We have to change our culture.

“We have to change our culture.”

It’s been muttered by every frustrated leader, in every organization, in both the public and the private sectors.

300px-enron_logo.svg_But what most of them mean is, “We have to change the way we do things around here.” At its most fundamental level, this is what the term “corporate culture” means: “the way things are done around here.”

Organizational culture is the sum of everything that makes up the modern workplace. It is the stated values of the organization. And, more importantly, it is the unstated values that have never been codified—yet which every employee fully understands.

It includes the symbols of the organization. Some are obvious, like the organization’s logo or the mission and vision statements that hang so prominently in the main lobby. Others are not so obvious to the public—parking spaces, private offices when everyone else has been moved to the new “open” floorplan, and weeklong training sessions in Palm Desert.

Culture is the conversations that take place in the boardrooms, in the hallways, in the cube farm, and in the break rooms. And it is just as much the conversations that don’t take place. The jobs-well-done, the need-to-improves, and the disciplinary actions that never happen.

It is the stories that are told, the awards that are presented, the celebrations that are canceled, the myths that are perpetuated.

The Smell of Diesel

Culture is the “smell of the place,” that feeling you get when you spend any time in an organization, no matter how large or small.

volkswagen_logoCulture defines what is OK—and what isn’t. Culture defines right and wrong, acceptable and unacceptable, meaningful and meaningless. Volkswagen has given the world a lesson in culture, because it takes a lot of people to create and install diesel engine software that cheats environmental tests. But they pulled it off for six years—and it wasn’t an internal leak that let the story out.

Culture is…
“the smell of the place.”

Culture can be strong or it can be weak, but it always exists. And it exists because people who work together must understand “the way things are done around here.”

Changing Culture

Anyone who gives culture a thought can understand these concepts. The hard part is accepting how resilient culture is.

Because culture defines a globally accepted template for action within the organization, by its nature it exists to resist change. This is the critical point every leader must clearly understand: there is no aspect of an organization that is more difficult to change than the culture. An organization that has never prioritized things like shared leadership or cross-functional teams, and wishes to move in that direction, must realize that it is embarking on a journey. It will require time, perseverance, and committed leadership. There will be resistance, much of it passive and well hidden, and there will be failure.

But organizational culture can be changed if the leaders go into the process with an awareness of the scope of the challenge and a plan for overcoming the inevitable obstacles.

Lean Management: No Posers Allowed!

A lot of executives have heard about Lean management and would like to try it – seems like a good idea.

(Even the Prime Minister’s Advisory Committee on the Public Service thinks Lean is a good idea!)

Are you ready to Rock?

For those who have heard of Lean, they usually think of exercises like 5S or Kaizen blitz. These are tools that let people sample the Lean approach and gain some quick wins – without making a real commitment. Unit managers can dip a toe in the water while still reporting to the C-Executives that, “Yes, we’re doing Lean!”

But running a couple of workshops and re-organizing the supply closet – then declaring yourself a Lean shop – is like learning to play three chords on a guitar and declaring yourself a rock star.

Just because you can play a little doesn’t mean that you are ready to live like a rock star – Rock and Roll is a lifestyle, man! No posers allowed.

Live Below the Waterline

Peter Hines and his co-authors, in the book Staying Lean, employ the (overused and tired, yet still appropriate) Iceberg metaphor to describe what really drives successful and sustainable Lean adoption.

In this interpretation of the Iceberg you’ll find the obvious, visible aspects of Lean above the waterline:

  • Technologies, Tools & Techniques
  • Processes

But, as always, the centre of gravity – and the aspects of Lean that will ultimately determine the long term success of the initiative – lies hidden below the waterline:

  • Strategy & Alignment
  • Leadership
  • Behaviour & Engagement

Enough about Lean

“But isn’t Lean supposed to be about focusing our efforts on the customer, eliminating waste, and continually improving our processes?”

Yes.

Now, this is where we stop talking about Lean for a minute.

It doesn’t matter what approach to managing your business you choose, if you don’t have those items that are “below the waterline” –

Strategy & Alignment, Leadership, Behaviour & Engagement – working, it doesn’t matter what approach you use. It won’t last, and you will soon be off chasing the next ‘flavor of the month’.

And that next approach will probably offer some nice short-term gains that are, again, not sustained. Rinse. Repeat.

