In today’s blog, we share a transcript of a recent podcast with Lisa Jackson of Corporate Culture Pros, by Emma Murphy of The Change Source. (listen or download the podcast)
Why is culture building so important in business today?
As the world has flattened and become more transparent, there are very real new competitive forces … companies of every size and in every industry are required to speed up rates of adaptation. Worker and customer expectations are colliding with the ability of an organization to respond to constant change. The “spaces between change” are shorter and smaller – it’s like there’s no more steady state. Change management efforts in business today are FAILING to deliver the promised ROI because external change is demanding more than internal capability has been developed.
Never before has there been such demand for letting go of old mindsets about the leader/employee relationship, the need to adopt modern work practices, and relentlessly attack bureaucratic and political hindrances that keep people from doing their best work. Companies like Amazon, Google, and JetBlue are paving the way with creative work environments that never compromise on performance.
Being adaptable is a capability, not an event.
Given the marketplace and external environment are changing faster and internal efforts to change are failing at high rates, how can an organization improve performance AND foster a capability for adapting quickly? In most change efforts, the goal is to “manage” the change in an isolated fashion – control the variables.
That being said, urgency is the first rule of change. Without it, change will not stick. So if change efforts are failing at high rates in any situation (if there is a good reason for the change), I advise leaders “The question Why?” has not been answered sufficiently.
Change management has historically been about identifying static predictable outcomes and managing to them. It was not invented for dynamic, rapid-adaptability times. This disconnect in my view is why 75% of these efforts fail – due to three underlying causes:
- Leaders underestimate the need to establish clarity of direction among all employees, and how much communication that takes. “Why this change? Why now? What does it mean for me? Leaders commonly fail to set the proper context. An example: We worked with an energy company that was failing to deliver stock price growth. The people inside the organization knew change was needed, and most leaders in top roles wanted change. (Everyone wants to be part of a company that is winning.) But the CEO of the company at that time, had a strategy of “pursue every opportunity” – there was no clarity about what to say “No” to. In an era of information and choice overload, this is fatal to efforts to change: Lack of leadership to say “We are going in THIS direction. We will let go of THESE as priorities.” It takes a LOT of communication of a simple message from a leader to turn a big ship of thousands of people.
- Change management typically addresses one situation – new technology, capturing a new market, introducing a new product. It does not typically examine the underlying leadership habits, behaviors, mindsets that must shift in order to sustain change, or build a capability for ongoing adaptability. Change is often decided by people who are removed from the day-to-day operations, and lacks fingerprints of the people who are going to implement the change. If you want change to succeed, think of it similarly to selling a new product in a new market: It’s a process to educate and influence customers before they will buy. You need a compelling value proposition. You need to almost bombard them with the reasons they need this … both emotional and fact-based (how many powerpoints can a person sit through about “making our numbers?”)
- People are confused about the real priorities during change. “I’m already maxed. What should I let go of, stop doing? How will undertaking this change make my life, job, easier and better? How does it connect to the bigger picture of what we are doing as a company?” Priority and resource tug-of-war are far too common during change. If people were not involved in the change, they won’t own it. That simple.
What is the link between organizational culture and competing effectively in the marketplace?
As we enter a knowledge-based economy flattened by globalization and the internet, being competitive is no longer just about having the “secret” sauce – it is very difficult to protect trade secrets in an internet-based economy, because the internet levels the playing field. Think about how real estate, publishing, buying books (buying anything) has been transformed by the internet – we have so much more choice and are empowered as consumers – and that will only grow.
Companies like Amazon understand that building a culture in which the Customer is King IS the way to compete – that to be the “World’s #1 online retailer” (Jeff Bezos declared that as Amazon’s mission around 1996), you have to get everyone in the organization to work as if the Customer were sitting in the room with you. Culture no longer is something left to chance – it’s the essential process to enable thousands of people to innovate based on what customers need and want, quickly.
In our 4-stage culture process, the first stage is assessing how well your culture is driving performance. Executives need to see this link directly and in a very compelling way. Culture is not guesswork. There are approaches to link culture to better performance measures: Profitability, market share growth, innovation, customer satisfaction, quality, employee engagement through your culture.
What common myths about culture do you encounter from leaders?
Overall, the biggest myth is that “culture cannot be changed.” This takes 3 particular forms:
Myth #1 – Culture change is necessary, but it’s long-term, difficult, and expensive.
We don’t really advocate for fundamentally changing a company culture, especially a large one. That IS painful and sort of like changing a personality – really hard.
Culture is how people work together that either helps or hinders achievement of vision and strategies. Changing culture is about helping leaders see their job as amplifying enablers and breaking down barriers to the direction and strategy. Finding which habits get in the way and changing them is like improving health: Focusing on small, steady changes that are simple to integrate into your life works best. Keep this process connected to the business, and ensure you’re always talking about the bigger context, “Why we are doing this.”
Myth #2 – People fear and resist change.
People do not resist change – they resist being changed. (if you doubt that consider how different the world is today from 100 years ago!). The frenzied “change for change’s sake” environments that many workplaces perpetuate today leave people feeling they are not part of the solution. Leaders rarely initiate change in a way that makes sense to people, both compelling and digestible (remember the “small change” approach described a moment ago)
Myth #3 – Our culture must change so we can “do more with less.”
