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The power of culture in transformation
- 1. OST The power of culture in transformation Perry Riggs – Deutsche Bank, April 2018
- 2. OST About the presentation Title: The power of culture in transformation Overview: This presentation explores two themes “Culture eats Strategy” (Peter Drucker) and “Culture can be changed in a managed way”. It looks at an actionable definition of culture, first and second order change initiatives, why cultural change is a wicked problem and what companies have done to successfully change their culture. About the Speaker: Perry Riggs is a seasoned IT leader with 30 years of experience building and leading teams across a wide array of industries and corporations ranging from startups to the fortune 50. He has worked at Deutsche Bank for 6 years first as a scrum master, then a product owner and is now lead for the Transformation Pillar on the Agile Services Team at Deutsche Bank. Perry’s research interest include culture, open source, leadership and communities of practice. You can contact Perry at perry.riggs@db.com or via LinkedIn. He is always interested in talking to people about any topic but especially the challenges of Agile leadership and organizational change management.
- 3. OST • Motivations • Two Premises & A Question • What is Culture? • 3 Cultural Change Approaches • Individuals • Team • Enterprise • References • Invitation Overview Learn from the mistakes of others. You can’t live long enough to make them all yourself Eleanor Roosevelt
- 6. OST Two Premises and a Question Focusing the conversation
- 7. OST Premise 1: Culture eats strategy! Premise 2: Culture can be changed in a managed way! Culture & Transformations are Linked Question: Does your initiative need a cultural focus?
- 8. OST Culture research has existed for decades
- 9. OST What is culture, Why should we care? Unraveling the Gordian Knot
- 10. OST Results from an eleven year Study1 Why should we care about organizational culture? 1Kotter, John P. Corporate Culture and Performance. • Everything about your business can be copied except your culture. • Culture “can account for 20-30% of the differential in corporate performance when compared with ‘culturally unremarkable’ competitors.” (Heskett 2011) • Companies with high performing cultures better weather tough economic times. • Including a cultural focus in a transformation project greatly increases the impact and effectiveness of that transformation. (Quinn 2011) • Its easier to attract and retain talent. Companies with high performing cultures far out perform their peers who do not. Average Increase for Twelve Firms with Performance-Enhancing Cultures Average Increase for Twenty Firms without Performance- Enhancing Cultures. Revenue Growth 682% 166% Employment Growth 282% 36% Stock Price Growth 901% 74% Net Income Growth 756% 1%
- 11. OST What comes to mind when you consider Organizational Culture?
- 12. OST • 164 definitions (Kroeber, Kluckhohn,1952) • A frequently referenced definition is Edgar Schein’s What is Culture? A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems • Descriptive, Understandable, but not actionable. • A model is needed that reveals the components of culture and how they interact.
- 13. OST Multiple Organizational Cultural Models have been defined. Handy's Model of Organizational Culture Power Role Task Person Environment Behavior Capability Beliefs Values Role Identity Gil Broza’s Logical Levels Geert Hofstede’s Cultural Dimensions
- 14. OST Behavioral science’s view of cultural change Behavior Capability Beliefs Values Role Identity Gil Broza’s Logical Levels Transformation Implementation Second Order Change – Leadership, Revolutionary • Cultural transformation - a process that would change the meanings that members attach to a phenomenon to subsequently invoke a change in their attitudes A form that penetrates so deeply into the genetic code that all future generations acquire and reflect those changes. First Order Change – Management, Evolutionary • Cultural reproduction – repetition of established ways of doing things • Cultural adaptation – Changing the form but not involving any change to the meaning attached to the change target. E.g. adapting a process from another industry to your. Cultural Transformation is a wicked problem1 Wicked problems are complex and complicated and have no ready-made solution. They cannot be solved by a commander-in-chief or an elite management cabal. They can only be solved through leadership, i.e. engaging the organization, asking thoughtful questions, participating in a dialogue of solutions. (McCalman 2015)1Rittel and Webber coined the term Wicked Problem in the context of problems of social policy
- 15. OST Cultural Change Approaches Individuals - Neurological Levels of Change
- 16. OST Location / People / Time… Actions / Reactions… Knowledge / Resources… What’s important? Labels we place on us… For what purpose? “Problems cannot be solved at the same level of awareness that created them”… Albert Einstein NLP: Neurological Levels of Change Model
