Integrate Organizational Culture with Strategy
Who needs goals, when you can develop new good habits. Don’t focus on achieving any goals. Instead, aim to develop the behavior that creates long-lasting habits and wields the results you want as a byproduct.
—Jeff Boss
While a CEO’s commitment is critical in an organization’s transformation journey, it is also important that people are culturally ready to support the implementation of the strategy. In Chapter 1, I shared an approach for undertaking an organizational culture assessment to understand the current state and to develop a shared vision by engaging leaders at all levels to agree on the desired future state. In this chapter, we will learn about a model that helps to integrate organizational culture with strategy. We will also uncover the last two stages of the culture assessment and alignment that we initiated in Chapter 1.
Organizational culture can be defined as a set of values, beliefs, and assumptions, demonstrated as behavior by individuals in a particular environment. If you dissect this definition a little bit, you will realize that there are two critical components, behavior and environment, both of which are essential ingredients for a culture change. The values, beliefs, and assumptions held by individuals are unseen constituents but have a strong influence on the people in the organization and dictate how they act, interact with others, and perform their jobs. At the same time, an organization’s environment has to be conducive to allow the desired behaviors to be exhibited.
The culture of the organization is heavily influenced by its leaders. Leadership sets the tone for behaviors expected from the staff in an organization, and individuals and teams change their behaviors to match the expectations of their leaders. Frontline staff and support staff who directly or indirectly interact with patients/customers provide valuable information about the mood of the organization. However, these groups have lower influence on changing the current and desired culture of an organization. Customers/patients and families provide valuable feedback and insight on cost, quality, and delivery expectations of the product/service offered by the organization, which in turn guides leadership in setting the vision. However, to internalize the behavior expectations that influence the culture of the organization is the responsibility of leadership.
Zappos, Southwest Airlines, Warby Parker, Google, the Mayo Clinic, Apple, Procter & Gamble, IBM, Cleveland Clinic, and Kaiser Permanente, to name a few leading organizations, have made cultural identity as a part of their competitive advantage. Their leaders didn’t stumble into the culture they desired—they deliberately created it. It is therefore not striking to see how many chief executives see their most important responsibility as being the leader of the company’s culture. According to Ginni Rometty, CEO of IBM, “Culture is your company’s number one asset.” Steve Ballmer, erstwhile CEO of Microsoft, said, “Everything I do is a reinforcement or not of what we want to have happen culturally.” In another remark from the C-suite, George C Halvorson, former CEO of Kaiser Permanente, largest nonprofit health plan and hospital system in the United States, serving more than 9 million members and generating about $50 billion in annual revenue, in the HBR article, “Culture to Cultivate,” said “Continuous improvement is the only cultural value that could unify an organization as large and diverse as ours.”
The CEO is the most visible leader in a company. His or her direct engagement in all facets of the company’s culture can make an enormous difference, not just in how people feel about the company, but in how they perform. Howard Schultz, former CEO of Starbucks Corporation, described the CEO’s role this way in his book Onward: How Starbucks Fought for Its Life without Losing Its Soul: “Like crafting the perfect cup of coffee, creating an engaging, respectful, trusting workplace culture is not the result of any one thing. It’s a combination of intent, process, and heart, a trio that must constantly be fine-tuned.”
In their article, “Culture and the Chief Executive,” Jon Katzenbach and DeAnne Aguirre, leaders at Strategy& list the following four asks from a CEO to spark and foster the cultural realignments they want to see:
Demonstrate positive urgency by focusing on your company’saspirations—its unfulfilled potential—rather than on any impending crisis.
Pick a critical few behaviors that exemplify the best of your company and culture, and that you want everyone to adopt. Set an example by visibly adopting a couple of these behaviors yourself.
Balance your appeals to the company to include both rational and emotional cues.
Make the change sustainable by maintaining vigilance on the few critical elements that you have established as important.
Long story short, in a transformational journey, culture change starts in the executive suite. Top leaders need to define the culture, communicate it to all organizational levels, act and behave in ways that reflect and reinforce desired outcomes and take responsibility for aligning and integrating culture, strategy, and operations. Leadership development can play a key role in accelerating, reinforcing, and sustaining culture change throughout the organization.
