Can You Fix a Broken Business Culture?

Or is it nearly impossible? Instead, should you just focus on fixing your business, and the rest will follow?

These are the questions raised by a recent Harvard Business Review article by Harvard Professor Louis E. Kirstein and research associate Emily McTague.[i] After conducting interviews with excellent CEO’s, including Doug Baker, CEO of Ecolab, Richard Anderson, CEO of Delta, Alan Mulally, former CEO of Ford, and Dan Vasella, Former CEO of Novartis, the authors believe that “Culture isn’t something you ‘fix’. Rather…culture change is what you get after you’ve put new processes or structures in place to tackle tough business challenges, like reworking an outdated strategy or business model. The culture evolves after you do the work.”

Culture can’t fix a faulty business model and successfully implementing a new business model can’t happen without the tough work of managing change.

I believe the authors are partly right. Fixing culture, which includes strong change management, won’t fix a broken business model or poorly timed or simply wrong business strategy. In my experience, many executives believe they are fixing their business by announcing a new business model, strategy or structure only to walk away from the tough work of implementation.  Unfortunately, they don’t have the patience or stomach for it. That is why they fail. The tough work includes change management and yes—changing the organization’s culture.

The CEO’s listed above had great business strategies. They also did the tough work of managing change and changing the culture of their workforce.

When implementing change, whether it is for a new business model or to ignite innovation, you cannot ignore the culture of your employees. Their culture is different from the reality and culture of the executive team and even the culture of middle management. Despite your level of affability, delegation and involvement, you are an outsider of your employees’ culture, due to your executive position. Don’t be delusional about this. Once you accept this, you will be better prepared mentally and emotionally to listen to their fears and concerns.

When implementing a major organizational change, and after you explain your strategy, invite your employees to ask questions. Then, articulate what will change in the new business model, what will not change, and how employees can now succeed.[ii]

Here is how two of the CEOs in the HBR article succeeded—using change management principles!

The HBR article describes the success of Eco Lab CEO, Doug Baker. Eco Lab completed 50 acquisitions over 10 years to offer customers more products and services. The unintended result of the acquisitions was organizational complexity, multi-layered management structures, increased bureaucracy and siloed management. This distracted management from its customer centric-culture.  To counter the distraction, Mr. Baker pushed decision making to the front line employees who worked directly with the customers. He did this by using common tools for change management, including management and employee training, and constant customer and employee feedback. The feedback helped Eco Lab tweak their implementation. He also used recognition, bonuses, and promotions to reward those managers and employees who accelerated these changes.

At Ford, CEO Alan Mullally, took over a company on the brink of bankruptcy. Ford had a cutthroat and aggressive management culture, which protected its own turf to the detriment of the company. His strategy to fix the situation was to make management work more collaboratively. The authors describe how Mr. Mullally implemented regular meetings of management from different Ford units to share updates, assess their performance, and identify and resolve issues collectively before they became intractable. He built a culture of personal accountability, where managers had to explain their problems, solutions to fix them, and their progress.  He succeeded in creating a more collaborative, results driven, aligned culture, which is required to successfully implement business strategy, make change, and accelerate innovation.

Business Change Doesn’t Happen on Its Own.

I agree with the HBR authors that executives need to articulate a clear business model, strategies, and structure before they can fix an organization. But organizational change doesn’t happen on its own. Executives need to stay involved in order to ensure that middle managers and employees have clarity on roles, responsibilities, and decision rights. Both middle management and employees must have the permission to share information and alternative solutions, and the guidance on how to succeed in the new business model and culture.  This requires a dedication to managing the change as well as changing the employee culture.

What has been your experience? Join the conversation?

Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and is a Managing Partner of InnovationOne. He consults on talent management, leadership development and coaching, innovation, and other strategic initiatives. Please e-mail Victor at victorassad6@gmail.com or visit www.victorhrconsultant.com. For innovation visit www.InnovationOne.US.

[i] Jay W. Lorsch and Emily McTague (April 2016) “Culture is Not the Culprit,” Harvard Business Review.

[ii] Changing employee culture is described well in Stan Slap’s book, Under the Hood.

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