3. Traditional Approaches to Culture Transformation—How Others Have Dealt with the Challenge
Chapter Contents
Attributes/Characteristics Approach
Effectiveness of Traditional Approaches
Overview
This chapter gives a brief overview of traditional culture change approaches along with associated pros and cons. It will help you to understand the advantages that Tangible Culture provides, as detailed in Chapters 4 through 6 (“How to Get to the Right Place the Right Way—Outcome Narratives,” “The Good Thing That Can Cause Big Trouble—Right vs. Right,” and “The Unseen Hand That Propels Organizational Action—Business Practices,” respectively).
Introduction
The Change and Culture team mentioned in Chapter 2, “We Can’t Do This the Traditional Way—IBM’s Acquisition of PricewaterhouseCoopers Consulting,” brought more than six decades of collective experience in culture change using the techniques in this chapter. We do not exhaustively cover culture approaches, but rather discuss some popular ones. Although they have shortcomings, IBM endorses and uses these traditional approaches, increasingly so by augmenting with Tangible Culture.
Culture is important to every aspect of business, so many people have developed ways to deal with it—from business leaders to human resources professionals to consultants. Four basic approaches have emerged as predominant:
Values
Principles
Behaviors
Attributes or characteristics
We cover each of these approaches briefly.
Values Approach
A short list of cultural components includes beliefs, behaviors, norms, assumptions, and values. Because values are a cultural component, it makes sense that business leaders would want to work on them directly.
IBM’s CEO, Sam Palmisano, initiated a values-based transformation in 2003 to deal with our complex, global business requirements.
“Organizational culture is like red wine—the quality is determined by what goes into it, how it is treated, and how long it ages. Founders’ personalities, values, and beliefs, the strategies and structures they enact, and the behaviors they reward, support, and expect determine culture. Effective cultures age well up to a point but they can turn bad; cultures must be monitored for their fit to the competitive environment.”
Benjamin Schneider, Ph.D.
Senior Research Fellow, VALTERA
Professor Emeritus, University of Maryland
A values-based effort starts by defining the organization’s key priorities, focus areas, and approaches to work. Often, this work is done by a single individual or a small group of senior leaders, as it was in 1914, when Thomas Watson, Sr. established IBM’s basic beliefs:
Respect for the individual
The best customer service
The pursuit of excellence
Nowadays, this top-down approach may be viewed as something imposed on a workforce. Consequently, many companies, including IBM, are taking a different approach. We will expand a little on IBM’s approach to give you some ideas.
When IBM decided to revisit its core ideals, it used new technologies to create a live, multi-day online “jam.” This gave the entire employee population the chance to engage in open discussion of what defined IBM—those things that would not change in the face of economic cycles, technology trends, or even geopolitical situations. The result was a restatement of the existing core beliefs in contemporary terms. (See the Palmisano, Hemp, and Stewart article in the Harvard Business Review for details on the jam approach.)
IBM’s current values, crafted through the values jam, are as follows:
Dedication to every client’s success
Innovation that matters—for our company and for the world
Trust and personal responsibility in all relationships
In values-based approaches, the values themselves are often brief and clarified through detailed explanations. Value lists are often relatively short, with three to seven statements being common. Values often cover the topics included in Table 3-1.
Table 3-1. Common Value Topics
Once created, the values are communicated, and companies use a variety of approaches, from creative media to training and education courses. Beyond communications, the next step for values-based culture transformations varies. Companies may identify a list of changes needed to embed them, recraft their competency definitions to incorporate them, or incorporate them into measures, just to name a few.
Values-based approaches have some distinct advantages:
Values are easy to define and understand.
Values enable dialogue and give the organization common terminology and meaning.
Values can be relevant to the organization for a long time.
Unfortunately, they are not perfect. Here are some concerns:
Values may become words on paper unless actively integrated into the business fabric. Communications and training are often not enough.
Value statements and their associated explanations typically fail to provide much, if any, clarification on how people are expected to enact the values.
Values may lead to confusion, such as when parties to a merger or partnership compare their stated values and find commonality, yet later experience tells them they do not act them out in the same ways.
The first concern—making the values more than just words—takes work, but it can be done. IBM used the “jam” approach to extract, and then prioritize, great ideas to foster the new values (and build employee commitment to the values at the same time). The other two concerns are more difficult and have caused culture clash at times.
For example, we know two companies that agreed to an alliance and compared their value statements to better understand each other and gauge their culture risk. Because both had a stated value of “keeping commitments” and other similarities, they were confident things would go well. Soon, however, members of both companies were frustrated. What was behind the trouble? Table 3-2 shows some of the reasons.
Table 3-2. Differing Meanings of “Keeping Commitments”
The value statement of “keeping commitments” became the source of miscommunication because of assumed meanings based in each company’s experience. And, in this case, it led to strife and hard feelings, and eventually to mistrust that required personnel changes on both sides. This situation is not unique; people will bring their assumed meanings into new situations—assumptions that come from their experience at the company, within their profession, and within their national cultures, just to name a few.
