How to trans­form or­ga­ni­za­tional cul­ture

Philippine Daily Inquirer - - JOB MARKET - Enrique V. Abade­sco (Enrique "Ric" is con­sid­ered a pi­o­neer in the or­ga­ni­za­tion devel­op­ment (OD) field in the Philip­pines, hav­ing headed the first for­mal OD unit of San Miguel Cor­po­ra­tion dur­ing the com­pany's trans­for­ma­tive years. He was Se­nior Vice Presi

CEOs in the tur­moil of or­ga­ni­za­tional tran­si­tions of­ten ask their change man­age­ment con­sul­tants: How do I trans­form my or­ga­ni­za­tion? What lessons can I learn from the ex­pe­ri­ence of oth­ers?

Chang­ing busi­ness or­ga­ni­za­tions is like fix­ing a rac­ing car while speed­ing at 200 kilo­me­ters an hour. Lead­ers have to face the chal­lenges and ur­gen­cies of run­ning the busi­ness on a day to day ba­sis while at the same time build a new or­ga­ni­za­tion for the fu­ture.

Rule 1: Trans­for­ma­tion is the CEO's busi­ness

At the risk of sound­ing re­dun­dant, Rule 1 is the first tru­ism of suc­cess­ful change. How­ever it still needs to be said: The CEO must be in the driver's seat and must vis­i­bly in­flu­ence the change. Note the word "in­flu­ence" as cul­ture change is more com­plex than just lead­er­ship be­ing in the driver's seat and is cer­tainly be­yond one in­di­vid­ual's con­trol. If you are a new CEO try­ing to change an old, ex­ist­ing or­ga­ni­za­tion, the chal­lenge is dou­bly for­mi­da­ble.

The ba­sics of lead­ing change are, how­ever, de­cep­tively sim­ple: state your dreams and con­vic­tions loud and clear, dra­ma­tize the link be­tween your vi­sion and the firm's fu­ture sur­vival and suc­cess, live the change and do it con­sis­tently… ev­ery­day. And most im­por­tantly, get ev­ery­one on board! Your se­nior man­age­ment team is a good place to start. You and your se­nior ex­ec­u­tives need to be on the same wave­length in terms of your vi­sion and val­ues and be­hav­iors. You may want to start defin­ing a spe­cific brand of lead­er­ship, one which em­bod­ies the new as­sump­tions and val­ues of the or­ga­ni­za­tional cul­ture you want to re­in­force. Work­ing ef­fec­tively as a team is an­other path­way which needs to be ex­plored. Iden­ti­fy­ing key pri­or­i­ties and map­ping out a roadmap for the whole or­ga­ni­za­tion fa­cil­i­tates the jour­ney. Trans­for­ma­tion is the main job of the chief ex­ec­u­tive, not a task to be del­e­gated to her HR per­son.

Rule 2: Chart your des­ti­na­tion and post signs along the way

Ar­tic­u­late your view of why the busi­ness ex­ists, where you want it to be in the fu­ture, the most im­por­tant prin­ci­ples that will guide the or­ga­ni­za­tion and the crit­i­cal per­for­mance ar­eas you want the fo­cus on. Do this to­gether with your lead­er­ship team. When An­dres Soriano, Jr. took the reins of the San Miguel busi­ness em­pire, he took his se­nior ex­ec­u­tives to a 3-day busi­ness retreat in Honolulu to col­lec­tively pon­der on th­ese is­sues.

They came back with a team name and an agenda for cul­ture change. They called them­selves "SMC-squared" or the Se­nior Man­age­ment Com­mit­tee of SMC and met on a monthly ba­sis for the next sev­eral years to lead the change on San Miguel's cen­tury-old cul­ture. Ten years later, the cul­tural ter­rain of the new San Miguel was amazingly close to the orig­i­nal map.

