With how many people have you discussed the issue of your company culture? It is a popular topic! When you join a company, there is intense scrutiny of what the culture of it is like. Every conversation, interaction, email from the Board or Executive team members is read with the idea of ‘what is this telling me about the culture of this organisation?’ It helps people to know the parameters of what good behaviour looks like and what are the acceptable norms of attitudes, styles and behaviours. However, systems and processes have a powerful influence on what behaviours are allowed to thrive.
Few organisations are satisfied that their culture is what they would like it to be! In our work with clients changing the culture often take up the most time to discuss, clarify and determine. Often defining where an organisation is, what its significant characteristics are and what works well for it and what works against it, in helping it achieving its goals is one of the hardest things to determine.
We begin with this definition: Culture is defined by the quality and characteristics of the environment that encourages or disallows certain behaviours, attitudes and actions. Culture is created by what people will do and what they won’t do.
This is important and significant to do and its importance became even clearer on reading the Harvard Business Review (Vol 90, No 7/8, July/August 2012. pp110-117) that focuses on organisational change and the issues surrounding culture change. ‘Culture change that sticks: start with what’s already working, by Jon R Katzenbach, Ilona Steffen and Caroline Kronley’) The authors of this Review believed that culture change often fails because it’s poorly conceived and executed. They also highlight one of our beliefs and starting points, that for culture change to be effective, it must draw upon the strengths of the existing culture.
To illustrate their proposition, the authors chart the journey of US health insurer Aetna. Aetna suffered a competitive crisis as it lost millions against nimbler operators. By 2000 it was facing law suits from its customers and poor relationships with its medical stakeholders.
Its culture was seen as complacent, risk averse, mediocre and suspicious of outsiders. When the company merged and was expected to adopt a more aggressive, sales-oriented culture it did not happen. The existing culture effectively resisted the change in approach – like tissue rejection in a transplant. After four CEOs tried and failed, new CEO, John Rowe, developed two main insights.
He saw that an obsession with costs was leading to poor customer service. This was counter-balanced by a deep customer commitment and sense of pride and purpose. He made these work by developing a new model. While this involved restructuring and job cuts, because people understood the need, it worked. The company went from a $300 million operating loss to being $1.7 billion in the black, and, as the article shows it was all about culture.
The authors cite other major corporate transformations, including General Motors and from them derived five golden rules when seeking cultural transformation. These applied to all the organisations they studied:
• Match strategy and culture by focusing on the why. Connect the need and create the desire.
• Focus on a few critical shifts in behaviour. Observe current behaviour and probe what it would be like if it was different. If trying to create a customer-refocused culture, watch out for behaviours which act for and against and reward/discourage or even punish those actions and behaviours.
• Honour the strengths of your existing culture. Don’t try and change everything and as they say ’Don’t throw out the baby with the bathwater’. As Aetna and others proved, much was right and could be used as a platform for renewal.
• Integrate formal and informal interventions. Develop new rules, metrics and incentives to embed cultural change. These need to be both formal, such as communications processes and learning interventions, and informal, such as behaviour modelling by leaders, ad hoc connections and storytelling.
• Measure and evaluate, through business performance, critical behaviours and milestones, to show how far along the road of culture change the organisation has gone.
These all sound fairly obvious but the execution of successful culture change is the one of the greatest challenges of contemporary leadership, and this article gives us an interesting set of ideas to engage with.