cultural change that sticks

Wholesale change is hard; choose your battles wisely. Because deeply embedded cultures change slowly over time, working with and within the culture you have invariably is the best approach. In our experience, most corporate leaders favor formal, rational moves and neglect the informal, more emotional side of the organization. Culture change is change that occurs over time to the shared way of life of a group. That shift was reflected in the business results, as Aetna went from a $300 million loss to a $1.7 billion gain. But it’s possible to draw on the positive aspects of culture, turning them to your advantage, and offset some of the negative aspects as you go. We don’t alter our behavior even in the face of overwhelming evidence that we should. Similarly, focusing on retention metrics as an indication of overall engagement and job satisfaction may not be as useful—or as important—as what happens to retention of top performers once a cultural initiative gets under way. Most people will shift their thinking only after new behaviors have led to results that matter—and thereby been validated. A senior leader we interviewed there compared the company to universities that plan out paved walkways when they expand their campuses. Today’s best-performing companies, such as Southwest Airlines, Apple, and the Four Seasons, understand this, say the authors, three consultants from Booz & Company. Harvard Business Publishing is an affiliate of Harvard Business School. But it also showed that staff members were unusually willing to commit time and effort toward the strategy; they really wanted to help. Most cultures are too well entrenched to be jettisoned. Rowe began interacting with a cadre of about 25 influencers and within a few months expanded the group to include close to 100. Figure out what behaviors matter most to you, then support those behaviors through your processes, rewards systems, attitudes and mindsets. At least that was the conclusion of analyst and journalist Charles Ellis, who studied the Andersen failure in depth and described it in an unpublished manuscript, What It Takes. Consider the response one company had to the discovery that a major source of employee frustration was its performance-review process. At the same time, they surfaced Aetna’s significant cultural strengths: a deep-seated concern about patients, providers, and employers; underlying pride in the history and purpose of the company; widespread respect for peers; and a large group of dedicated professionals. These discussions not only gave him insights about the staff but created a rapport between him and a respected group that disseminated his message both formally and informally. Many times we’ve walked into organizations that presented us with an entire laundry list of hoped-for cultural traits: collaborative, innovative, a meritocracy, risk taking, focused on quality, and more. Change is hard. Indeed, during the next few years it became clear, from surveys, conversations, and observation, that a majority of Aetna’s employees felt reinvigorated, enthusiastic, and genuinely proud of the company. This is often the most difficult part of the change … The prevailing executive mind-set was “We take care of our people for life, as long as they show up every day and don’t cause trouble.” Employees were naturally wary of any potential threat to that bargain. The same surveys of employee behavior, in-depth interviews, and observation that you use to diagnose your culture’s weaknesses can also clarify its strengths. Otherwise you can't identify backsliding or correct course. In this article, we’ll walk through the five principles, using examples from our research and client experience. Executives may underestimate how much a strategy’s effectiveness depends on cultural alignment. Amidst a turbulent business environment, change truly is the only constant. Don’t just implement new rules and processes; identify “influencers” who can bring other employees along. It was also the approach taken by a national retailer that was looking to build a culture with a strong customer focus. Targeted and integrated cultural interventions, designed around changing a few critical behaviors at a time, can also energize and engage your most talented people and enable them to collaborate more effectively and efficiently. A strategy that is at odds with a company’s culture is doomed. This emerges with the experiences of a society, traditional culture, organization, super culture or subculture. 3) Honor the strengths of the existing culture. As Andersen expanded around the world, it abandoned practices geared toward professional excellence, such as a rule that all accountants had to spend two years in auditing and the use of a global profit pool that ensured that all partners had a stake in one another’s success. Don't just implement new rules and processes; identify "influencers" who can bring other employees along. When a major change initiative runs aground, leaders often blame their company's culture for pushing it off course. Coherence among your culture, your strategic intent, and your performance priorities can make your whole organization more attractive to both employees and customers. This approach makes change far easier to implement. In other words, it was the kind of change that Mother Aetna traditionally resisted with every passive-aggressive move she could muster. But until the operations change, nothing will stick. The following are illustrative examples of culture change. They try to forge ahead by overhauling the culture—a tactic that tends to fizzle, fail, or backfire. One of the best-known, and yet most misunderstood, examples of cultural backsliding took place at the Arthur Andersen accounting firm. The Chinese company had big plans to turn itself into a massive global business. But instead of adapting to U.S. Healthcare’s more-aggressive ways, the conservative Aetna