Back to Lean.

Given that, couldn’t you just focus on those three items and forget about Lean? Yes, absolutely. But those three bullets are so difficult for managers to get right that often an external framework is useful to guide their behaviours and actions.

Note – we are not talking about “employee” behaviours and actions.

Unfortunately, that is the mindset that many managers take when they start to explore Lean as an approach to guiding the activities in their organization. But it’s not about “them”. It’s about “you”.

With that in mind, I would like to talk about the single most important tool that a manager has to support a successful Lean rollout.

Genchi Genbutsu

Genchi genbutsu is Japanese for “go and see for yourself”, often referred to in North America as going gemba.

This is a simple concept that can be further simplified for the North American manager: “Get out of your office!”

You will never get the real story sitting at your desk. Reports will be filtered for any number of reasons – most emerging directly from CYA issues.1

This is not a “take charge” event. Your goal is to observe and ask appropriate questions; perhaps the most important – and least employed – tool that a manager has.

Stop making excuses. You are not too busy. You want to call yourself a leader? Get out of your office and go talk to your people. Every day. Nothing that you do is more important than this.

Scratching the Surface

This Lean project? It won’t be quick, and it won’t be easy.

Obviously, we are just scratching the surface of these topics, but the resources available are vast. Some are free, some not. The most important thing?

First, you have to care.


1CYA

‘Stones’ Photo Credit: Jonathan Bayer via Compfight cc
‘Office Door’ Credit: Julia Manzerova via Compfight cc

Business Sustainability and Risk

Last week I was lucky enough to attend an Executive Workshop in Phoenix, Arizona, that was presented by the AHC Group, and led by the group’s founder, Dr. Bruce Piasecki.

For those who are familiar with the long-term focus of Bruce’s work, it will come as no surprise that the theme of this meeting was around various aspects of business sustainability—often referred to as corporate social responsibility (CSR). Windfarm-220x330These discussions revolved around the various ways that a business can approach the ‘three legs’ that define sustainability efforts: social, environmental, and economic (also commonly referred to as people, planet and profit).

Beyond the simple pleasure of leaving behind the subarctic temperatures of home—I must say that I really enjoyed the event, and I would like to share a few of the highlights.

The meeting itself was comprised almost entirely of speakers from the private sector—companies that are wrestling with the challenges of implementing these ideal world concepts in the unwashed reality of day-to-day business.

The topics were varied and well connected—but the session on evaluating risk really resonated with me, so I thought I would share a few of my notes.

One final thought before we get to the good stuff: this was a private event, so I’ll not be sharing any names. Apologies to those who will not receive credit for their contributions. I thought it better to err on the side of caution in this case. However, if you would like to have some first hand experience with these events, the solution is simple—sign up to attend!

Risk Management

  • Determining the Probability of an event is much more difficult than determing Severity. People have a fairly easy time finding agreement on the potential impact that a given event will have—but when asked to nail down the likelihood that it will happen, consensus is much more difficult.
  • There are some legitimate reasons to debate who your Risk/Safety group reports to—is it the CEO, CFO, Legal, or is there direct communication with the Board? It parallels the question: who is your legal counsel there to protect: the CEO or the Corporation? Two very different priority profiles can be in play.
  • Are you evaluating your Risk exposure thoughout your full value chain or is your focus internal? Are you asking your suppliers about their risk exposure and mitigation plans? Microsoft and nVidia both faced revenue challenges in the last quarter—and both pointed to reduced global sales of PC’s as the floods in Thailandresulted in severe shortages of hard drives. PC makers were unable to ship finished units. And who at these companies had figured East Asian environmental issues into their risk exposure?
  • Include an outsider in your Risk Identification activities. Many companies have been involved in ‘high risk’ activities for so long that it has become ‘normal’ to those who live it every day. They don’t see the degree of risk as they are simply too accustomed to it.
  • And, in a real eye-opener: every $1 spent on planning will save $4 – $7 in response costs.
  • Many of us are familiar with the Probability/Severity matrix, which often takes a form like this:

Risk map1-480x261

This is a very straightforward way to look at risk exposure. But the important issue that was raised: what happens when an event in the top left box takes place? An event with a very low probability of happening—but when it does, the impacts are profound.

Risk map2-480x261

Think Deepwater Horizen oil spill or the Fukushima I Nuclear Power Plant disaster. Events like this indicate the need for viewing that segment of the matrix in a different light.

Risk map3-480x255

Reputational Risk

  • There is growing corporate awareness of ‘Reputational Risk.’
    • The importance of this risk component appears to be driven by the increasingly frictionless sharing of information via the Internet and social networks.
  • It is thought that this concern with reputation will accelerate a move to the concept of the Triple Bottom Line as:
    • Shareholder returns are being increasingly impacted by negative reputation events, and;
    • We are beginning to see executive compensation packages that include KPI’s that track CSR indicators.
  • Businesses are finally coming to the realization that bad press on the Internet lives ‘forever’. A negative event or story can and will continue to surface in Google searches for months and years after the issue has been rectified. Is your company doing enough to surface the positive things that it is doing? And like it or not, social media is here, it is real, it is important, and companies had better get out in front of it—or suffer the consequences.
  • Remember that your supply chain can and will impact not only the direct operating risk, but also exposes you to great Reputational Risk (have you been tracking the Foxconn/Apple stories that were precipitated by theNew York Times investigation?)
  • This is not a static environment: what was acceptable in 2008 will not be acceptable in 2015.
    • Sharing of negative reputation is never going to become more difficult
    • Activists are becoming increasingly sophisticated and dedicated to online communications and community building

Reaction

As I listened to these discussions—particularly as the concept of reputation was revisited—I came to see that some of the same advice that we have been giving leaders to enhance their skills on the ‘micro’ level is equally pertinent on the ‘macro’ stage:

  • Employee engagement is the solution to many of their issues. How to encourage this engagement? Well, that’s a whole other series of posts—but let’s start with the concept of ‘trust’ and let it spin out from there.
  • Great leaders (and managers) must become great storytellers. The attention of our various stakeholders is so fragmented that, if you want to convey a lasting message, you must be able to grab and hold that attention. We are living in an era that is witness to the creation of a ‘YouTube Generation.’ Attention span has gone from hours to minutes, and is now measured in seconds. If you doubt this, think about the pacing of some of our classic movies, The Godfather for example:

Now, reflect that against the cuts that are made in the Best Picture of 2011, The King’s Speech (a restrained and slow moving film by current standards):

Leading Change—Talking About Communication

I spend a lot of time talking about communication around here.

Why? Because it may very well be the most important aspect of anything you hope to achieve in a group environment.  Right now, we’re focusing on change and the steps that you can take to give yourself the best chance of success.

But it really goes beyond just change management—if you can’t communicate effectively, you can’t accomplish anything where the group size is greater than one!

You Under-Communicate 100x Too Much

One of the 12 things you should do when you encounter resistance and need to get your change initiative back on track is to improve and increase communication.

It may be #2 on the list, but it should be #1 in your heart!

You might be tired of me repeatedly coming back to John Kotter and his lessons on organizational change, (and if you are, you might just as well remove this site from your bookmarks…) but in his words:

“It’s not likely that you will under-communicate a little bit; you will probably under-communicate 10x to 100x too much.”

So with that thought as a backdrop, let’s look at some foundational elements for the communications aspect of your change management plan.

A Change Communication Strategy Framework

My intent is to provide you with a framework for discussion, and some objectives for your change communications.

Communication Objectives

  • To explain the need for change and create a sense of urgency
    • Business case for change
    • What would be the consequence of keeping things as they are?
  • To articulate a clear vision of the post-transition future
    • What is the future-state vision of your organization and how will it be achieved?
  • To inform employees regarding expected changes and the on-going change initiative
    • How familiar are you with the expected changes?
    • What opportunities might it open up for you and/or your work group?
    • What challenges might it present for you and/or your work group?
    • What do you think you might gain/lose, if anything, as a result of these changes?
  • To manage expectations with respect to the change
    • Has anyone produced before and after process maps in a format that can be easily understood and communicated?
    • Would this be useful?
  • To encourage managers and employees to take ownership of the change and to share responsibility for its successful implementation
    • We expect employees to share their concerns and to contribute to the identification and implementation of any solutions that may be necessary.
    • Do you think the work environment at your organization is conducive to that?
  • To overcome resistance to change
    • What, if any, previous experiences have you had with change?
    • How did that go for you?

Timing/Frequency of Communications?

