So here’s how to deserve better.
By Niko Canner
The CEO intones earnestly about a “future state” culture, and the HR head immediately becomes the primary agent of trying to arrive there.
I’ve come to regard this the way a psychiatrist might regard a never-married, wealthy, attractive 48-year-old, seeking matrimony without changing too much the life that he’s grown used to.
Big companies are giant production functions, and part of what they’ve evolved to produce is the cultures they have today. Reality is complicated, but a useful simplification for a CEO is to begin with the assumption that top management, a group of which he or she has generally been a part for several years, has produced the culture it deserves.
Sign up for the monthly TalentQ Newsletter, an essential roundup of news and insights that will help you make critical talent decisions.
Contrast for a moment John McPhee’s vivid description of the late Frank Boyden, who served as headmaster of Deerfield Academy from 1902 to 1968:
[Boyden’s strategy] is best exemplified by his showmanship and his pantoscoping attention to detail. It has been said that a thousand details add up to one impression, and at Deerfield it is the headmaster who adds them up. He thinks in pictures. Once a picture seems right, he wants to keep it that way. Anything that mars it or changes the focus irritates him. To be handed an athletic letter, a citation for academic excellence, or almost any other award, a boy has to walk up onto the stage of the school auditorium: the headmaster stations a teacher beside the steps to see to it that the boy’s coat is buttoned. A lengthy and expensively produced concert program once arrived from the printer with one name misspelled. “Miller” had been set as “Millar.” The headmaster had the program reprinted. He stages basketball games as if he were the manager of La Scala. Every student has to attend, and all are checked in at the door by masters with clipboards, thus assuring a full house. People come in from all over the valley, too, and the headmaster walks around before the game orchestrating the behavior of his boys, casting acrid glances in the direction of excess commotion, greeting all the farmers, druggists, dentists, and telephone linemen as they come through the door. Then he takes his place on the players’ bench.
A software company is not a boarding school. Different strategic visions demand unique, uncompromising cultural expressions. But Deerfield in that era can certainly be said to have acquired the culture, and the legacy—at its frequent best and at its sometime worst—that Boyden deserved.
During my time at Katzenbach Partners and at Booz & Company after the acquisition of Katzenbach, we worked on a significant number of culture change initiatives. A few were quite successful; most weren’t. In our failures, we never really helped top management deserve a culture better than the culture their company had evolved to produce. In the successes, top management had a Boyden-like hunger—even while employing notably different methods—to deserve the culture they wanted, and the work we did to help them on tactics was just one small expression of their commitment.
How Doesn’t Culture Work?
Culture is the fabric of shared patterns of how people act, think and feel that impact collective performance. It’s the grain of how a company’s people perceive their world, pay attention to some things and not others, engage customers, spend money, treat one another.
Let’s dive deeper into what this means practically. Most work on culture begins from a small number of agreed-upon values or cultural imperatives, then tries to move an organization to align with these ideals broadly, across the many specific contexts in which people work. Accountability, speed, innovation or any handful of touchstone words like this are meant to crystallize a complex web of actions that together make a company tight, fast or successful in generating and capitalizing on new ideas.
This seems sensible, perhaps because companies with distinctively effective cultures do often use touchstone words, and employees across a broad range of contexts act in alignment with these words. For instance, Zappos talks about Delivering Happiness, and has also created a vivid sense of what it means to be a place where employees “create fun and a little weirdness” in service of that goal. Similarly, any Southwest Airlines team member can riff at length about what “warrior spirit,” “servant’s heart” and “fun-loving attitude” mean to them and mean in practice.
Unfortunately, it is almost never the case that the real patterns of how people act, think and feel take shape in this way. Almost no one derives what to do in the concrete rough and tumble of everyday life from a few touchstone words.
In companies like Zappos and Southwest, these powerful words are condensations of patterns that are already durably embedded. This doesn’t mean that the words don’t matter. They help people internalize how the many things they observe and experience are in fact manifestations of the same big idea, which strengthens the intellectual and emotional reinforcement of these examples.
The flight attendant humorously improvising or the pilot pitching in to tidy up the plane aren’t “just things those people did”: they’re distinctive behaviors that they do routinely because they are committed to being cheap and being fun. However, when these patterns aren’t already there, using a word like “cheap” or “fun” is like pushing on a string.
How Does Culture Work?
