{"id":1824,"date":"2015-08-06T00:41:39","date_gmt":"2015-08-06T05:41:39","guid":{"rendered":"http:\/\/flevy.com\/blog\/?p=1824"},"modified":"2015-08-04T02:36:57","modified_gmt":"2015-08-04T07:36:57","slug":"putting-culture-at-the-center-of-organizational-change","status":"publish","type":"post","link":"https:\/\/flevy.com\/blog\/putting-culture-at-the-center-of-organizational-change\/","title":{"rendered":"Putting Culture at the Center of Organizational Change"},"content":{"rendered":"

\"success?\" A 2013 Booz & Company study,\u00a0\u201cCulture\u2019s Role in Enabling\u00a0Organizational Change\u201d by\u00a0DeAnne Aguirre,\u00a0Rutger von Post, and\u00a0Micah Alpern analyzes the results of a survey of 2,200 executives, managers, and employees from a broad range of companies across the world. This research sheds light on current perceptions of organizational culture.<\/p>\n

This study shows a widespread belief that organizational culture is a key element of company success. For example, as the authors report, Eighty-six percent of C-level executives and 84 percent of all managers and employees say culture is critical to their organizations\u2019 success, and 60 percent see it as a bigger success factor than either their strategy or their operating model.<\/p>\n

However, this is contrasted with the astonishing statistics about the need for cultural change: A full 96 percent of respondents say some change to their culture is needed, and 51 percent think their culture requires a major overhaul. About 75% of the respondents believe their company needs significant culture restoration, which tracks closely to the proportion of people disengaged at work. The goal of the study wasn\u2019t primarily to measure the need for cultural change. The survey did not ask what types of cultural change was needed or desired.<\/p>\n

This study suggests that the great majority of companies have cultures that reflect the contemporary models of the late industrial era of business, where the unraveling of social trust between employer and employee has only accelerated in the past few years, and where work stress levels are at a historical high.<\/p>\n

The real goal of the study was to explore the role that organizational culture plays in business transformation efforts. Projects to enact enterprise change usually are the result of the perceived requirement to adapt to a changing market environment. Relative to that goal, the survey results are more like a criticism of management than any guarantee of the success of change efforts, in general, and more precisely, the authors states:<\/p>\n

Only 24 percent\u00a0said their companies used the existing culture as a source of energy and in<\/em>\ufb02ue<\/em>nce during the change effort.<\/em><\/p><\/blockquote>\n

Creating Sustainable Advantage with Culture and People<\/h2>\n

Business Leaders have been challenged in leveraging their \"strategyorganizational culture for marketplace success. Peter Drucker once remarked, \u201cCulture Eats Strategy for Breakfast\u201d.<\/p>\n

Culture is an outgrowth of leadership and can be changed\u00a0to meet organizational goals. This dynamic interplay between leadership and culture is critical if even the most brilliant of strategy is to be effectively implemented.<\/p>\n

There have been no standards in defining culture. It\u2019s complicated. Sometimes it\u2019s even paradoxical. Your employees, partners, and other stakeholders will perceive your culture in different ways and even use different words to describe it. With all the other challenges your business is confronted with, it is easy to see why organizational culture has not been a priority for the leader. However, there is real power to be reaped in nurturing this intangible asset.<\/p>\n

\u201cBusiness leaders and the financial and industry analysts that follow them have also come to recognize that establishing and fostering the right corporate culture is not simply a way of staying out of trouble,\u201d said Lou Gerstner of IBM and again said, \u201cbut represents a fundamental driver of sustainable differentiation and winning in the marketplace.\u201d<\/p>\n

The competition moves faster than it used to. \u201cHaving the best product or service or making the perfect strategic move doesn\u2019t buy much time at the top. The landscape has shifted from looking for that long-term sustainable competitive advantage to managing a portfolio of transient advantages, moving from one short-lived advantage to the next.\u201d As Rita Gunther McGrath wrote in the Harvard Business Review<\/p>\n

Sounds difficult, doesn\u2019t it? That\u2019s because it is. But this is where culture comes in. Like most organizations, your competitors have typically ignored culture. They\u2019ve been focusing on strategy and operations and culture simply became a luxury that they would get to once they achieved some success. But the goal of culture is to drive the success of the enterprise.\u00a0Waiting to focus on your culture until after you become successful actually sentences you to a never-ending culture of mediocrity. This, in turn, reduces your capability to succeed. It\u2019s a negative \u201clever\u201d. Instead of magnifying the force you want to apply. A mediocre culture increases the distance to your goals.<\/p>\n

Focusing on culture not only removes this negative lever, it can exchange it with a positive one if you do it right. And, unlike products and strategies, which can be quickly copied, the culture advantage has more sustainable power. The fact that it is complicated and challenging means that any advantage you achieve over the competition will be difficult to match. So, how do you secure this kind of advantage? It starts with understanding what culture really is.<\/p>\n

Organizational Culture Defined<\/strong>\"organizational<\/h2>\n

Let’s start with \u201cvalues\u201d.\u00a0 At the core, culture is about what is valued. This can include framed \u201cvalues statements\u201d or \u201cprinciples statements\u201d. Arthur Anderson and Enron had value statements in their headquarters about principles like integrity, however, it turns out\u00a0making financial performance at all costs was the guiding principle\u00a0<\/em>so that\u2019s how people behaved.\u00a0Your culture is the collection of words, actions, and perceptions that explains and supports what is really valued by the system.<\/p>\n

And that means it\u2019s complicated. There are four factors in this definition that create your culture: language, actions, perceptions, and tangibles. You and your people activate the first three. Culture is a complex combination of what we say it is, our behaviors, and the underlying assumptions and ideas behind it. As you might expect, those three areas are often unpredictable, which is one reason why culture can be so disorderly. It becomes something that you have to put together, understanding you\u2019ll find some paradoxes along the way.<\/p>\n

For example, we\u2019ll state we value customer service, but we\u2019ll also say we value being dedicated to the long term. Those values are reasonable, but at times are quite completely opposite to each other. One is proactive and one is reactive, and to analyze where the culture really stands on that contradiction, you\u2019ll have to assess several things at once. It\u2019s the combination of what people say and how they behave do that will eventually determine how those two values are equalized.<\/p>\n

Additionally, you have to factor in the \u201ctangibles.\u201d Tangibles are the\u00a0non-human<\/em>\u00a0parts of culture. Tangible things like dress code, office location, office decor, office layout, etc. These also reveal what is valued, so they have to be included in your assessment of what your culture in truly is.<\/p>\n

This definition is powerful because it enables action. Language, actions, perceptions, and tangibles give you all the areas you can work with. They give you areas where you can test, change, and discover. And they keep the conversation about values moving, rather than stuck down a path that leads toward a boring new set of inspirational posters\u2014but no improvement in performance.<\/p>\n

Now, think about your organization\u2019s culture. Think about the language, actions, perceptions, and tangibles they define and support what your organization truly values.<\/p>\n

The Benefits of Accounting for Relationship\u00a0Capital (RC)<\/strong><\/h2>\n

Relationship Capital (RC) as an open standard which is becoming an important metric in distinguishing one leader from another and one organizational culture from another. Quantifying the quality of trustworthiness amongst your team and with your key stakeholders in this hyper-connected and transparent world is to be expected.<\/p>\n

How you behave is as important to your business success as what products you create or services you deliver. By accounting for these commitments and perceptions you gain the following benefits:<\/p>\n