- 17. OST “Whether you believe you can or believe you can’t, you’re right”… Henry Ford Neurological levels of change Question / Prompts Your current truth Question / Prompts Your new truth What needs to happen / the development points? Any limiting beliefs that need eradicating? Purpose What is your purpose? What is the highest positive intention for this area of your life? 6) Knowing your purpose move into your identity. n/a Identity Who are you in this area of your life? Who are you when you do the things you do/ What are the labels you place on yourself? 5) Who are you now in this area of your life? Who are you now and what labels do you now place on yourself? 7) Values & Beliefs What’s important to you about this? Why does it matter? What’s the most important thing to let someone you care for know about it? 4) What is now important to you about this? What now matters? 8) Skills & Capabilities What areas of expertise do you draw on? What skills do you put into practice? What capabilities do you tap into? 3) What areas of expertise do you now draw on? What skills do you now put into practice? What capabilities do you now tap into? 9) Behaviours What is it that you do? If someone was watching you what would they see you do? What would they hear you say? 2) What is it that you now do? If someone was watching you what would they now see? What would they now hear you say? 10) Environment Where are you when you engage in this area of your life? Who else is there? What do you see and hear about your environment? 1) Where are you now or in the future? Who else is there now or in the future? What do you see and hear about your environment 11) NLP: Neurological Levels of Change Framework
- 18. OST Cultural Change Approaches Individuals & Small Teams – Cultural Retrospective
- 19. OST The Cultural Retrospective • Utilize the 10 Moving Motivators from Management 3.0 • Individuals rank the Motivators most to least important. • Introduce the Motivation Map Motivation Map Moving Motivators
- 20. OST The Cultural Retrospective • Post individual rankings onto the Motivation Map • Discuss Findings with Team and rank Motivations • Introduce the Culture Map Motivation Map with Team Rankings Culture Map
- 21. OST The Cultural Retrospective • Collaboratively notate (as shown to the right) the teams current state for each motivator. • Workshop actions to close the gaps between motivator priorities and current culture • Capture actions and track as in a normal retrospective • Experiment with your own motivators and values Culture Map With Team input
- 22. OST Cultural Change Approaches Teams, Divisions, Enterprise - The Competing Values Framework
- 23. OST The Competing Values Framework Development History • Campbell, Brownas, Peterson, and Dunnette (1974) 39 indicators • Quinn and Rohrbaugh (1983) analysis results in two competing dimensions. • Flexibility, discretion, dynamism vs stability, order, and control • Internal orientation, integration, unity vs external orientation, differentiation, and rivalry • The two dimensions give rise to four quadrants that are contradictory or competing across the diagonal which is the source of the name. • Each quadrant represents basic assumptions, orientations, and values—the same elements that comprise an organizational culture. Flexibility and Discretion Stability and Control InternalFocusandIntegration ExternalFocusandDifferentiation Clan (Collaborate) Adhocracy (Create) Hierarchy (Control) Market (Compete)
- 24. OST Adhocracy Orientation: Creative Leader Type: Innovator Entrepreneur Visionary Value Drivers: Innovation outputs Transformation Agility Theory of Innovativeness, vision Effectiveness: and new resources produce Effectiveness The Competing Values Framework • Hierarchy oriented cultures are structured and controlled, with a focus on efficiency, stability and “doing things right.” • Market oriented cultures are results oriented, with a focus on competition, achievement, and “getting the job done.” • Clan oriented cultures are family-like, with a focus on mentoring, nurturing, and “doing things together.” • Adhocracy oriented cultures are dynamic and entrepreneurial, with a focus on risk-taking, innovation, and “doing things first.” • Cultural Profile may vary by division or team • Cultural Congruence – Leadership success, ease of change Flexibility and Discretion Stability and Control InternalFocusandIntegration ExternalFocusandDifferentiation Clan Orientation: Collaborative Leader Type: Facilitator Mentor Team Builder Value Drivers: Commitment Communication Development Theory of Human Development Effectiveness: and participation produce Effectiveness Hierarchy Orientation: Controlling Leader Type: Coordinator Monitor Organizer Value Drivers: Efficiency Timeliness Consistency and Uniformity Theory of Control and efficiency Effectiveness: with capable processes produce effectiveness Market Orientation: Competing Leader Type: Hard Driver Competitor Producer Value Drivers: Market Share Goal Achievement Profitability Theory of Aggressively Competing Effectiveness: and customer focus produce Effectiveness Start Ups
