A successful company’s culture evolves. Its culture is the foundation that predicts how well the company fares, for better or worse. And because it is difficult to measure and manage, it too often stumbles along on its own. Consequently, many companies find themselves in situations that if leadership and the board had been more diligent, issues that impact the company could have been better managed or deterred.
In their classic work, In Search of Excellence, Tom Peters and Robert Waterman Jr, former McKinsey and Co. associates asked, “what is the secret to successful business management? Why is one company extraordinarily successful and another with a similar focus mediocre?”
Their extensive research, which culminated in their run-away best seller, set forth eight basic practices. The first practice and one they emphasized was “a bias toward action,” which they described as a company’s willingness to experiment, take risks and welcome ideas from all in the organization at every level, a bias toward change.
They found that the inability to change and innovate is systemic, “American corporations tend to be too shortsighted to permit experimentation and innovation.” When things don’t go well management tries for a new strategy, reorganizes, fires and hires and “yet nothing much changes,” the old culture prevails.
We can readily see that in the culture of a Wells Fargo or Volkswagen or…the list is endless. Old habit patterns persist. The authors say, “If we want change, we fiddle with the strategy or change the existing structure,” yet they asserted that “innovative companies are especially adroit at continually responding to change of any sort in their environments.”
Terry Jones, a former American Airlines associate, Founder of Travelocity, Founding Chairman of Kayak.com, and author of Innovation, lectures on change and innovation. And he says of his audience participants “they see the world changing around them and realize they have to change to keep up with it … yet while they may understand the need for change, it often seems their bosses or coworkers don’t.”
Taking a proactive vs. a passive role in implementing and adapting to change is critical to a successful culture. Click To TweetTaking a proactive vs. a passive role in implementing and adapting to change is critical to a successful culture. And there is no question that many of the companies and banks I have referenced in other publications must make needed dramatic changes to their culture to not only survive but also to avoid future extreme costs to be borne by our economy.
One recent example of a company’s consistent failure to embrace change is SEARS, once a household name “where America shopped for everything for decades.” The company that once dominated the retail landscape has filed for Chapter 11 bankruptcy protection. For many reasons, the once trusted place to go to for most of our household needs, couldn’t change to a culture that gave better customer service and met customer demands.
In Managing at the Speed of Change, author Daryl R. Conner says, “Executives who successfully implement change regardless of their location (and what they offer) display many of the same basic emotions and behaviors.” In his extensive research, he found that “the single most important factor in managing change successfully is resilience, the capacity to absorb high levels of change while displaying minimal dysfunctional behavior.”
No question, change is challenging and consequently many companies and individuals continue the same patterns of behavior even if their own health is at stake, or the company’s health and reputation and its shareholder value is. What’s accepted and rewarded continues even if the outcome is harmful.
According to Douglas A. Ready, ”two-thirds of large-scale transformation efforts fail. But that’s not a terribly helpful piece of information unless we’re looking for confirmation that change is hard, really hard. What is useful is to understand what leaders can do to substantially increase the odds that their companies won’t be among the two-thirds that fail.”
Change experts, Mr. Conner among them, believe that “for change to take effect it needs to be approached as an understandable process that can be managed and in so doing it promotes confidence and can be successfully executed.” As he points out, major change minimizes our ability to dominate what happens around us. We as people want be in charge of our environment.
He believes, “we reject the unanticipated consequences of what change may bring.” Change that is radically different from the existing culture is more difficult to implement. So changes need to be more in alignment with the present culture to be embraced and succeed. Change requires leadership, not just management.
According to Mr. Conner, ”true understanding of how and why people successfully change is possible by integrating all the various approaches.” An easy task, no, possible yes. Change requires:
Clarity: from the top down the desired change must be crystal clear. People need to understand the whys and wherefores, the direction it is taking, their roles in the change and the reasons for it.
Engagement: Successful change requires engaging people’s emotions in the process. People need to be motivated by the proposed change and buy into it.
Direction: Communication about the change requires people know where the company wants to go and why. What is the situation that needs changing? An environment needs to be developed that makes it a team and collaborative effort.
An organization must access what works, what they are doing well and also what needs improvement. It must clearly identify the need for change and get buy-in from those involved. Of course, if an organization’s reputation is in shreds then it’s easy to identify the reasons change is imperative. Still, note how many companies fight change even if it is sorely needed.
The organization which is not resilient is not innovative and resists change, will cease to exist. Click To TweetThere are tremendous pressures on business today. The organization which is not resilient is not innovative and resists change, will cease to exist. Organizations today must learn to make changes quickly, efficiently, effectively and economically for productive outcomes. There simply is no choice.
Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.
