Winning-culture_positioning-paper_110802

Copyright NDUNA 2012. Reprint with permission. Winning Culture – positioning paper

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If culture is the DNA code for

WINNING COMPANIES organizational genetic engineering

is the business we are in

BY SOREN LETH-NISSEN, PRESIDENT AND FOUNDER OF NDUNA

FRANK DYBDAL LILLEORE, PhD AND ASSOCIATE PARTNER IN NDUNA

Brutal Facts on Winning Cultures

According to a surveyi of 365 companies in Europe, Asia and North America, culture plays a crucial role in creating competitive strength and high-‐‑performance.

Nearly 70% of business leaders agree that culture provides the greatest single source of competitiveness.

Actually, more than 4 of 5 leaders believe that an organization lacking a high-‐‑performance culture is doomed to mediocrity.

Despite those facts, fewer than 10% report that their company can rightfully be described as a winning culture.

Is that because mediocrity is seen as salient, or is it because transforming a mediocre culture into a winning one is not as easy as it may sound?

Since we assume that no-‐‑one leader wouldn´t like to win, we choose to believe in the latter.

Here is why.

Cultures Don’t Change – They Learn and Adapt

The founding father of the notion “corporate culture” Edgar Schein already in the 1960’s pointed out that organizational culture is a product of what the members over time has been led to believe is the formula for success in the organization. Moreover, we learn from Schein that organizational culture has two important functions:

1. It keeps the organization together by producing an integrative glue of shared beliefs and an common identity

2. It differentiates the organization from its environment and sets up mechanisms for interaction and exchangeii

Both functions are key to understand when dealing with analysis and intervention into organizational culture – the job of organizational generic engineers.

Firstly, when we are dealing with the very core of the company existence, what is, and what can be, is not completely up to leaders to decide. Culture is at the same time stronger and more elusive than that. The truth is that any new culture has to – and must be – build on top of the existing.

Secondly, to understand and to change company culture, a thorough examination of the mechanisms for interaction with the external environment is pivotal. All too often, the outside-‐‑in perspective is missing in cultural interventions. Nevertheless, as a cultural system to a large extent is self-‐‑referential, the path to change is to go beyond borders and take a fresh outside look into the organizational realm. Often only to discover the bitter truth that what has formerly been seen as self-‐‑explanatory and unique barely is any of it. The cobwebs of the organizational mind must be cleaned out to create mind space for new thinking and next practices.

In sum, the unique values and deeply rooted believes of the company cannot be erased or extinqed. But often the culture is in dire need of re-‐‑articulation, re-‐‑inactment, and re-‐‑positioning vis-‐‑a-‐‑vis the important stakeholders to become a winning one.

That is exactly what organizational genetic engineers do.

In order to create a winning culture the three main challenges is to:

I. Unearth and assess the existing culture II. Define the mindset and behaviors of the new

winning culture III. Adapt and re-‐‑channel the existing culture into a

winning culture

We take a closer look at each of the challenges in turn.


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I. Unearth and Assess the Existing Culture

Make no mistake: There is no neutral ground to analyze company cultures on. All methods and tools are infected with assumptions, limitations and bias. And since we are not aiming to back new grounds in social science but are in the business helping business, the assessment criteria should be pragmatic and cost conscious when choosing analytical methods. So ‘good enough’ may be just that – good enough.

We do not believe in qualitative or quantitative research methods – we believe in a meaningful and sound combination. That is, triangulation.

Observation of “in vivo” management decision making processes and in-‐‑depth interviews with key informants using an ethnographic method based on sociological and anthropologyiii is powerful to firmly grasp the complexity and schisms of the organizational realm.

But in order to gauge the prevalence of and relative strength of certain values and beliefs, questionnaires with metric scaling building on a well-‐‑founded generic cultural model is invaluable. So we do both. And do not mind being labeled ecclectists.

Further, we utilize a comprehensive systemic model with pre-‐‑defined structural elements and causal relationships – the Burke-‐‑Litwin frameworkiv -‐‑ for assessing organizational performance and change. Moreover, we argue that a cultural assessment using a tool like Cameron & Quinn’s Organizational Culture Analysis Instrument (OCAI) considerably adds value to understanding the dynamics of what is, and what can be, when speaking culture change.