- 25. OST Formative Years Clan Adhocracy Hierarchy Market Early Success Clan Adhocracy Hierarchy Market Apple’s story via Competing Values Framework John Scully Years Clan Adhocracy Hierarchy Market Jobs Returns Clan Adhocracy Hierarchy Market 1976 – Apple Founded, entrepreneurial, charismatic leader was setting direction 1984 – Macintosh, entire organization adopts the “pirate culture” of Macintosh team 1985 – Global Expansion, Competitive rivals, John Scully hired to baby sit Jobs and ultimately orchestrates his firing 1997 – A better version of Steve Jobs returns to the role of CEO 2000 – Jobs leads the company back to including elements of a Clan/Adhocracy culture (Quinn 2011, chapter 3)
- 26. OST Home Depot’s story via Competing Values Framework 1979 – First Store opens, “take care of associates so they can take care of customers”, Inverted leadership pyramid 1981 – Home depot goes public, one of the founders, Bernard Marcus is CEO 2000-2007 – Robert Nardelli CEO, Lean Six Sigma approach, Revenue $45B Up to $81B, stock 8% Lowes 180% Culture was damaged and as a result the focus on customer service diminished. 2007 – Frank Blake, a Nardelli deputy, assumes leadership and quickly refocuses on Customer Service
- 27. OST Adhocracy Orientation: Creative Leader Type: Innovator Entrepreneur Visionary Value Drivers: Innovation outputs Transformation Agility Theory of Innovativeness, vision Effectiveness: and new resources produce Effectiveness The Competing Values Framework Informal Survey • What culture are you in today? • Your Preference as Individual, as Manager? • Where do the Agile Values thrive? Flexibility and Discretion Stability and Control InternalFocusandIntegration ExternalFocusandDifferentiation Clan Orientation: Collaborative Leader Type: Facilitator Mentor Team Builder Value Drivers: Commitment Communication Development Theory of Human Development Effectiveness: and participation produce Effectiveness Hierarchy Orientation: Controlling Leader Type: Coordinator Monitor Organizer Value Drivers: Efficiency Timeliness Consistency and Uniformity Theory of Control and efficiency Effectiveness: with capable processes produce effectiveness Market Orientation: Competing Leader Type: Hard Driver Competitor Producer Value Drivers: Market Share Goal Achievement Profitability Theory of Aggressively Competing Effectiveness: and customer focus produce Effectiveness Individuals and Interactions Question: Does your initiative need a cultural focus? Responding to Change Working Software Customer Collaboration
- 28. OST 1. What precisely is it in cultural terms that needs changing? 2. What does the cultural change target look like in the present moment? 3. What are the organizational implications of the current cultural variable? 4. What changes in its form are required and why? 5. How is one to set about changing its form to ensure it performs a different function? 6. What will this cultural variable look like after it has been changed? Critical Questions for the Cultural Change Manager
- 29. OST DIAGNOSE AND CHANGE CULTURE Determine scope of the organization in question, Team, Group, Division, Enterprise. Identify Team to lead the definition of the As-Is and To-Be culture. 1. Reach consensus regarding the current organizational culture. 2. Reach consensus on the preferred future organizational culture. 3. Determine what the changes will and will not mean. 4. Identify stories illustrating the desired future culture. 5. Identify a strategic action agenda. 6. Identify immediate small wins. 7. Identify leadership implications. 8. Identify metrics, measures, and milestones to maintain accountability. 9. Identify a communication strategy. Each Step is an in-depth conversation designed to establish consensus through dialogue across a wide spectrum of staff. Sr. leadership for the target organization must be involved. If you don’t know where you are, a map won’t help. Chinese Proverb If you don’t know where you are going, any road will do. Watts Humphrey
- 30. OST 1,2 Assess The Current & Preferred CultureBibliography provides links to an OCAI excel template 1. Reach consensus regarding the current organizational culture. 2. Reach consensus on the preferred future organizational culture. 1. Instrument focuses on 6 core elements • Dominant Characteristics • Organizational Leadership • Management of Employees 2. Distribute 100 points across 4 probing statements. • Organization Glue • Strategic Emphasis • Criteria of Success
- 31. OST 3. Determine What will change and not change 1. What are the attributes and activities that we want to emphasize if we are to move toward the preferred quadrant? 2. What norms, artifacts, and behaviors should dominate our new culture? 3. What attributes should we reduce or abandon if we are to move away from a particular quadrant? 4. Although we will move away from a quadrant, which of its characteristics will we preserve? 5. What is unique about each quadrant that we want to make certain to preserve? 6. What continues to be important about this culture type even though we will begin to emphasize another culture type? 7. What can we routinize so that we don't have to provide additional attention or resources to this aspect of our culture? 8. How will we recognize the new culture?.
