This is a summary of a book titled “Win from Within: Build
organizational culture for Competitive Advantage” written by James Heskett who
is a professor emeritus of Business Logistics at the Harvard Business School.
The book was published by Columbia Business School Publishing in 2022. It
provides an applicable overview with concrete examples.
The book details 16 steps to change your culture on the
premise that evidence does not support most of the common wisdom about
organizational culture. An effective culture boosts the bottom line and fosters
flexibility, innovation, and learning. Responsibility rests with the leaders to
engage and retain employees and an organization’s policies must reflect its
values. High-engagement workplaces share several crucial characteristics and
experimentation improves your likelihood of success. There might be some
challenges presented by remote work, but they are not insurmountable. The risk
associated with good cultures going bad is that change becomes difficult.
A strong culture does not imply marketplace success and is
not necessarily a winning asset. It could even be toxic. But leaders can shift
the culture in a matter of months. The steps listed here are useful to everyone
involved in managing organizations.
Culture and strategy are complementary. For example, Satya
Nadella simultaneously healed Microsoft’s dysfunctional culture and led a major
strategic shift from Windows to cloud computing. On the contrary, resisting new
ideas assuming what worked in the past will continue to work, is one of the
most common pitfalls.
An effective culture boosts the bottom line, and fosters
flexibility, innovation, and learning. The competitive advantage of an
effective culture can outlive that of any strategy. Organizations that put
their employees first gained long-term market share and later rewarded their
shareholders handsomely. Analysts can predict a company’s relative
profitability by studying just the culture. There can even be a virtuous
feedback loop between cultural changes and impact on profit. For example, Ritz
Carlton vets the hirings thoroughly and empowers almost anyone to spend up to
2000$ to redress a guest’s problem. It emphasizes attitude and empathy.
Leaders must engage and retain employees and culture can be
a tiebreaker in engaging talent. Organizations with effective culture can be
tiebreakers but they could also be pressure cookers. Discontent stems from a
lack of training and a lack of being acknowledged.
Companies known for highly engaged employees train their
recruiters in employee engagement as a competitive advantage. They seek people
with complementary viewpoints and empower them with the necessary skills. The US Marine Corps, the Mayo Clinic and
Harvard Business School all have sustained high engagement beyond their
founding generation and leverage a team-based structure to maintain the
culture. Similarly, Southwest Airlines views the late departure as a team failure,
not an individual one. This results in a top on-time record.
Experimentation is key to success.Booking.com authorizes any
staffer to run a test without advance approval. Testing is taught and test
evidence overrides executive judgment. Failed tests provide lessons. The author
asserts that measurement without action is a great way to scuttle the success
of a lot of effort that precedes it.
Sometimes, a toxic culture has devastating results. After
two Boeing 737 MAX planes crashed, a whistleblower said management had rejected
an engineer’s request for a safety measure. Employees feared retaliation for
bringing problems to management’s attention. Similarly, the O-Ring failure
destroyed the Challenger space shuttle, and the case of Volkswagen’s
emissions-testing imbroglio is well-known.
Remote work presents cultural challenges and the best that
the leaders of increasingly remote workforces can hope for may be hiring
advantages and modest increases in productivity.
James Heskett lists the following steps to accomplish
culture change:
1.
Leaders acknowledge the need for culture change
– Leaders must take note of the metrics and messages emerging from the “shadow
culture.”
2.
Use discontent with the status quo as a spur for
change – Drastic steps might be needed to crystallize and alleviate the
concerns people see with change.
3.
Share the message of change – Communications
must be ongoing, clear, and simple. Listen to the reactions. Repeat.
4.
Designate a change team – A team can be tasked
with cultural change codifying values, gathering input, meeting deadlines, and
maintaining the impetus for change.
5.
Install the best leaders – Bring the right
people to the fore; tell the wrong people good-bye. Your goal is alignment
around change.
6.
Generate and maintain urgency – Culture change
should take six to 12 months. As John Doerr said, “Time is the enemy of
transformation.” Build in a sense of drive.
7.
Draft a culture charter – by articulating what
must change and how. For example, Microsoft spurred change to empower people
“to achieve more.” Compare the current state to the desired future.
8.
Promulgate a change statement that involves the
whole organization – Communication is crucial. Gather comments; include or
reject them; document the outcome.
9.
Set up a “monitor team” – This team tracks
relevant measurements, checks progress, and ensures that communication
continues.
10.
Align everything – Changes must align with
corporate values. Reward what matters.
11.
Put changes into motion – Leaders must walk the
talk. McKinsey found that change is more than five times likelier when leaders
act the way they want their employees to act.
12.
Teach people at every level how to implement
change – Training must be imparted.
13.
Measure new behaviors – Align your metrics with
your new expectations and handle troubles.
14.
Acknowledge progress – Milestones are just as
much reason to celebrate as the goal.
15.
Give big changes time to unfold – Long range
habits take time to reach the customer.
16.
Keep reminding yourself what culture change
requires – This is an ongoing evolution. Frequent check-ins with everyone on
the team and recalibrations help.