We believe that the best validated, time-‐‑proven models so far are just good enough when mapping the territory for a new winning culture. So what is then exactly a winning culture?

II. Define the Mindset and Behaviors of the New Winning Culture

Extensive research has been conducted to disentangle the winning, excellent, or high-‐‑performance culture. Some consensus has emerged over time. Though, we are not that focused on definitions and the exact description of the key traits of the winning culture. A formal definition is just an abstract outline of something far more complex and contextually embedded than any 4-‐‑8 bullet description. A winning culture goes beyond any formal description – ultimately a winning culture is a collective emotionally charged psychological reality that only in-‐‑crowds can experience.

That being said, we dare to make a few simplifications to get off the ground. Because there actually is a few signifiers that are common to winning cultures -‐‑ and only to winning cultures. We call them genomes of the winning culture.

Genome #0: Winning Cultures Don’t Just Win

This first one is out of range, but perhaps the most important since it is the one often neglected exactly because of the focus on winning. A winning culture does not just win. Actually winning and high-‐‑performance is merely a positive by-‐‑product of something more important, namely a unique corporate soul or identity. The heart of the winning culture is not about winning but about being and belonging to something truly unique that cannot be invented or imposed. The corporate soul dwells in the heritage and life story of the company, and it deeply connects the members of the organization. That creates the “winning personality”. Personality comes first, and winning follows, but both are intrinsic to the winning culture. A company can have a strong personality and soul, but still underperform if it lacks the set of values and behaviors that motivate people to do the right things. Similarly, high-‐‑performance behaviors pursued independently can drive the organization into a permanent stress mode and harm the connection that people feel with the company.

Genome #1: Juvenile playfulness

Next, we see that a winning culture is able to evade the pitfalls of the maturing, stagnant culture. It retains elements of its innate juvenile lust for learning, experimenting and challenging the existing state of things. Thus, it is partly “anti culture” since a growing culture naturally will emerge into more complex, more inwardly oriented, and more stable stages. It keeps simple things simple. And do not overcomplicate complex matters. A mindset of simplicity.


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Genome #2: High aspirations and passionate energy

Now here is one that goes directly into winning. In winning cultures people are never satisfied with status quo – tomorrow can and must be better than today. Setting ambitious targets, comparing and competing to make better is a strong driver of results and progress. Energy levels are high and fueled by achievement – not the other way around. The sense of fulfillment that comes from winning is the source of the passionate energy inherent in winning cultures.

Genome #3: Empowerment and trust

In winning cultures authority is delegated to where the business results are created. Encouraging people to make sound judgement calls and act on behalf the whole company is a principle that is carried through and culturally embedded in norms of trust and reciprocity. This reduces that need for formal control system and bureaucracy. It saves costs and means that speed and execution is way up.

Genome #4: Clarity, Consistency and Conse-quence

This one links to and supplements what has just been stated above. The fact that authority is delegated should not be confused with that responsibility is dispersed. On the contrary – responsibility follows authority. Being responsible for a given outcome means for instance that if KPI’s are not met, consequences will be incurred. Those consequences – positive and negative -‐‑ are made clear and accepted together with the ownership of outcomes. In winning cultures people often themselves propose what positive and negative consequences there should be linked to meeting and not meeting certain targets. Possible explanations for failure are only relevant from a learning perspective, not from that of performance assessment.

There is another aspect to this. When it comes to breach of social norms and values of a winning culture this is not only an issue to be dealt with by management. In winning cultures socialization and social control is strong, so people will respond directly to colleagues showing neglect of core values and behaviors out of sync with the culture. Ultimately transgressors are expelled from the community.

