Tuesday, May 22, 2007

Culture Club

Companies that try to change their business model, their brand’s approach to markets and their operations run into a similar and vexing problem – one I call the “culture club.”

Change will never occur if you can’t convince the stakeholders in your company’s culture that change is good. There may be every good reason – financial, operational, and even marketing – to change the direction of your company’s brand. But your managers and workers, some of whom may have been with the firm for many years, are the company’s culture. Without their consent, the culture won’t change: it’s like your employees hold a club over your head.

One intent behind my earlier post about Pitney Bowes was to begin a dialogue about changing the path – and the brand meaning – of a company as it moves forward. As many older firms do, Pitney Bowes wants to transform the way its customers, prospects and investors view the firm. I wonder, though, if phrases like “The mailstream is all around you—a global force synonymous with commerce” have been absorbed and agreed upon by the corporation’s 33,000+ employees.

If your employees don’t agreed with what you’re doing, they will occlude the fulfillment of your efforts to transform the company. Not only will they block the changes, they’ll become reactionary voices and undermine your work.

Joel Staff just stepped down as CEO of Reliant Energy. He’s become an expert in corporate turnarounds. (I knew him when he first became CEO of Baker Hughes; 10 years later, he led a management buyout of National Oilwell and turned that into a $16 billion company. He took over Reliant in August 2003. He in on record saying:

…at Reliant and National Oilwell there was a lot of the sense that the problem, the enemy, was within the company, so people didn’t demonstrate respect for each other…I think I gained a deeper understanding of how powerful people are when they get committed and own the vision.

How many companies do you know where “the people” are committed to the corporate vision and direction? Mustang Engineering has been a positive example in previous posts. My sense is that Caterpillar is another, although I could change my mind based on a current lawsuit.

Negative side? I suppose you could look at Enron before the crash – at least among its senior executives. They clubbed the brand (and an entire market sector) into a bloody mess. The victims of its top-down version of the culture club were its employees, its stockholders and even a whole industry.

I propose a rule: A company’s position ought to take hold – and take place – in the minds of all its stakeholders. I emphasize the word “all” because the internal stakeholders, the employees, are frequently ignored when it comes to fostering change – at least that’s my observation. I’ll call this the Stakeholder Rule (absent a better name).

When I present the Stakeholder Rule to clients I usually ask, “Is your company’s culture bottom-up or top-down?” It’s not a complex question. When I explain that I’m attempting to discover who owns the company’s culture, it is usually answered rather honestly. So I’ve been fortunate in my clients.

An honest answer is usually the starting point for one of two recommendations. No. 1, make certain that the transformations you want to affect are communicated to and involve the interactive participation of all your internal stakeholders. Or No. 2, conduct intensive internal research to discover the real answer. