GOOD LEADERS DRIVE CULTURE AND CHANGE

“Strategy will only succeed if Leaders support it with the appropriate culture.”

Culture matters, enormously. Studies have shown again and again that there may be no more critical source of business success or failure than an organization’s culture – it trumps strategy and leadership. That isn’t to say strategy doesn’t matter, but rather that the particular strategy a company employs will succeed only if it is supported by the appropriate cultural attributes. Think about this in terms of a strategy is to be the best in customer service. To achieve that strategy, an organization may create a culture of happiness that emphasizes training employees well, trusting them to do their jobs well, and respecting the decisions they make. At the end, Leaders driving change must drive appropriate culture to support strategy, otherwise it could lead to poor strategy execution. Indeed Leaders who drive culture are much more successful with implementing and sustaining strategy.

Data shows that companies with unsupportive cultures and poor strategic alignment significantly under perform their competitors…. In fact, companies with both highly aligned cultures and highly aligned innovation strategies have 30% higher enterprise value growth and 17% higher profit growth than companies with low degrees of alignment. Alignment is clearly critical, but an ever-greater struggle as priorities and strategies change more rapidly than ever before. Strategic employee recognition plays a foundational role in helping employees understand changing strategy so they can stay aligned with business needs in their every-day tasks. You can ensure employees stay aligned by adjusting the reasons for recognition in your strategic program and encouraging all employees to frequently and in-the-moment praise their colleagues for delivering on those expectations. Leaders who align culture and strategy are more successful.

The way successful Leaders achieve much higher degrees of cultural and strategic alignment lies in gaining a greater understanding of the cultural attributes that any given company needs to foster, given its particular innovation strategy. Defining those cultural attributes is unique to every organization. Think of these attributes as your core values. What are the behaviors and actions you need and expect from every employee in order to achieve your strategic objectives? Those behaviors are your cultural attributes.

Yet even the most successful Leaders concede the difficulty of maintaining the cultures that led to their success. Cultures are built up a brick at a time, a point at a time, over decades. You need consistency; you need persistence; you need gentle, behind-the-scenes encouragement in addition to top-down support. And you can lose it very quickly. Organizational culture is a bit like a bonsai tree. It can be steadfast and strong, but it requires deliberate nurturing to grow in a particular way. One bad chop can also kill the culture you’ve worked for years to create.

Change is the only constant in the world. A Leader needs to manage change imposed by outside forces but must also constantly create a culture of leading change with the objective of driving effectiveness, efficiency and adaptability. When Leaders fail to lead change, the organization and its stakeholders like customers, employees, shareholders, suppliers etc also suffer the consequences. If any of the following behaviors sound like you or someone you work with, beware! The most common characteristics of leaders who are incapable of leading change are:

Arrogance—you think that you’re right, and everyone else is wrong.
Melodrama—you need to be the center of attention.
volatility—you’re subject to mood swings.
Excessive Caution—you’re afraid to make decisions.
Habitual Distrust—you focus on the negatives.
Aloofness —you’re disengaged and disconnected.
Mischievousness—you believe that rules are made to be broken.
Eccentricity—you try to be different just for the sake of it.
Passive Resistance—what you say is not what you really believe.
Perfectionism—you get the little things right and the big things wrong.
Eagerness to Please—you try to win the popularity contest.

It wasn’t lack of charisma or the “vision thing” that brought down smart, powerful Leaders. For over seventy percent of the time, it was simply bad execution. This issue is even more relevant today, because leadership failures are even more visible than they were over a decade ago — and in high-definition. In the last few years, at global level, the Leaders of BP, Hewlett-Packard, Burger King, Bank of New York Mellon, Pfizer and Yahoo were unceremoniously shown the door for failures that — in addition to lacklustre execution — also included poor communications skills, an abrasive management style and the wholesale defection of unhappy executives. Hitherto popular African Leaders in both Public and Private sectors were also unceremoniously thrown out by the stakeholders such as the populace, shareholders, regulatory authorities, and government for intolerable performance levels.

