This emerges with the experiences of a society, traditional culture, organization, super culture or subculture. Begin implementing little changes that fall in line with the stated values and fill the … Making Culture Initiatives Stick The simplest measure for leaders to drive culture change is being intentional about culture. For all its benefits and blemishes, it’s a legacy that remains uniquely yours. We’ve known for a long time that it takes years to alter how people think, feel, and behave, and even then, the differences may not be meaningful. Its employees were also proud of the many famous people—movie stars, astronauts, sports heroes, and other public figures—that the company insured. So management introduced a simple behavior: asking people who were providing input whether they had ever given the feedback to the person being reviewed. Store managers received training in the behaviors, which were also translated into specific tactics, such as ways to greet customers entering the store. Too often a company’s strategy, imposed from above, is at odds with the ingrained practices and attitudes of its culture. Culture change is change that occurs over time to the shared way of life of a group. Every culture is the product of good intentions and has strengths; put them to use. 3) Honor the strengths of the existing culture. If you'd like to share this PDF, you can purchase copyright permissions by increasing the quantity. Most people will shift their thinking only after new behaviors have led to results that matter—and thereby been validated. These discussions not only gave him insights about the staff but created a rapport between him and a respected group that disseminated his message both formally and informally. Most cultures are too well entrenched to be jettisoned. One of the best-known, and yet most misunderstood, examples of cultural backsliding took place at the Arthur Andersen accounting firm. Cultural inclinations are well entrenched, for good or bad. One early and important networking effort by Rowe was to identify a core group of “key influencers”—potential leaders who could offer invaluable perspectives on the cultural situation, regardless of their level in the hierarchy. Cultural Change that Sticks: Dr. Dieter Kahling of Henkel on executing and leveraging cultural change for financial performance. After a thoughtful pause, Rowe replied, “Well, I guess it is all about restoring the Aetna pride.” As we noted earlier, he got a spontaneous standing ovation from the hundreds of attendees. While on the surface revenues remained strong, its rapport with customers and physicians was rapidly eroding, and its reputation was being bludgeoned by lawsuits and a national backlash against health maintenance organizations and managed care (which Aetna had championed). These organizations follow five principles for making the most of their cultures: 1. Consider the response one company had to the discovery that a major source of employee frustration was its performance-review process. The stores that have introduced the new behaviors are already beginning to see results, including improved same-store sales in key product areas and fewer customer complaints. The retailer’s leaders enlisted the help of internal “exemplars”—people who were known for motivating their teams effectively. He declared that instead of just cutting costs, the organization would pursue a strategy he called “the New Aetna.” It would build a winning position in health insurance and a strong brand by attracting and serving both patients and health care providers well. For example, has a new policy successfully been implemented? Most companies, if they look hard enough, will find that they have pockets of activity where people are already exhibiting the new, desired behaviors every day—just as the “exemplar” store managers did at the retailer. Coherence among your culture, your strategic intent, and your performance priorities can make your whole organization more attractive to both employees and customers. At the time, many believed that a single client relationship had brought the firm down for largely legal or regulatory reasons. Indeed, during the next few years it became clear, from surveys, conversations, and observation, that a majority of Aetna’s employees felt reinvigorated, enthusiastic, and genuinely proud of the company. Some corporate leaders struggle with cultural intransigence for years, without ever fully focusing on the question: Why do we want to change our culture? Each new measure, while defensible, made it a little easier to compromise the firm’s values. Today's best-performing companies, such as Southwest Airlines, Apple, and the Four Seasons, understand this, say the authors, three consultants from Booz & Company. Have enough people at multiple levels started to exhibit the few behaviors that matter most? It was also the approach taken by a national retailer that was looking to build a culture with a strong customer focus. That shift was reflected in the business results, as Aetna went from a $300 million loss to a $1.7 billion gain. Targeted and integrated cultural interventions, designed around changing a few critical behaviors at a time, can also energize and engage your most talented people and enable them to collaborate more effectively and efficiently. For example, if customer relationships are crucial, do managers update the CRM database on a regular basis? But it’s possible to draw on the positive aspects of culture, turning them to your advantage, and offset some of the negative aspects as you go. What is happening with less obvious indicators, such as local sales improvements or decreases in customer complaints? Executives should pay attention to four areas: Are key performance indicators improving? The following are illustrative examples of culture change. The prevailing executive mind-set was “We take care of our people for life, as long as they show up every day and don’t cause trouble.” Employees were naturally wary of any potential threat to that bargain. Companies should also use their tracking efforts to remind people of their commitment. When a major change initiative runs aground, leaders often blame their company's culture for pushing