Culture and Performance

Insights from a pioneer on the evolution of corporate culture shaping, why most culture efforts still fail, and keys for successful transformation

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culture and performance

My fascination with culture began more than 40 years ago when another young industrial engineer named Jim Delaney and I started a process improvement consulting firm not long after graduating from University of California Los Angeles. I quickly discovered that it was easier to decide on change than to get people to change. I observed that companies, like people, had personalities and, while some were healthy, most were like dysfunctional families. They had trust issues, turf issues and resistance to change. The difference between working with Sam Walton on the supply chain at Walmart versus with Woolworth was like night and day. It was clear one would succeed and the other would fail because of the mindset and habits of the firms.

That led me to a professor at University of Southern California who had published a book containing articles that described a phenomenon called Organizational Character. Since I had clients, he convinced me to join the doctoral program and conduct research on the phenomenon. My dissertation, published in 1969, became perhaps the first field study ever of corporate culture at the organizational level.1

The central finding then, which holds true today, is that organizations become ”shadows of their leaders.” We knew early on that culture change had to start at the top. If the senior team didn’t collaborate for the greater good, then the organization would have turf issues and silos. If the leaders were too hierarchical and controlling, you’d find those traits from top to bottom of the organization. We found that we could diagnose the culture, but the challenge we faced was “how do you change habits of adults,” especially successful senior leaders?

That led to a second breakthrough finding. I had a major life event, which created some epiphanies that changed how I saw the world and changed some of my behaviors. My research into change through ‘Ah Ha’ moments uncovered the work of Kurt Lewin, an early social scientist. One thing he said helped create Senn Delaney as a culture-shaping firm and enabled us to shape behaviors in new more powerful ways: “When we are young, we are like a flowing river – and then we freeze.” Lewin’s theory was that we all get frozen into habits, and unless there is some form of unfreezing, we stay stuck.2 Lewin was also a believer in the need to treat the whole system; not just the leader but the team and the organization. As a result, we began to experiment with insight-based learning modules for CEO teams around the behaviors in a healthy, high-performing leader, team and organization. We call these the Essential Value Set.

Hear Larry’s epiphany in this short video. Join our Ultimate Culture Community to view his complete presentation.

Up until then, almost all behavior change in business was based on a Skinnerian behavior change model: Define what you want and reinforce it. It is a sound model that we employ to reinforce change after the epiphanies, but it is not a powerful enough model on its own to embed habits.

There was not much interest in culture shaping when we formally launched the firm in 1978. Our first clients were retailers who wanted to have what Nordstrom or Walmart had. Nordstrom had the ultimate in customer service. In those days, Sam Walton had a very efficient organization with his greeters and happy boxes. Retailers intuitively got that the customer experience was a cultural thing but generally thought it was a store issue. We stuck to our guns, and when asked to create a service culture, we would agree only if we could start with the CEO team since the stores are the ‘children’ of the whole organization.

Major industry changes surfaced the imperative of having a healthy culture. Divestiture and the breakup of Ma Bell in the phone industry led to culture shaping back then. As Ray Smith, then CEO of Bell Atlantic and later Verizon, said, “If I put my ear on the track I can hear the train coming and we are not ready. We have to change or die.”

Our biggest initial cultural transformation was changing a phone company and helping create a very successful Verizon. Over time, more and more industries have faced change and come up against what we call “The Jaws of Culture.” Today, rapid, massive transformational change is happening in many industries, particularly healthcare and banking.

State of culture change today: Good news and bad news
Today, organizational culture has reached a tipping point. Most CEOs know that culture matters and can have a strong impact on business results. Studies now confirm it is considered as important to success strategy. That is the good news.

The bad news is that despite this broad executive understanding of culture, and the many studies and books written over decades to demonstrate the link between culture and performance, the fact remains that too many culture change efforts still fail or fall short of their potential. We have shown through our work with hundreds of companies around the globe that successful culture transformation is possible, and we have demonstrated along the way that there are key principles that must be followed for this to occur.3

Common reasons most culture change efforts fail
Key principles for successful transformation
Not CEO led
Culture is a human resources initiative and is not led from the top.
Purposeful leadership:
The CEO and senior leadership must own and lead the culture-shaping process. HR has a critical role in making culture change work, but as Gen. Joe Robles, former CEO USAA, the company with the highest customer loyalty in America, said during his many years of leading the company, “I’m the chief culture officer.”
Lacks personal change element
The process doesn’t create deep personal commitment to change. It is too intellectual and not transformational. It may create some understanding through things like 360-degree assessments and surveys, but not transformational personal epiphanies.
Personal change:
People need to unfreeze existing habits and make personal behavior change. This occurs on an emotional (not intellectual) level, can only develop through insight-based learning. This is best accomplished in natural work teams to shift thinking and reinforce change.
Not managed as a strategy
There are too many disconnected initiatives; Lots of activity but it is not clearly managed as a strategy.
Align strategy, structure and culture:
All institutional systems, trainings, performance management and HR practices and communications process need to be aligned with a clear definition of the desired culture, which covers the Essential Values.
Doesn’t reach the entire organization
It is not taken from top to bottom in a way that creates momentum and mass.
Create energy, mass and momentum:
Cultures have antibodies and lives of their own. The process has to have the feel of “the train is heading north and you better get on.” A broad group of active, visible leaders needs to engage all employees, top to bottom, in shaping the desired culture.

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Notes:
1 Larry Senn (1970). Organizational character as a tool in the analysis of business organizations.  Ph.D. dissertation, Los Angeles: University of Southern California.
2 Kurt Lewin (1947). Frontiers in group dynamics: Concept, method and reality in social sciences; Social equilibria and social change, Human Relations, vol. 1 no. 5, pp. 6-41.
3Larry Senn (2014). Four key principals for successful culture change. Huntington Beach CA: Senn Delaney.

Larry Senn

About Larry Senn

A pioneer in the field of corporate culture, Larry Senn is chairman and founder of international culture-shaping firm Senn Delaney, a Heidrick & Struggles company. He has led culture-shaping engagements for the CEOs and leaders of numerous organizations, including dozens of Fortune 500 companies. Senn has authored and co-authored several books, including Winning Teams—Winning Cultures, The Human Operating System, 21st Century Leadership, and Up the Mood Elevator: Living Life at Your Best.

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