Power of Culture

… Did you ever wonder how your company's culture – that set of thoughts, norms, behaviors and their underlying beliefs that determines "the way things work around here" – came to be? Or why, when you try to change it, it seems so resistant? Well, here's a little story about a scientific experiment that shows how culture comes into being and why it is so resistant.

The experimenters began with a cage. Inside the cage, they hung a banana on a string and placed a set of stairs under it. Five monkeys came into the cage. Before long, one of the monkeys started to climb the stairs toward the banana. As soon as it touched the stairs the experimenters sprayed all the other monkeys with really cold water. When another monkey made an attempt to get the banana they again sprayed the other monkeys with cold water. After a while the monkeys prevented any of their group from going after the banana.

After the cultural prohibition against "going for the banana" had been established the experimenters put away the cold water. They took one of the original monkeys out of the cage and introduced a new one. Upon spotting the banana the new monkey went after it. To its surprise and dismay all of the other monkeys attacked it. After another attempt and attack the new monkey learned that if it tried to climb the stairs and get the banana it would be assaulted and so it stopped going after the banana. It had been acculturated, assimilated into the cage's "don't go for the banana" culture.

Next the experimenters removed another of the original five monkeys and replaced it with another new one. The second new monkey went to the stairs and predictably it was attacked. The first new monkey took part in this punishment with enthusiasm! Similarly a third original monkey was replaced with a new one, then a fourth, then the fifth.

Every time the newest monkey took to the stairs it was attacked by the other monkeys. Most of the monkeys that were beating it had no idea why they were not permitted to climb the stairs or why they were participating in the beating of the newest monkey. After all the original monkeys were replaced none of the remaining monkeys had ever been sprayed with cold water. Nevertheless, no monkey ever approached the stairs to try for the banana. Why not? Because as far as they knew: "That's the way it's always been done around here."

 And that is how a company's culture unfolds: Acceptable and unacceptable behaviors are initially established in response to important external events but, over time, all that remains are strongly-held notions about what is and what isn't acceptable behavior. The origins of these beliefs vanish with the departure of the members of the group who were present when the patterns and standards were initially established. In a long-lived organization, there might be no members left who know why a given behavior is considered acceptable or unacceptable. Yet all members of the organization are quick to enforce whatever the cultural standards might be.

According to McKinsey 7 out of 10 strategy implementation initiatives fail as they do not deliver the expected value.

What is the reason for that?

Actually in most cases it is not because the strategic plan was lousy or the communication plan was poor. In most of the cases (70%) it is because of culture.

What is culture? Culture can be seen as the personality of an organization, a shared set of thoughts, behaviors and their underlying beliefs of what gets awarded and punished and its symbols.

If you think about breaking your own individual habits, you can imagine how tough it would be to change the collective pattern of an organization.

At the same time many people consider culture as the soft and fluffy side of the business and try to ignore it while focusing primarily on the hard side (strategy, structure, governance) when in fact culture is the single most important success factor to any organizational transformation. As many studies and our own experience tell us it is a make or break.

As the monkey example above shows invisible, unwritten rules have the power to guide our collective behavior and it is that collective behavior which drives ultimately the sustained performance of an organization. I would, therefore, argue that culture does not only ‘eats strategy for breakfast’ as many claim, it also eats ‘structure for lunch’ and ‘governance for dinner’

Obviously, every organization has a culture. It might be there by chance or by design, in many organizations it is actually there by chance. It might work for us or against us, in many organization it works against the organizational strategy and vision. If it should work for you, you need to align it to your strategy and orchestrate carefully how it unfolds.

How can you change a culture? As much as you cannot make a racehorse out of a farm horse you cannot transform a culture along all dimensions. You need to build on some elements from the past that will be still important to your future success while adding a few culture dimensions that are new.

In doing so still too many organizations focus on management by announcement with generic values (integrity, fairness or transparency) and wonder why employees still do what they have always done and the systems, processes and structure still reinforce the old culture.

If you want to change a culture, it is not about generic or even well-crafted statements. Often times companies start out with with fanfare and promises and end with fizzle and disappointment. If you want to change a culture, you need to define the target culture state in the light of your organizational strategy (with concrete and tangible behaviors that are observable and tangible) and adjust the emotional experience your employees make.

It is our experiences that shape beliefs.

It is those beliefs shape actions and

It is those actions eventually shape results.

Changing an emotional experience is first and foremost about consistent good leadership behavior, in particular in difficult moments (Moments that Matter or Moments of Truth). In many cases it helps to get people with a fresh growth mindset and outside-in view in key leadership positions. As a Senior Leadership Team you need to become aware of the collective unwritten rules in an organization, purposely replace some of the dysfunctional beliefs with new functional beliefs, commit to those behaviors and ensure your leaders Showcase the new culture in their daily behavior and receive regular feedback.

As a next step you need to align all reinforcing mechanisms (processes, systems, governance, goals, communication, incentives, talent management …) to your target culture.

Last but not least a word of caution. For business executive it is a real tough job as strategy and culture are almost the opposite dimensions.

Most of senior executives learned during their time in business school traditional methods on management (strategy, marketing, finance, data, science, technology and portfolio management). These disciplines are important, but only half of the equation. In those decision sciences senior executives have learned to quantify business problems, but as we learn from reality ‘not everything that counts can be counted and not everything that can be counted counts’. The other side of the equation, often times the game changer, is culture, leadership and organizational health.

• Strategy is market-driven outside-in, rational, and about the future whereas
• Culture: people-driven, inside-out, emotional, about the past experience

The safest bet you can make on a successful transformation is to have leaders in place who are able and willing not only to be good managers setting up a solid strategy but also good leader who inspire people and shape the emotional experience their people make.