Potentially the most discussed and misunderstood term in business, … culture.
How often have you read, or heard leaders of Australia’s largest companies state that their greatest challenge is to change the culture of their respective organisations? How many actually achieve this? Of those who state they achieve it, how successful were they in improving company performance as a result of cultural change programs? Is there a relationship between organisational size and cultural change effectiveness? Is there a best time to address cultural change in an organisation? How do you define success?
These are some of the many questions posed regarding cultural change, yet there appears to be an ongoing debate as to what culture actually generates.
From a personal perspective I have had the opportunity to work in a number of corporations and participate in these processes, among those are, established organisations such as Kodak, moving from one business model based on silver halide to more advanced digital technology. Telstra, a telecommunications organisation moving from a government owned bureaucracy to privatised entrepreneurial organisation. ‘Three’, defining itself from a start-up position. Each have their own unique idiosyncratic requirements.
So to start with, where does culture fit as a key management process?
To answer this I will refer to Nitin Nohria (is the Richard P. Chapman Professor of business administration, Dean of faculty, Harvard Business School ), William Joyce ( Professor of strategy, Amos Tuck School of Business, Dartmouth College, and Bruce Roberson (McKinsey & Company, Inc, U.S.), in their book ‘what (really) works‘- ‘The 4+2 formula for sustained business success. The groundbreaking five-year study of secrets of the world’s best companies’ refer Harper Business books, HarperCollins publishers.
‘Based on the Evergreen project, a massive five year study in which consultants and business school professors at top universities around the country (U.S. only) analysed ten years of data on 160 companies and more than 200 management practices, the authors discovered that all companies simultaneously master six specific management practices.
The 4+2 formula divides the practices into four primary practices, all of which must be followed ….’
According to Nohria, Joyce and Roberson there are four primary practices driving a successful organisation. They are:
- strategy
- execution
- culture
- organisation
and any two of the four secondary practices
- talent of employees
- leadership and governance
- innovation
- mergers and partnerships
Accepting these are the key drivers. Then where does culture sit as a priority ? I believe it is priority number one.
Get the culture right and the rest will follow. For example, the right culture attracts the people to fit it. Culturally aligned individuals become the leadership teams who generate the strategic processes, generating and executing market winning strategy.
Why? Because culture is all about being human, who you are, your personality. It’s the way you think, the way you behave, the way you learn, your beliefs, your values, it’s about you the person. It all starts with the individual, and emanates from their influencing environment.
The greater the alignment of the individual behaviours and values to a defined optimised profile, the greater the ability to create a unified organisation, executing market winning outcomes.
So let’s understand what we mean by culture…
Think of culture as the key influencer of the way we conduct our day to day lives. How does this transfer into the work environment?
To do this I will use a ‘honeycomb’ analogy to demonstrate the principles. ‘Honeycomb’, because the strength is created by the fusion of the individual cells. Imagine, a single cell of a honeycomb represents your family, its values and behaviours, then there is a cluster of honeycomb representing your local community, and its values and behaviours, then a bigger cluster representing your city, then more representing your state, then more again for your country. The key message here is the complexities of your family and their specific behaviours are not always replicated as the cluster becomes larger. However, there are threads that stay constant and they become more refined as the size of the honeycomb grows to eventually represent the culture of the country. For example, ‘mateship’ represents the cultural essence of Australia
Quote from Wikipedia: ‘Mateship can be defined as the code of conduct, particularly between men, although more recently also between men and women, stressing equality and friendship.’
Could you ever imagine changing the culture of the country? Would this not be a catastrophic event, creating huge levels of upheaval and potentially violence?
Now let’s bring this all back to the organisation using the same principle of the ‘honeycomb’ . As an individual coming into the organisation you bring with you, your cultural belief and behaviours, and if they fit with your department, then more than likely work will be enjoyable and productive, flowing through to the company you work for. If this is not the case, you will more than likely be unhappy and eventually leave, or worst case create disruption in your department. As the honeycomb grows your department becomes part of a line of business (L.O.B.), eventually the honeycomb represents the company. Each and every cell within the honeycomb representing the people and departments of the organisation.
So it is not uncommon for companies to espouse values, such as ‘ being open and honest’ or, ‘become an agent of change’ or, ‘do the right thing’. Most of which become aspirational, and are defined based on a thought leadership process.
If however, the organisation culture has morphed into the business over a long period of time, and the organisation is large. We can equate the impact of cultural change analogous to that of changing a country culture, very disruptive with potential long term negative effects, particularly on morale. This outcome can initiate the departure of some of the organisations best talent.
The utopian view is to design culture in from the start of the organisations ‘life’, either within a department, L.O.B., or company at large. If this is not possible then a long term cultural focus should be integral to the business strategy such that cultural change occurs over a lengthy period of time. Creating a more gradual and acceptable change in-line with the dynamics of the business environment. However, in rapidly wavering markets this position is not always the most acceptable.
Even more important, should the question be, is this a cultural issue, or is it purely strategic ? Substituting culture for poor leadership decision making, deflecting the issue ? This I believe is systemic in many organisations. A wrong choice here can lead to devastation of the business.
The starting point is with the leadership team, to define the organisation and its role in the market, as part of a visionary process. From such a process it will become clear and evident what the gaps are, what actions are required to close the gaps, and over what period of time. The key being realistic, however, when unrealistic timeframes are devised you can guarantee poor executional outcomes, in fact, this could lead to a retrograde position for the organisation, and the culture.
Typically, what happens more often than not is a new C.E.O. is appointed, he/she then concludes the current organisational culture does not meet the requirements necessary to effectively deliver their new strategy. The Board are then informed cultural change is essential to deliver operational effectiveness and performance. Then they make bold statements to their shareholders similar to ‘ We will need to change the culture of this company to deliver improvements to your R.O.E. ‘. Discovering 12 to 18 months later, progress is stalled, and there is no indication of change for the betterment. Shareholders are left confused and disappointed as the company continues to stagnate.
All this when the core issue to the organisation could be simply facing up to the honest fact, that it is not the culture. Its the lack of strategic leadership.
Organisations must, and should review any business cultural change program with great caution for the short, medium and long term ramifications can last far longer than the tenure of any C.E.O., Eastman Kodak company is a great example of such decision making.
At Mind Fusion we would be delighted to receive your comments based on experiences and observations. How do you relate to the comments above? Do you believe they provide adequate examples of culture, and insights necessary to address appropriate leadership decision making?
We look forward to assisting your organisation in the quest for sustainable business performance and growth.
Contact Mind Fusion today and begin the journey.