Principles Approach
Like values, business leaders often select principles to clarify their culture expectations. They may take the form of guiding principles, operating principles, or even targeted topics, such as leadership or teaming principles.
Principles tend to be developed by leaders, often with little input from lower levels. Indeed, principles are one way for leaders to communicate expectations and priorities.
Because principles can be targeted at many different areas, they take on a broad range of characteristics. Table 3-3 shows a couple examples from different contexts.
Table 3-3. Example Principles
After the principles are defined, they are communicated. Many organizations also integrate them into the regular work context through regular reviews and education.
Principles have several advantages:
Principles are easy to define and understand.
Principles focus attention where leaders want it.
Principles are flexible (for example, for a specific transition or project).
Principles can be used to reinforce other approaches, such as value statements.
However, principles suffer from many of the same issues as the values approach:
Principles can be seen as “flavor of the month,” especially if they are changed too frequently and/or not woven into “real work.”
Principles can cause confusion if the words have different meanings for people who need to apply them (for instance, merger and acquisition or alliance context).
Principles focus on what and provide little on how to perform them.
In creating BCS,[1] we saw some of these issues first hand. The leaders developed operating principles, but the words did not mean the same thing to everyone, and most of the differences were in how those principles were to be carried out.
Behaviors Approach
Now to the approach culture experts have been waiting for—behaviors. Remember the short list of culture components—beliefs, behaviors, norms, assumptions, values? It makes sense to work on behaviors directly—they are observable, whereas many other culture components are not.
“Too often, leaders try to delegate culture change to H R and integration specialists. In my experience, the single most critical lever for successful cultural change is active, engaged leadership. Without top leaders engaged in culture definition and change leadership, you tend to have multiple cultures which can conflict with each other and suboptimize overall organization performance.”
Mike Markovits
Vice President
IBM Global Executive and Organizational Capability
Behavior statements are developed in various ways, often with input from several levels. They are used to clarify what people should do to support targeted business requirements.
For example, leaders of an organization may be concerned about customer satisfaction. They may develop value or principle statements, such as “We are responsive to our customers and prioritize their requests.” Then, specific behavior expectations may be identified, such as the following:
We return phone calls within two business hours.
We ask questions and listen before responding to ensure we understand requests.
We seek feedback and modify our approach if appropriate.
These behavior statements go one important step further in helping to clarify the desired culture because they are expectations that can be seen, and thus measured.
When the behaviors are crafted, gaps are often identified. Because the basis is behaviors, it is easier to identify the gaps than with value or principle approaches. The gaps may be based on current behaviors that are contrary to what is desired as well as on behaviors that do exist but need to be enhanced or increased. Table 3-4 shows some examples.
Table 3-4. Behavioral Gap Assessment
From this gap assessment, “enablers” may be targeted and actions planned, designed, and implemented. Table 3-5 shows common enablers for culture work.
Table 3-5. Common Culture Enablers
From the list in Table 3-5, the company may choose to
Implement education on how important responsiveness is to customer satisfaction.
Provide employees with ways to informally monitor their own performance.
Prepare a checklist of questions to help prompt effective customer interactions.
Establish a formal feedback process for following up with customers.
Establish a recognition system to honor employees who are making a difference with customers, and to acknowledge employees who are improving most rapidly.
The behavior approach has several advantages:
Behaviors provide a clear way of communicating expectations.
Behaviors make it easier to identify actionable gaps.
Behaviors provide an observable way to measure achievement of expectations.
However, it has some disadvantages:
Behaviors are difficult to craft (they often sound like principles or values).
Behavior definition takes time, and some business leaders lose patience with the process (or fail to see the business value).
Behaviors are defined discretely and typically without context, which means that they may be difficult or unclear to apply to specific situations.
This last point is significant. It is plausible to define an expectation that calls be returned within two business hours, but have some transactions that require more research. Following the “rule” may be counter-productive (for example, annoying to customers).
Attributes/Characteristics Approach
A similar approach to behaviors is that of attributes or characteristics. This approach can be a way to quickly diagnose the current state culture.
Attributes or characteristics approaches begin with a cultural diagnostic tool. Some questionnaires are manual, such as the Harrison Culture Assessment (Harrison). Others are automated, such as the Denison Organizational Culture Survey and Human Synergistic’s Organizational Culture Inventory. Many of the automated tools benchmark results against a database. These three are examples, and there are other good ones, too!
“Many factors need to align for corporate culture to become a strategic advantage. Our experience (and our research!) shows that focused alignment on business objectives from the top to the bottom of the organization brings the best results. Leading companies clearly position their culture strategy as a part of their business strategy. Those are the ones that get results!”
Daniel Denison
Professor of Organization and Management
IMD Business School, Lausanne, Switzerland
and Founding Partner, Denison Consulting, LLC
These tools seek to describe the culture(s) and target improvement areas. They are used to profile the current state, and sometimes to establish a future state expectation. The gap then becomes the difference between current and future states on specific dimensions.
