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  • 1. Booz & Company June, 2011 Creating a more innovative culture Jon Katzenbach
  • 2. Culture matters “ Everything I do is a reinforcement, or not, of what we want to have happen culturally. … You cannot delegate culture.” Steve Ballmer, Microsoft CEO “ If you get the culture right, most of the other stuff will just take care of itself.” Tony Hsieh, Founder and CEO of “ Fixing the culture is the most critical – and most difficult – part of a corporate transformation.” Lou Gerstner, retired CEO of IBM “ No company can sell employees on a culture if it isn’t practiced, and believed in, from the very top down.” Colleen Barrett, former President Southwest Airlines
  • 3. But what is this fuzzy “culture” thing, really? We Say an Organization’s Culture is … … its self-sustaining patterns of behaving, feeling, thinking, and believing
  • 4. Decision Making Information sharing And what does an innovative culture look & feel like? Leadership Effectiveness Work Execution Relationships (In-)formal knowledge exchange Being curious Open feedback Quick, informed decisions Based on expertise Non-risk averse
  • 5. Continuous improvement Proactive behavior Collaboration across units Interacting based on trust Market & competitor observation Accountability Encouraging experimenting Mistakes as teaching moment Decision Making Information sharing (In-)formal knowledge exchange Being curious Open feedback Quick, informed decisions Based on expertise Non-risk averse Work Execution Leadership Effectiveness Relationships And what does an innovative culture look & feel like?
  • 6. Four imperatives when dealing with culture Work “With and Within” Your Existing Culture Use Viral Methods Mobilize Rational and Emotional Forces Start with Changing Behaviors not Mindsets 1 2 2 4 4
  • 7. 1) Work “with and within” your existing culture
    • The existing culture can be a powerful source of energy
    • Culture is usually a product of good intentions and is rarely “all bad”
    • Understanding “the good” about an existing culture can accelerate change
    It’s a long race - culture changes slowly
  • 8. Situation 1 2 3 4 Case study: U.S. Marine Corps
    • Embodied these elements in his own behaviors in highly visible ways
    • Al Gray “resurrected & praised” elements of the traditional USMC culture
    • Morale was low; values and discipline severely damaged
    • Troubled organization in aftermath of Vietnam war
  • 9. 2) Start with changing behaviors, not mindsets — it’s faster and more lasting Three Levels of Corporate Culture Invisible Elements Visible Elements Focus here first
    • Identifiable markers
    • Patterns of overt behaviors and interactions
    • Ingrained approaches to performing tasks and solving problems
    • Thoughts, feelings, and beliefs
    • Corporate stories
    Symbols Behaviors Thoughts, Feelings, Beliefs
  • 10. 3) Mobilize Rational and Emotional Forces Balancing Rational and Emotional Rational Emotional Communities & Networks Vision & Values Strategy Structure & Process Purpose Commitment & Pride “ Front Line” Top Leadership Culture Evolution
  • 11. Case Study: Aetna Turnaround Situation 1 2 3 4
    • Initiated behavior change at multiple levels - top, frontline and middle
    • Jack Rowe appointed CEO
    • Programmatic change had been successfully resisted by ”nice culture”
    • Three CEOs and their leadership teams had tried and failed
  • 12. 4) Spread the behavior changes virally Multiple Mechanisms Pride Builder Cells Communities Focused Networks 4
  • 13. Case Study: Bell Canada Situation 1 2 3 4 5
    • Started small, used viral methods to accelerate behavior change
    • Frontline employees were still not getting traction with customers
    • Strategy was revised and operating model redesigned but ...
    • Behaviors in market with customers were not differentiated
    • Largest Telco company in Canada - analogous to AT&T
  • 14. Changing behaviors: Three sources of influence Messaging Programmatic Interactive
    • Vision
    • Values
    • Engagement
    • Structures
    • Processes
    • Metrics
    • Informal networks
    • Affinity groups
    • Communities
    Cultural Values Critical Behaviors in Key Populations
  • 15. Example 1: P&G
    • Open working areas
    • Experienced, cross-functional teams
    • Portfolio mgmt capability
    • Technology game boards
    • Top10 consumer needs
    Cultural Values Critical Behaviors Programmatic Interactive Messaging
    • Increasingly complex assignments for promising employees
    • Sr. level support that connects and develops
  • 16. Example 2: Global Technology Company
    • Executives roaming halls soliciting ideas
    • High executive salary during cost cutting
    • All executives resigned from community and civic leadership roles
    Global Technology Company Programmatic Interactive Cultural Values Critical Behaviors
    • Divisions given autonomy to address unique needs
    • Stringent manager performance reviews
    • Indiscriminate cost-cutting
    • Coffee chats and town halls
    • Individual accountability requirements replacing team incentives
    Messaging Cursive: Actions detrimental to creating a more innovative culture
  • 17. Work “With and Within” Your Existing Culture Target Few Critical Behaviors Mobilize Rational and Emotional 1 2 3 Use Viral Methods Use Messaging, Programmatic, and Interactive Approaches 4 5 Five key takeaways to creating a culture that is much more innovative
  • 18. For more information
    • Visit us at
    • Contact us at [email_address]
      • Learn more about our latest thinking on culture
      • Discover our perspective on leadership, organization, and human capital issues
      • Sign up to receive the publications of the Katzenbach Center
    We appreciate your interest in the Katzenbach Center and warmly welcome your comments and questions