- 33. OST Key take aways • Consider culture during any change initiative • Culture directly impacts company performance • Culture can be changed in a managed way • Culture change is a wicked problem • Culture change takes multiple years • Cultural Change is never done
- 34. OST References Bibliography • Blain, Andrew. “Team Culture Retrospective - Adapted from Management 3.0.” Elabor8, 10 Oct. 2016, elabor8.com.au/team-culture-retrospective/. • Cameron, Kim S., and Robert E. Quinn. Diagnosing and Changing Organizational Culture: Based on the Competing Values Framework. Jossey-Bass, 2011. • Deal, T. E., and Allen A. Kennedy. Corporate Cultures: the Rites and Rituals of Corporate Life. Basic Books, 2002. • Denison, Daniel. Leading Culture Change in Global Organizations: Aligning Culture and Strategy. Jossey-Bass, 2012. • Kotter, John P., and James L. Heskett. Corporate Culture and Performance. Free Press, 2011. • Kotter, John P., and Dan S. Cohen. The Heart of Change: Real-Life Stories of How People Change Their Organizations. Harvard Business Review Press, 2012. • Kroeber, A.L. and Kluckhohn, C. Culture: A Critical Review of Concepts and Definitions. Peabody Museum, Cambridge, MA, 181. 1952 • McCalman, James, and David Potter. Leading Cultural Change: the Theory and Practice of Successful Organizational Transformation. Kogan Page, 2015. • North, Dan. “In Praise of SWARMing.” Dan North & Associates, 26 Jan. 2018, dannorth.net/2018/01/26/in-praise-of-swarming/. • Schein, Edgar H., and Peter Schein. Organizational Culture and Leadership. John Wiley & Sons, 2017. • Spencer-Oatey, Helen. “What Is Culture? A Compilation of Quotations.” GlobalPAD Open House, 2012. • Watkins, Michael D. “What Is Organizational Culture? And Why Should We Care?” Harvard Business Review, 7 Aug. 2014, hbr.org/2013/05/what-is-organizational-culture. Stars indicate the relative contributions of the cited work to this presentation
Editor's Notes
- OST in the banner stands for Open Source Transformation. It is only an idea at this point, but the goal is to establish a community of people who freely share their transformation collateral in the same way that developers share code. The value proposition being that the collateral has little relevant value when compared with the experience and expertise that was used to create that collateral. The idea can be applied equally to OSA. Open Source Agile. Think about it.
- Something has been missing in my work doing transformations. Even though I was following best practices like Kotter and Prosci it still felt like the changes we were driving were not complete, lacking depth, lacking stickiness In a conversation with Arie Van Bennekum of Wemanity he indicated that he only hires people with backgrounds in Behavioral sciences Antevorta is a working group at the Cary Technology Center that is focused on developing the engineering culture Dan North published the blog In praise of Swarming in which he derided pre packaged approaches to transformation Recently the Financial Control Authority of the UK published “Transforming Culture in Financial Services” basically indicating that the culture in banking was the root of all the bad behaviors exhibited by bank employees. Collectively these ideas inspired a effort to understand the role that culture plays in transforming an enterprise.
- Culture Eats strategy Peter Drucker: If your strategy is dependent on a behavior or belief that is not present in your culture then you strategy will fail. Culture can be changed in a managed way With proper dialogue across the business culture can be transformed and managed It is, however, a slow process that takes year. It also requires leadership that understands how to engage the organization in a dialogue Does your change initiative need a cultural component? To answer this question we must understand your current culture, your strategy and the alignment between the two. Most likely the answer is yes but the degree of difference will determine the scale of the cultural component.