Genome #5: Stakeholder centricity

Contrary to mediocre cultures winning cultures are extrovert. Winning is measured in terms of value creation for stakeholders, say customers. Everybody understand and appreciate that levels of profit and wellbeing is solely determined by how valuable external constituencies see the relationship and services of the company. Stories, heroism, artifacts and other cultural assets very much reflect that the

customer is king. Winning cultures therefore also has a wake eye on competitors – staying ahead of competion is very much of heart of the corporate soul. Winning does not rhyme with being number two. And being a bit paranoid does not necessarily mean that nobody is after you.

Genome #6: Individuals who team

Despite the strong corporate soul and high trust levels in winning cultures, collectivsm is not seems as a good in itself. People are there to do things of value to stakeholders and the company because they find it meaningful, so they are primarily focused on fulfillment of their tasks and objectives. That being said, there is a strong sense of cooperation since is becomes very clear that rarely anyone in any sizable company can perform on their own – it even seems as if the organisational structures and performance systems are geared towards driving people together to overcome interpendencies and suboptimization. People in winning cultures are conscious of the balance between give and take – if they realize that they are teamed with a free-‐‑rider, there is little hesistancy to move on. This links to what has been said earlier about social control.

DNA Code of the Winning Culture

To sum, the six genomes of the winning culture forms a DNA code that can interpreted in a general cultural assessment model (Competing Values Framework, Cameron et al 2006v) as illustrated below.

Observe that all four dimensions of the framework are covered by the six cultural genomes, indicating that the winning culture is a balanced and complementary one. Then look again. The genetic code of the winning culture is richer on the diagonal axis cutting through the Collaborate and Compete


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dimensions. This reveals that the ”secret” of the winning culture is that the two seemingly contradicting forces of ”internal, people focus” and ”external, customer focus” are working in tandem to propel the success of the company. This links perfectly with the insights from Schein stated above: we should look for the cultural key mechanisms among the transactions and exchanges in and out of the organiation. The other two dimensions Control and Creativity are present, but they are subordinated to the social activity in and out of the company. Governance structures and innovation are means to ends. People and Customers are the real deal. This suggests that the endless discussion of putting people or customers first has reached a verdict: Put people together with customers.

Applying the Winning DNA Code to a Specific Company Culture

Of course, the actual expression of the genomes described above within a specific company will vary. Take ”Stakeholder Centricity”: A consumer product company may focus on the customer by blanketing the office with life style posters featuring its target customers. A professional service firm might send out a weekly update on important clients.

The true test of a winning culture is whether expectations of high performance – and the heartfelt desire to win – are understood, accepted, widely shared and enacted through coherent behaviors across the span of the company’s activities. The exact expression of these winning behaviors in a specific company context must be specified more closely.

Charting the gaps and idenfifying the pathways to enhancing an existing mediocre culture to a winning one is partly an analytical, partly a creative process. Here are some points of departure.

III. Adapt and Re-channel the Existing Culture to Win

As mentioned earlier culture cannot be changed, but through cultivation and discipline it can be adapted and it can adopt new mindsets and behaviors. Like humans – changing believes does not happen by command but eventually by inspiration and proof. Seeing is believing. Doing is acquiring new behaviors, thereby breaking in new habits. Cultural leadership is all it takes – and that is a whole lot.

It starts with a clear-‐‑cut idea of what type of culture the company needs, identifying the specific norms and behaviors that go along with it. Then it is about focusing on the drivers that shape and influence culture rather than attempting to change culture itself, since that would be trying to swim up-‐‑stream a waterfall.

We see a handful of steps that to some extent are sequential but once introduced take iterative adjustments as the process unfolds. Note that the steps in the following are generic to culture change but the description under each of them reflect moving towards a winning culture.

The point not to be missed here is that the way a cultural adaptation process is designed must take into consideration the desired resulting culture – the way we work with culture will impact culture itself. Subject matter and method are intertwined in culture work. This is something that rarely is observed in mainstream change management literature.

1. Set the Direction for the Winning Culture

The results from assessing the current culture and describing the specific behaviors must be baked into a compelling transition story. The transition story should at the same time reassure that the unique corporate soul remains intact and clearly state the need for adopting specific new behaviors that will turn current practices into winning ones.

