How Culture can Make or Break a Company? GROUP -5
Background EDS, set up in Texas in 1962, was the pioneer of IT ‘Outsourcing’ industry in US. Founder Ross Perot believed in ‘Can Do’ culture, to promote this new concept. Company grew slowly initially, but picked up exponential path after it was acquired by GM in 1984. Gradually slowing up, Co could not keep pace with new developments in IT, was at peak of crisis by 1998 when GM decided to sell off. Dick Brown becomes the new CEO in 1998, first outsider to take the position. Brown identifies Structural and Cultural issues, comes out with bold and smart decisions, and subsequently turns around the company. A good case to understand how culture can Make or Break a Company..
Symptoms & Diagnosis Symptoms Diagnosis MIS not integrated, Unable to send mail Poor communication, Information Blockage $ 80 billion contract backlog of signed Lethargic Attitude, Lack of commitment contracts No financial & marketing data available Performance no valued Last minute mail reply Absence of Enthusiasm & Urgency Inflexible & Indifferent behavior Unwillingness to change CEO Dick Brown was quick to identify the ‘Cultural Gap’ at EDS, and made policies accordingly.
What lies beneath such Artifacts? Artifacts Behavior Values Fundamental Assumption In Order to get to Root Causes, we need to find these Fundamental Assumption
Root Causes for the Poor Organizational Culture Weak leadership from former CEO -- Cultural A leader get the behavior what he tolerates. Split Organizational structure Each unit had separate P&L, Strategy Organization lacking cohesiveness, customer orientation Less accountable, More inefficient No performance related appraisals/punishment -- Cultural Promoting Lethargic attitude Deadlines not met. Poor Benchmarking Absence of quality check & feedback loop. Culture of the Organization is nothing but how it’s people think and act..
Actions & Reactions For Cultural Change Focal Question Learning Focus Desired Outcome 1. Why? Facts and shared desire Common understanding to improve of challenges 2. What? Identifying Root Causes Common direction & purpose. 3. How? New Process & Strategies Common learning and experience 4. What if? Integration Converting business process into Culture A cultural change may be initiated by the leadership, but will be successful only if it reaches the Grass root levels of the organizations.
How did CEO Brown turned around the Company Project Breakaway Restructuring to become ‘Customer Centric’ Promoting Co-ordination and Efficiency. Culture of Accountability Monthly Performance call – compulsory feedback & follow through Helping executives to learn from CEO experience. Culture of Unfiltered Communication Instant and in person contact with CEO Promoting inter-unit communication Hiring & Firing Policy People who don’t buy the cultural change are exited. New people with right orientation and ‘desire to win’ are in. Changing the Tone & Content of every day conversation Optimistic talk for reviving and driving the growth of company Talking more about the success of company/team rather than individuals.
Key Takeaways – Cultural Change flows from top, but had to be supported by all levels. Communication – both top down & horizontal Cooperation – between different verticals & units Collaboration – between all stake holders ..are key means to achieve high performance through cultural change.