Culture Eats Strategy for Breakfast

You can have the best strategy in the world but if your staff aren’t motivated they won’t deliver it.

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Here is my approach for achieving the culture change that is necessary for a successful turnaround.

?When a new strategy is introduced to a company it is often like moving the deck chairs around on a ship.

While the moved deck chairs might give you a different view, the reality is if the people sitting in them don’t like the new view, they will move them back to where they were.

This is what happens to most change initiatives.

New strategies and initiatives are often sabotaged and normally fail. This is because those involved need to change their behaviour and if they haven’t bought in to the reason behind this change they will resist.

An amazing new strategy is presented to the team but because they don’t own the change themselves, they turn up the next day and carry on doing what they’ve always done.

You might have heard the phrase ‘strategy eats tactics for breakfast’. This means that tactics reinforce each other and align as part of a strategy, where tactics by themself have no consensus to focus on.

However there is a more critical component to get right first. Alignment of behaviour - culture.

Culture is the real key to change, hence ‘culture eats strategy for breakfast’.

And this is much more difficult to get right than the strategy.

Without the right culture, people will move the deck chairs where they want them and not where management wants them. They will not be aligned with the strategy.

Culture is about everyone justifying to themselves the need to make changes to their own behaviour, to how they do things in a way that supports the new strategy.

There may be lots of tricks to achieving this but experience has taught me the best way is not through management infantilising their staff and telling them exactly what to do. Instead I always advocate a collaborative process in which the staff define what change they feel is necessary to bring about positive change.

The solution they arrive at might not be the exact change that management had in mind, but this is a far better scenario than having the deck chairs moved back.

My own approach to putting this into practice has evolved over years of trial and error, and learning from a lot of failure. The first stage is to discuss with senior management the purpose and goals of the business in order to get a sense of their desired outcomes in a business turnaround. This provides some parameters that are used in subsequent meetings with junior management and staff.

By establishing a sense of purpose, some goals and the need for change to achieve them, everyone becomes involved in strategy development. More importantly, we can discuss the change of behaviours necessary to deliver the new strategy.

Essentially everyone is invited to get involved.

During the meeting we (the turnaround professionals running the meeting) act as facilitators to encourage contribution while at the same time pointing out the impact of alternative initiatives and how they might reinforce or prejudice strategy and what behaviour changes will be required.

The focus is to constantly revisit the strategy and the behavioural changes necessary to deliver it until a consensus is agreed by most staff and is one that we as the turnaround professionals believe can work.

Until a consensus emerges all meetings have the same agenda of 5 items:

1.??????????????????Purpose

This item seeks to establish a unified company purpose that everyone agrees with. Few companies have this so normally I tell my favourite ‘company purpose story’ to illustrate what this means. The story goes that during a visit to the NASA Space Centre in 1962, President Kennedy noticed a janitor carrying a broom. He interrupted his tour, walked over to the man and said: “Hi, I'm Jack Kennedy, what are you doing?” The janitor responded: “I'm helping put a man on the moon, Mr President.” Such clarity and alignment of purpose is the sort of reply I aim to achieve for every employee in a company. Having everyone involved in defining the company purpose means they own that purpose and is far better than having it handed down to them. The process also gets everyone working as a team and pulling in the same direction. This means when this stage is finished the hard part is already done and the rest of the agenda falls into place. The resistance to change has largely been overcome. Because this item is so crucial to get right, this item often takes up most of the meeting time.

One of our own companies, Beaumont Boilers had lost direction when we acquired it. It manufactured, supplied and installed industrial boilers to prisons, hospitals and hotels and saw itself as a manufacturer rather than recognising its primary purpose as the supplier of efficient hot water solutions to its customers. To emphasise our new purpose we renamed it Beaumont Water Heaters.

2.??????????????????Goals

Here I’m seeking to find both value and financial goals that everyone agrees are needed for the survival of the business. Clear goals become the focus of the strategy. A goal might be the need to increase sales by a specified amount and to achieve this another goal is needed such as to establish a sales culture.

For Beaumont, our goal was to find a market based on the purpose since when we acquired the company, sales had significantly declined over 30 years due to the hight cost of manufacture. The previous was still trying to sell based on quality but was losing market share to competitors due to the high price.

3.??????????????????Strategy

The strategy item is all about the team considering alternative options for achieving the goals and then agreeing which is the best one given the company’s resources. Keeping this simple is key where beforehand I will have considered which alternative strategies might achieve the turnaround. I remain open minded to those that management and staff propose and seek to reinforce the good ones. If necessary I advance ideas to seed the discussion and reinforce positive ideas without overtly promoting any one strategic option.

For Beaumont, a number of strategic options emerged but the one agreed upon was to shift the focus from the sale of boilers to selling ‘hot water’. Instead of selling our expensive and uncompetitive commercial boilers, we would offer 5-year contracts with free supply and installation against service contracts to maintain them. By removing the upfront costs we ended up with term agreements. This had the effect of valuing the company as a service provider with fixed cash flow?rather than a manufacturer. The icing on the cake was that we could install refurbished boilers that were a fraction of the new price and equally reliable. Another aspect of our strategy that emerged was to outsource the manufacturing of components leaving us to simply assemble the boilers in our warehouse. This significantly reduced our fixed costs.

4.??????????????????Culture

This item involves getting staff to agree what sort of culture best suits the preferred strategy. Discussing it can result in the strategy being revised but it seeks to get general buy in for the right culture.

It treats culture as an abstract concept that allows me to remind everyone that the old culture didn’t work. This is a sensitive topic as it balances fear for jobs with a need to fight if the company is to survive. It cannot be fudged and everyone is made clear of the need for culture change if the turnaround is to be successful. This also sets up the final item which is where it gets personal.

At Beaumont, we encountered some serious resistance to cultural change and this item highlighted those who were up for change and those who weren’t. The answer was simple and those who wanted to save the company were galvanised when the others were made redundant.

5.??????????????????Behaviour Change

Finally the crucial item for achieving change. Once the previous items have been agreed, this one becomes obvious but is sensitive because it is personal. It involves everyone identifying and agreeing the changes of their own behaviour that are necessary to deliver the new culture. Get it right and everyone willingly repositions their own deck chairs.

It involves staff working together to discuss and agree what they do when they come to work tomorrow and how it is different to what they did yesterday. It also involves redefining everyone’s roles and responsibilities and recording the need to take personal responsibility for changing their behaviour as the key to owning it.

These individual behaviour changes add up to a change of culture. And they start with top management.

At Beaumont I accept that the fear of losing jobs was a major factor behind the changes but everyone got behind the new culture and embraced it when they saw a secure future when the term contracts began to roll in and revenue increased.

Throughout the culture change process the meeting chairs and facilitators need to be very aware of everyone in the meeting since some embrace change more readily than others. This is fine so long as everyone agrees with the purpose and goals and are willing to go along with the proposed change on the basis that they are reserving judgement before wholly embracing the change. You need also to look out for the dangerous actors who appear to readily agree with proposed change but become saboteurs. I refer to them as ‘speak chuckers’, who behind the scenes seek to undermine any new initiatives.

To summarise, the secret to changing company culture is getting everyone to own the company’s purpose and goals by defining them together. Team unity and ownership of one’s role in the company flows from there and leads to the behaviour change that in turn delivers results.

If you’ve found this article to be useful and know someone who you think will benefit from reading it then please pass it on.

I’d also love to hear about any of your own insights into fostering a positive company culture in the comments.

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