Leadership
Building a robust, adaptive culture based on supportive behaviors and norms should be the foundation for transformation in every business.
Transformation should be front of mind for every business leader today. The COVID-19 pandemic has ushered in new ways of working, accelerated the adoption of digital technology, and forced firms to rethink their business models. At the same time, the disruption caused by the pandemic will have shaped the values, mindsets, and behaviors of your employees. These changes may or may not be the ones your organization needs to thrive in an increasingly uncertain and unpredictable world.
To ensure your company transformation sticks, you must first make sure you have built an adaptive culture. A 2021 survey by Strategy&, part of the PWC network, found 55% of respondents believed culture was more important than strategy and operations in driving better business outcomes.
What is adaptive culture?
Organizational culture is widely defined as a shared set of values, beliefs, and norms of behavior.
While all companies are different, we have identified seven elements of adaptive culture which have been used consistently by companies that have successfully transformed their organizations. When applied together, they constitute the foundations of a culture that can rapidly adopt new technologies and respond to changing business and social environments.
Addressing customers’ needs and pain points rather than focusing on products or profit.
Prioritizing the wellbeing of other stakeholders in the ecosystem and not just the company.
Using data and analytics to guide decision-making rather than relying only on experience or judgment.
Proactively engaging with other teams across the organization to solve problems rather than working in silos.
Valuing speed, not risk minimization, over perfection.
Openness to change, experimentation, and rapid learning.
Inspiring, empowering, and energizing people to make decisions while also holding them accountable.
Customer centricity and ecosystem focus will help define your organization’s strategy and priorities. At the same time, analytical orientation, collaborative reflex, bias to action, and a learning mindset address the habits that guide employees’ daily work. The final element is a leader who empowers and develops their team while holding them accountable.
Organizations will prioritize different elements depending on their needs. Use The 7 Elements of Adaptive Culture Assessment to identify your company’s culture change priorities. Identifying the most critical culture gaps is an essential element of every culture change process.
The pitfalls to avoid when changing culture
Anyone who has ever started the new year with a vow to exercise more or eat more healthily knows how hard it can be to change habits. This challenge is amplified when you are trying to alter the behavior of potentially thousands of employees. Below are four pitfalls to avoid when embarking on cultural transformation journeys.
1. Delegating responsibility for culture change
The CEO and other senior executives must be the face and voice of culture change by championing the desired principles and behaviors and explaining why it is necessary. If the case for culture change isn’t clear, it can quickly breed anxiety, cynicism, and resistance across the organization. For example, in one global organization we worked with, the CEO and all functional leaders aligned early on the expected future behaviors.
They dedicated the resources needed to assess how the necessary changes would impact departmental structures, budgets, and work outputs. The senior leaders devoted a lot of time clarifying the future direction, responding to concerns, and participating in design sessions to create the path forward. The visibility of the executives sent a far-reaching message that the changes were real. The senior leader frequently communicated the tough messages and worked to create and integrate the future ways of doing business by being closely involved.
““Depending on the scale of change, it can take up to three years, so it is vital to celebrate progress to ensure the pace and momentum don't flag” ”
2. Failing to gain input from the broader organization
One way to bring employees along on the journey is to create a clear picture of the desired future state. It must be specific, yet flexible enough to be adapted across units and geographies.
It often helps to work backwards, first defining the front-line target culture and identifying the systems and processes that support and reinforce it. The most successful transformations take both bottom-up and top-down approaches to culture change, gaining input from frontline staff about how they see culture impacting their ability to perform at their best. Involving employees also helps to gain acceptance of the change.
Some successful firms have set up teams that tackle specific tasks linked to changing culture, which can be as simple as the way a company runs its meetings. Establishing groups of highly engaged culture champions can help make sure the message trickles down to all employees. Creating a visual depiction of the cultural road map across every function, division and discipline can also help make the culture change feel more tangible. Ongoing communication can allow every level of the organization to hear, interpret and provide feedback on their roles’ cultural impacts.
3. Ignoring successful elements of the existing culture
When embarking on culture change, it is essential to acknowledge the elements of the existing culture that have supported the organization’s success up to now. Make sure you identify your cultural strengths, such as collaboration and teamwork, that you want to preserve. These elements should be woven into your new culture.
One Fortune 500 organization we worked with had taken a culture of collaboration too far – to the point where people tried to create solutions that were unanimously accepted. Business decisions were painfully slow, and solutions were often watered down to keep all parties satisfied. The new cultural framework valued collaboration, but also clarified decision-making rights and the need to identify the best solution over having full agreement.
4. Forgetting to align systems with the new desired culture
Often, companies forget to redesign the tools and levers that shape behavior to support the desired culture. Take the case of a company in the financial services industry. Faced with new competitors and changing industry dynamics, the CEO decided the company needed to focus more on customers, innovation, and executing nimbly. The leadership team defined the required culture principles and the associated behaviors, and then launched an intensive communication campaign to support the new leadership principles. Yet after a few months, the desired culture still wasn’t sticking.
After drilling down into the problem, management discovered that employees were still being measured and rewarded based on the old cultural norms. This in turn translated into confusion among workers. Once the new culture was embedded into the goal setting and incentives system, it supported the desired culture change by holding staff accountable for living into it.
Other often overlooked systems that can be pivotal for culture change are recruiting, assessment, and development. It is vital to empower managers to recognize and reward employees for breaking down the barriers to culture change and implementing the desired culture. Showing consistent appreciation helps to accelerate these new behaviors.
Culture change won’t happen overnight. Depending on the scale of change, it can take up to three years, so it is vital to celebrate progress to ensure the pace and momentum don’t flag. To succeed in building a truly adaptive culture, leaders need to ensure they communicate the goal clearly, and adapt systems and processes to reward and incentivize new behaviors.
This article was first published in MIT Sloan Management Review in August 2021
//sloanreview.mit.edu/article/why-every-executive-should-be-focusing-on-culture-change-now/
Authors
Rose Hollister
Rose Hollister is leadership Consultant at Genesis Advisers and former Senior Director for MacDonald’s Leadership Institute.
Cindy Wolpert
Cindy Wolpert is leadership Consultant at Genesis Advisers and former Vice President of Coaching and Assessment at Fidelity Investments.
Kathryn Tecosky
Kathryn Tecosky is Chief People Officer of the Biotechnology Innovation Organization and former Leadership Consultant for Genesis Advisers.
Michael D. Watkins
Professor of Leadership and Organizational Change at IMD
Michael D Watkins is author of The First 90 Days, Master Your Next Move, Predictable Surprises, and 11 other books on leadership and negotiation. A Thinkers 50-ranked management influencer and recognized expert in his field, his work features in HBR Guides and HBR’s 10 Must Reads on leadership, teams, strategic initiatives, and new managers. He taught at Harvard, where he gained his PhD in decision sciences, and INSEAD before joining IMD, where he directs The First 90 Days and Transition to Business Leadership programs.
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