Execution is as critical as ever, in and of itself, but today we also have transparency to deal with at every level of the organization. The Leader is communicating with his every move and — because of the open window into our business that has been enabled by modern technology – the Internet — stakeholders are learning about poor Leadership execution faster. Thus, more is at stake than ever before; and the need to vet Leader choices, during the interview process, is greater also.

The overall Chief Executive and the senior executives of the management team occupy the formal leadership positions in a company, but titular leadership responsibility doesn’t always translate into leadership action. There are occasions when leaders are unwilling or unable to lead change.

The Costs of Hollow Leadership

The consequences of a failure to lead change vary with the severity of the situation. If market conditions are fairly stable and the competitive environment is not particularly demanding, leadership failures may not be that damaging. If, however, the market is going through dramatic change, which demands equally dramatic change in the organization, failure to actively lead the company through those changes can be catastrophic.

The biggest risk of failed leadership is that the market changes so much, and the company changes so little, that the company’s products and services no longer satisfy customer needs to the degree required. Unfortunately, by the time it is absolutely clear that the survival of the firm is at stake it is often too late to do anything about it. The company then goes out of business.

If the firm survives, it is still seriously damaged by a failure to lead. When the leadership failure is at the very top-level, it is common for various senior executives to try to fill the vacuum. Without a clear decision on direction by the Leader, this can lead to protracted power struggles and a further deterioration in competitive market position as the senior executives block or undermine each other’s initiatives. Key employees can get frustrated with this lack of proper, needed action and leave the company, degrading its strengths even more. And a failure to lead can become habit-forming, weakening the leadership “muscles” in the organization and making it that much harder to lead in the future even by successive Leaders.

Why Leaders Fail to Lead Change

With all of these dire consequences, why would executives ever fail to fulfil their leadership responsibilities? The answer is often quite simple. Either they think they have the option of not changing, or they know that change should take place but somehow cannot execute it.

The option to ignore the requirements of the marketplace is never available. Leaders who think inaction is a viable choice delude themselves. They unfortunately believe they can continue to do what they like and are comfortable with (not what market conditions demand), or that they can implement changes at a rate or time that is convenient. These are dangerous illusions. They often stem from the frequently intoxicating sense of power and control that comes with a leadership position. But the simple fact is that no company has the power to overcome market conditions. Market conditions (customer needs and desires, competitors’ strengths and weaknesses, etc.) are, by definition, outside a firm’s control.

If a leader recognizes that he/she cannot control market conditions, only respond to them, yet still fails to lead the implementation of necessary changes, the missing ingredient is often mental toughness. A leader who lacks mental toughness does what comes naturally, not what is needed, and does what is easy and popular, instead of what is difficult and unpopular. Poorly developed mental toughness skills can cause a leader to embrace the comfort of familiar, but flawed, actions rather than take the risk of doing something new that is actually required by the situation. Lack of mental toughness produces intolerance for friction and differing opinions, for new facts or insights which challenge the accepted view, and contributes to the misunderstanding of market conditions.

Strategic Planning and Mental Toughness

The illusion of personal power over market conditions can be cured with a rigorous strategic planning process that focuses on a methodical, systematic assessment of those conditions. An objective, measurement-based evaluation of customers’ needs, the company’s strengths and weaknesses, and those of the competitors, will clarify required changes. (Subjective opinion-based evaluations tend to reinforce management’s preconceived notions.) With a coherent, comprehensive strategic plan, the company has a tool to evaluate future changes in market conditions and can more easily decide how to respond to those changes. The Leader also gains a tool to help overcome a frequent obstacle to change: not knowing quite what to do. Simply put, it is easier to adjust your course if you know where you are going in the first place.

The company will not benefit from its strategic plan if that plan is not actually implemented. Mental toughness is required for implementation. Specifically, implementation rests on leaders who:

Have a high degree of self-knowledge.
Are willing to hear unpleasant messages.
Are able to tolerate ambiguity.
Are able to tolerate uncertainty.
Maintain clear and logical thought under great pressure.
Know when to lead and when to recede.
Pride themselves on operating at high standards of performance.
Have, and can create in others, a healthy sense of urgency.
Seek solution-oriented feedback with which to adjust performance.
Do not have to be right all the time.