  • Timing with respect to the implementation schedule?
  • Timing with respect to other key events in your environment?
  • Regular update (e.g. Newsletter) or ad hoc communications?

Communications Vehicles?

  • Electronic – intranet, email, blogs, wikis, social networks
  • Paper – to reach those without electronic links or comfort
  • In person – to provide opportunity for dialogue and engagement in large groups, small groups, and individually

Source of Communications and Communications Audiences?

Who owns the change initiative and who should be responsible for sending and receiving communications?  What are the communications roles of:

  • The President/CEO/Lead?
  • Senior Management?
  • Transition Project Manager?
  • HR?
  • Communications Director?

Audience Segmentation

Strategic communications requires some sort of audience/user segmentation.  A standard way of doing this is based on familiarity with the initiative and favorability of opinion.  Be sure that you have these segments in mind as you plan your communications.  If your message speaks to only to the boosters, how do you think it will be received by the detractors and the cynics?

 

Change segmentation-600x452

 

Employee Issues

What are the key issues for your employees that you must be sure to address?  Have you asked them?  How recently?

  • Training?
  • Impact on how we will do our work?
  • Impact on management and supervision?
  • Impact on careers and career planning?
  • Impact on social relations at work?

Workshops

Have your management teams prepared for workshops with the employees as part of the planning process and to create greater engagement from everyone who will be affected?

  • What is our role in achieving the desired future end-state?
  • What are we losing in the new end-state?
  • What are we gaining in new end-state?
  • What can we do to make the transition easier?
  • What help do we need to make the transition easier?
  • What steps do we need to take to develop our role in reaching the end-state?
  • How will we know that we are successful?

Ongoing Support

Leaders who expect the change—even among those who are behind them—to simply be accepted and followed without any further support are in for tough times.  You can expect that your team will need additional:

  • Change leadership coaching
  • Facilitated group problem-solving sessions
  • Teambuilding
  • Recognition and celebration of successes

This list should provide you with a good starting point as you think about how you will communicate with your people.  But, of course, it isn’t exhaustive—what important pieces would you add to the framework?

Strategic & Operating Reviews: A Checklist to Understand Your Capacity for Change

As the rate of change that our people and our organizations face continues to accelerate, many are undoubtedly in the process of preparing for some form of transformational change.

For public servants, most of you are preparing to face the fallout of the current SOR, while private sector companies wrestle with increasing intrusion from global competition or the market disintermediation of online players.  In either case, your organization is undoubtedly in the process of or preparing to undergo a “transformation”.

Against this backdrop, I felt that it would be useful for managers to have a tool that would allow them to evaluate the current state of their organization—the capacity of the organization to engage in real change right now.

Ask Everyone

The opinions of employees and other stakeholders are an important indicator of where you should focus your efforts.

Completion of a questionnaire based on these materials should take less than 20 minutes to complete, and can provide you with valuable insight. Of course, you will still need to put the answers into context;

  • what is their position/job type,
  • where are they located—central or regional,
  • do they supervise others,
  • how long have they been part of the organization, etc.

Your Vision Statement

If your organization has a strong change capability, most of your employees and colleagues will agree with these statements.  If they disagree with any of the statements, then you have pinpointed a weakness in your change capability that you will need to mitigate.

I agree/disagree that:

  1. Our vision statement represents the future vision for my organization.
  2. Achievement of this vision will require a transformational change.
  3. I have a clear role in achieving this vision.
  4. This vision is likely to be achieved by the year X.
  5. I can list the top 3 most important barriers to achieving this vision.

Elements of Strategic Change

As with any other project that an organization takes up, the planning and development of a change initiative should have a clear strategic plan, i.e., there are deliberate and coordinated actions.  Throwing some things against the wall to “see what sticks” rarely works when executing a marketing plan, and are about as likely to work with a change management initiative.

Different elements need to be in place, in varying degrees, for successful strategic change to take place. However, some requirements may be more important than others for your organization.  Are these elements present in your organization? How do you, your employees and your colleagues rank the relative importance of each element? Which is most important? Which is least important?

