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LEADING CULTURE CHANGE

STANFORD UNIVERSITY PRESS

Contents

List of Illustrations..............................................................................................................................................viiList of Culture Change Cases.......................................................................................................................................ixPreface............................................................................................................................................................xiAcknowledgments....................................................................................................................................................xv1 Culture Creates Value In which the author introduces the concept of culture as engine of value creation.........................................................32 What Is Organizational Culture? In which the author provides two working definitions of organizational culture..................................................133 Five Critical Success Factors for Culture Change In which the author discusses five actions crucial to culture change...........................................214 Setup In which the author describes initial CEO decisions and a framework essential to beginning culture change.................................................375 Launch In which the author describes the tools, methods, and structures needed to get culture change off the ground.............................................566 Propagating the Wave In which the author describes best practices in change acceleration, human resource levers, and executive authenticity.....................937 Celebrating Progress In which the author describes how to measure and celebrate movement toward the Vision Culture..............................................1388 Three Common Culture Change Scenarios In which the author provides three commonly found real-world examples of culture change...................................1559 Culture Change Leadership Competencies In which the author delineates a set of "leadership competencies" for the CEO............................................17710 Culture, the Economy, and Survival of the Fittest In which the author discusses the recent financial crash and its relation to culture.........................193APPENDIX Dawson Culture Change Lexicon.............................................................................................................................199Notes..............................................................................................................................................................205Index..............................................................................................................................................................209

Chapter One

Culture is the engine of value creation. Building a consistent, strong organizational culture is one of the most important contributions a leader can make. Why? Because organizational culture is the prime mover and the accelerator, or barrier, for all other value-producing (or destroying) activities.

A distinctive, well-aligned culture creates a powerful competitive advantage, one that is difficult to duplicate. It is the medium through which any leadership initiative will be executed. Indeed, leadership priorities will only be realized to the extent that the culture allows and facilitates those priorities to come about. Culture is a first cause in creating value outcomes, and can be shaped by leaders who channel this powerful force.

The CEO and top team can shape and change culture to accelerate or hinder organizational value. This book is about how to shape culture so that it becomes an accelerator to value creation.

Why is Culture underutilized by Leaders?

Impediments arising from the organizational culture pose a serious risk to successful execution of any and all leadership initiatives. In extreme external conditions, overcoming those culture impediments will determine survival. Why is there such fatalism and abdication by leaders when it comes to active shaping of this critical variable? Leaders often speak eloquently about their culture, but then delegate the entire space to the Human Resources function, as though it were an accounting detail they did not need to bother with.

Understanding, defining, and leading the culture of an organization is a primary job of the CEO or top leader and should not be delegated. CEOs should be as knowledgeable and involved in shaping the culture as they are in relating to customers, working with the board, and driving the strategy.

Culture Can Be Shaped and Changed

Here is the good news: culture can always be shaped, and often changed for the better! I have seen it happen many times in my consulting practice over twenty-five years-and the literature is full of rich examples that reinforce that conclusion. How is it that culture changes? And can it be deliberately shaped? These are the questions I hope to answer in the pages that follow.

Individual personality and organizational culture have much in common that we can learn from. We all have certain personality traits-some of them established early on and relatively fixed, others acquired through life in the course of experience. When we meet any of life's challenges-whether aspired to as a goal or thrust upon us by circumstance-our ability to deal with that challenge will be accelerated or limited by our personal attributes. If it is our desire to climb a mountain (or if we "find ourselves" at the bottom of one that must be climbed), there are numerous physical and personality characteristics of the climber that will make the journey more or less successful. Some of these characteristics could even preclude the journey before it ever begins. We all begin with some baseline portfolio of physical, mental, and emotional attributes: stamina, determination, lung capacity, risk-taking, and so on. These can be developed-to a degree-through focused training and sufficient will to achieve the goal. However, there will almost always be a point at which baseline traits and physical attributes become limiting factors instead of facilitators.

The very wish to climb the mountain (or to recognize that it must be climbed due to circumstance) is an attribute of the individual at the bottom of that mountain. There are some, finding themselves at the bottom of the mountain, who conclude, "I am perfectly content here without the bother of climbing this mountain." Others cannot begin their climb soon enough. Some need or drive compels such individuals to climb the mountain, for reasons that are important to them. That "reason" may be reactive or proactive: "I'll die if I don't get out of this valley, over that mountain" or "I'll be better somehow when I get to the top."

There are many parallels with organizational culture in this discussion of individual personality. If the "mountain" is the external environment facing any organization, and organizational culture is a stable set of values and capabilities, we can think of organizational culture as the accelerator or barrier to those strategic intentions of the organization. In this context, organizational culture may also become a powerful competitive...