Published on July 24, 2017
“Shortcomings in organizational culture are one of the main barriers to company success in the digital age… cultural obstacles correlate clearly with negative economic performance.” McKinsey article on the importance of Culture
It is reassuring to see that venerable, traditionally ‘quant’ consultancies like McKinsey are finally lending credence to the intrinsic power of organizational culture. Other writers like Tom Peters, John Kotter, Jim Collins, Jim Kouzes and Barry Posner have railed about it for decades, yet it took the intensity of a VUCA world to finally raise broader awareness.
The authors cite three main areas of concern: silos, risk aversion, and lack of a customer-centric mindset, as being collectively detrimental to organizational success in a digital world, and offer some excellent strategies and anecdotes as remedies.
But a deeper dive would show that true cultural development and sustenance requires not only strategic policies, but organic, strategic and systematized conversations, that deepen relationships, clarify mission, values and expectations, and foster accountability.
Digital strategy, while requiring much faster creation than traditional strategic plans, still requires agile and resilient execution. First, individuals must clearly understand and take personal ownership of the strategy and policies, and then agree as to how teams and tribes will share accountability to drive results. The power of effective culture lies at that granular level. It is not a top-down, one-off process.
In speaking of his famous 8-step change management model, Harvard professor John Kotter lamented that he witnessed many companies drive the process well, right up to Step 7 (Consolidating Gains and Producing More Change) and Step 8 (Anchoring New Approaches in the Culture), only to see senior managers or champions leave or let up on communication, and watch the organization slip back into old habits within a year or two. Devastating. But the main reason was that no systematic method of continual communication was built into the structure and policy, to ensure the change took deep root.
To guard against this, one company, Actionable Conversations, has hit upon an effective solution. Their logic states that better conversations lead to deeper relationships,which lead to higher employee engagement, which improves any performance metric you can think of. They prescribe one-hour, leader-led conversations, once a month, that help teams apply cutting-edge business thinking to their current challenges and opportunities. Employees then enter a small behavioural change commitment into a platform that provides progress metrics over the course of the following month.
The key is to implement vertical and lateral conversations, across teams, functional and departmental silos, and on a regular basis, so that strong, trusting relationships are simultaneously built, while employees discuss the most pressing issues facing the company. Regular strategic conversations act like a massage, keeping key messages front and center in mind, and facilitating the gradual behavioural changes that eventually become the fabric of a new, stronger culture.
It is somewhat surprising that it took so long for the competitive advantage of a strong, positive culture to be more widely recognized and deployed, but perhaps that is because creating and nurturing such a culture is hard, relentless work. But in VUCA world, as the article says, solving these cultural problems is no longer optional. And that, in the long run, will be a very good thing.