The preceding list does not contain attributes that some might infer from the term “mental toughness.” Nowhere in the list is there any mention of intimidating people or treating them badly. It does not contain any reference to being aggressive, selfish, or insensitive with others. On the contrary, mental toughness focuses primarily on the individual leader, self-confidence, and task oriented self-discipline.

The path to mental toughness starts with preparation. Leaders should seek out candid feedback from colleagues and subordinates using a 360-degree review in order to discover blind spots that inhibit performance, secure in the knowledge that the only really dangerous deficiencies are the ones we refuse to confront. Armed with that feedback they should take stock of their personal strengths and weaknesses and make the commitment to take necessary steps to achieve personal change. Executive coaching, time for reflection and testing, and focused concentration will help effect those changes.

Achieving the mental toughness attributes is also made considerably easier by consciously shifting emphasis from one’s personal career-achievement objectives to the greater goals of the organization. Unrelenting focus on making the organization (and all of its members) successful and unremitting attention to the realities of the marketplace will produce the mental toughness needed to make the changes required by that marketplace. This is both the role and the definition of a leader who leads. A Leader should must attempt to ceaselessly focus on effectiveness, efficiency of its organization in addition to the adaptability of its core strategy because the only constant in the world today is change.. `

Leading change: What leaders must do

Leaders must often change the operating culture of their companies. Broadly, a company’s operating culture is “the way we doing things around here,” and can involve new tasks, new roles, new processes, policies or procedures, new technology, and so on. Often, changing an operating culture is primarily about changing work-related attitudes. Regardless of its exact nature, competitive businesses must be flexible, adept and quick to make change.

There are four key challenges associated with leading change. They can be thought of as the functions of leaders during change. Each function requires certain qualities of character in the leaders. Success or failure depends on how well the leadership team accomplishes each of the following:

1) Evaluation of the status quo

This aspect of leadership concerns the mandate for change. Leaders should strive to create “a burning platform” for change. The status quo, or current state of affairs, must be carefully described and evaluated. Two aspects of this challenge are conducting the diagnosis and creating dissatisfaction. Leaders must first diagnose the status quo and determine why change is necessary. Leaders should assemble evidence in support of the change. This begins with the leader taking stock of his or her own role in the change. Accountability on the part of the leader will result in more credibility when the leader asks for others to be held accountable. In addition, the status quo should be evaluated for the overall organization as well as its component parts. In diagnosis, leaders must draw attention to performance, which should be described with objective metrics.

Leaders must also create dissatisfaction with the status quo. Performance metrics are also useful for creating dissatisfaction with the status quo. A sense of urgency will come from understanding how performance will suffer if the change does not occur. It is important for leaders to create dissatisfaction with humility and without assigning blame. Change is a necessary part of every organization. Everyone involved in the change effort must be “in the same boat” and understand why the status quo will lead to failure.

A leader cannot effectively evaluate the status quo, without key leader qualities of humility, focus on the whole, and avoiding the blame game

2) Designing the future you wish through articulation of a vision

Leaders who want to drive change must behave like an Architect by designing and communicating a compelling vision for the future. The change process involves moving from Point A to Point B, from the status quo to a desirable, future, goal state. Two components of articulating a vision are describing goals and inspiring others. Change is destined to fail unless leaders can communicate clearly a set of desired goal states. Everyone must understand “where we are going.” This includes broad strategic objectives and also specific, concrete goals. Communicating should be done through examples and metaphors. For example, the change process can be construed as an adventure or a journey, complete with maps, speed bumps, forks in the road, wrong turns, obstacles to overcome and an attractive destination. Effective change leaders inspire others to believe in their vision. Self-confidence is vital. Leaders must convince themselves first. Inspiring others also requires empathy. Leaders are more persuasive if they understand how their vision is perceived from different vantage points. In addition, any consequences of the change should be described for all levels of the organization. What does the change mean for individuals, teams, business units, the organization as a whole? Whenever possible, leaders can also emphasize high principle. For example, providing safer products or higher quality is the “right thing to do” for the business but also for its own sake.