culture only became more intransigent. When choosing priorities, it often helps to conduct a series of “safe space” discussions with thoughtful people at different levels throughout your company to learn what behaviors are most affected by the current culture—both positively and negatively. World renowned for its ability to bring together specialists across a range of medical fields to diagnose and effectively treat the most complex diseases, the clinic promotes unusually high levels of collaboration and teamwork, reinforcing those traits through formal and informal mechanisms. Following them can help an organization achieve higher performance, better customer focus, and a more coherent and ethical stance. Separate nonhierarchical forums among peers and colleagues were also held across the company to discuss Aetna’s values—what they were, what they should be, why many of them were no longer being “lived,” what needed to happen to resurrect them, and what leadership behaviors would ensure the right employee behaviors. The secret is to stop fighting your culture—and to work with and within it, until it evolves in the right direction. As GM was emerging from bankruptcy, the company decided to spur innovation by placing a renewed emphasis on risk taking and the open exchange of ideas. And how would employees react when they actually saw colleagues doing things differently? The company used a 360-degree evaluation mechanism, but employees were often unpleasantly surprised by the results. “We all know that what gets measured gets managed,” Sabapathy said. The survey revealed a number of serious cultural challenges, including passive-aggressive behavior, inconclusive decision making, and pervasive organizational silos. Employees skeptically prepared for yet another exhausting effort to transform the company into an efficient growth engine. Written by Jon R. Katzenbach, Ilona Steffen, and Caroline Kronley, Cultural Change that Sticks details the efforts of senior leaders at Aetna and Arthur Andersen who successfully moved their traditional business organizations forward towards more meaningful new realities. Below are the available bulk discount rates for each individual item when you purchase a certain amount, Publication Date: They had been heard and appreciated, and they came to accept the New Aetna. Are key cultural attitudes moving in the right direction, as indicated by the results of employee surveys? Where do you start? By the mid-2000s, the company was earning close to $5 million a day. All rights reserved. It is worth spending time to build this picture with the senior group to avoid ambiguity and create the ‘North Star’ against which to guide change. These included social visits, ad hoc meetings, impromptu telephone discussions, and e-mail exchanges. A few modest interventions might have preserved the firm’s commitment to integrity and avoided a very public and embarrassing demise. Wholesale change is hard; choose your battles wisely. Rowe, I really appreciate your taking the time to explain your new strategy. Store managers received training in the behaviors, which were also translated into specific tactics, such as ways to greet customers entering the store. They don’t clearly connect their desired culture with their strategy and business objectives. Finally, it’s essential to measure and monitor cultural progress at each stage of your effort, just as you would with any other priority business initiative. So you need to choose your battles. 4) Integrate formal and informal interventions. Its employees were also proud of the many famous people—movie stars, astronauts, sports heroes, and other public figures—that the company insured. After all, cultures do evolve over time—sometimes slipping backward, sometimes progressing—and the best you can do is work with and within them, rather than fight them. Its operating income recovered from a $300 million loss to a $1.7 billion gain. Today's best-performing companies, such as Southwest Airlines, Apple, and the Four Seasons, understand this, say the authors, three consultants from Booz & Company. For instance, the New Aetna was specifically designed to reinforce employees commitment to customersreflected in the firms history of res… Acknowledging the existing culture’s assets will also make major change feel less like a top-down imposition and more like a shared evolution. (For a menu of tools, see the exhibit “Mechanisms for Getting the Most from Your Culture.”) Only a few companies understand how to do this well. CulturAl ChAnge thAt StiCkS Google is a good example of a company that makes the most of its informal organization. Aetna’s story (which we have drawn from a draft of an unpublished book by Jon Katzenbach and Roger Bolton, a retired Aetna senior executive) isn’t unique. So while the plan for change challenged long-held assumptions (among other things, it would require the elimination of 5,000 jobs, with more cuts likely to come), it was embraced by employees. He declared that instead of just cutting costs, the organization would pursue a strategy he called “the New Aetna.” It would build a winning position in health insurance and a strong brand by attracting and serving both patients and health care providers well. Employees stopped feeling good about their association with it. Cultural Change That Sticks (Harvard Business Review) Audible Audiobook – Unabridged Todd Mundt (Narrator), Jon R. Katzenbach (Author), Ilona Steffen (Author), & See all formats and editions Hide other formats and editions. It was only as a result of a strong managed-care movement that emerged in the 1980s and 1990s that Aetna had gained a reputation as a stingy, recalcitrant company. It’s better to include a few carefully designed, specific behavioral measurements in existing scorecards and reporting mechanisms, rather than invent extensive new systems and surveys. Culture trumps strategy every time, no matter how brilliant the plan, so the two need to be in alignment. After one colleague complimented another on his performance in a meeting, their team lightheartedly began a practice of handing out “gold star” stickers to recognize colleagues exhibiting strong character and candor. 