Chapter 14

CHANGE YOUR CULTURE AND CHANGE YOUR RESULTS

"Everything you do to try to adapt and change and renew a company—whether it’s organizational change, marketing, finance, HR—takes place in a crucible and that crucible is culture." — Louis V. Gertsner, Jr.

THE BEST AND THE REST

What separates the marketplace heroes from the has-beens and wanna-bes?

It can’t be only products, services, or price. There is competition everywhere. And yet there are businesses, government agencies, and nonprofits that don’t just compete with the others; they dominate in areas such as product and service quality, innovation, execution, and most important, results.

Your competitors don’t hire all geniuses and leave you with the dunces. Their computer systems, compensation, and operational processes are not dramatically different from yours. When they discuss strategy, the words on their flip charts are not significantly more insightful than yours. The difference is, ultimately, an intangible. It is a culture where every person at every level is focused on and committed to doing whatever it takes—including readily embracing change—to deliver meaningful results.

That’s your primary leadership job: to build a compelling culture that becomes the intangible that sets your organization apart.

WHY TALK ABOUT CULTURE IN A BOOK ABOUT CHANGE?

We have known about the importance of organizational culture for decades. Yet the role your culture plays in making change work and achieving long-term success has never been more crucial. Here’s why:

• Culture beats strategy. Southwest Airlines is not the only airline to adopt a low-cost strategy to compete in its marketplace. It is simply the best at creating a culture where everyone is totally committed to implementing that strategy. If your strategy is not supported by your culture, your culture always wins.
  Culture beats change. Early in my professional career I worked in state government. The newly elected governor ran on a platform of streamlining and cutting employment. Four years later, the size of government had grown at about the same rate that it had before he took office. The rhetoric changed, but the culture remained the same. In a battle between sustaining change and the existing culture, place your bets on the culture.
• Culture serves as an anchor or accelerator for change. Everyone talks about a desire for continual innovation. USAA, the award-winning financial services company serving individuals who have served in the US military and their families, takes it to an entirely different level. This is the company that first introduced check depositing through photos taken by a smartphone.
• At USAA, innovation is encouraged and expected from everyone, and the numbers indicate this has been a success: 8,000 ideas, a 95 percent participation rate in innovation, and 247 new patents in 2012.¹ The company’s commitment to creating and sustaining the culture serves as the accelerator that separates it from all the companies that talk about innovation and never deliver.
• Culture attracts talent, and talent affects your ability to be nimble and resilient. Talented people have a choice. The companies that are consistently beating you in the marketplace are creating environments where talented people appreciate the opportunity to contribute and succeed. They take the extra time to hire for fit. And they think in terms of talent development rather than performance management. You might score the occasional upset without a culture that attracts and nurtures talented people, but consistent excellence will be difficult to sustain.

CULTURE: WHAT IT IS AND WHAT IT ISN’T

The MSN Encarta Dictionary defines culture as “the patterns of behavior and thinking that people living in social groups learn, create, and share.” Culture isn’t the holiday party or monthly birthday celebration. It isn’t casual dress on Fridays, and it isn’t scheduled fun on a quarterly basis.

There is nothing wrong with any of these activities. When done as part of the natural way things are done because of shared beliefs and values, they are fine examples of the culture—although I can make a strong case that scheduled fun is an oxymoron that hurts more than it helps.

Culture is the DNA of your business that defines the “way we do things around here.” It is the integrated patterns of human behavior that include thought, speech, and action. Culture is the security guard at USAA who excels at contributing innovation ideas. It is the ground crew at Southwest Airlines that puts in extra effort to maintain turnaround times in the face of a snowstorm and subfreezing temperatures. And yes, it is the fun atmosphere at Zappos that contributes to excellent customer service rather than detracts from it.
In short, culture is the habits your organization displays over time that show what you truly believe about your purpose, people, performance, and professionalism. Those habits are defined and driven by shared:

• Purpose.
• Values, assumptions, beliefs.
• Performance expectations and standards.
• Language, legends, and symbols.

THE CHALLENGE OF CULTURE CHANGE

What companies come to mind when you think of legendary cultures and great place to work? Three of the names I hear often have already been mentioned in this chapter: Southwest Airlines, Zappos, and USAA. The following national names are usually mixed in with a number of lesser known but equally great cultures when the question is asked in my presentations:

• Google
  
• Nordstrom
  
• Les Schwab Tire Centers
  
• Publix
  
• Whole Foods
  
• DSW Shoes
  
• Procter & Gamble

One common factor jumps out as I review these legendary organizations: they focused on culture from their beginning rather than completing a cultural overhaul later after missteps.

That doesn’t mean that you can’t change your organization’s or team’s culture. But transforming a culture is the most challenging type of change in which you can engage.

HOW HARD IS IT?

Asking how difficult it will be is a little like asking, “How long and hard must you train to complete a marathon?”