For example, the tool may indicate relatively low performance in areas such as the following:
Understanding the vision and goals of the organization
Customer focus
Willingness to address issues proactively
Along with target areas, the expected degree of improvement and schedule to measure progress are identified. Actions must then be designed to bridge the gap. For example:
Develop and deploy communications and training to
Ensure that the organization’s vision and goals are well understood.
Emphasize the importance of, and benefits from, focusing on the customer.
Implement measure and incentive changes to focus attention on customer satisfaction and achievement of goals.
Identify and coach the leaders whose styles may be contributing to employee reticence to be proactive (for example, “shoot the messenger”).
These tools can also provide a basis for comparing different companies in an M&A or alliance context.
Attribute or characteristic approaches have several advantages:
They can be administered broadly and thus involve many people.
They typically come with built-in benchmarks or comparisons, which can help target areas for improvement.
They provide a baseline for evaluating progress over time.
Unfortunately, this approach is not perfect either:
Some tools describe the existing culture yet do little to help leaders know what actions to take—and some companies do not take action to “move the needle,” failing to realize that the assessment itself provides little (if any) direct benefit.
Some tools are not tightly linked to business outcomes (that is, “If I improve in the identified areas, how can I be sure my business results will improve?”).
Over time, people can learn the “right” answers for follow-up evaluations.
It can be difficult to use the information to communicate expectations because the information is general and expressed without reference to “regular” work.
This final point is important, and something inherent to the approach. If a company wants to increase customer focus, it is easy to communicate that point and think it is enough. Employees are even nodding during the presentation! But how should they focus on the customer? What is acceptable/unacceptable? How does customer focus compare with other priorities? And more important, how should employees handle difficult situations where the customer is impacted yet the best answer is not clear?
Combinations
To gain multiple benefits, some organizations combine approaches. A company may define its values and then the associated behaviors. Another company may begin with an attribute tool, and then use the information to develop principles and/or behaviors.
One reason for combining approaches is to enable a gap assessment, which is difficult with some of the approaches. Another reason is that large efforts may involve multiple leaders, each with a preference. In general, business leaders tend to prefer value and principle approaches, whereas culture experts tend to prefer behaviors and attributes.
Effectiveness of Traditional Approaches
The degree of effectiveness for these approaches is okay. Clearly, all four are logical and have provided benefits over time. However, as indicated in Chapter 1, “Introduction—An Overview of Tangible Culture,” culture continues to be a problem in many situations, even for companies that have employed one or more of these approaches. This is especially true for multi-enterprise situations, such as mergers, acquisitions, and alliances.
Here’s what Larry Bossidy and Ram Charan said about culture change efforts:
Most efforts at cultural change fail because they are not linked to improving the business’s outcomes. The ideas and tools of cultural change are fuzzy and disconnected from strategic and operational realities. To change a business’s culture, you need a set of processes—social operating mechanisms—that will change the beliefs and behaviors of people in ways that are directly linked to bottom-line results.
We agree. In fact, this chapter lists the issues we sought to overcome. Specifically, we wanted to develop an approach that acknowledged some realities:
People, individually and collectively, have differing perceptions, experiences, opinions, knowledge, skills, and preferences. When an effort crosses organizational boundaries, these differentials become pronounced.
Senior leaders typically clarify their intent at a strategic level and leave operating decisions—where the important how question emerges—to middle and lower levels.
It is easy to assume that agreement on values, principles, and behavior statements means agreement on how to execute those expectations. Even if the how is discussed, it may remain vague without knowing situational details.
Most of the time, there are a number of “right” ways to perform work, and unfortunately, these “right” answers often conflict with each other. Reconciling “right” answers can prove difficult, especially in complex, newly formed, and/or evolving circumstances where it is easy for people to see things differently.
Communicating new expectations so that they are actionable is difficult, especially for large-scale transformations that are often global, multi-enterprise, and complex; however, attempts to clarify the expectations with more detail can be self-defeating (more information often means that less people will read it).
Culture is extremely difficult to measure objectively, and it is easy to default to measuring schedule and budget achievement to gauge success.
Shortcomings and all, IBM endorses and uses the four approaches in this chapter. Each has its appropriate application, provides benefits, and addresses certain aspects of culture.
Now that we have Tangible Culture, our toolkit has expanded. We have more options, and we can craft more combined approaches, which gives us more flexibility—something extremely valuable in dealing with this difficult topic on complex improvement efforts.
Conclusion
The four traditional approaches to culture change—values, principles, behaviors, and attributes/characteristics—all seek to address the complex topic of culture, yet from different perspectives. Each of these approaches has pros and cons, and even combinations of them do not fully address known issues with culture change.
The next chapter begins to unfold our process for seeking to address these issues, beginning with Outcome Narratives, which help to clarify expectations within the work context and provide a way to objectively measure culture change along the journey.
References
Bossidy, L., and R. Charan. Execution: The Discipline of Getting Things Done. New York: Crown Business, 2002, p. 85.
Harrison, R. “Understanding Your Organization’s Character.” Harvard Business Review, May–June 1972.
Palmisano, S. J., P. Hemp, and T. A. Stewart. “Leading Change When Business Is Good.” Harvard Business Review, December 2004.