By now most companies have made the cuts they are going to make to right size based on the economy and current business levels. The challenge most companies face is how to drive up performance with the staff that’s remaining. This article highlights the why and how to leverage culture as a way to drive higher productivity.
McKinsey and Accenture agree that culture (also called “Organizational Mindsets”) is one of three essential building blocks for high performance.
According to McKinsey research discussed in Managing Your Organization by the Evidence, accountability, clear direction setting, and a strong culture are the main ingredients that will generate sustained performance year after year. They report that fifty percent of companies will find the best performance results by focusing on these management practices:
- Articulate clear roles.
- Communicate an inspiring vision.
- Craft and manage an open and trusting culture.
Similarly, Accenture attributes high performance to these three building blocks:
- Market Focus and position
- Distinctive Capabilities
- Performance Anatomy: a set of organizational mindsets. “These mindsets drive important differences in behavior—by individual employees on up to those of the company itself—that lead to better business outcomes.”
Let’s look at the elements of creating an open and trusting culture that leads to having the right set of organizational mindsets. It’s a little more difficult than you might think, and here are a couple of reasons why.
- 1. Leaders assessment of the quality of their culture is often wrong. According to Dave Logan, the author of Primal Leadership, leaders are wrong about the quality of their culture by a level of two on a scale of five. This means leaders think that everyone in their organization believes it’s open and trusting but that’s not how people actually operate within it.
- Organizations lack alignment on priorities and values. An open and trusting culture requires everyone to be working off the same set of priorities and values. In today’s environment one priority is the pressing need to change the culture (the culture: how we do things). While this is a daily mantra for most top leaders, the disconnect is that the sense of urgency for culture change is dramatically reduced at lower levels inside an organization.
If you have taken on a leadership role only to find the organization seriously lacking a sense of urgency then you are in good company. John Kotter who is rated the number one “leadership guru” in America by Business Week magazine, in his current book, A Sense of Urgency, addresses this topic. While talking about urgency he says, people don’t recognize the immediacy of the problem or if they do then they point the finger at someone else with the result that the collective sense of urgency is often zero.
If you find this describes your organization then what can you do?
Here are a few suggestions:
- Measure and manage your culture as a strategic asset.
- Help all of your people understand the market challenge—engage them in the conversation.
- Tap your people’s shared values to fuel the change.
- Be a student of the game and recognize that culture takes time to evolve.
Measure and manage your culture as a strategic asset. It used to be that there was no real good way to measure your culture. That’s no longer the case. Assessment instruments like Values Centre’s Cultural Transformation Tools provide a diagnostic on the level of alignment between an organization’s personal values to the current culture values, and alignment between the current culture values and the desired culture values including a calculation of entropy. Entropy is the amount of lost energy in the system.
Using values as a base level of measure makes sense because our values—those things that we hold most dear—are our deepest source of motivation. Values alignment between a company’s employees and their culture is one of the best leading indicators for high performance.
Help all your people understand the market challenge – engage them in the conversation. Assume that your people want to truly understand the market challenge. Common reasons they don’t understand is they lack information or lack perspective. It’s the “can’t see the forest through the trees” syndrome.
Examples of how business models and markets are changing dramatically are everywhere in every industry. If you help your people find personal examples first, then with their eyes opened it’ll be easier for them to engage about what’s happening in your industry, and the need to adapt and change to these realities. Here are two personal examples:
- Redbox video kiosk replaces Hollywood video for video rentals in our town. The only Hollywood Video store in our town closed its doors and the RedBox video kiosks showed up down the street within the same month. While it cost $4.99 to rent a movie at Hollywood Video it costs just $1.00 to rent from RedBox. Talk about a paradigm shift!
- The disruptive business model of Progressive Insurance has sent State Farm into a tailspin. It’s hard to miss the amusing Progressive television commercials that feature the gal in white named Flo. Progressive is new, they have a centralized call center and do business over the phone and Internet. Contrast the Progressive cost model with State Farm’s model and it’s easy to see that State Farm’s model is expensive due to its physical offices and emphasis on a personal “Good Neighbor” agent model. It appears State Farm realizes the significance of this shift. Perhaps in response to Progressive’s television ads, State Farm’s television ads featured discounts of 40% “just call 1-800…”
This idea of using examples is just one way to get your people to understand the urgency of the need to change. The point is you must get your people engaged in a way that they open their eyes about the need for change. It’s probably a good time to adopt the idea that keeps Intel innovating, which is to be a bit paranoid. It’s a fair bet that if you don’t make your offer obsolete then a competitor will.
Tap your people’s shared values to fuel the change. Values are causal, meaning that each decision we make we refer back to our internal system (beliefs, values) to determine how we will respond. When leaders get this, and use shared values to stir the hearts and minds of their people, it’s like adding dry kindle to hot embers… you get fire and energy (passion).
Dave DeWalt president of McAfee understands this point well. When the McAfee board asked him to join as CEO they knew the financial scandal that had sunk the previous leadership had hurt the McAfee brand. With Dave they got a values-based leader. What did Dave do? The first day of work he stood at the front entrance of their Headquarters building and greeted and shook the hand of every employee who came to the office that day. Dave gets that values, like respect, are the heart of a company culture. Another of the values he models is honest communication and it appears this value of transparency has translated into positive results. With Dave at the helm McAfee turned in 16 quarters of consecutive growth. Impressive given the difficult economic climate and that security software is a mature category.
Be a student of culture. Culture is to a company, what personality is to a person; it grows and changes. Just as our experiences, commitments, and living in concert with our values shapes us personally, this is also true for a company. As with anything that is worthwhile, it takes patience, focus, and commitment to get results. This is particularly true with regards to culture.
Summary Thought leaders such as McKinsey and Accenture have identified business model innovation (distinctive capabilities) and culture as strategic weapons in the new economy. Executives are beginning to look at culture as a tangible asset to be measured, rather than a soft quality of their organization. To compete for talent and customers in the coming years, executives will need to place culture development on par with product R&D and other mission critical facets of the business.
Follow these steps: manage your culture, help your people understand the market challenge, tap their shared values to lead change, and become a student of culture. This approach will put you in play for the long term. You’ll see a mood change come over your people. They’ll see you engaging, caring, and they’ll respond with a greater sense of urgency and a greater willingness to go the extra mile. It’s these changes across your enterprise that will combine to drive up productivity.
Learn more about Culture Integration International: Companies that manage their culture increase revenue by four times over those that do not. At Culture Integration International we use our Culture Alignment Framework™ to provide our clients a way to maintain high levels of sales momentum and productivity while retaining and attracting key talent during periods of growth, acquisition, merger, joint venture, turnaround, or founder transition/succession.
 Managing Your Organization by the Evidence, (2006) by Keith Leslie, Mark Loch, Bill Shaninger, p.6 in the PDF file, https://solutions.mckinsey.com/ohi/_SiteNote/WWW/GetFile.aspx?uri=:/ohi/default/en-us/Files/wp1591276990/Managing%20your%20organization%20by%20the%20evidence_ea230b70-794b-43d0-b28a-8baa78d2ed2a.pdf
Performance Anatomy- Competitive Essence and Building blocks, http://www.accenture.com/Global/High_Performance_Business/Overview/BuildingBlocks/Competitive-Essence-and-Building-Blocks.htm
The Values Centre, www.valuescentre.com