18/08/2023
Leadership & Manage people
It’s well-known that firms where strategy and culture align outperform firms where they do not. It follows, then, that if the two aren’t aligned, you most likely need to change your culture.
That’s simple to say but hard to do. The values, beliefs, and norms that make up your culture are intangible and diffused throughout your organization. They’re hard to grab hold of and manipulate. And while people tend to resist most organizational change, they’re particularly hostile to cultural change because it threatens established behaviors and relationships.
To figure out the secret to cultural change, we conducted interviews about it with more than 60 business leaders from different industries around the world—including CEOs, functional vice presidents, and plant managers. Some of these leaders hadn’t tried to change their firms’ cultures; others had tried and failed. Still, in our sample we found enough leaders whose efforts were successful to draw conclusions about what does or doesn’t work.
We quickly realized that none of the successful initiatives had begun with a list of desired core values for a new culture. None had begun with detailed studies of the current culture and its relationship to strategy implementation. And none had begun by revising HR policies—including those for employee evaluation and compensation. To be sure, such actions were useful later in the process, but they weren’t decisive early on because they were all moves that could be reversed at low cost. Employees were quick to recognize them as such and, as a result, withheld their full commitment to cultural change. Yes, they attended the training sessions, agreed to follow the new corporate values, and gave lip service to implementing a new culture, but they knew that someday the latest initiative would blow over and normal activity would resume.
So what did the successful leaders do? They created stories highlighting actions that were inconsistent with a firm’s established culture but reinforced an alternative culture that was more strategically aligned. Stories about heroic employees who went above and beyond for customers, for example, helped bolster service-oriented strategies; stories about risk-taking and creative persistence helped promote innovation strategies; and stories about attention to detail and dramatic process improvements helped support strategies that emphasized high-quality, low-cost production.
Crafting new stories forces business leaders to commit to cultural change in a way that creating new HR policies or cultural charters doesn’t. Once the stories have spread throughout an organization, they’re difficult to disavow or dislodge. And as the new stories replace narratives that reinforced the old culture, employees begin coming up with their own stories and end up co-creating a new one consistent with a firm’s strategies.
What’s the key to making these new stories work? Our research has identified six rules that business leaders need to follow.