Yes/No – strategic change requires:

  1. Flexible Management Policiesthat permit employees to decide how best to carry them out, depending on the circumstances.
  2. Commitment of senior managers and leaders.
  3. Planning and prioritizing– along with ongoing operations, as an integral part of the regular business planning process.
  4. Progress to be measured and monitored.
  5. Calculated risk-taking– a certain amount of it.
  6. Audit and evaluation functionthat play a role in encouraging improvement.
  7. Accountability mechanismsthat encourage all employees to take ownership of results as appropriate to their roles.
  8. Some positive incentivesfor employees to participate.
  9. Important messages be shared and understood by all stakeholders.
  10. Information sharing – a positive attitude toward it.
  11. Innovation to compensate for the absence of sufficient financial resources to achieve business objectives.
  12. Talent, skills and dedication of employees– be recognized as the most valuable resource available to an organization.
  13. Communication and accountabilitythat cuts horizontally across the vertical chain of command.Small fishbowl-270x327
  14. Ability (best practices supported by technology) to successfully transfer critical knowledge from person to person or role to role.

Some of the following statements reflect commonly held stereotypes. Based on your own knowledge and experience, do you agree or disagree with them? Do your employees and colleagues agree or disagree with them? What do your answers reveal about weaknesses in your organization in the areas of working climate, employee engagement and organizational alignment?

I agree/disagree that in my organization:

  1. Management policies are written in such a way that they restrict the freedom to carry them out as effectively and efficiently as possible.
  2. Leadership appears to be committed to a single, clearly articulated transformational agenda for the organization.
  3. Strategic change priorities are clearly articulated through the regular cyclical business planning process.
  4. Managers have the performance information they need to make decisions that will keep them on track towards achieving the vision.
  5. Taking calculated risks can be damaging to one’s career in the event of failure.
  6. Audit and evaluation are primarily regarded as punitive exercises that frequently result in the assignment of blame for poor performance.
  7. Strategic change is supported by the establishment of clear accountabilities for results.
  8. Employees are rewarded and/or recognized for their contributions to continuous improvement.
  9. Many important messages, whether accurate or not, are first communicated through the rumour mill.
  10. It is difficult to get people to share information if they perceive that it might cause them to lose an advantage.
  11. Limitation of financial resources tends to be regarded as a valid barrier to the achievement of strategic change.
  12. Employees feel as though their well-being receives the care and attention that it deserves.
  13. Horizontal channels of communication and accountability are well developed and utilized in support of operational and organizational development objectives.
  14. Despite frequent employee turnover, little support is available (either in sharing best practices or supportive knowledge capture technologies) for ensuring that critical knowledge is successfully transferred from person to person or role to role.

The Sticking Points

An organization’s ability to successfully undergo a strategic change is dependent upon management policies and practices, human resources management, knowledge management, organizational culture, and communication.

Here is a quick checklist of some common things organizations often overlook or downplay as they embark on a strategic change project:

  • The vision for the future is effectively communicated below the managerial levels.
  • People tend not to change their way of doing things unless they have a compelling reason to do so.
  • There are mechanisms to ensure that a consistent transformational plan would survive a change in leadership.
  • There are mechanisms to ensure that the highest priorities are identified and resourced.
  • Vertical ‘stovepipes’ effectively inhibit the necessary horizontal initiatives.
  • The organizational culture promotes continuous improvement through the encouragement of critical thinking.
  • Employees generally perceive change as a threat.
  • In general, adequate expertise and support methodologies are available within organizations to facilitate improvement initiatives.
  • There is insufficient time available to launch improvement initiatives within organizations because of heavy workloads associated with normal day-to-day activities.
  • There should be an active leadership role responsible for standardizing and supporting business management tools designed to support continuous improvement efforts within organizations.
  • Regulatory roadblocks are not impediments to change and improvement within organizations.
  • Organizations should adopt a common approach to promote continuous improvement across operating units.

As with any checklist or tool—this is not intended to be an exhaustive and complete list.  Rather, it should provide a starting point as you begin to ask the difficult questions of yourself and your people.  All input is valid, all data is useful.  But it’s up to you—as the “subject matter expert” on your organization—to evaluate the feedback that you receive in the proper context.

Kotter’s 8 Steps to Change: More Relevant Than Ever

Failure is not fatal, but failure to change might be.
– John Wooden

In 1996, John Kotter published Leading Change, which quickly became the seminal work in the change management space.

