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  1. 1. Booz & Company June, 2011 Creating a more innovative culture Jon Katzenbach
  2. 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. 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. 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. 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. 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. 7. 1) Work “with and within” your existing culture <ul><li>The existing culture can be a powerful source of energy </li></ul><ul><li>Culture is usually a product of good intentions and is rarely “all bad” </li></ul><ul><li>Understanding “the good” about an existing culture can accelerate change </li></ul>It’s a long race - culture changes slowly
  8. 8. Situation 1 2 3 4 Case study: U.S. Marine Corps <ul><li>Embodied these elements in his own behaviors in highly visible ways </li></ul><ul><li>Al Gray “resurrected & praised” elements of the traditional USMC culture </li></ul><ul><li>Morale was low; values and discipline severely damaged </li></ul><ul><li>Troubled organization in aftermath of Vietnam war </li></ul>
  9. 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 <ul><li>Identifiable markers </li></ul><ul><li>Patterns of overt behaviors and interactions </li></ul><ul><li>Ingrained approaches to performing tasks and solving problems </li></ul><ul><li>Thoughts, feelings, and beliefs </li></ul><ul><li>Corporate stories </li></ul>Symbols Behaviors Thoughts, Feelings, Beliefs
  10. 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. 11. Case Study: Aetna Turnaround Situation 1 2 3 4 <ul><li>Initiated behavior change at multiple levels - top, frontline and middle </li></ul><ul><li>Jack Rowe appointed CEO </li></ul><ul><li>Programmatic change had been successfully resisted by ”nice culture” </li></ul><ul><li>Three CEOs and their leadership teams had tried and failed </li></ul>
  12. 12. 4) Spread the behavior changes virally Multiple Mechanisms Pride Builder Cells Communities Focused Networks 4
  13. 13. Case Study: Bell Canada Situation 1 2 3 4 5 <ul><li>Started small, used viral methods to accelerate behavior change </li></ul><ul><li>Frontline employees were still not getting traction with customers </li></ul><ul><li>Strategy was revised and operating model redesigned but ... </li></ul><ul><li>Behaviors in market with customers were not differentiated </li></ul><ul><li>Largest Telco company in Canada - analogous to AT&T </li></ul>
  14. 14. Changing behaviors: Three sources of influence Messaging Programmatic Interactive <ul><li>Vision </li></ul><ul><li>Values </li></ul><ul><li>Engagement </li></ul><ul><li>Structures </li></ul><ul><li>Processes </li></ul><ul><li>Metrics </li></ul><ul><li>Informal networks </li></ul><ul><li>Affinity groups </li></ul><ul><li>Communities </li></ul>Cultural Values Critical Behaviors in Key Populations
  15. 15. Example 1: P&G <ul><li>Open working areas </li></ul><ul><li>Experienced, cross-functional teams </li></ul><ul><li>Portfolio mgmt capability </li></ul><ul><li>Technology game boards </li></ul><ul><li>Top10 consumer needs </li></ul>Cultural Values Critical Behaviors Programmatic Interactive Messaging <ul><li>Increasingly complex assignments for promising employees </li></ul><ul><li>Sr. level support that connects and develops </li></ul>
  16. 16. Example 2: Global Technology Company <ul><li>Executives roaming halls soliciting ideas </li></ul><ul><li>High executive salary during cost cutting </li></ul><ul><li>All executives resigned from community and civic leadership roles </li></ul>Global Technology Company Programmatic Interactive Cultural Values Critical Behaviors <ul><li>Divisions given autonomy to address unique needs </li></ul><ul><li>Stringent manager performance reviews </li></ul><ul><li>Indiscriminate cost-cutting </li></ul><ul><li>Coffee chats and town halls </li></ul><ul><li>Individual accountability requirements replacing team incentives </li></ul>Messaging Cursive: Actions detrimental to creating a more innovative culture
  17. 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. 18. For more information <ul><li>Visit us at </li></ul><ul><li>Contact us at [email_address] </li></ul><ul><ul><li>Learn more about our latest thinking on culture </li></ul></ul><ul><ul><li>Discover our perspective on leadership, organization, and human capital issues </li></ul></ul><ul><ul><li>Sign up to receive the publications of the Katzenbach Center </li></ul></ul>We appreciate your interest in the Katzenbach Center and warmly welcome your comments and questions