it off course. But this time, without ever describing their efforts as “cultural change,” top management began with a few interventions. Good Read: “Cultural Change that Sticks” For over a decade, the Baird Group has provided some of the nation’s leading healthcare organizations with culture assessments that enable them to gain a greater understanding of the culture behind the patient experience. Another strength companies can leverage is the employees who are already aligned with their strategy and desired culture. He and Williams focused on getting cross-sections of people to reflect on how they were feeling and on identifying their sources of anxiety and concern. Are key cultural attitudes moving in the right direction, as indicated by the results of employee surveys? Don’t just implement new rules and processes; identify “influencers” who can bring other employees along. Rowe didn’t walk in with a new strategy and try to force a cultural shift to achieve it. 3. Rowe began interacting with a cadre of about 25 influencers and within a few months expanded the group to include close to 100. World renowned for its ability to bring together specialists across a range of medical fields to diagnose and effectively treat the most complex diseases, the clinic promotes unusually high levels of collaboration and teamwork, reinforcing those traits through formal and informal mechanisms. Many times we’ve walked into organizations that presented us with an entire laundry list of hoped-for cultural traits: collaborative, innovative, a meritocracy, risk taking, focused on quality, and more. Whether formal or informal, interventions should do two things: reach people at an emotional level (invoking altruism, pride, and how they feel about the work itself) and tap rational self-interest (providing money, position, and external recognition to those who come on board). And Aetna’s financial performance reflected that. Aetna’s story (which we have drawn from a draft of an unpublished book by Jon Katzenbach and Roger Bolton, a retired Aetna senior executive) isn’t unique. A few modest interventions might have preserved the firm’s commitment to integrity and avoided a very public and embarrassing demise. These surveys serve as good a basis for dialogue and act as a simple reinforcement mechanism. Jon R. Katzenbach is a senior vice president in the New York office of Booz & Company and the leader of the Katzenbach Center, which focuses on the development and application of innovative ideas for organizational culture and change. These insights led Rowe to rethink his approach to the company’s turnaround. At Aetna, Rowe explicitly sought out informal interactions with employees. 4. But cultural intervention can and should be an early priority—a way to clarify what your company is capable of, even as you refine your strategy. When that’s the case, an organization with an old, powerful culture can devolve into disaster. Aetna’s business model was under attack going through law-suits and its economy was declining. If not approached correctly, measurement efforts can quickly become cumbersome, time-consuming, and expensive. As you promote critical new behaviors, making people aware of how they affect the company’s strategic performance, be sure to integrate formal approaches—like new rules, metrics, and incentives—with informal interactions. Culture trumps strategy every time. As a result of this straightforward question, colleagues began to share constructive criticisms with one another more often, resulting in fewer demotivating surprises and a better dialogue about performance. AETNA CULTURE – When Aetna merged with U.S. Healthcare lower-cost health care provider, in 1996, a major culture clash ensued – However, instead of adapting to U.S. Healthcare’s more-aggressive ways, the conservative Aetna culture only became more intransigent – Aetna’s leaders could make little headway against it, and one CEO was forced out after failing to change it. Abstract When a major change initiative runs aground, leaders often blame their company's culture for pushing it off course. They try to forge ahead by overhauling the culture—a tactic that tends to fizzle, fail, or backfire. From May 2001 to January 2006, its stock price rose steadily, from $5.84 (split adjusted) to $48.40 a share. As GM was emerging from bankruptcy, the company decided to spur innovation by placing a renewed emphasis on risk taking and the open exchange of ideas. Below are the available bulk discount rates for each individual item when you purchase a certain amount, Publication Date: Wholesale change is hard; choose your battles wisely. 2. At Aetna a major turning point came during one question-and-answer session, when a longtime employee said, “Dr. Acknowledging the existing culture’s assets will also make major change feel less like a top-down imposition and more like a shared evolution. These conversations helped Rowe and his team identify Aetna’s biggest problem: A strategy that focused narrowly on managing medical expenses to reduce the cost of claims while alienating the patients and physicians that were key to Aetna’s long-term success. All too often, leaders see cultural initiatives as a last resort, except for top-down exhortations to change. Ellis traces the firm’s decline to the 1950s, when its leaders shifted their focus from quality and integrity to beating other firms’ revenue numbers and market position. To boot, the company was losing roughly $1 million a day, thanks to cumbersome processes and enormous overhead, as well as unwise acquisitions. Aetna’s leaders could make little headway against it, and one CEO was forced out after failing to change it. 4) Integrate formal and informal interventions. But this time, without ever describing their efforts as cultural change, top management began with a few interventions. At least that was the conclusion of analyst and journalist Charles Ellis, who studied the Andersen failure in depth and described it in an unpublished manuscript, What It Takes. Can you tell me what it means for someone like me?”