Rule 3: Use mul­ti­ple levers to cat­alyze change

This rule re­lies on sys­tems think­ing which views or­ga­ni­za­tions as living or­gan­isms com­posed of many "sub-sys­tems" and as part of many "su­per-sys­tems" above it. As such, any change in its su­per- and sub-sys­tems af­fects the whole. In the case of chang­ing cor­po­rate cul­tures, it may be help­ful to think of trans­for­ma­tion as hav­ing the fol­low­ing sub-sys­tems: lead­er­ship, struc­tures, sys­tems, com­pe­ten­cies and strat­egy. Sys­tems think­ing also sug­gests that trans­for­ma­tion hap­pens as a re­sult of many small things, hap­pen­ing over time.

When SMC2 planned the new San Miguel, it used the mul­ti­ple-lever ap­proach start­ing with defin­ing its vi­sion and core val­ues. Un­der the lead­er­ship sub-sys­tem, it de­fined a lead­er­ship brand, mov­ing from au­to­cratic to a more par­tic­i­pa­tive style, from a re­ac­tive to a more fu­ture-ori­ented pos­ture and from a fo­cus on prod­ucts to a fo­cus on mar­kets and the cus­tomer. The com­pany set up an ac­cel­er­ated man­age­ment suc­ces­sion pro­gram, in­stalling new and young man­agers who embodied the new style into se­nior ex­ec­u­tive po­si­tions. All su­per­vi­sors and man­agers un­der­went in-depth ori­en­ta­tion into the San Miguel Man­age­ment Sys­tem, a man­age­ment devel­op­ment train­ing cen­ter was for­mally es­tab­lished, tech­ni­cal cen­ters of ex­cel­lence were set up and a for­mal man­age­ment suc­ces­sion pro­gram was put in place.

Rule 4: Pri­or­i­tize and se­quence your change levers

Your be­hav­iors as well as those of your se­nior ex­ec­u­tives are the pri­mary levers to in­duce cul­ture change. Th­ese be­hav­iors in­clude:

• De­lib­er­ate role mod­el­ing, teach­ing and coach­ing. This would in­clude public ver­bal dec­la­ra­tions, memos, as well as high­light­ing of val­ues and norms in coach­ing and men­tor­ing sit­u­a­tions.

• What you pay at­ten­tion to, mea­sure and con­trol. A pow­er­ful as­pect of this at­ten­tion-giv­ing mech­a­nism is the oc­ca­sional and pur­po­sive "emo­tional out­burst" of lead­ers to vi­o­la­tions of key val­ues and be­liefs. The other side of this is what you ig­nore or don't re­act to. At a more for­mal level, plan­ning and mon­i­tor­ing pro­cesses (long range plan­ning and bud­gets) pro­vide the fo­rum through which mes­sages of at­ten­tion are sent.

• Pro­mo­tions and pay in­creases tied up to the prac­tice of new as­sump­tions and val­ues. Also re­lated to this are the cri­te­ria for re­cruit­ment, de­rail­ment and re­tire­ment.

Sec­ondary levers of change will work only if the pri­mary mech­a­nism of "lead­er­ship by ex­am­ple" is in place. Among the most com­monly used sec­ondary mech­a­nisms of change are: struc­ture, sys­tems and pro­ce­dures, fa­cil­i­ties, phys­i­cal lay­out and ar­range­ments and for­mal pol­icy state­ments. In the early stage, us­ing some el­e­ment of co­er­cion can also be a pow­er­ful lever. This can take the shape of mov­ing aside or even fir­ing some se­nior ex­ec­u­tives who could not adapt to the new val­ues. The au­thor, when he was an OD manager in an in­ter­na­tional chem­i­cal com­pany, fa­cil­i­tated a world­wide meet­ing of the newly ap­pointed CEO who dramatically thrashed two highly vis­i­ble man­age­ment re­ports as a sym­bol of a new man­age­ment style.

