Inclusive Culture: how it affects Organizational Transformation

Introduction

In today's rapidly evolving business environment, organizational transformation is critical for companies to survive and thrive. Traditional transformation programs, such as restructuring, mergers, and acquisitions, often face high failure rates. Studies show that approximately 70% of business transformations fail, primarily due to a lack of effective change management and inadequate consideration of the human aspects involved (cfr. mi-3.com ).

In this article I would like to share some thoughts on inclusive culture I've been developing in more than 2 decades within the corporate world.

Inclusive culture plays a crucial role in ensuring that transformation efforts are not only successful but also sustainable. Organizations are made up of people. If we want to change organizations and have sustainable benefits over time, we must win their hearts and minds.

Defining Culture and Inclusive Culture

Culture encompasses the shared values, beliefs, and behaviors that shape how an organization operates. It influences decision-making, employee engagement, and overall performance. The culture is inclusive when it ensures that the needs of all stakeholders are broadly considered, creating an environment where everyone feels valued and empowered to contribute to the transformation journey.

An inclusive culture does not alter the ultimate goals of the transformation but adapts the roadmap to how the organization operates. It respects the company's history, values, and decision-making processes, ensuring a seamless transition from the past to the future.

Inclusive culture tailors the transformation journey to fit the unique characteristics of the organization. This approach ensures that the transformation process is not disruptive but rather a natural evolution. For instance, understanding the company's history and key values helps design a transformation roadmap that resonates with employees, fostering greater acceptance and engagement.

As reported in the article here attached (cfr. ?mi-3.com.au ), Gartner attributes transformation failure to the lack of a modern approach to data governance. Data does not drive transformation: data can help to read the transformation journey. People drive actions. People with their set of beliefs, principles, culture, and ideas can make or break transformation, not data. It is imperative to have a human-centric approach to properly address transformations. All the other elements (e.g., technology, data, infrastructures, etc.) are only enablers of transformation that can help a single individual to do better and/or more.

As rightly written 30 years ago by Janie Daniel Duck in the Harvard Business Magazine (Nov-Dec 1993 edition), “Change is intensely personal. For change to occur in any organization, each individual must think, feel, or do something different. Even in large organizations, which depend on thousands of employees understanding company strategies well enough to translate them into appropriate actions, leaders must win their followers one by one” (cfr. hbr.org ).

An important implication of what is above written is that the more a transformation is driven by those directly impacted, the higher the likelihood of its success. Employees are more likely to embrace changes when they are part of the decision-making process. While leadership defines the end goals, the execution should be managed by the associates who understand the day-to-day operations and challenges.

As reported by McKinsey in a 2021 study (cfr. mckinsey.com ), “organizations with successful transformation programs are more likely than others to embed transformation disciplines into business-as-usual processes.”

Too often, companies rely on external consultants to drive transformation, arguing that internal teams should focus on current operations. However, this approach can lead to a disconnect between the transformation strategy and the company's cultural traits. Instead, external help should temporarily support operations, allowing internal teams to lead the change. This ensures continuity and leverages the company's inherent strengths.

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Another important component of the engagement approach is communication. There is vast literature on the importance of communication in change management. As such, I am not going to repeat what experts much more entitled than me wrote about this topic. I can only say that everybody should play a key role in it.

Leaders are key, as they share the reasons for change as well as their commitment. The management is often the message. It’s with their actions and decisions that they show commitment and can influence (or not) the transformation.

In the above-cited article from Harvard Business Review, Janie Daniel Duck 30 years ago was already very clear on it (cfr. hbr.org ).

On the other hand, employees play an equally key role being at the other end of the communication channel. Explaining to them the reasons for change and being constantly updated on its progress helps to break down barriers and reduce the distance between the transformation active players and the rest of the organization. People are impacted by transformation. It is natural they are worried because it’s about their life, their families, their future. Keeping them out of the loop increases only concern and frustration.

Also, the way we communicate makes a difference. In the above-cited McKinsey study (cfr. mckinsey.com ), companies with successful transformations tend to communicate more face-to-face. In particular, emailing memos are less used by successful companies than by all other organizations.

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Successful transformations require time to develop new, robust roots that can sustain the organization. Embracing a long-term execution perspective allows for the gradual integration of new ideas and processes, minimizing disruptions and fostering sustainable growth.

A long-term approach to transformation involves setting realistic timelines and milestones, allowing for continuous assessment and adjustment. For instance, the transformation journey of General Electric (GE) under Jack Welch's leadership spanned over two decades. Welch implemented gradual changes, focusing on building a culture of continuous improvement and innovation. This long-term perspective allowed GE to adapt to market changes while maintaining stability (cfr. ey.com ).

Similarly, embracing long-term execution involves investing in continuous learning and development. Companies like IBM have successfully navigated multiple transformations by fostering a culture of lifelong learning. IBM's focus on upskilling its workforce and encouraging employees to adapt to new technologies has been crucial in maintaining its competitive edge over the years (cfr. digitopia.co ).

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Balancing new ideas with established practices is essential for successful transformation. While new employees bring fresh perspectives and can act as change agents, it is equally important to value long-term associates who carry institutional knowledge. Radical changes that dismiss the past can lead to the loss of valuable know-how, creating disruptions that can hinder progress.

One effective strategy is to create cross-functional teams that include both new hires and seasoned employees. This approach fosters a culture of collaboration and innovation, blending fresh ideas with tried-and-true methods. For example, Google's "20% time" policy, which allows employees to spend 20% of their time on projects outside their regular duties, encourages innovative thinking while leveraging the company's established practices.

Inclusive culture integrates the best of both worlds, combining innovative ideas with established practices to create a balanced approach. This synergy not only enhances the transformation process but also ensures that new initiatives are grounded in the company's core values and operational realities.

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Young associates from Generation Z and Millennials bring creativity, enthusiasm, and a new way of thinking. Their involvement in transformation programs can inject energy and foster innovative solutions. These generations are adept at using social media and modern communication tools, breaking down silos and enhancing collaboration within the organization.

Moreover, younger generations view work differently from their predecessors. They prioritize purpose, inclusivity, and work-life balance, and they expect their voices to be heard. Involving them in transformation initiatives not only leverages their technological prowess but also ensures that the transformation is aligned with future workforce expectations. This can lead to a more engaged and motivated workforce, driving the transformation's success.

I am always surprised to see how topics like ESG are seen differently by different generations. This is evident to me during the interactions I have with young colleagues. Older generations like mine consider ESG as something to be done because this is where the market is going. Younger generations are incredibly passionate about topics like sustainability, environment, and energy, because they really see it as an opportunity to change the world for the better!

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Conclusion

?Inclusive culture is essential for successful organizational transformation.

By considering the needs of all stakeholders and involving them in the process, companies can create a transformation journey that is both effective and sustainable. Key elements of an inclusive culture include:

• Adapting the transformation roadmap to fit the organization's unique characteristics.
• Engaging employees directly impacted by the transformation.
• Leveraging internal talent over external consultants for continuity.
• Fostering constant communication at any level.
• Embracing long execution timings for sustainable growth.
• Balancing new ideas with established practices.
• Involving younger generations to foster innovation and collaboration.

By fostering an inclusive culture, organizations can navigate the complexities of transformation and achieve long-term success.

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