Everyone we know who has tried to implement a new business strategy has inevitably run into the same problem — their organization’s culture is incompatible with their new strategy.
Whether you’ve decided to invest in new product innovations and your company’s culture does not value learning from failure; or you’ve decided to expand globally and your company’s culture values remaining local; or you’ve decided to decentralize and your company’s culture values centralization — sooner or later, your new strategy is going to conflict with your company’s culture.
Abandon or change?
So, what do you do: Abandon your strategy or change your culture?
Abandoning your strategy typically isn’t a good idea — it is, after all, the way you are going to gain competitive advantages in your marketplace.
But changing your culture? No one knows how to change an organization’s culture! Or, at least, that’s what most people think about culture change.
However, it turns out it is possible to change your organization’s culture. While writing our book on culture change, we interviewed over 60 business leaders who engaged in culture change in their organizations. We were able to identify a deceptively simple approach to changing an organization’s culture. This approach starts with a simple question:
How is your firm’s current culture shared and reinforced among your employees?
The answer? The stories that your employees share with each other exemplify what your company values, what it believes in and what it expects from its employees.
It follows from this observation that, if you want to change your organizational culture, then you have to change the stories that employees share with each other about your culture. They have to stop sharing stories that exemplify the old culture and start sharing stories that exemplify a new culture.
How will employees start sharing new stories?
You need to build new stories. As a business leader, you build new stories when you engage in actions that radically break with your organization’s old culture and exemplify the values and norms of a new culture. In short, you act in ways that are so radical, so new — compared to your old culture — that your actions build stories about a new culture that spread throughout your organization like wildfire.
Consider a few brief examples:
- One business leader operating in a rigid, top-down culture needed to build a new culture that emphasized customer service at all levels in the firm. He built a culture-changing story when he invited a phone center employee to address the senior executive team about what the firm needed to do to support a new online product.
- Another business leader operating in a culture that emphasized manufacturing efficiency needed to build a new culture that focused on “delighting and empowering” customers. She did this by inviting customers to divide a diverse group of products — including many of the firm’s products — into two types: products that delighted them as customers, and products that were functional but not delightful. None of this firm’s products ended up in the delightful category. That led to revised product innovation strategies that focused on delightful products.
- A third business leader, operating in a culture that emphasized R&D-driven product innovation with limited customer input, needed to build a new culture that put customers at the center of the innovation process, especially for products designed for developing countries. So, in a break with how product innovation was done in this company, this leader took several team members to India to see how customers there actually used their products. What they learned led them to radically change the product and helped incorporate the consumer perspective more broadly in the product innovation culture.
- Another business leader needed to shake up the complacent culture of his IT firm. After a year when the firm lost money and had to lay off hundreds of employees, he invited his top management team to a celebration dinner at a fancy San Francisco restaurant. But instead of the fine dining and drinks they expected, the only items on the menu were bread and water. He announced to the team: “We’ve done so badly this year, that this is all we deserve — bread and water.” He also told them he had already scheduled a real celebratory dinner for the following year, when he knew that the team would actually have something to celebrate. And they did.
Commonalities in culture change
Based on the above examples, our research identified six key attributes that every successful culture change story has in common.
- They must authentically reflect your personal values — your employees will smell the hypocrisy of inauthentic stories from miles away.
- You, as a business leader, must star in these stories. These are not stories about someone else; they are stories you build while you are doing something radically different from the old culture.
- The stories you build must break with the cultural past of your organization, with a path toward a new culture — this allows your employees to co-create the new culture with you.
- These stories must appeal to your employee’s heads if there is a solid business case why your culture needs to change. The stories also must appeal to their hearts because the new culture appeals to their highest personal values and aspirations.
- These stories are often theatrical so your employees will remember them.
- You must create a story cascade, which empowers people throughout your firm to start building their own culture-changing stories.
Thus, while culture change is not easy, it can be done. So, if you need to change your organizational culture to implement a new strategy, start by building culture-changing stories.
Jay Barney, a frequently cited scholar in strategic management and professor at Eccles School of Management at the University of Utah, has published over 125 articles and book chapters, plus seven books. He has co-authored ”The Secret of Culture Change: How to Build Authentic Stories That Transform Your Organization” with Manoel Amorim and Carlos Julio.
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