At some point in the life cycle of most companies, a strategic inflection point occurs where the company’s future is poised between growth and decline. In our previous blog posts, we’ve discussed the leader’s role as well as a proven “business excel-leration” process of corporate renewal which can be used by any leader motivated to achieve change, whether a founder CEO who has been surprised by an unexpected inflection point, or a new CEO or general manager who has been recruited to turn around or divest a business. The end goal is a re-energized and renewed company that creates shareholder value for years to come. Vital to the success of this process is to transform to a high performance culture to underpin achieving the goals of the corporate transformation or renewal.
The reason is simple. Culture shapes an employee’s unconscious actions in addition to conscious behaviors. Without the willing support of the majority of employees, any renewal is likely to fail, no matter how diligent or committed the management team is to driving the new direction. That’s because there are more employees than transformation team members, and policing everyone’s actions on a minute-by-minute basis is impossible. A high performance cultures makes the job easier by harnessing unconscious behaviors to reinforce conscious actions.
How do you know cultural transformation is needed? In any turnaround, the assumption should be that it will be needed, because culture is a frequent contributor to the reasons why the company is in need of transformation.
Two factors drive the difficulty of changing a company’s culture: the degree of cultural transformation needed, and the degree of cultural inertia.
How Much Change is Needed?
The first and most obvious is the degree of cultural transformation needed, and it is important to understand whether you are dealing with a cultural issue as a root cause, or whether there are operational factors at play that manifest themselves as cultural issues. Though the demonstrated behavior is the same, the solution will be different.
Is it Culture or is it Process?
For example, take a situation in which problems that arise are not dealt with efficiently. The root cause could be cultural, or operational, or both — and it’s very important to understand which one you are dealing with, otherwise you could wind up solving the wrong problem.
For example, is this a company with a culture in which problems are ignored and passed off to someone else? Alternatively, are employees highly motivated to solve a problem immediately, but lack the skills or the process to do so efficiently?
The first situation is a culture problem, and employees must be culturally conditioned to place a high priority on problem solving. If the “pass the buck” mentality is deeply prevalent, both staff replacement by others who are motivated to solve problems, in addition to cultural training for employees, will be necessary to create a high performance culture.
The second is likely not a cultural problem, but an operational problem disguised as a culture problem, and may be solved by skills training or the insertion of additional key process-oriented employees who can harness the enthusiasm in a more efficient fashion.
Trying to “motivate” employees through cultural re-training, when you have a structural or operational issue, will only result in frustrated employees. On the other hand, understanding how deeply embedded a particular undesirable cultural attribute is in the company will be key to understanding how much to transform the culture.
How Much Cultural Inertia Exists?
The second factor in determining the degree of difficulty of changing a company’s culture is the degree of prior success the company has achieved. Counter-intuitively, the difficulty of cultural transformation increases significantly if the company has been successful at achieving results, but now finds its prior business or operational model needs to change. Understanding this correlation is important, because one may assume that past success is indicative of a high degree of competence and proficiency that will make change easy. Unfortunately, if the competence and proficiency reinforced cultural attributes that now need to change, change will be extraordinarily difficult because it has been continuously reinforced by past success along directions that are no longer beneficial. A culture that was once a high performance culture may no longer be a high performance culture given a potentially changed environment.
In corporations, as well as in physics, “a body in motion tends to stay in motion, unless the body is compelled to change its state”. In practical terms, if the new direction requires actions which would be “un-natural” in the previous mode of operation, even the most motivated and willing employee will unconsciously lapse into the behavior that previously made them successful – even though it is not leading to success today or in the future. It is human nature. Therefore in these situations, it is extremely important to undertake a cultural transformation with great diligence. If the culture is successfully transformed, the payback is tremendous, because if employees who have a track record of competence and success are re-pointed in the new direction (probably with the addition of some new talent as well) and motivated to execute, then the transformation to a high performance culture will be well on its way to a major success.
To learn more about how past success leads to future failure, read the next post in this series here.
Don’t “Go It Alone”!
When facing these strategic inflection points, seasoned management consulting professionals can make a difference between failure and success. BusinessExcelleration’s former operating executives have “been there, done that” through multiple similar situations and can bring a wealth of knowledge and experience and expertly apply it to your particular corporate transformation and help you create a high performance cultures. Learn more about our services!