Readers familiar with strategic planning and deployment will appreciate that the four perspectives of the Balanced Scorecard (BSC—a framework for strategic performance management), namely, learning and growth, process, customer, and financial, resonate well with the quadrants of the Competing Values Framework (CVF), namely, people, process, innovation and growth, and competitive benchmarking. The quadrant terminology in CVF is more explicit, though, in compelling organizations to think about innovation and growth, and competitive benchmarking while designing their strategy to enable them to continuously improve upon their performance. To be competitive in the marketplace you have to be customer centered and develop products and services in partnership with customers.
Acknowledging that each organization is a mix of four culture types, namely, people, process, innovation and growth, and competitive benchmarking, and that each strategy is also a mix of the same four components, I have used CVF as the base model and included in it the leadership and structure components of CAP model, that were introduced in Chapter 3, to create a new model that integrates leadership, structure, organizational culture, and strategy (Figure 5.1).
Leaders and practitioners are encouraged to use this model for engaging internal and external stakeholders to develop their organization strategy. The constituents of this model will remind all stakeholders to consider the following aspects while designing their organization strategy:
1.People development and accountability
2.Operational effectiveness through process optimization
3.Innovation and creativity
4.New products, services, markets, and geographies to increase revenue
5.Product/service offerings that differentiate them from others
6.Partnerships with customers/patients/communities/suppliers to codesign products/services
7.Creating value through integration
8.Using language that is easy to understand, relate, and communicate
9.Leadership as role model
10.Ensuring alignment among culture, strategy, and operations
11.Setting up the right organizational values
12.Defining the behavior expectations from people
13.Designing systems and structure to provide an environment for people to live values, daily (LOVE—Live Our Values Everyday)
14.Influence of other internal factors
15.Influence of other external factors
16.Designing a strategy that is robust and agile at the same time
Now, with the understanding of the above integrated model, you will be able to appreciate the activities undertaken during the last two stages of the culture assessment and alignment approach shared in Chapter 1 (Figure 5.2).
A. Initiate and assess, B. Plan and design, and C. Enable and execute were covered previously. Refer to Chapter 1.
D. Evaluate and sustain
1.Review and revisit the organization’s vision, mission, strategic directions, objectives, and priorities.
2.Confirm, amend, or redraft the vision and mission statements and values.
3.Confirm, amend, or redraft the strategic directions and objectives, and establish areas of focus to support the desired future culture.
4.Revisit or redefine roles and responsibilities of different teams and establish agreement how they would support each other to build the new organizational culture.
5.Develop and define the big dot measures (key performance indicators) for the organization strategy based on the desired culture.
6.Define leadership behavior and attributes that will promote the effectiveness of the desired culture quadrant of the Competing Values Framework.
7.Design a maturity scale for measuring organizational culture change.
8.Organization’s communication team implements a multiplatform comprehensive strategy for engaging all staff and opens lines of communication that will promote how, when, and what cultural values are important moving forward to reflect the new culture.
9.Develop leaders for identified cultural attributes and establish standard work for these leaders.
10.Create a personal improvement plan and accountability targets with defined timelines to improve leadership competencies.
11.Develop issues resolution and a review process.
12.Evaluate and report team progress toward the desired culture using a maturity scale.
13.Seek steering committee interventions to overcome any structural and environmental barriers to change.
14.Solicit formal and informal feedback from stakeholders during the cultural transformation.
E. Integrate and spread
1.Facilitate establishment of criteria for identification, selection, and prioritization of opportunities, initiatives, and projects to support the new culture (Figure 5.3).
2.Develop an action plan for each group aligned to organization strategy and the desired future culture.
3.Identify quick win opportunities and strategies that can be implemented immediately and will demonstrate visible results for creating positive momentum in the organization.
4.Share and celebrate successes along the culture change journey.
5.Conduct failure mode effects analysis (FMEA) to proactively plan to mitigate any risk and take corrective measures.
6.Cross-pollinate learning between functions and departments.
7.Establish standard work.
8.Train, coach, and mentor teams to increase spread and maturity of culture change across the organization.
9.Develop and implement a management system framework to align strategy with desired culture and integrate into daily operations.
10.Establish a knowledge management system to document lessons learned at pre-established milestones and continue the culture change journey by updating new targets each year in the charter.
Sensei Gyaan: As a leader, challenge yourself to first shift your own paradigm from referring to the excellence journey as one of your organization’s strategic objectives/priorities to making the excellence journey itself the organization’s strategy.