The transition story must be told and otherwise conveyed in various ways to both provide overall messages at a company level and – evenly importantly – be cascaded to a unit, team, and even individual level in order to provide guidance, involvement and ownership.

The transition story must be phrased as an open invitation to everybody. An invitation needs a reaction from the receiving party. Accepting the offer means that you are joining the party. Turning the invitation down means that the party still will take place – but without you. Same story if you choose not react to the invitation. Consent is mandatory.

2. Galvanize the Leadership Team for the

Cultural Crusade

A wide range of factors influence culture, and leadership is the single most important one. What leaders do and say – in that order – consistently over time shapes culture like nothing else. Therefore, the leadership team must stay close throughout the transition period. If the stretch between what is and what will be is relatively large even small cracks in rhetoric and management conduct eventually will undermine the whole new construction.

It is a universal norm that action speaks much louder than words. And if the two differ action always has the upper hand. So before walking the talk, the leadership team has quite a lot of talking the walk to do. How should resistance be handled? What should be the consequence of people or units not meeting new performance measures – is there a second chance when not being first in a winning culture? Which occurrences


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or conditions could justify exceptions to the new regime – if any? When it comes to creating a winning culture those questions cannot be taken lightly – our advice would be to demonstrate “tough love”. Also internally in the leadership team should that be necessitated.

3. Kick-start New Behaviors in the Organization on a Business Agenda

A culture of accountability and performance is best achieved by holding people accountable for results and actual delivery, rather than spending efforts on running a “culture change programme”. Again, the change method must in itself reflect the theme of the change at hand. In winning cultures the focus is on action and real achievement so let it be that way.

The simplest way to initiate the transition is to change the KPI’s in the level 2 management layer to reflect the desired behaviors and results. Spice that up by doubling the consequences of meeting and missing KPI’s. Make sure that a fair share of the KPI’s are interlinked and shared where interdependencies calls for teamwork and common effort. This cocktail most likely will trigger an avalanche of changes in performance schemes down the lines. Behavioral domino.

4. Drive Change by Managing Cultural Drivers

Now here is a job to be done by the leadership team. The transition can indirectly be impacted dramatically by redesigning processes, roles, performance management, performance metrics and incentive structures. Also HR practices around promotion, recruitment, talent development etc can help speeding up the transition.

Pull as many levers as possible to thrust the organization and behavior in the direction of the winning culture. Attrition and recruitment directly aimed at creating the new culture is indeed powerful – it demonstrates the resolve to move beyond the point of no return and will turn up the heat on any lukewarm followers. Increasing the non-‐‑voluntary turnover by just 5-‐‑10 % will work wonders – guaranteed.

5. Communicate, Celebrate – and be Relentless

Cultural change can be a long haul – and one that requires tireless leadership. Transitions that go deep into realigning the corporate soul with a whole range of new winning behaviors will easily span 2-‐‑3 years time. That is, if things go smooth. The smoothness is fueled by consistent, sustained communication and reinforcement of the new behaviors, demonstrating over and over again that they indeed are winning.

Victories and important milestones should be celebrated appropriately – but resist the temptation to declare victory outright. Tuning and pruning is always needed on an ongoing basis.

As a former CEO reflected after 6 years of transition efforts turning an aristocratic, highly departmentalized and silo-‐‑thinking company into a flexible matrix-‐‑organized market-‐‑driven innovator: ”My job nowadays is that of a gardener – though, not to cultivate and fertilize the soil. But to start up the hedge trimmer every now and then when for instance small departments and permanent project groups start creeping back in on our hard earned flexible ways of organizing ourselves”.

i Source: Bain survey, 2006 ii Schein, E. H. Organizational Culture and Leadership. (2004) 3rd edition. CA: Jossey-‐‑Bass. iii Geertz, C. (1973) The Interpretation of Cultures. New York: Basic Books iv Burke W W & G H Litwin (1992). A Causal Model of Organizational Performance and Change. Journal of Management. 1992, vol 18, No. 3, 523-‐‑545 v Cameron, K S, Quinn R E, Degraff J, and Thakor A V. (2006) Competing Values Framework – creating value in organizations. New Horizons in Management.

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