It’s true that more efficiency is demanded especially in manufacturing or technology businesses. The biggest trap we see organizations is “starting new things, and stopping nothing.” You may be able to do it all, just not all at once. Prioritization is a very relevant and lost art in business. Change fails when leaders assume that we can squeeze more productivity out of people by forcing them to work in new ways that someone up the chain sold as “high productivity.”
How can leaders inspire changes in behaviors including approaches to planning, teamwork, collaboration, decision making?
It’s interesting that you mention those 4 particular areas: These are the core habits of an adaptive culture – ie, making shifts in how you approach planning, teamwork, collaboration, decision making. We could do a whole separate piece on these! To keep it simple, the answer about a leader inspiring changes is very straightforward: Model it. Our approach to culture alignment or culture building (versus culture change) is to identify specific and simple habits using people inside the company who are fairly close to the front lines (managers and directors). The goal is to “tear down boundaries, foster more cross-functional and cross-geographical collaborating, push decision making as low as possible (to people who are in front of the customer), ensure teams have very clear shared goals.
The HOW you get the habit change is by training a critical mass of people who become the early adopters and role models for the change – rather than training everyone in how to do it. We like to find the pockets of the business where the change has the highest sense of urgency and need for change, and start habit-shifting there.
If 95% of people are not natural change agents – how can we overcome this through strong leadership?
Urgency is the first rule of change! If you create a sense of urgency for change, you will see change agents pop up all over the place. People want to WIN – so if you connect how the change will help them WIN, it creates a sense of passion and excitement. That energy is what unleashes innovation. Human beings are creative by nature – they don’t necessarily LEAD change but find their collective passion and “change agent” becomes less relevant.
How do you overcome negative views and skepticism about the organization’s ability to change from employees?
We use this simple diagram we call the change curve to explain this to leaders – if you draw a simple bell curve, you know that some % on the left-hand side are “never going to make it” and some percentage on the right-hand side are “ready to lead change.” The rest are in the middle – varying degrees of skeptical, waiting, hopeful. What leaders tend to do is focus on the left-hand side of the curve – converting the skeptics and naysayers.
What we teach is, “create pull to the right” by engaging those who are ready, hopeful, and want a reason to be part of something good. You will have to address naysayers, but often converting them is as simple as creating that sense of passion, excitement, urgency … and their voices fade. The ones who “will never make it” tend to opt out of environments where their sad song is not being heard.
What needs to be done to help leaders become better managers of change?
Tools on how to effectively lead in a flatter, rapid-change economy are needed for today’s leaders, that did not exist 5 or even 10 years ago. In our Culture Builder Toolkit, we detail 4 stages of change, including 3 focus areas for addressing the “human element of change.”
The human element of change is the key competency that is often missing. It includes:
1) Change Management capability (everyone needs it in today’s world),
2) Change Leadership – how you create and sustain inspiration, passion, and excitement that is connected to the customer, and
3) Personal Resiliency – the ability to cultivate a personal style that is friendly toward change.
These 3 capabilities are something every leader can develop if they understand the distinct skills.
How can leaders increase engagement during a culture change?
The funny thing is, most employees and front-line managers are REALLY engaged in culture and love the topic. It’s the leaders we often have to engage!
I like to quote John Kotter on this one, the early guru of organizational change – in his 8 steps for leading change, he says “Organizations tends to under-communicate by a factor of 10 or 100x what’s needed.” This completely resonates with our experience – again, going back to the example of how you “open a new market” for a product or service, it’s a process of communicating with that buyer in many different ways over time, not a one-time presentation or town hall meeting.
This is why we believe training culture champions is so important – they become “communicators as role models.”
We also are big believers that culture should be on the agenda of internal communications from the top, if you are seeking to shift it – so it’s talked about frequently and top of mind for people. This is what creates that sense of passion and excitement I mentioned. One of our clients puts “culture update” on the monthly Town Hall led by the CEO – in 2 years culture has become the Hot Project to be on, outside of “normal responsibilities.”
Can you share a case study or experience of how a strong leader of change has successfully implemented culture change and what were the outcomes and benefits for the organization?
We worked with the North American division of a global consumer healthcare company, in which the incoming President had an interest in culture, but not a commitment to changing it. We began with an assessment. It was eye-opening – a painful and completely honest account of how unhappy and demoralized people were. I remember him saying “I could only read for about 15 minutes at a time and then had to take a break. It’s heartbreaking this is the kind of environment people are coming to every day.” He committed to a turnaround of that situation.
This leader trained 15% of the organization’s employees as culture champions, had monthly meetings in which culture was discussed, and dedicated a full-time Culture Director to oversee the effort.
Two years later, which included a period of layoffs in which about 1/3 of the business was let go, people are inspired and passionate about coming to work. They know and feel clear where the organization is headed, and what their part in it is. The values in that part of the organization mean something – they are used as a basis for decision making. They are notably a better organization, including their sales growth in a relatively flat market. When I spoke to the culture lead a couple of weeks ago, she said “The banner on our company culture was energizing for people … and while we did a lot of things right in the business, this is the juicy part – it is absolutely the reason we are succeeding today in a way we were not 2 years ago.”