15 years later—an eon in the Internet time-space to which we have become accustomed—and Leading Change is still the work that most change management professionals will point to when asked “how to do it.” There have been some other blips on the radar in the change management discussion, most notably the high-intensity spotlight wielded by the Heath Bros, Chip and Dan, in Switch: How to Change Things When Change is Hard.

Yet everyone keeps coming back to Mr. Kotter. (welcome back!)

leading-change-kotterWhy? Because effecting change—real change—transformative change—is hard. Really hard.

And The Eight-Stage Process of Creating Major Change that Kotter spelled out in Leading Change has been proven to work better than most anything else when appropriately implemented. The Eight Steps give organizational leader/managers a clear map to follow when most are wandering in the dark as they face the challenges of non-linear acceleration of change as we move into the 21st century.

But this post is not intended to re-hash every aspect of the Eight Steps. Rather, I wanted to remind everyone how unique it is in this “management” space to have a book that has held up so well over time. So many flavour-of-the-week approaches to managing an organization have come and gone in the last fifteen years that we could, and have, fill a library with them.

The other, really unusual aspect of Leading Change as a cornerstone work, is that its relevance has only increased since publication. Business-as-usual did not pass this book by; it is virtually required reading for anyone who leads an organization today.

The Eight Step Process

For those who are not familiar with Kotter’s work, here is a list of his Eight Steps, with some recent comments that he has made on those issues that he finds to be critical for success (I’ll include a link to these comments when/if it becomes publicly available):

1. Establish a Sense of Urgency

  • This is the absolute starting point.
  • You must appeal to both the intellectual AND the emotional.
  • Repeatedly screaming at people “Your platform is burning, you are going to die!” does not work.
    • Threats lose their value.
    • It results in a demoralized workforce.
    • Talent leaves as soon as there is a good out.

2. Create a Guiding Coalition

  • If you want transformational change, you must create transformational leadership.
  • If you want transformational leadership, hierarchical-command/control structures will not work.
    • Good managers, utilizing good policies and practices, can create great results—but they cannot create transformational change.
  • Note the use of the term Coalition: if you want transformational leadership, this must represent a broad cross-section of people from all levels of the organization.
    • people who have their hearts in it
    • people who will provide leadership
    • people who will attack barriers
    • people who will get others on board
  • If you don’t do this right, it will effect everything else that follows.

3. Develop a Vision and Strategy

4. Communicate the Change Vision

  • It’s not likely that you will under-communicate a little bit; you will probably under-communicate 10x to 100x too much. And your initiative, no matter how well planned, will fail.

5. Empower Broad-Based Action

  • Give away authority. The hierarchy must give way to the network.

6. Generate Short-Term Wins

  • Make the wins real and they will be powerful.
  • If people don’t see results, cynicism will quickly follow.

7. Consolidate Gains and Produce More Change

  • Never let up!
    • You must maintain the urgency.
    • If you hand your initiative off to a change management “department” or “committee” — you will fail.
    • Don’t get discouraged, it might require cycling back and trying new things.
    • Don’t let your “command and control” genes take over.
  • It’s like tending a fire, you can’t start it and walk away.

8. Anchor New Approaches in the Culture

  • You don’t “change your culture” to create transformation.
  • It’s the reverse, if you want to create a culture change then go through the other seven steps — then, after success has been created, the outcome will be a change in the culture!

Management v. Leadership

I think it’s safe to say that we are all exhausted with the manager or leader debate. I’ll not waste too much time on that. However, a couple of quotes from Kotter that make it very clear; change management is a task for leaders.

Managers can define projects, develop measures, and monitor systems—they cannot create change.

“Leadership defines what the future should look like, aligns people with that vision, and inspires them to make it happen despite the obstacles.”

“…linking the discussion back to the engine that drives change—leadership—and in showing how a purely managerial mindset inevitably fails, regardless of the quality of people involved.”

Change Leadership

So, the question that spins out of all of this focus on leadership:

Is it time to change the term “change management”?

Would the process be more accurately conveyed if we started referring to it as “change leadership”?

Read the Book

Again, if you haven’t read Leading Change, and you have any interest in creating lasting change in an organizational environment, you really should pick up a copy.

Not only do you stand to gain some critical knowledge, I think you will be shocked at the prescience of this 15 year-old book.

updated 11 October 2011 – added a link to the recent Kotter webinar


note: this post originally appeared on the Delta Blog, 5 October 2011