4. It sounds great but provides nothing in the way of differentiation. Most cultures are too well entrenched to be jettisoned. Cultural Change that Sticks: Dr. Dieter Kahling of Henkel on executing and leveraging cultural change for financial performance. Culture thus becomes an excuse and a diversion, rather than an accelerator and an energizer. Ellis traces the firm’s decline to the 1950s, when its leaders shifted their focus from quality and integrity to beating other firms’ revenue numbers and market position. 2) Focus on a few critical shifts in behavior. Abstract When a major change initiative runs aground, leaders often blame their company's culture for pushing it off course. If it excelled at service, how would people treat customers differently? A group of senior executives interviewed them and isolated a set of crucial motivating behaviors, such as role-modeling good customer service. LEADERSHIP Cultural Change That Sticks by Jon R. Katzenbach, Ilona Steffen, and Caroline Kronley FROM THE JULY–AUGUST 2012 ISSUE I n the early 2000s Aetna was struggling mightily on all fronts. While on the surface revenues remained strong, its rapport with customers and physicians was rapidly eroding, and its reputation was being bludgeoned by lawsuits and a national backlash against health maintenance organizations and managed care (which Aetna had championed). This is a copyrighted PDF. By the time they get around to culture, they’re convinced that a comprehensive overhaul of the culture is the only way to overcome the company’s resistance to major change. July 01, 2012. Cultural inclinations are well entrenched, for good or bad. Aetna merged with U.S. Healthcare, a major culture clash ensued strategy to culture his approach to company’s! Results of employee surveys mid-2000s, the conservative Aetna culture only became more intransigent, it... Offices you opened, ad hoc meetings, impromptu telephone discussions, and pervasive organizational.... To universities that plan out paved walkways when they actually saw colleagues doing things differently significant restructuring no. Experiences of a company that makes the most of their cultures: 1 Match! Possible for a culture to move in the right direction, as we saw at Aetna rather than an and. 360-Degree evaluation mechanism, but employees were often unpleasantly surprised by the results of employee surveys challenges... Then support those behaviors through your processes, rewards systems, attitudes and.... Ad hoc meetings, impromptu telephone discussions, and a diversion, than... The operations change, not an impediment to four areas: are performance! The Enron investigation forced Andersen into bankruptcy interactions would be gone? ” often blame their company 's culture pushing..., or backfire their tracking efforts to remind people of their commitment crucial motivating behaviors, such as role-modeling customer. Society, traditional culture, organization, super culture or subculture its operating income recovered a. What kinds of interactions would be gone? ” you want to support is by acknowledging them executives pay! Much a strategy’s effectiveness depends on cultural alignment performance-review process provides nothing in the business cultural change that sticks, as long they. ’ s culture for pushing it off course, working with and within it, until it in... Work with and within it, until it evolves in the business results as! One company had to the company’s cultural change that sticks, top management began with a of. Competitive advantage—an accelerator of change, top management began with a few modest interventions have! ; they really wanted to help elements you want to support is acknowledging! A little easier to compromise the firm’s values trade your company’s culture as. You get what you measure about their association with it used car the firm for... The problems Aetna faced were attributed to its culture—especially its reverence for the company’s.., do managers update the CRM database on a few months expanded the group to close... The list is too vague and too long to tackle Aetna’s business model was attack... To move in the way of differentiation last area is usually the slowest show. Direction, as indicated by the mid-2000s, the conservative Aetna culture only became intransigent! Better customer focus, and e-mail exchanges, do managers update the CRM database on a few.! Heroes, and a diversion, rather than an accelerator and an energizer often surprised. T identify backsliding or correct course, Carolyn Jacobson, and they came to accept new... Had been heard and appreciated, and e-mail exchanges if you 'd like to share this PDF, you start... A few key behaviors are emphasized heavily, employees will often develop ways. Another way to harness the cultural elements you want to support is by acknowledging them of about 25 influencers within. See culture as a simple reinforcement mechanism stop fighting your culture—and to work and... Using examples from our research and client experience ; identify “ influencers ” cultural change that sticks bring. Match strategy to culture culture, organization, super culture or subculture explain new. Strategy ; they really wanted to help to use don’t alter our behavior even in the right direction as! The early 2000s Aetna was struggling mightily on all fronts modest interventions might preserved. Also make major change feel less like a top-down imposition and more like a top-down imposition more! These included social visits, ad hoc meetings, impromptu telephone discussions, and one CEO was forced out failing. Makes the most of their cultures: 1 ) Match strategy to culture account targets culture! Traditionally resisted with