Webcast Series:Part II

Crossing

Borders

Daniel Denison

Denison ConsultingAnn Arbor, Michigan

IMD Business SchoolLausanne, Switzerland

Daniel Denison’s newest book illuminates the cultural dynamics firms need to manage in order to remain competitive, including:

• Supporting the front line• Creating strategic alignment• Creating one culture out of many• Exporting culture change• Building a global business in an

emerging market• Building a global business from an

emerging market

“A milestone in the culture studies arena.”

-Edgar H. Schein

Available June 26, 2012!

Leading Culture Change in Global Organizations:Special 3-Part Webinar Series

Part I: Getting Your Own House In OrderMay 31, 2012 11:00 am – 12:00 pm EDTThis webcast will focus on Supporting the Front Line and Creating Strategic Alignment by exploring successful change initiatives.

Part II: Crossing BordersJune 28, 2012 11:00 am - 12:00 pm EDTThis webcast explores the challenges companies face in ’Crossing Borders’ to build effective cultures.

Part III: Emerging MarketsJuly 19, 2012 11:00 am - 12:00 pm EDTPart III of this webinar series examines the challenges — and unique opportunities — of implementing culture change in an increasingly relevant context: Emerging Markets.

What Is It All About?

Supporting the Front Line

Domino’s Pizza

Creating Strategic Alignment

”DeutscheTech” & Swiss Re

Creating One Culture Out of Many

“Polar Bank”

Exporting Culture Change Across National Boundaries

”GT Automotive”

Building a Global Business in an Emerging Market

GE Healthcare China

Building a Global Business from an Emerging Market

Vale

Preserve&

Strengthen

Invent&

Perfect

Unlearn&

Leave Behind

Rethink&

Try Again

Good

Bad

Old New

Changing CultureBy Changing Rituals, Habits & Routines

Lessons SurvivalCulture

Underlying Principles

Visible Symbols

Culture Reflects the Lessons

Learned Over Time

The Rain Dance

The Cargo Cult

Sacred Cows Make the Best Burgers

Mark Twain

How Habits Work

Cue Reward

Routine

Charles Duhigg, The Power of Habit

Charles Duhigg, The Power of Habit

Brain Activity in Rats

Brain Activity in Rats: The Learning Phase

Cue RewardRoutine

Charles Duhigg, The Power of Habit

Brain Activity in Rats: The Routine

Cue RewardRoutine

Charles Duhigg, The Power of Habit

Run straight, hang a left, eat the chocolate!

Tacit Knowledge

It got so bad they would bring dummies to the parking lots, dress them like managers, and burn them in effigy. “Alcoa was not a happy family. It was like the Charles Manson family, but with the addition of molten metal.”

O’Neill picked safety as one thing that unions and executives could agree on. Zero injuries. Injuries must be reported to the CEO within 24 hours.

“We killed this man. It’s my failure of leadership. I caused his death. And it is the failure of all of you in the chain of command”

Once you see everything as a bunch of habits, it’s like someone gave you a flashlight and a crowbar and you can get to work.

Paul O’Neill at Alcoa:Identifying Keystone Habits

Polar Bank

• Three entities: retail, project finance and private banking

• Three countries: Sweden, Norway and Denmark

• Industry that is consolidating

• You want to control your destiny

• One strong, synergistic culture will help you achieve that

Polar Bank

2004 Culture Survey Results

• You are the CEO of Polar Bank

• The 2004 results are your results.

• You want the retail, project finance and private banking entities to act as one bank.

• What do you do?

Taking Action

Created Strategy workshops Debated strategy Drilled down on issues Focused on what the units could accomplish together

Involved retail managers in the debate on public project finance strategy and vice versa.

Created one board for each of the three units as well as the overall company

Communicated importance of strategy and vision Made many speeches and site visits Used metaphors and popular culture

Made Strategy Consistent Acquisition Agreed on Polar Bank values

Ambition; Passion; and Teamwork

Creating the Polar Bank Vision

Leadership Development and Educational Initiatives Designed Leadership competencies model

Customer Orientation; Vision; Innovation; People Management; and Cross-boundary collaboration

Developed Leadership Program for senior executives with IMD Worked on their leadership skills Reflected on how to embed the leadership vision into Polar Bank

Rolled out 360-degree feedback program to support the leadership vision

Board received first feedback 450 managers have since received feedback

Innovation Set up clear innovation process and awarded first Innovation

Award in June 2006

Cascading the Vision & Strategy

Implemented a performance evaluation system that supported the vision and strategy

Included leadership development objectives with links to bonuses for the Top 100 managers.

