One fine day, not long ago, after comparing his company’s stock price against a peer group, the Chief Executive descended from on high and gathered his trustworthy Vice Presidents around him.
“Hear ye all. I command ye to reshape our corporate culture and launch this faire company upon the seas of everlasting greatness!”
His advisors looked sheepishly at one another then stared at their shoes, none daring to speak. Finally the secretary taking notes in the corner spoke up. “Are you out of your mind?”
Reengineering The Corporation
Back in the 1990’s, the concept of “Business Process Reengineering” (succinctly put forth in a best-selling business book, Reengineerig the Corporation by Michael Hammer and James Champy), swept through executive suites like a prairie grass fire. By getting rid of layers of unproductive management staff and reducing time spent on non value-add processes, reports, meetings and other activities, companies could focus their energies and resources on delivering greater customer value and improving operating performance.
The book sold over 2.5 million copies its first year and stayed atop the New York Times bestseller list for well over a year. Reengineering was adopted at an accelerating pace and by 1993, as many as 65% of the Fortune 500 companies claimed to either have initiated reengineering efforts, or to have plans to do so. This trend was fueled by the fast adoption of BPR by the consulting industry eager to help lacklustre companies dramatically improve performance.
Very quickly, however, the shine faded as the expectations for lasting and profitable change failed to materialise. One of the key criticisms is that BPR failed to look at the entire enterprise value chain, but instead focused on individual departments. Many saw it as a palliative term for headcount reductions.
Today there is another business prairie wildfire burning out of control. It’s called “Culture Change”. A recent Google search using the words “culture change” came up with 1.62 billion hits (compared to just 452 million for “leadership”). Maybe we should call it a Tsunami!
Nearly every business publication, business article and best-selling business book mentions corporate culture and culture change, usually in the same paragraph. And culture change consultants (one client named them “culture vultures”) are springing up like weeds, thanks mostly to the past several years of corporate layoffs and unemployed executives and middle managers looking for work. And everybody seems to be an expert.
But scraping away the fresh paint on these newly minted culture consultants finds the same set of Powerpoint slides taken from the few key studies of culture change by experienced practitioners such as Harvard Professor John Kotter, MIT Professor Edgar Schien, Zappos CEO Tony Hsei, former IBM CEO Lou Gerstner, and a few others.
And each “culture consultant” has his or her Step-by-Step process for culture change. But how many of them have really designed, implemented and driven a successful culture change process? Very few. Most of their knowledge is borrowed, not their own.
And the sobering fact is, most culture change efforts fail! With or without the “culture experts”.
The Inviolate Requirements for Successful Culture Change
After being in the business of culture change for over 30 years and making all the mistakes, and having some incredibly huge successes, we can now tell you, emphatically, what it takes to successfully change culture. All four of these elements are required. Skip any one and the culture won’t change. And by the way, it’s going to take a lot more leadership time than you originally planned. How much? How about 40% of the time of senior executives devoted to reshaping the culture! If you can’t commit, don’t start.
- Personal change at the top: The CEO and senior team must be willing to change their individual and collective ways of working and their personal behaviours to match the new cultural behaviours required inside the company. The key principle here is that “organisations are shadows of their leaders, and that’s the good news and the bad news!”
Another principle we have discovered about successful culture change is: “Change the leaders or change the leaders!“
- An aligned senior team that accepts the accountability and responsibility to lead the culture change. If one individual, say the CFO, believes that she has real work to do and the rest of you can deal with the “soft stuff”, and chooses not to accept the mantle for personal leadership, the change won’t take hold. It’s all in or all out!
- Overcoming the critical mass of inertia: Unless you get the critical mass of “undecided or cautious” to change, the inertia of the old culture will bring the entire change process to a grinding halt. One way is to recruit those few employees in the organization who are most respected and enthusiastic about the culture change and train them to be internal facilitators, mentors, coaches and guides. An other way is to ask those most negative and caustic about change to go somewhere else! Then develop an engaging and stimulating programme to recruit and enroll the large group of “undecided”. They are looking for leadership and a reason to change, so show them the way.
- Redesign the daily business processes, especially the HR processes to better match the new culture desired. If you want a new culture of more innovation and accountability, reduce the amount of meetings where people are scrutinised for every little detail by senior management. Give awards for new ideas and even “almost good ideas”. Reevaluate your hiring profile and redesign your new employee induction process to stress the new cultural requirements. Reevaluate your promotion and development policies; do they match the new culture desired? Evaluate middle managers on how well they develop people as well as how well they meet budgets.
There is no short-cut to reshaping culture. Miss any one of these 4 elements, or try to cut back on them, and you will definitely fail.
Want to change culture? Are you sure you’ve got the stamina and commitment? Go long or don’t start!
Written and Posted by: John R. Childress
Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid
John also writes thriller novels!