’s responsibility to the values existing in every minute of interaction with employees they can crush their own message quite unconsciously. It is worth noting that this behavior is weighted in people’s minds so much more highly than high-profile communications events. When your boss ignores the values in a business decision or by shouting at you in a meeting, that has far more impact on what the real culture is than what is written on posters, wallet cards, and ID lanyards.
3. GET LEADERS ENGAGED IN A GENUINE DIALOGUE
That means leaders must involve themselves in honest, considered conversation about culture. That takes days of intense dialogue over several years, not a few moments in a breakout to talk about “what the values mean to me”.
IBM invested in its Strategic Leadership Forum (SLF) process for the top 2000 executives over 7 years. SLF brought together business unit leaders from across the corporation and invited them to examine their strategies and execution plans. These structured dialogues created the space for executives to compare experiences, share their analysis of the corporation’s culture, and build an agenda for action.
These dialogues enabled IBM’s shift from a largely product-driven organization to a business services company, integrating solutions across organizational boundaries.
4. USE ONE-TO-ONE COMMUNCATION
When I first started at McKinsey & Co in 1997, one of my first assignments was a letter of proposal for a company in Columbus, Indiana. Three weeks later, by chance, I met the principal responsible for the bid in the elevator one night and eagerly asked him: “Did we win the business”? He paused briefly and then replied, “No. But we do have the opportunity to serve.” This became an unforgettable moment. I had just been corrected in an unplanned encounter, and was guided toward the McKinsey culture – our work is client service; we never put our needs ahead of our clients’ needs, and we reflect this in our language to our clients and to each other.
People learn how to fit in from information gathered from others in the organization. We look at what attracts the approval and disapproval of peers and others around us.
5. RECOGNIZE MOMENTS OF TRUTH
A common pitfall for leaders is ignoring the fact that the core issues that symbolized the past—and even contributed to past success–now stand in the way of the future. Sometimes this is reflected in a key executive who delivers results, but breaks the values of the new culture. In other cases, a company seeking integrated solutions might fail to address the formal and informal rewards that support a culture of product silos.
These norms exist in micro-actions: how meetings are conducted, decisions are made, information is shared, parking spaces are allocated, and consequences are determined for performance. They describe and define a way of doing things that is distinctive to a particular organization. We recently asked one CEO to list his top three priorities. Then we compared these priorities with what was in his calendar; interestingly, only 5% of what was in his calendar reflected his top priorities. Once he changed his calendar to reflect his priorities rather than focusing on business performance reviews and crisis management, the improvements came more quickly.
6. FOCUS ON OUTCOMES, NOT ACTIVITY
Anyone designing a culture change needs to ask: ‘what are the three business metrics undermined by today’s culture?’ Not: ‘what are the four values that we need to most succeed?’ Let me tell you why.
“Communication, Respect, Integrity and Excellence” are excellent corporate values by most definitions. Until, that is, you find out they were Enron’s! Papering over a culture with a few pious words is not culture change. Compare this with Lululemon, the athletic clothing manufacturing and retailer. In the past five years, their market cap has eclipsed Nike’s, and they claim this was based in large part on a formula that aligns company values with employee behavior and customer experience. Lululemon’s values, or ‘manifesto’, are integral to the life of the business – its business actually depends on this culture and when it appointed a CEO that didn’t subscribed to them performance suffered.
What’s distinctive about Lululemon – or Southwest Airlines, Gore or SAS Institute – is that the culture enables business performance. Too many of these culture change initiatives are premised on a generic notion of culture – like the Enron values – that is not the point.
Strong Culture companies use culture to support execution of their strategy. It is an ‘always on’ management system that lets everyone know what they need to do to execute the strategy. There are no rule books and videos that tell you, it’s day-to-day contact with peers, managers, executives that tell you what’s important. Southwest Airlines’ high-energy, fun, non-hierarchical culture is instrumental to them realizing their business goals. It is not a random by-product of using a fleet of Boeing 737s, but an integrated element of a business system that gives them faster turnaround times, distinctive customer service, and industry-leading employee productivity rates.
Start by asking what business result I want to achieve, what business strategy the new culture will enable. This is completely different than starting with the values and behaviors. It means you will problem solve for all of the barriers to executing your strategy – process, management system, organization structure, rewards, leader behavior – that will tell you where the ‘real’ culture lives and what you need to do to change it.
That’s the difference between a ‘Culture Change Initiative’ that is focused on the ‘feel good’ factor and a business that genuinely understands how culture can be a competitive advantage.
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