New patterns build on already established patterns. Patterns at higher levels of abstraction—like “being highly accountable” or “putting the customer first”—emerge from more concrete patterns, like responding to messages within a day or visiting stores rather than reading reports.
Starbucks has newly hired executives work as baristas. Years ago, I had breakfast with a senior partner at BCG who had just joined Starbucks as their chief strategy officer, during her second week on the job. She was focused on two things: helping finish the board deck on corporate strategy and serving customers behind the counter.
This fundamental experience is the soil in which other practices take root, from day-to-day decisions like sending a top-performing store manager outside her district so that she can take on a more challenging assignment, to big decisions, like closing all stores for three hours in 2008 to retrain partners in the Starbucks experience.
Culture spreads by analogy. Some of these analogies are immediate and local, like early franchisees in McDonald’s translating the way Ray Kroc would himself clean bathrooms in the stores to the need to fix any issues with the cleanliness of stores immediately and, if necessary, themselves.
Some of these analogies are more conceptual and global. In a time when management consultancies were largely small, personality-driven shops, Marvin Bower instilled professionalism at McKinsey by making an analogy to law firms, such as Jones Day, where he worked after graduating from Harvard Law and Business Schools.
This analogy to law firms manifested in everything from the division of roles between associates and partners, to the standardized format of documents, to the emphasis on “obligation to dissent” with partners or clients on the basis of facts and logic.
Culture naturally spreads from a smaller “we” to a larger “we.” If I’m an employee on the fish counter at Whole Foods, it’s easy to leap from how I relate to my specific self-directed team (e.g., no one joins the fish counter team without my participation in the choice), to how I participate in the store as a whole, to what it means to me to be an ambassador for Whole Foods as a company.
If I’m a teller at Citi, it’s much harder to move from sub-point #2 “challenge mediocrity constructively” of corporate value #7 “demonstrate a passion for winning” to a clear sense of what to do about the mediocrity that I happen to experience in my branch office on a given Tuesday.
While we think of culture change as something that takes a long time to achieve, culture forms and reforms quickly in contained environments when all the signals powerfully line up. As Philip Zimbardo commented on his Stanford Prison Experiment: “Our planned two-week investigation into the psychology of prison life had to be ended after only six days because of what the situation was doing to the college students who participated. In only a few days, our guards became sadistic and our prisoners became depressed and showed signs of extreme stress.”
Companies like Chipotle recognize this powerful force of a contained, powerfully reinforcing environment can be harnessed for good. “Restaurateurs” at Chipotle are store leaders who build great people culture by developing and mentoring teams of top performers.
Together, team members commit to and achieve high standards in every aspect of running their restaurant. When every team member is part of a strong “we” like this, initiative that pulls the team further toward a shared ideal is celebrated and strengthens the team’s collective standard. Behavior that doesn’t meet the high aspirations is quickly addressed.
People who internalize being part of this kind of “we” are more likely to recreate it elsewhere, which Chipotle recognizes: They offer the Restaurateur a $10,000 bonus any time one of her team members gets promoted to be general manager of another restaurant.
One of the most powerful experiences I’ve had working on culture change as a member of a Booz & Company team advising then-CEO of General Motors Fritz Henderson on work during and immediately coming out of GM’s bankruptcy. Henderson was too rushed and too wise to work on culture through the traditional approach of a cascade: “first, align top management, then the next level…”
Instead, after the first meeting launching the work, Henderson identified eight “pride builders” who embodied the culture he wanted to build, each one or two levels under his top executive team. We helped these pride builders—one of whom, Mary Barra, is now Chief Executive—develop a shared understanding of what they were doing right, concrete examples of what was already working, and some areas where they could push things harder and faster in the direction they were already pushing. These pride builders, in turn, identified five to ten colleagues each, mostly two levels under them, who equally exemplified how GM needed to be.
A handful of weeks into the effort, when previous teams concerned with culture at GM would still have been debating the fine points of their team charter, Henderson was in a room with six dozen or so of these pride builders, committing to take action on their concrete priorities (“Yes, we can get this decision about a bottlenecked issue at Cadillac made within a week or two”). Like Chipotle’s Restaurateurs, these pride builders were able, with top management behind them, to move fast, surface and debate tough facts, take a stand driving decisions rather than letting things get lost in the matrix, and so on.
The vast majority of work on “change management” emphasizes the actual, day-to-day work of management too little—and the kind of programmatic activity that the staff functions and consultants are positioned to drive from outside the chain of line management too much.
