The Good, Bad and Ugly of Leading Cultural Change

Many executives believe that organizational culture is too squishy to be managed reasonably. So, when implementing new business models, strategies, or mergers and acquisitions, executives spend a lot of time on marketing analytics, financial analysis, mission, organization structure, key messages and talking points and leave the persuasion, change management and the inevitable need to change culture to middle management.

This neglect of organizational culture is one of the reasons that about 70% of all M&As, strategy implementations, and cultural change efforts fail.[i] We all remember Peter Drucker’s famous line to the management of Ford Motor Company over lunch, “Culture Eats Strategy for Breakfast.” It does! When ignored, the current culture feasts on just about everything for its survival.

Four Mistakes Executives Make When Leading Cultural Change

No. 1 Believing that culture is soft and squishy and not measurable or manageable. I participated in an innovation workshop this summer on the successful measures and metrics for innovation. The participants struggled with how to effectively measure their innovation culture and initiatives. I heard a practitioner flatly say, “You can’t measure culture.” She could not be more wrong! Culture is measurable and manageable. Below, I will introduce you to two researchers who have created models to measure and change culture, based on their empirical research. Any organization attempting to improve innovation, implement strategy, complete a merger or acquisition, or try to change its culture will fail, if it doesn’t consider the current culture.

No. 2. Believing that you know the culture of your employees. Culture guru Stan Slap informs us that employee culture is about survival.[ii] Employees tell stories about leaders - some are based on fact, some urban legend. Those stories become the lore about how to survive at the company, or if you work for this VP or that director. As an executive, you won’t fully know the culture of the workforce because part of it is about you, and employees won’t share their stories about you, with you.

When you implement new business strategies, the rules regarding employee survival change. In addition to communicating new business models, strategies, or organizational structure, you need to inform your employees what they should do differently to succeed. Better yet, allow them to surface their concerns, either in face-to-face meetings or by using company blogs or other interactive digital technology. In doing so, you will learn more about your employees’ culture and how to address their fears. You will also be able to provide targeted solutions. If you don’t tell employees what they need to do to succeed, they will resist new business strategies out of fear for their own survival.

No. 3. Not using validated, reliable assessments to measure culture and recommend solutions. Reliable assessments exist. Daniel Denison conducted research on his cultural model, which showed that strong organizational cultures resulted in improved financial results. His model includes four dimensions of culture: mission, adaptability, involvement and consistency.[iii] It is used to address critical issues such as mergers and acquisitions, organizational transformation and turnarounds, leadership develop, and the alignment of strategy to human capital.

C. Brooke Dobni Ph.D. developed a model for assessing and improving innovation cultures, based on empirical evidence.[iv] (Disclosure: I am a managing partner with Dr. Dobni in InnovationOne). His organizational dimensions include: leadership, investment, knowledge management and process. In another empirical study, he showed that organizations with strong cultures of innovation enjoyed improved financial results.[v]

No. 4. Not using proven models to lead change. My favorite model is John Kotter's 8-step change model.[vi] It is well researched and has been used extensively with a long history and public record of successful results. The model begins with having leaders articulate compelling reasons for change. What is the burning platform? Then, drawing together a guiding coalition to lead the change. As a third step, leaders develop a clear, shared vision. Step four is effectively communicating the vision. Five is empowering people to act on the vision. Six is creating short-term wins. Seven is consolidating and building on the gains. Eight is institutionalizing the change.

When companies embark on a new business strategy, it is clear that they must take into consideration its impact on their employees’ cultures. How much confusion and fear will the new strategy cause to the current workforce culture? Tools exist to measure the key dimensions of the current culture, as well as to gather valuable employee feedback on how to implement the strategy, measure progress, and adjust the implementation to speed up results, and drive higher impact.

Are you treating your organizational culture as soft and squishy? Or, do you include cultural assessments as a key implementation tool for strategy execution?

Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and is a Managing Partner of InnovationOne. He consults on talent management, leadership development and coaching, innovation, and other strategic initiatives. Please e-mail Victor at [email protected] or visit www.victorhrconsultant.com. For innovation visit www.InnovationOne.US.

[i] Clayton M. Christensen, Richard Alton, Curtis Rising, and Andrew Waldeck, (March 2011) “The Big Idea: The New M&A Playbook,” The Harvard Business Review; and Donald Sull, Rebecca Homkes, and Charles Sull, (March, 2015), “Why Strategy Execution Unravels—and What to Do About It,” The Harvard Business Review.

[ii] Stan Slap (2015) Under the Hood: Fire Up and Fine Tune Your Employee Culture, Penguin Group, New York, NY.

[iii] Daniel R Denison, Corporate Culture and Organizational Effectiveness, (1997).

[iv] Dobni, C.B. (2008), “Measuring Innovation Culture in Organizations: The Development and Validation of a Generalized Innovation Culture Construct Using Exploratory Factor Analysis,” European Journal of Innovation Management, Vol 11. No. 4, 539559.

[v] C. Brooke Dobni, (2011), “The Relationship between innovation orientation and organizational performance,” International Journal of Innovation and Learning,” Vol. 10, no.3 2011. Copyright 2011 Inderscience Enterprises Ltd.

[vi] John P. Kotter, Leading Change, (1996)