Pursue Growth & Learning Series - Article Takeaways: “Culture is Not the Culprit”

05/04/2016     

Below are key learnings from the article ‘Culture is not the Culprit’, written by Jay W. Lorsch and Emily McTague, published in the April 2016 issue of Harvard Business review. 

  • Cultural reform has been proposed as the solution to many things wrong in corporations.
  • All eyes are on culture as the cause and the cure.
  • Corporate leaders interviewed—current and former CEOs who have successfully led major transformations—say that culture isn’t something you “fix.”
  • Cultural change is what you get after you’ve put new processes or structures in place to tackle tough business challenges like reworking an outdated strategy or business model.
  • The culture evolves as you do that important work.
  • It makes intuitive sense to look at culture as an outcome—not a cause or a fix. Organizations are complex systems with many ripple effects
  • When the leaders used tools such as decision rights, performance measurement, and reward systems to address their particular business challenges, organizational culture evolved in interesting ways as a result, reinforcing
    the new direction.
  • Culture isn’t a final destination. It morphs right along with the company’s competitive environment and objectives. It’s really
    more of a temporary landing place—where the organization should be at that moment, if the right management levers have been pulled.
Case studies
  • Ecolab
    • Problem:
      • Lots of mergers and acquisitions hurting company's strength of being customer-centric.
      • More silos and leaders spending less and less time close to customer and the front-line staff that was close to the customer.
    • Solution:
      • Push more decision making to front-line staff after carefully training employees closest to customer.
      • Managers eventually let go and trusted employees.
      • Used meritocracy to motivate employees to carry out business goals.
        • Advancement/rewards/public praise used to signal kind of behavior that was valued.
    • End result:
      • Culture of autonomy and strong focus on customer.
  • Delta
    • Problem:
      • Delta took over Northwest airlines while coming out of bankruptcy protection and during downturn in air travel - also not a merger, it was a pure takeover, doing things Delta's way - also Northwest highly unionized and out of touch with employee needs as used to using a go between.
    • Solution:
      • Delegation and empowerment of people around the top leader.
      • Build strong relationships with employees - learn how to satisfy and motivate both on the job and personally
        • Offered best training, flex schedules, best airplanes and good crew hotels.
        • Good pay and benefits - 10% of earnings for company wide bonuses.
        • Didn't group all employee needs together. Ex: Ground staff in NE getting planes out during blizzard have diff needs.
        • No nepotism rule - want loyalty and generations of employees who get the company.
    • End result:
      • Management showed cares about people and fed into culture of trust.
      • Largely got rid of union by employee vote.
  • Ford
    • Problem:
      • Brink of bankruptcy and lost 25% of market share .
      • Management not working collaboratively - too aggressive and cutthroat.
    • Solution:
      • Regular meetings where several levels of execs shared updates on their units.
        • Met daily when at peak of crisis.
      • Asked leaders to use color coded system (red/yellow/green) to assess overall company performance and their initiatives. It was quick and had a holistic view.
        • At first it was all green as leaders afraid to show vulnerability to which CEO would push, "we lost billions last year and you are telling me there are no problems?"
        • Eventually a few brave leaders began speaking up and he praised them for their transparency.
      • Fostered personal accountability when managers had to explain problems and headway.
      • Launched "One Ford" to break up silos and give global view - added global heads of each major area.
    • End result:
      • Leaders realized being more collaborative and honest allowed them to work together and find solutions faster.
  • Novartis pharmaceuticals
    • Problem:
      • Merger of 2 competing pharmaceutical companies to create this.
      • Moved from prescription drug based to diversified portfolio of health care products which was much more complex.
    • Solution:
      • Lead the change with a clear purpose at the top.
      • Set clear vision and objectives.
      • Set clear expectations for employees.
        • Must be flexible, accountable and act in the customers' interests.
      • Set clear metrics for gauging performance and ensuring quality across all areas.
        • Good performance management system would help keep employees focused on the right things.
      • Make it clear what won't be tolerated.
        • Bribing, bad stories internally.
      • Since collaboration and alignment can't be forced, decentralize decision making to empower people to do what's best for their areas.
        • Let's teams move faster and think/act more creatively.
    • End Result:
      • Employees became much more customer-centric and performance-minded.
      • CEO realized that with each org change made, company's culture was starting to match the vision he'd outlined early on.

Author: Christa Foley

Tags: Culture

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