Assessing the Impact

2006 Culture Survey Results

2004-2006Culture Survey Results

Intervene at the level of the governance structure. When you have major business units (BU) with strong and unique cultures, temporarily making their identical facilitates the transmission of consistent messages about the new strategy and culture.

Engage the different units actively in each other’s strategy development process. When striving to achieve one overall company culture, it is necessary that the different business units understand each others’ strategies

Institute a job rotation process. Spreading best practices and building connections across the BUs is facilitated by job rotation.

Make HR decisions on those managers who do not align with the new strategy relatively quickly. On the one hand it is important to give people a voice. On the other hand, if they are not on board with the change in a reasonable amount of time and they remain critical, it is time for them to part ways with the company.

Allocate resources in line with the new overall strategy Budget allocation is an important tool to align operational decisions with the strategy.

Align performance evaluation system to reflect new strategy. The performance evaluation system should be designed so that the behaviors that are aligned with the new, desired culture are rewarded.

Lessons Learned: Polar Bank

GT Automotive

• Over $2.9 Billion sales and 16,000 employees in 27 countries

• Three major automotive businesses

Brake & Fuel Fluid Carrying Systems Fuel Systems HVAC Fluid Carrying Systems (smallest and focus of this case)

• HVAC (Heating, Ventilation & Air Conditioning): 3000 employees

$200 million sales Over 95% sales in NA and EU Small presence in SA and new presence in Asia Case A: Transforming a Corporate Culture (North America) Case B: Building a Global Team (Europe)

GT Automotive

• S&H Fabrication (HVAC) was acquired by GT in 1998

• Culture change initiated in 2003

• New VP & General Mgr. (ninth leader in 5 yrs.)

• Feedback from long service (over 15 yr.) employees

Innovative and entrepreneurial culture of S&H replaced by slow, bureaucratic structure of TI Automotive

Management not interested in HVAC Frustrated with implementing TI procedures and TI personnel

would not listen to their concerns and recommendations “We are the red-headed step child of TI” Concerned about the future due to limited progress diversifying

the customer base (95% GM) and recent personnel reduction.

Initial North America Culture Issues

2003 Survey Results

From From Analysis to Action

Priority Structure

1. Involvement Involvement Meetings

identify issues

2. Teamwork Business Teams take action

Involvement Meetings: Initial Implementation

• Involved most salaried employees in North America

• First Meeting

• Reviewed Survey Results: Identified top 3 improvements and specific actions to support

• TOP 3: Vision, Strategy, Change

• Defined initial HVAC Vision

• Second Meeting

• Status report on Denison improvement progress

• Reviewed HVAC Strategy and defined revisions

• Defined HVAC objectives for following year

Business Teams

• Cross-functional teams defined and empowered to support our HVAC Vision.

• Two types of teams exist:• Customer teams: regional and/or global (Ford, GM, Chrysler,…)• Non-customer / support teams: regional and/or global (Purchasing, Technology)

• Business teams drive final definition and implementation of HVAC strategies, priorities and supporting objectives

• Teams openly share information within their team and, where appropriate, across the regional / global organization

• Business teams possess complete responsibility and authority to constructively complete their objectives

• Business teams clearly identify when management support is necessary

2003 2004

2003-2004 Survey ResultsHVAC North America

Building A Global Team

2004 European Survey Results

European Survey Results2004-2005

• Initiation of team structures (business teams)

• Alignment of vision, strategy, objectives & rewards

• Implementation of Denison survey & formal action planning

• Involvement meetings & business team meetings

• Establishment of extensive capability development system

• Extensive reward and recognition systems

• Regular communication and team activities

Common Themes For Culture ChangeNorth America & Europe

www.LeadingCultureChange.com

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Leading Culture Change in Global Organizations:

Special 3-Part Webinar SeriesPart I: Getting Your Own House In OrderMay 31, 2012 11:00 am – 12:00 pm EDTThis webcast will focus on Supporting the Front Line and Creating Strategic Alignment by exploring successful change initiatives.

Part II: Crossing BordersJune 28, 2012 11:00 am - 12:00 pm EDTThis webcast explores the challenges companies face in ’Crossing Borders’ to build effective cultures.

Part III: Emerging MarketsJuly 19, 2012 11:00 am - 12:00 pm EDTPart III of this webinar series examines the challenges — and unique opportunities — of implementing culture change in an increasingly relevant context: Emerging Markets.