A leader cannot effectively design the future with vision statement, without key qualities of empathy, self-confidence, courage and focus on the whole.

3) Lead the implementation process

Implementation concerns the nuts and bolts of making the change happen. Successful implementation requires leadership at all levels of the organization. Generally, there are two components to leading the implementation process. Leading an implementation process almost always means going first. Fear, which is a key obstacle to change, can be overcome in the organization when leaders have the emotional mastery and courage to go first in making their own changes. Leading by example is also a form of accountability. When leaders hold themselves accountable they are better able to demand that others are also accountable. Leaders must insert themselves into the trenches of the change efforts. Another key facet of implementation is commitment. Lack of commitment is a major source of failure. Leaders may have the right plans in place but unless the followers are committed to the plans, the change will almost always fail. A fundamental law of change management states, “Leaders can impose some of the changes on all of the people, and all of the changes on some of the people. But leaders cannot impose all of the changes on all of the people.” Rather, participation is the mother of commitment. Full implementation is possible only through carefully planned opportunities to involve the broader team. In addition, implementation is a trial-and-error process. As changes are becoming reality, new ideas about how to proceed are likely to emerge. Some ideas that come from the “front-line” will be worth keeping. Leaders must provide opportunities for learning, sharing ideas, and spreading best practices. Managing participation takes courage because leaders must give up some control, and it involves lack of arrogance because leaders must remain open to ideas of others.

A leader cannot effectively execute or implement strategy without key qualities of emotional mastery, humility, accountability and courage.

4) Assess results, sustainability of change

Ultimately, change efforts should translate into positive results. Positive, sustainable change will require that the organization cycle through the change processes several times. Change Leaders are responsible for assessing results and determining where the change has been successful and where it has not. Effective leaders learn from experience. Objective performance metrics are the most important results for leaders to evaluate. They are the “bottom-line” of change efforts. It is important for leaders to remain objective and neutral about performance. Leaders should assess results without an interest in seeing one kind of result or another. Learning, which is the key to long-term success, comes from both good and bad results. When parts of the organization where the change has been successful are identified, those lessons can be applied elsewhere. When parts of the organization are identified where change has not been successful, leaders can attempt to understand the root causes of performance without assigning blame. Leaders should own the entire change process for the organization as a whole.

It is tempting to believe that organizational change will occur as a revolution. However, this is rarely the case. Instead, organizational change occurs as an evolutionary process. Leaders must recognize that long-term success will require that they cycle through the leadership functions of change several times. Leaders must re-analyze the status quo, re-articulate their vision, persist in implementation, and continually assess results. Learning from experience is the key ingredient in evolutionary change. Lessons from one round of change can be applied to later ones. Leaders can build on the results from their assessment in several ways. For example, a coalition can be built. Some parts of the organization will achieve positive results early on. Those individuals can be included in further rounds of change as examples, mentors, role models and emerging leaders. Also, best practices can be identified and spread throughout the entire organization. Sometimes different parts of the organization will face different obstacles, and what has worked in one part will not work elsewhere. But learning is the means to achieve positive, sustainable change. Leaders can also identify the needs of the broader team as they embark on another round of change processes. For example, further change may require additional resources, skill development or communication. As the organization cycles through the change process, it is important for leaders to reinforce a focus on the entire organization. Leaders should find a way to humbly communicate the idea and genuine feeling that “we are all in this together,” and that implementing change is a process that enables all of us to grow and learn together. The success or failure of change efforts is indeed dependent on how successful leaders are at assessing and reassessing how aligned and cohesive everyone feels. There is often no choice in whether to change, but leaders can and must listen constantly for obstacles and opportunities.

A leader cannot effectively assess results and sustain the change without key qualities of empathy, lack of blame, accountability and focus on the whole.

Lere Baale is a Director of Business School Netherlands www.bsn.eu and a Certified Strategy Consultant at Howes Consulting Group www.howesgroup.com