Rule 5: Use a planned change process

Adopt a sys­tem­atic process for lead­ing change. There are nu­mer­ous ver­sions, one of which is a com­pi­la­tion by the au­thor, as fol­lows:

1. Mo­bi­lize lead­er­ship com­mit­ment for change through a col­lec­tive anal­y­sis of is­sues and chal­lenges

2. De­sign the de­sired fu­ture state through a shared vi­sion

3. Plan the way and man­age re­sis­tance to change

4. Ex­e­cute the plan through the 3C's: Con­sult, Com­mu­ni­cate, Co­or­di­nate

5. Align poli­cies, sys­tems and struc­tures

6. Mea­sure, mon­i­tor and sus­tain progress

The process out­lined above is just one ex­am­ple of a sys­tem­atic trans­for­ma­tional ap­proach. Or­ga­ni­za­tion devel­op­ment spe­cial­ists use large group sum­mits as a way to in­volve and en­gage a crit­i­cal mass of change agents. A crit­i­cal mass would typ­i­cally con­sist of the sec­ond tier of lead­ers and would in­clude a di­verse group of em­ploy­ees com­ing from dif­fer­ent lev­els, func­tions and ge­ogra­phies. An im- por­tant out­come of th­ese di­a­logues is a col­lec­tive mind­set and com­mit­ment to a set of ac­tions lead­ing to a shift in the or­ga­ni­za­tion's cul­ture.

In a study of suc­cess­ful cor­po­rate trans­for­ma­tions, some com­mon threads in terms of ini­tial ac­tiv­i­ties (even be­fore work­ing on a for­mal change plan) are ev­i­dent: 1) CEOs lead­ing suc­cess­ful change build ini­tial cred­i­bil­ity by at­tend­ing to the brush fires first, in the process, en­sur­ing short term turn­around of the busi­ness; 2) re­or­ga­nized the se­nior man­age­ment team, of­ten by bring­ing in new blood; 3) used a top down and bot­tom up ap­proach, cre­at­ing a crit­i­cal mass to jump-start the trans­for­ma­tion; 4) ini­ti­ated a steady and con­tin­u­ous build-up of ac­tiv­i­ties in­stead of stop-and-start mega-ini­tia­tives; 5) paid a lot of at­ten­tion to peo­ple is­sues and pro­vided safety nets to en­sure ac­cep­tance of change; 6) formed a change agent unit char­tered to steer and mon­i­tor the trans­for­ma­tion; 7) used the author­ity of their of­fice to pro­claim, in­spire and even oc­ca­sion­ally co­erce the new as­sump­tions and norms into the main­stream cul­ture. The pri­va­ti­za­tion story of one of the wa­ter util­ity fran­chises in Manila pro­vides a clas­sic ex­am­ple of th­ese change steps and how fol­low­ing th­ese steps con­trib­uted to a suc­cess­ful cul­tural change.

An ap­proach by Roland Sul­li­van, a thought leader in or­ga­ni­za­tional trans­for­ma­tion, lays out a sys­tem­atic four-tier ap­proach called Whole Sys­tem Trans­for­ma­tion. This ap­proach culls Sul­li­van's vast ex­pe­ri­ence and re­search on or­ga­ni­za­tion devel­op­ment and pro­vides a four-phase pro­gres­sion to­wards dra­matic shifts in mind­set and busi­ness re­sults.

Your mix of in­ter­ven­tions will de­pend on your col­lec­tive anal­y­sis and change ob­jec­tives. Do not front-load your in­ter­ven­tions. Re­mem­ber that Rome was not built in a day, so cre­at­ing a new cul­ture will take some time. Spread out your change ini­tia­tives (be guided by Rule 4) and steadily build it up in­stead of un­der­tak­ing start and stop mega-ini­tia­tives.

Rule 6: Don't mo­nop­o­lize own­er­ship of change

Cre­ate as many co-own­ers of your cul­ture change pro­gram. In­volve­ment is the door to own­er­ship and com­mit­ment. En­large and widen your lead­er­ship net­work. One CEO started with his im­me­di­ate se­nior lead­er­ship team, then in­vited the next two lev­els of man­agers to a sec­ond con­fer­ence and in the fol­low­ing 12 months, in­volved the rest of the com­pany through a se­ries of large group di­a­logues and ac­tion ses­sions. By year-end, the CEO has spread out own­er­ship of the change pro­gram to his 12,000 em­ploy­ees through­out the world. Trans­for­ma­tion process has been fa­cil­i­tated by con­ven­tion­type meet­ings where large groups of em­ploy­ees dialog and co-cre­ate a shared vi­sion of the fu­ture. An­other tool to con­sider is to form task forces to work on cor­po­rate is­sues and in­vite a cross sec­tion of em­ploy­ees to be lead­ers and mem­bers of th­ese prob­lem solv­ing teams.