There is one answer if you are in great health, are in excellent physical condition, and regularly run long distances. There is another completely different answer if the only two times you ever consider running is (1) if you are being chased by a robber or (2) if you have to go to the bathroom really bad.

So let’s assume that the one word that best describes your culture is mediocre. You can expect to devote two to three years of consistent attention to this change…and that is if you devote adequate resources to the challenge.

WHY IS IT SO DIFFICULT?

Creating a new culture requires developing and building buy-in for a common set of unifying values, assumptions, beliefs, and habits that drive actionable performance and behavior toward a shared purpose.

You will need every leadership skill covered in this book to overcome the baggage and create the buy-in to begin this change. Even then, it will be a difficult challenge. Here’s why:

• There is a great deal of baggage to unload. People come to a new company wanting to succeed. They are willing to give you the benefit of the doubt if only because they want to keep their new job. In a change effort, you must deal with years or even decades of mistrust and failed change efforts masquerading as the voice of experience within your team.
• It takes a long time to develop new habits. Traditional wisdom says that it takes 21 days to develop a new habit. My experience is different. For instance, I read that eating a small amount of dark chocolate every day is good for your health. I tried the 72 percent cocoa solids version and immediately developed the habit. But well after 21 days, I still struggle at blogging as much as I would like.
  Habit formation is driven by a number of factors, including the strength of the urge to change and the reinforcement you receive from doing so. Researchers at the University College London report that although their best estimate is 60 days, their studies have shown new habits forming in as few as 18 days and as many as 254.² Now multiply that by the number of people who you need to get on board for the new culture, and the challenge becomes obvious.
• Everything affects the culture, and the culture affects everything. The quote from former IBM chief executive officer Louis Gerstner, Jr., at the beginning of this chapter sums up the problem. The culture that you are trying to create is engaged in conflict with the one that currently exists. Every new idea, action, and change is being affected by the existing culture. Imagine competing viruses in your body, and you start to get the picture.
• Results are not immediate, so people lose interest. You might see some immediate improvements, but it will be months before you notice significant change. Think of it like your new exercise program: you have to put in weeks and months of effort before people on the outside notice a significant difference. Improvements start happening much sooner, but it is easy to lose focus when they are not readily visible at the outset.

SEVEN IMPERATIVES

There is no 10- or 12-step program for changing a culture. There are, however, seven critical imperatives that must be accomplished to achieve buy-in and develop new habits.

1. Define the purpose, vision, values, and current reality. You can’t simply say, “The culture needs to change.” You must clearly define how the future must be different from the present.
   
2. Create continual awareness. About the time that you believe you  have sent every imaginable message about the importance of the culture, you are beginning to cut through the clutter of workplace distractions.
   
3. Cultivate the language. Words have meaning. We’re not talking a cult-like, secret ceremony language. The best cultures adopt and cultivate the language of success rather than of failure.
   
4. Leverage the legends and symbols. Promotions, salary increases, and recognition are the symbols of success in organizations. Use them wisely to reinforce behavior that is aligned with your desired culture. Create and share the legends of performance that demonstrate the culture in action.
   
5. Build and maintain the competencies. Desire to live the culture without the knowledge and skills to do so creates frustration and causes others to doubt your commitment to the change.
   
6. Align structure, process, and procedure. Structure, process, and procedure create habits. Make sure that the habits you create support the values, beliefs, assumptions, and aspirations of your culture.
   
7. Actively assimilate and strengthen group membership. Hire for fit. Teach new team members your culture through an intentional on-boarding process. Coach for cultural fit as well as performance, and be willing to remove those who do not live your values—even if they produce good results.

Change Leader Action List

Leaders who develop great cultures make different choices than their competitors in every area of the business. As a result, they don’t simply compete—they dominate their markets. Here are three things to do now:

1. Assess your current culture. Is it an anchor holding you back or an accelerator pushing your forward? You can find an assessment tool in the Resources section at www.penningtongroup.com/make-change-work/.
2. Look for areas to utilize the seven levers for driving culture change covered in this chapter. You can download thought starter ideas in the resource section at www.penningtongroup.com/make-change-work/.
3. Show the courage of accountability. It is not enough to simply state the purpose, goals, and values. You must actively define and demonstrate what they look like in practice and create the environment for change to occur. There is a line from the often-quoted “Unknown” that applies here: “If you really want to do something, you will find a way; if you don’t, you’ll find an excuse.”

References
1. Bryan Mahoney, “USAA—A Study in Pervasive Innovation,” November 16, 2012, http://www.innovationexcellence.com/blog/2012/11/16/usaa-a-study-in-pervasive-innovation/.
2. Ben D. Gardner Sood, “Busting the 21 Days Habit Formation Myth,” Health Chatter: The Health Behaviour Research Centre Blog, June 29, 2012, http://blogs.ucl.ac.uk/hbrc/2012/06/29/busting-the-21-days-habit-formation-myth/.