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Organizations want answers to these three questions:

Leadership: How can we create the necessary leadership capacity in our “high potentials” to manage the necessary change?

Strategy: How can we create the kind of differentiating strategy that will translate into competitive advantage in our market?

Employee Engagement: How can we engage our employees in ways that will support new levels of personal growth and organizational performance?

All good questions. All “slightly” off the mark.??(Sorry about that.)

Here’s why. They all fail to leverage the most powerful lever at our disposal:??A strong and adaptive culture. We need to reframe each of these questions through the lens of culture – the most powerful and unifying force. But here’s the sobering reality. For most organizations – the level of chaos and complexity in their external world is now matched with the same level of confusion in their work culture. They are in total alignment – and that is not good.

What this usually means is that the culture – or how we do things around here – is held hostage by fragmenting forces that are unleashed in our increasingly uncertain work world.??In other words, complexity and the pace of change are the “givens” -- and meaning at work gets lost in the confusion. Here are just a few of the dysfunctional forces at work:

One – We are horizontally-challenged: Power, influence and access to resources still flow vertically – creating politicized and dis-empowered environments that capture too much of the psychic energy of the organization. The notion of “boss” is alive and well – creating artificial ceilings and psychological distance between the different levels of the organization. We need less hierarchy and more collaboration.

Two – We are function-driven: The specialization of departments and roles breaks up the “whole” in rational but equally diminishing ways. Functional excellence breeds an “us vs. them” mindset that allows job-driven loyalties to trump even modest efforts at collaboration. Invisible but formidable walls take the form of biases, preferences, and “expertise-driven” sub-cultures that no longer serve the overall business (and seem to create an arrogance that impedes a service mindset). It definitely impedes any kind of process orientation.

Three – We are reductionist thinkers: Don’t get intimidated by the word – reductionist. You need to learn it – grasp it wholly. We are “reduced and seduced” by the logic of breaking our problems down into their parts – hoping they will come back together neatly from our coordination efforts. Sorry. It works with fixing machines but not with creating change in complex organizations. Today, change is a complex and constantly evolving process that requires constantly evolving solutions. Our biggest challenges (e.g., poor morale, lack of??customer focus, etc.) need to be addressed holistically at the culture-level.?

It’s our only chance. Overall, forces like these create a fragmented culture that never fully develops into a strong center with enough gravitational pull to keep the organization “whole.” As a result, we live at the outer edges of our organization – pushing on well-intentioned programs to save the day. Without connection to a unifying center, we play the smaller game. We live at the porous edge of organizational life – where vulnerability and anxiety rein. In a world of complexity, chaos, and challenge – culture represents our best chance to thrive as we execute our strategies with the full force of a totally aligned organization.

Here’s a brief summary of what I have learned over the last ten years: Culture can have a powerful impact on performance but it must be framed and developed in a way that it can meet the diverse needs of our customers, employees – and the business itself. My journey, however, started with the wrong focus. My first attempts – biased by my immersion into the world of “lean” (over two decades at Toyota) – where heavily focused on process and continuous improvement strategies as the unifying force for transforming organizational cultures. The idea that the business could be transformed through operational efficiency was very appealing to leaders – and significant investments were made in “lean.”

Not surprisingly, these efforts were too narrow and the changes were not sustained. Too many things in the business system were out of alignment for the “process orientation” to carry the day. We also discovered that the operational efficiency focus was competing with our needs for innovation and new thinking.

We were making things work better – but we weren’t seeing the overall business improve.

While we did make some gains in operational efficiency for our clients – they did not translate into strategic efficiency. Strategic efficiency, by its nature, produces improved business performance. It is the organization’s cultural capability to translate its core strategies into differentiating results by "wholly" aligning the organization to the things that matter most.

Probably the best example of strategic efficiency in the “pre-pandemic world” was Southwest Airlines.??In fact, Southwest Airlines may be one of the best examples of how a culture can drive strategy -- and vice versa.??Their strategy was clear and simple: Short flights, convenient schedules, standardized “fuel efficient” aircraft, no food or frills, and low-priced tickets. Their consistent profitability in an industry ravaged by inconsistent financial performance created dozens of copycats. They could copy the highly visible elements to some degree – but could not replicate the Southwest culture.

We watched in amazement as planes came and went – with the front liners bringing an enthusiasm and engagement we just didn’t see in other service companies. No one was able to match the level of intensity, motivation, cooperation, coordination, teamwork, and empowerment that have been deeply embedded into the Southwest culture.??(Again, the chaos and complexities of an increasingly competitive and Covid-challenged world have put the SWA culture to test over these last couple of years.)

So, here’s the truth we must deal with:??Operational efficiency (while important) does not necessarily build a “strategically efficient” culture that can drive new levels of performance.?

So, what can we do?

When we lead through strategic efficiency, we keep our cultures connected to the realities of our business -- not extraneous programs that only feel good. When we lead through strategic efficiency, we protect the "whole" and don’t allow others to sub-optimize it through their part of it. When we lead through strategic efficiency we can effectively counter the three dysfunctional forces noted above (horizontally-challenged, function-driven, reductionist thinkers). When we lead through strategic efficiency we enable our cultures to meaningfully grow in response to what the world needs most (not our internal business needs and desires). We feel empowered because instead of a fractionalized culture leading us . . .

. . . we are leading the culture.

If leading through culture intrigues you, e-mail me at?[email protected] ?for the complete article that reveals more details about the process forward!

Onward,

Mike