Transformation – The Culture Problem

Your results tomorrow – depend on the actions today – of the organisation you shaped yesterday

Every organization is doing a balancing act between using precious time, resources and talent on identifying the next big thing in their industry – and minimizing the time, resources and talent on delivering the current value proposition to their target segments.

Some go to one extreme and some go to the other – whether that is the right approach depends on how close they are to the beginning and the end of their product life cycle. So if you just invented a 100% co2 neutral jet fuel, you should focus on minimizing risks and cost to serve and produce (80% co2 neutral jet fuel currently costs 8 times that of traditional fuel). Vice versa if you are a world leader in pumping oil up from the underground, you need to switch your focus from execution to innovation.

Now this is strategy – but as Peter Drucker famously said: “Culture eats strategy for breakfast”. Meaning when 5-10 people in top management decides to go right and the entire organization is hardwired to go left, then the organization wins the tuck of war. Unless you do something. Unless you identify and implement effective levers to align the culture.

Every organization is perfectly aligned to get the results that they get

In 2010 we developed this model to create one simple picture of the workable change research and practice (There is still quite a lot of unworkable material). The external levers represent the interaction between the organization and the owners, customers and larger ecosystem to fund and obtain insights and technologies to drive the next big thing. The CxO levers represent the main tools that top management apply to lead the organization towards that next big thing – agreeing on goals, structuring for success and driving change in every dialogue. Finally, the role of HR in placing the right people in the right roles, continuously developing strong leaders and experts in a world fast changing competencies as well as engaging the organization on performance and execution. All three sets of levers affect the leaders, employees, processes and finally results.

The levers do not change – but the tools do. For example in 2010 employee engagement surveys were still mostly focused on the job of the employee, while a few organizations like Maersk had inserted a module as leadership feedback. Postnord went further and implemented a strategy execution module, where you at any given time could see, where in the organization strategy was failing and in which way, so you could quickly remedy it (disclaimer: I helped both companies do that:).

External levers

The three sets of levers represent an entire book of course, so here we will just focus in a few critical points from each. While the external lever of owners is very much about setting business expectations, and customers is about truly understanding their needs through powerful market research, then the ecosystem is about value innovation – like Proctor & Gamble scanning the market for innovations and connecting with relevant scientists, experts and alumni or GlaxoSmithKline opening up their patents pools in less studied diseases.

The classic market research tools in our innovation workshops

CxO levers

Communication is a field of its own, but we will in the next articles dive into how to use behavioral economic insight to remove irrational resistance. There is an entire science around goal setting, but a few things must be adhered to – simple and realistic connection from top to bottom and a translation at each level of what that means in terms of activities. Structure often goes wrong, because management starts with their most critical people and then build an organization around them. Very irrational – also very human.

Instead we designed a full process for a large global pharma client, where you start by diagnosing the issue, identifying the objectives and selecting the most relevant design criteria as the first three steps in the model below. Then to design your optimal structure you pick the most relevant structural building blocks based on the criteria, combine them into full design options and select based on your design criteria. Only now can you start considering your current team, so at least you have the right target structure and you know where you have made compromises.

This image has an empty alt attribute; its file name is organizational-design.png
Organizational design needs to start with the business

Direct HR levers

Placing people is about getting people in, up and out of organizations, so this is a dramatic area. Lots can be said about recruitment not least on debiasing the selection, but a powerful trick if you have an attractive company and you are looking to fill a critical but not abnormal role is to avoid selecting and just let interested parties deselect themselves against tough criteria – providing references, ticking off simple but hard questions like appraisal scores, psychometric tests etc. It needs to be done respectfully and transparently though!

Placing the right people in the right roles is typically left to organic change, but this cannot stand alone – typically when running an organizational review we find that about 20% of the most important roles are not filled by the best players – and many of the best players have unimportant roles leaving them unutilized at best and ready to leave at worst.

Development is a whole other ballgame and luckily has come far from the days of pure knowledge dumps in lecture style. Today you need several development vehicles attacking different learning styles at the right time preferably in a coherent concept, so the brain has an easier time to recall it. One of my still favorite concepts is the leadership pipeline – although the book requires some updating to modern leadership – because of the focus it puts on work values over skills. That is truly embracing the why of a behavior over the how of the behavior. It is not difficult to build a great team, set objectives, delegate smartly, coach people or manage performance – the skills are easy. But getting people to value it and to do it – now that is the key to any development.

The Leadership Pipeline is dated but understood the criticality of values over skills

Culture change

The idea of focus on work values instead of skills or behavior is not important alone in leadership development – it is a core principle in change. You might have read about true change requires new artifacts, behaviors and values – sounds difficult right? The point is that if you can change values, then behaviors and artifacts follows.

The three sets of levers above represent the places you can set in to align your culture with strategy – but the effectiveness of the tools is equally important. These are just a few of the examples and even they need updating as the wider culture changes – the expectations to work from home, digitalization, diversity or sustainability to mention a few. If you are missing one of the two you will either be crawling towards your goal or going nowhere in a hurry.

But with those in place you have a solid foundation – the highway if you like. Next time time you will see the racecar – how to build a high level change initiative with respect to problem solving, project management and change stages. Finally, you will meet the driver – with all the irrational biases – and some of the most powerful tools to circumvent them. Stay tuned!

If you are in a hurry, contact brian@behaviouralstrategygroup.com or +45-23103206.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s