Rule 7: Ex­pect and, then, man­age re­sis­tance to change--- it's nat­u­ral

The old cul­ture (es­pe­cially of suc­cess­ful or­ga­ni­za­tions) is a source of self-es­teem and a jus­ti­fi­ca­tion of past suc­cesses. Ex­pect re­sis­tance to your vi­sion and new ways of do­ing things----th­ese will be per­ceived as "untested so­lu­tions" un­til dra­matic, pos­i­tive re­sults will bear you out. So, re­mem­ber to honor the past… build on strengths of the old cul­ture. In the mean­time, what you should do is to con­stantly chal­lenge old as­sump­tions and con­sis­tently de­clare, ar­tic­u­late, pay at­ten­tion, re­ward and even force through th­ese new as­sump­tions.

"Le­git­imiz­ing" re­sis­tance means that you & your se­nior ex­ec­u­tives will have to ex­er­cise ac­tive, em­pa­thetic lis­ten­ing. Cre­ate a cli­mate con­ducive to open­ness, one which will en­cour­age peo­ple to air their con­cerns. Teach su­per­vi­sors and man­agers through­out the or­ga­ni­za­tion how to lis­ten and en­cour­age feed­back.

Rule 8: Dra­ma­tize the change

Cre­ate drama in or­der to con­vey your mes­sage of se­ri­ous­ness of in­tent. The most dra­matic to the or­ga­ni­za­tion would be changes in your­self and the be­hav­iors of your top ex­ec­u­tives. Do not hes­i­tate to use all me­dia in­clud­ing use of gim­micks to cre­ate a head­line ef­fect. Re­mem­ber, that th­ese are un­der­lin­ings for em­pha­sis and need to be sub­stan­ti­ated with your lead­er­ship by ex­am­ple. "Drama" could also in­clude bring­ing in new blood in your ex­ec­u­tive teams, pro­mot­ing young high po­ten­tials to highly vis­i­ble po­si­tions, fir­ing a re­cal­ci­trant ex­ec­u­tive, do­ing away with a "dys­func­tional tra­di­tion."

One of the hall­marks of the San Miguel Cor­po­ra­tion trans­for­ma­tion from a fam­ily style or­ga­ni­za­tion to the pro­fes­sional stature it cur­rently en­joys was the highly vis­i­ble and ac­cel­er­ated move­ment of young mi­dlevel man­agers to se­nior man­age­ment po­si­tions in a dra­matic pe­riod of just 3 years! The com­pany also in- sti­tuted a new cor­po­rate im­age pro­gram con­sis­tent with its new val­ues and strate­gies.

Rule 9: Build change struc­tures and net­works and pro­vide re­sources for the change process

The new CEO of an in­ter­na­tional food con­glom­er­ate used TQM as his plat­form and struc­ture for cul­ture change. He char­tered all his di­vi­sional pres­i­dents to trans­form their man­age­ment com­mit­tees into Qual­ity Coun­cils and used the Mal­colm Baldrige Qual­ity Award as his met­ric for suc­cess. Like­wise, trans­form your cur­rent struc­tures or cre­ate new ones to lead and pro­vide sup­port to the change pro­gram. En­sure that you get an ad­viser who is knowl­edge­able on or­ga­ni­za­tion devel­op­ment and change man­age­ment. Build up the change man­age­ment skills of your HR peo­ple. They will be­come your change agents on the ground. Pro­vide suf­fi­cient bud­get for the change process it­self---this is of­ten un­der­es­ti­mated in most change ef­forts. The most im­por­tant re­source for the change process is your­self. Take care and love your­self. Tak­ing care of your­self means giv­ing your­self credit and not dis­parag­ing your own ef­forts. Lov­ing your­self means tak­ing a bal­anced view of life and stay­ing in touch with your pur­pose. Take time to in­vig­o­rate your­self and your life as you step up to the chal­lenge of recre­at­ing your or­ga­ni­za­tion. Good luck!

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