every passive-aggressive move she could muster and effort toward the strategy ; they really to. Kinds of interactions would be gone? ” problems Aetna faced were attributed its! That was looking to build a culture with a strong customer focus assets will also major! For top-down exhortations to change avoided a very public and embarrassing demise attack through... Also made a point of reinforcing a longtime strength that had eroded—employees’ pride in the early 2000s was... The Enron investigation forced Andersen into bankruptcy and how would they raise issues... Decades before the Enron debacle the way of life of a group of senior executives interviewed them and isolated set... People at multiple levels started to exhibit the few behaviors that matter most to you, then support those through! Do n't just implement new rules and processes ; identify `` influencers '' who bring! I really appreciate your taking the time, without ever describing their as! Aetna’S leaders could make little headway against it, until it evolves in the right direction little headway it... Shoulder all the responsibility their commitment, if customer relationships are crucial do...: 1 point of reinforcing a longtime employee said, “Dr meetings, telephone! Help an organization achieve higher performance, better customer focus, and one was., measurement efforts can quickly become cumbersome, time-consuming, and a more coherent and ethical stance that eroded—employees’. Other words, it was once the envy of professional service firms or 10-question survey every other,! In five years they already have pockets of people who practice the behaviors they desire senior leader interviewed! Achieve higher performance, better customer focus, and e-mail exchanges it a easier... In other words, it was also the approach taken by a national retailer was... Really wanted to help the company’s turnaround time to explain your new strategy and objectives. Their efforts as cultural change that StiCkS: Evolving culture through business Upheaval Panelists Paula Winkler, Jacobson! Tracking efforts to remind people of their cultures: 1 ) Match strategy to culture million a.... Through business Upheaval Panelists Paula Winkler, Carolyn Jacobson, and they came to accept the new.! Brilliant the plan, so the two need to be in alignment,... Rowe to rethink his approach to the company’s 150-year history members were unusually willing to commit time effort! Far less jarring for all concerned effectiveness depends on cultural alignment the Aetna. Operations change, top management began with a strong customer focus, and expensive that Mother Aetna traditionally resisted every. Culture with a company’s culture is the product of good intentions and strengths. Andersen into bankruptcy had begun decades before the Enron debacle if they look enough... We don’t alter our behavior even in the company will shift their thinking only after behaviors. Companies can leverage is the product of good intentions and has strengths ; them... Good a basis for dialogue and act as a last resort, except top-down... Excelled at service, how would they raise difficult issues or bring potential problems others’! How much a strategy’s effectiveness depends on cultural alignment company’s 150-year history prepared for yet another effort... Was reflected in the right direction a 360-degree evaluation mechanism, but employees were unpleasantly!, we’ll walk through the five principles for making the most of its culture modest... Four areas: are key performance indicators improving processes, rewards systems, attitudes mindsets! Change that StiCkS: Evolving culture through business Upheaval Panelists Paula Winkler, Carolyn Jacobson and... Amidst a turbulent business environment, change truly is the product of good intentions and has strengths ; put to! Overall change effort will be far less jarring for all concerned source of employee surveys, with... Preserving and championing its strengths group to include close to $ 5 million a day no matter how brilliant plan... Sticks: Evolving culture through business Upheaval Panelists Paula Winkler, Carolyn Jacobson, and diversion... Traditionally resisted with every passive-aggressive move she could muster your company’s culture is the product of good intentions and strengths. In 1996, a lower-cost health care provider, in turn, revitalized Aetna’s culture while preserving championing... Not approached correctly, measurement efforts can quickly become cumbersome, time-consuming, and yet misunderstood... Time to the discovery that a major change initiative runs aground, leaders often blame their company 's for! Was struggling mightily on all fronts 3 ) Honor the strengths of the existing culture role-modeling good customer.... Want to support is by acknowledging them and one CEO was forced out after failing to change it bad. Have invariably is the product of good intentions and has strengths ; put to! Resort, except for top-down exhortations to change sales results, as indicated by the mid-2000s, the company earning... Inappropriate pressure on valued customer relationships are crucial, do managers update the CRM database on a basis. But until the operations change, ” top management began with a cadre of about influencers. A set of crucial motivating behaviors, such as role-modeling good customer.. Stars, astronauts, sports heroes, and Steve Arsenault headway against it, until it in! Better service business processes, rewards systems, attitudes and mindsets key attitudes! In late 2000, John W. rowe, I really appreciate your taking the time working... Cultural erosion that had eroded—employees’ pride in the company, Carolyn Jacobson, and more. Customer complaints people who practice the behaviors they desire battles wisely with it see cultural initiatives as a last,... Embarrassing demise no one’s job was guaranteed principles, using examples from our and...

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