- Academics have been studying culture since the 18th century. The volume of research and material dwarfs that of the relatively modern Agile movement
- In 1992, HBS Professor James Heskett and John Kotter completed an extensive research project detailing the corporate cultures of 200 companies and how each company’s culture affected its long-term economic performance. They published a book, Corporate Culture and Performance, arguing that strong corporate cultures that facilitate adaptation to a changing world are associated with strong financial results. They found that those cultures highly value employees, customers, and owners and that those cultures encourage leadership from everyone in the firm. So if customer needs change, a firm’s culture almost forces people to change their practices to meet the new needs. And anyone, not just a few people, is empowered to do just that. One standout Exhibit in that book highlights the difference in results over an eleven year period between twelve companies that did and twenty companies that did not have this sort of culture.
- In 1992, HBS Professor James Heskett and John Kotter completed an extensive research project detailing the corporate cultures of 200 companies and how each company’s culture affected its long-term economic performance. They published a book, Corporate Culture and Performance, arguing that strong corporate cultures that facilitate adaptation to a changing world are associated with strong financial results. They found that those cultures highly value employees, customers, and owners and that those cultures encourage leadership from everyone in the firm. So if customer needs change, a firm’s culture almost forces people to change their practices to meet the new needs. And anyone, not just a few people, is empowered to do just that. One standout Exhibit in that book highlights the difference in results over an eleven year period between twelve companies that did and twenty companies that did not have this sort of culture.
- Research completed in 1952 identified 160+ definitions for culture Edgar Schein’s definition is one of the most widely noted
- There are an equal number of cultural model as there are definitions. The key is to identify or create a model that ties together those elements that you are interested in and show the how those elements drive behavior.
- The ideas we see in Agile also appear in the behavioral science literature. First order change is the realm of management while second order change is the role of leadership. Leadership here is not the person appointed as the head of an organization but rather the person that people voluntarily follow. In most case that is the appointed leader of an organization but it is possible for a non manager to be a leader within an organization.
- The cultural retrospective is explained nicely on the Elabor8 website which can be found in the bibliography. This has applicability for Teams or groups of teams and we encourage its use by scrum masters, product owners and people managers. The approach can easily be modified by looking at a smaller number of the Moving Motivators or by designing your own list of values associated with the cultural model you select for your practice.
- The key item to note here is that a company has a profile that will include characteristics from all four quadrants. Typically one quadrant will be dominant over the others so you will see a kite like shape as shown in the sample company profile in red.
- Hierarchy Think about McDonalds and how the experience is the same and the food is the same anywhere you go in the United States. Market Philips and Xerox are unique because they were both Hierarchy companies that under took a transformation and transformed themselves to Market focused cultures Adhocracy NASA is a surprise here as I would have expected them to be hierarchical but their operating model is very fluid and they build and take down teams very rapidly as they innovate on the technology aligned to their missions. IDEO is a California design company and is the company that created Design Thinking Startups generally begin as adhocracy and make a slow counter clockwise trip around the Competing Values Framework. Clan Watch the credits of a Pixar movie and you will see a list of all the children born during the production of that movie. The multi colored profiles show that a single company can have many internal different cultures. The degree of alignment between the different parts of the or are indicators of cultural congruence, Congruence makes it easier to change. Congruence comes up again when we look at the 6 dimensions that are analyzed as part of the Organizational Cultural Assessment Instrument.
- While the Apple journey was taken from Quinn, the Home Depot was manufactured by the speaker as an attempt to tell their story via the competing values framework.
- The important idea here is that a conversation takes place to identify the values and behaviors that your initiative is delivering and determine if the culture of the organization under going the change supports those values and behaviors. If not then you need to include elements in the change initiative that will drive those changes into the culture.
- Each of these steps require generative dialog among leadership and down and across the organization. Cultural change is a wicked problem, its messy and when it challenges the power structures of an organization, as most all transformation programs do, it will devolve into a political war that threatens the foundation of the change. This is one reason that culture change comes from the top down. It requires significant sponsorship and organizational power to drive the changes in leadership, either in behavior or personnel.
- Steps 1-3 are provided only as a sample of the process needed to identify the current and desired culture. The degree of alignment among the 6 profile elements, i.e. Dominant Characteristic – Criteria for Success determines the effort or complexity of changing the culture.
- If you would like to participate in a working group focused on culture issues then please reach out.