Ron led a discussion on organizational transformation in pursuit of innovation as part of the CNEXT Generate Program for Senior…
Years after the Great Recession took hold of our economy, many companies continue to struggle as they work to adapt to the “new normal.” Shifting consumer attitudes, the rise of new technologies, gridlock in Washington, the challenges facing the European Union, and increased global competition complicate an already rocky road. Yet, I have found that despite the obstacles, there are companies that seem to keep pace with changing conditions and thrive. I believe a key factor in their success is the ability to define, shape and continuously renew their corporate culture in ways that allow them to adapt to the changing environment and succeed.
A Pragmatic Approach to Building A High-Performance Culture
Early in my career I learned that the concept of culture to drive performance often led to complicated organizational initiatives that would die of their own weight. Carrying out these initiatives lacked senior leader ownership and a pragmatic approach to reaching employees. All too often, the work of cultural transformation became hollow slogans, which failed to align the “stated culture” with what employees experienced.
Since then, experience has taught me that successful cultural transformation requires four essential ingredients:
- A common definition of what culture is and why it is important, which is shared by the organization’s leadership and ultimately the entire organization;
- A culture that aligns with the organization’s history, current internal and external challenges, and strategic aspirations and plans;
- A team of leaders who expend the time and resources to align the “stated culture” with the culture employees experience in their everyday interactions. Leaders must be committed to measuring the gap, and taking meaningful and visible steps to achieve this alignment; and
- An organizational ability to renew and evolve the culture to meet new challenges.
Defining What We Mean by Culture
Because company culture influences the way employees think, act and feel it is important that they understand how culture is defined and why it’s important. This is particularly true during times of great change.
In its simplest form, I define a company’s culture as “the way we do things,” which in practice translates to the values and behaviors we will encourage, and those that will not be tolerated in the context of:
- How we interact with customers and other constituents
- How we conduct our business; and
- How we treat employees and each other.
Culture can enable or block achievement of business strategy
Depending on how you define each element, your culture can help or hinder business outcomes in areas such as: customer loyalty, product innovation, market differentiation and crisis management. The cause-and-effect nature of company culture should not be underestimated. It touches all aspects of your business, your brand and reputation.
At its best, your culture can be a source of inspiration, pride and purpose for employees, which in turn can lead to greater productivity and higher levels of performance. However, culture that is not aligned with company strategy and not transparent to employees can lead to poor decisions and performance issues over time. Involving employees in defining your company’s culture is an important step in the process.
Leaders are the Architects of Company Culture
Building a new culture should never be left to chance. As leaders, we are accountable for shaping company culture and ensuring it is aligned with business strategy. The management processes, policies and practices we put in place will drive decisions and behaviors. For example, how you hire, develop and reward employees speaks volumes about your company’s culture.
In shaping culture, leaders need to create formal and informal mechanisms that together help to develop a core set of common beliefs and behaviors essential to a healthy culture. Formal mechanisms such as organizational structures facilitate decision-making, communication and workflow. Informal mechanisms such as peer-to-peer interactions and networks encourage discretionary effort and problem solving.
We must also commit time and attention to measuring the effectiveness of our actions and degree to which we are achieving the desired outcome. You’ll know you have succeeded in transforming the culture when the vast majority of employees say that in their division or business unit their immediate supervisor behaves in a way that is consistent with the “stated culture” of the company.
Company Culture Should be Regularly Renewed
As a CEO, I have seen first-hand how companies can hang on to certain ways of doing things while the world is passing them by. This is particularly dangerous in today’s rapidly changing environment where adaptation and innovation are essential to the long-term viability of most businesses.
Leaders must guard against cultural stagnation. Successful companies can be especially vulnerable to this predicament, as they become complacent over time. I believe companies should undergo a cultural refresh every 3-5 years by:
- Staying vigilant to external trends and conditions through customer outreach, research and data collection;
- Examining “the way you do things” in the context of the external environment through open, frank discussion with employees about what is working well and why, and what needs to change; and
- Implementing selective changes that preserve the strengths of your culture, while mitigating its weaknesses. Renewing your culture does not necessarily mean wholesale change. You’ll find that small adjustments are all you may need to restore organizational vitality and position the company for long-term success.
In the coming years, corporate America will continue to face challenges in the new environment. Making sure your culture is evolving in ways that will help your company thrive is an important step in that journey.