. While the stickers probably would have been received skeptically as a top-down initiative, as an organic peer-to-peer custom they helped reinforce GM’s larger cultural evolution. Following them can help an organization achieve higher performance, better customer focus, and a more coherent and ethical stance. If it excelled at service, how would people treat customers differently? Where do you start? Not an easy question. Another way to harness the cultural elements you want to support is by acknowledging them. The company used a 360-degree evaluation mechanism, but employees were often unpleasantly surprised by the results. A senior leader we interviewed there compared the company to universities that plan out paved walkways when they expand their campuses. They might include a deep commitment to customer service (which could manifest itself as a reluctance to cut costs) or a predisposition toward innovation (which sometimes leads to “not invented here” syndrome). 5. They try to forge ahead by overhauling the culture--a tactic that tends to fizzle, fail, or backfire. Culture trumps strategy every time, no matter how brilliant the plan, so the two need to be in alignment. Finally, it’s essential to measure and monitor cultural progress at each stage of your effort, just as you would with any other priority business initiative. When, in an off-the-cuff response to a question at a town hall meeting, he highlighted pride as a reason employees should get behind change, he received a spontaneous standing ovation. When choosing priorities, it often helps to conduct a series of “safe space” discussions with thoughtful people at different levels throughout your company to learn what behaviors are most affected by the current culture—both positively and negatively. Today’s best-performing companies, such as Southwest Airlines, Apple, and the Four Seasons, understand this, say the authors, three consultants from Booz & Company. A strategy that is at odds with a company’s culture is doomed. Cultural Change That Sticks (Harvard Business Review) Audible Audiobook – Unabridged Todd Mundt (Narrator), Jon R. Katzenbach (Author), Ilona Steffen (Author), & See all formats and editions Hide other formats and editions. Happily, it’s also possible for a culture to move in the right direction, as we saw at Aetna. The world’s most influential CMOs tackle the topic of diversity and inclusion in business head-on. By the mid-2000s, the company was earning close to $5 million a day. Then in 2002 indictments during the Enron investigation forced Andersen into bankruptcy. Contrast such nebulous aspirations with those in an organization in which a few cultural traits truly do match and support the strategy, like the Mayo Clinic. But instead of adapting to U.S. Healthcare’s more-aggressive ways, the conservative Aetna culture only became more intransigent. Inspiring new skills and habits. Culture trumps strategy every time, no matter how brilliant the plan, so the two need to be in alignment. Are people living up to their commitments to key account targets? (For a menu of tools, see the exhibit “Mechanisms for Getting the Most from Your Culture.”) Only a few companies understand how to do this well. When the leaders of Aetna applied these rules while implementing a new strategy in the early 2000s, they reinvigorated the company’s ailing culture and restored employee pride. But it also showed that staff members were unusually willing to commit time and effort toward the strategy; they really wanted to help. Culture trumps strategy every time, no matter how brilliant the plan, so the two need to be in alignment. As Andersen expanded around the world, it abandoned practices geared toward professional excellence, such as a rule that all accountants had to spend two years in auditing and the use of a global profit pool that ensured that all partners had a stake in one another’s success. They had been heard and appreciated, and they came to accept the New Aetna. That shift was reflected in the business results, as Aetna went from a $300 million loss to a $1.7 billion gain. Honor the strengths of the existing culture. In fact, its fall stemmed from a creeping cultural erosion that had begun decades before the Enron debacle. Bottom-up culture change aligned with organization strategy and goals as discussed in the Harvard Business Review in the article “Culture Change that Sticks” by Jon R. Katzenback, Ilona Steffen, and Caroline Kronley. and pay only $8.00 each. The practice soon began to spread. Separate nonhierarchical forums among peers and colleagues were also held across the company to discuss Aetna’s values—what they were, what they should be, why many of them were no longer being “lived,” what needed to happen to resurrect them, and what leadership behaviors would ensure the right employee behaviors. Simply put, rather than attacking the heart of your company, you will be making the most of its positive forces as your culture evolves in the right way. Rigorous measurement allows executives to identify backsliding, correct course where needed, and demonstrate tangible evidence of improvement—which can help to maintain positive momentum over the long haul. Copyright © 2020 Harvard Business School Publishing. Getting your team eagerly bought into culture shift is the first step to lasting change. These included social visits, ad hoc meetings, impromptu telephone discussions, and e-mail exchanges. When Aetna merged with U.S. Healthcare, a lower-cost health care provider, in 1996, a major culture clash ensued. ‘Culture change that sticks: start with what’s already working, by Jon R Katzenbach, Ilona Steffen and Caroline Kronley’) The authors of this Review believed that culture change often fails because it’s poorly conceived and executed. In this article, we’ll walk through the five principles, using examples from our research and client experience. Change that Sticks: Evolving Culture through Business Upheaval Panelists Paula Winkler, Carolyn Jacobson, and Steve Arsenault. What kinds of interactions would be visible in any new offices you opened? LEADERSHIP Cultural Change That Sticks by Jon R. Katzenbach, Ilona Steffen, and Caroline Kronley FROM THE JULY–AUGUST 2012 ISSUE I n the early 2000s Aetna was struggling mightily on all fronts. This enormous strength had been largely untapped. 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