Culture Change: The Objective or a Positive By-Product?

dilbert change

Nothing defines humans better than their willingness to do irrational things in the pursuit of phenomenally unlikely payoffs. This is the principle behind lotteries, dating, and religion. ~Scott Adams (creator of Dilbert cartoons)

Here’s a radical thought!  Instead of a culture change program to fix a business problem, why not focus on solving the business problem with culture change as a positive by-product?

Why would I propose such a weird idea and risk putting the thousands of culture change “experts” out of business? Two reasons really.

The first is that most culture change programmes fail to deliver any real culture change. A myriad of research and business studies show that culture change is successful only about 20-30% of the time.  In 2008 a McKinsey & Co. global survey of 3,199 executives found that only about 1/3 of transformational (culture change) efforts succeeds. In an article titled Success Rates for Different Types of Organizational Change, researcher Martin E. Smith found the success rate for culture change to be around 20% as compared to a 40% success rate for technology change. In the words of one CEO, “culture change is damn hard and not for the squeamish!”

Everyone knows these statistics and yet the number of “culture change consultants” keeps growing. (reminds me of the Scott Adams quote above)

Would you schedule yourself for an operation with only a 20% chance of success?

The second reason for suggesting that we abandon “culture change programmes” is that some of the best known and most sustainable culture changes were not really culture change efforts at all, but programmes to fix a significant business issue.

Culture Change As A Natural By-Product

Let me give you an example:

The General Motors Fremont, California plant opened in 1962 it closed its doors in 1982 after twenty years of strife, strikes, worker-management animosity, poor quality (the worst plant in GM global), and year after year of losses. Workers hated their jobs and hated management so much it was not uncommon to put half a tuna sandwich inside a door panel that was then welded shut. Employees hated their jobs, management hated being posted there (a career ‘dead-end’ assignment), and customers hated the cars.

Then in 1985 came the headline article in Car and Driver magazine: “When Hell Freezes Over” (the title alluding to a miracle), about the change in culture at the plant. The Fremont plant had reopened in 1984 and one year later had the highest quality of any GM automotive plant, absenteeism had fallen from above 20% to less than 2%, not one strike, with the same employees! Fremont was producing great cars by great people.

The ‘miracle’ was attributed to the joint venture between GM and Toyota. The plant Toyota GMwas renamed NUMMI (New Union Motor Manufacturing, Inc.) and implemented the world-famous Toyota Production System, which features extensive training, a high level of respect for people, and among other things, the ability to stop the line at any time so that poor quality could be fixed on the spot (a process known as Andon). For the next 25 years, the NUMMI plant was a showcase of modern management and an example of a high-performance culture.

But the change miracle of 1984 was more than just the introduction of the Toyota Production System. It was a total culture change that wasn’t designed as a culture change. In fact, according to Toyota manager John Shook in an MIT Sloan Management Review article, culture change was not the goal, but the natural by-product of how people were treated and a new set of work processes.

Collateral Benefits

My 30+ years as a practitioner working with senior leadership teams and issues of alignment and corporate culture have convinced me that our current understanding of culture is woefully weak and that the concept of “corporate culture” is one of those highly interconnected concepts that are almost impossible to define or fully understand.  Just as a living elephant is more than a collection of legs, tail, trunk, ears, body parts stuck together, so corporate culture is greater than the sum of its parts. It’s the expression of all these elements, and, like the elephant, it has a life of its own in many ways.

There are so many variables that impact the effectiveness of a company culture, so many different drivers that make up a culture (beliefs, leadership behaviours, history, national cultures, industry factors, employee hiring and firing practices, promotional policies, strategy, structure, …. the list goes on and on). Trying to design and implement a “culture change programme” would be difficult at best.

My two favourite strategies for culture is to design and build it at the beginning, or focus instead on changing one or two of the key business levers that also impact culture, such as in the NUMMI example above.

Not only is it a more focused approach, but it has a higher probability of delivering sound business results, and a reshaped culture as a natural by-product. I call these “collateral benefits”!

Written and Posted by:

John R. Childress
Senior Advisor on Corporate Culture, Leadership and Strategy Execution
Author of LEVERAGE: The CEO’s Guide to Corporate Culture and FASTBREAK: The CEO’s Guide to Strategy Execution
Visiting Professor, IE Business School, Madrid

email: john@johnrchildress.com

PS: John also writes thriller novels

 

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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One Response to Culture Change: The Objective or a Positive By-Product?

  1. Pingback: The Focus of Culture Change is not Culture | John R Childress . . . Rethinking

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