Jon Katzenbach and I spent several months doing research in GM’s North American Manufacturing, at our own expense, almost a decade before the work with Fritz Henderson and the pride builders during the bankruptcy. We chose GM’s plants because we believed that if we could find motivating front-line leaders in an environment that difficult, we’d be able to put our fingers on what it looks like to develop a strong subculture, without any of the tailwind that companies like Southwest and Starbucks create for their front-line units.
Through this research, we painted a picture—described in Jon’s book Why Pride Matters More Than Money—of how these leaders operated, and we were able to show that their plants performed better and were improving faster than peers. What GM needed to do with these insights wasn’t to create a change program, or hire Katzenbach Partners to provide expert advice about how to act on the best of what GM’s leaders were already doing. They needed to make it a big part of executive leadership’s work in the manufacturing division to get their plant managers to lead the way their pride builder colleagues demonstrated it was possible to lead.
Executive leaders needed to embrace this work with the same level of urgency that Fritz Henderson later, under more desperate circumstances, embodied. GM’s manufacturing leaders agreed with our findings, they made some small investments in change programs, but they mostly focused on other things. It isn’t clear that this “off to the side” made a large or lasting difference.
What Great Founders Do
Jon Katzenbach has come to believe that it doesn’t make sense to work on transforming culture: that one should focus on changing a critical few behaviors, using the strengths of the existing culture as a tool to leverage in making those changes. As he wrote in a 2013 article for Harvard Business Review, “There’s No Such Thing as a Culture Turnaround”:
“Company culture changes very slowly, so efforts to do an about-face are inevitably a waste of time and energy: Organizations either declare victory prematurely or, in frustration, abandon the attempt.”
This is good advice for most leaders, well calculated to avoid wasteful direction of energy into poorly-specified corporate culture programs. And yet this advice flies in the face of what I’ve found worked for me as an entrepreneur. And it flies in the face of what I’ve seen work for founders and transformational leaders who have built lastingly distinctive companies at far greater scale.
Leaders who build great cultures focus on the whole institution, shaping companies where each facet of operations reinforces a vision not just for how the company should succeed, but of how it should engage, look, think and feel. In this respect (and perhaps this respect only), Frank Boyden and Steve Jobs were birds of a feather.
Leaders who get culture right at the scale of a whole company recognize that every particular sends a message about what’s good and what’s unacceptable. Think of Ray Kroc cleaning bathrooms as he drove around the country visiting McDonald’s franchises, or Sam Walton setting a powerful example of thrift even as he became one of the nation’s richest men.
As these examples show us, great cultures that scale tend to be extreme. An environment that constantly reinforces something far from the norm, across far-flung operations, can only be produced by a set of distinctive ideas translated into an encompassing set of habits and practices.
These cultures are usually produced by founders, although the story of Boyden, who became headmaster shortly after Deerfield’s one-century mark illustrates how it is eminently possible for a much-later leader to have a founder-like influence by demonstrating a similarly pervasive focus on manifesting core ideas in every aspect of daily operations.
So, You Want to Change Your Culture …
The CEO who wants to change culture needs to want it enough to change his or her life for it. Culture change plans need to look less like the programmatic lists of values, forums and activities we’ve all seen so often, and more like an uncompromising articulation of operational and behavioral litmus tests to which top management and every other layer of management holds themselves accountable.
Culture Change, of the “Capital C” kind, means digging into the specifics of how people in critical jobs deliver on the company’s distinctive way of creating value. This isn’t Citi’s meaningless maxim “challenge mediocrity constructively.” It’s the specific number of minutes it takes Southwest to turn a plane, or the way Starbucks works through every aspect of what it means for a front-line employee to be a partner—from the way they come to own shares to the way they learn customers’ names.
Top management in companies that shape or reshape great cultures constantly confront the gaps between their vision for how the company should operate and how day-to-day realities play out on the field. More importantly, they create an environment in which team members at all levels confront these same gaps in a similarly unrelenting way.
There’s no place for mediocrity to hide on the specific dimensions where the company is geared to excel. Companies who shape great cultures elevate everyday operations. There isn’t a less demanding way, and the leaders who shape these cultures wouldn’t wish it otherwise.
Niko Canner is the founder of Incandescent, a strategy consulting and venture development firm. He previously served as cofounder and managing partner of Katzenbach Partners, and in 2010 was named one of the top 25 in the consulting profession by Consulting Magazine.