Trust: key for successful culture transformation to unlock data value

Cultural transformation

Through my interaction with customers, I came to the realization that for data to be a true strategic asset, a deep cultural transformation is needed across the organization. Such changes are never easy, yet six fundamental areas of change are needed: agility, data-driven decisions and processes, data as strategic asset, tech intensity, DevOps everything, and inner-sourcing.

Future articles will expand of each one of those transformations, this article focuses on the issue of Trust, which is the lever that makes culture change possible.

Trust as the key ingredient for success

Many organizations have a trust issue that leads to workers being treated as cogs in the machine. Organization that wants to innovate should take inspiration from natural processes such as evolution, that has proven successful at adapting to changes over billions of years, rather than inflexible industrial manufacturing analogies.

Employees have deep rooted desire to live and work in environments in which trusting relationships and trustworthy behaviors are the norm rather than the exception. Doug Stilwell [1]

Trust is a reinforcing process that is uneven across organizations. When trustworthy behaviors are modelled and reinforced, they eventually become the cultural norm. But the opposite is also true: dishonesty, incompetence, lack of integrity or negative preconceived notions about human behavior can lead to a climate of mistrust.

Trust can be conceived as a lever that facilitates or hinders cultural transformation [1]. High trust leads to more willingness to adopt the new way of working, whereas low trust can block progress of even the best strategies.

Here’s why trust is important to the six culture changes needed to maximize value from data:

• Agility: management need to empower employees to experiment and fail and trust that this learning culture will increase productivity and adaptability. Employees need to trust that even failures in the spirit of experimentation will be rewarded.
• Data-driven people and processes: employees need to trust that the organization has good intents in collecting the required information and will make use of it for the benefit of all stakeholders including workers.
• Data as a strategic asset: management need to trust the enterprise and provide transparency by giving access to key data source across the organization. Lack of trust lead to data silos and the inability to leverage the data for strategic value creation. Good governance and security foundations is a more robust way to control data security risks than data hoarding.
• Tech Intensity: management need to trust that funding employee skilling is a good investment. Even if there is always the risk of employees leaving after acquiring the new skill, for most employees, such investment increase loyalty, decrease turnover, gives competitive advantage and generates long-term agility [2].

The only thing worse than training your employees and watching them leave is not training them and having them stay. Henry Ford [3]

• DevOps Everything: management need to trust all developers to commit artefacts that can deploy all the way to production without onerous manual validation processes.
• Inner Sourcing: management need to trust the developer community that sharing access to the broader code repository is not a security risk nor an impediment to productivity but instead results in better collaboration and more innovation.

Does your organization suffer from systemic trust issues?

Here's a list of red flags that can indicate trust issues:

• Inequity: If your individual contributors, unionized employees, or contractual workers are not treated with respect or different subgroups are unfairly discriminated, then self-protection will be a blocker to innovation. Organizations should implement diversity and inclusion best practices and rebuild the trust to empower every employee to reach its full potential.
• Below market value compensation: If your employees are overworked for salaries below industry average, your culture does not value and trust employees to their actual worth. Industries such as gaming and accounting are known to burn new grads and replace them by new batches of graduates every year. With shrinking workforces in developed countries, the different expectations of today’s generations, and the technological transformation, organizations should re-evaluate their workforce strategy and stop treating employees like commodity.
• Task-based micro-management: If your employees are tasked and measured on the execution of small units of detailed work within the organization’s core value chain, then they are not empowered to innovate and improve the system. The organization should look at outcome-based management practices.
• Micro-management by metrics: If your employees must contend with a deluge of KPIs that tract their activities and outcomes, then productivity will be wasted on reviewing those KPIs and when compensation is impacted, gaming the KPI system. A typical example would be a sales force automation that mandates detailed data entry without helping front-line salespeople sell better [4]. Such strict measurement systems enforce the status quo and a specific way of working rather than empower and trust employees to deliver the outcome with room open for innovation in the way to accomplish this work. Instead, the organization should look at a short list of OKRs with metrics that directly map up the hierarchy to business objectives.
• Strict role definitions: If your employees have very precise job descriptions due to hierarchical command-control structure or as an outcome of union mandates, then employees have limited to no option to innovate. The organization should look at making the definitions outcome-based rather than task-based, and institute a process to empower employees to contribute to continuous improvement activities. Unions with a true focus on employee wellbeing should be receptive at humanizing and empowering their membership.
• Hierarchical power: Directive and authoritative leadership lead to cultures of consistency and compliance that leave no room for flexibility and innovation. In Hofstede’s cultural dimension theory [5], organizations and societies with high power distance place high emphasis on people of power to make or approve decisions. This creates dependence, gate keepers and privilege to the people in power that goes counter to the trust and acceptance needed across the organization to innovate. Organizations should create a system within the societal acceptability boundaries to foster independence of thoughts, solicit bottom-up feedback, enforce openness of directors to different opinions and find ways to accelerate information flow within the organization [6].
• Fixed mindset: Fixed mindset leads to cultures where individuals avoid challenges, take criticism personally and feel threatened by the success of others. An example would be a corporate climate with excessive competitiveness for limited resources such as bonus, promotions, surviving layoffs, executive attention, etc. Research by Google [7] finds that effective teamwork, a prerequisite for innovation, requires the psychological safety where members take risks and feel vulnerable in front of each other. The organization should try to develop a growth mindset that will foster higher level of trust.

The Toyota NUMMI Example

Cultural transformation is possible and the example NUMMI, a joint venture between Toyota and General Motors, founded in 1984, is enlightening and proves that even in the traditional unionized industry of manufacturing, empowering, and trusting employees can yield amazing business results: [8]

• Teamwork was instituted in small teams with rotation to break the monotony of the tasks. Team leaders would brainstorm area of improvements and workers who made cost-savings suggestions would get a bonus.
• Continuous improvement was in the hand of the workers. Each step was streamlined and made comfortable for the workers to increase efficiency.
• Focus on quality not quality. Workers were empowered to stop the production line at any time and call for a team leader to help resolve an issue. Unaddressed problems are much more costly to resolve later in the process than right at the time it’s discovered.
• Low absenteeism: workers embraced the new way of working and absenteeism fell from 20% to 2%.
• Business impact: Defects dropped to the lowest of all GM plants and huge cost savings were realized. A study found that 50% fewer workers were needed than the original production system.

Conclusion

How's the cultural transformation going in your organization? If your organization feels a need to rebuild trust, I highly suggest this recent article from HR: Don’t Let Cynicism Undermine Your Workplace (hbr.org)

Here's a good video that explains Microsoft's story.

[1] The Systems Thinker – Trust As A Systemic Structure in Our Organizations - The Systems Thinker

[2] Employee Training as an Investment, Not a Cost | Hughes

[3] Often attributed to Henry Ford, however not traced to a reliable source according to the Benson Ford Research Center at The Henry Ford. Henry Ford Quotes - The Henry Ford

[4] 5 Reasons Salespeople Hate CRM | Yesware

[5] Power Distance Index; High Power Distance Culture; Low Power Distance (culturematters.com)

[6] Asst. Prof. O?uzhan Aytar, The Influence of the Power Distance on the Innovation. Innovation Principles and Practices (pp.31-49), March 2020. (PDF) THE INFLUENCE OF THE POWER DISTANCE ON THE INNOVATION (researchgate.net)

[7] re:Work - Guide: Understand team effectiveness (rework.withgoogle.com)

[8] Case Study: Lessons from the Toyota Production System - Propel Solutions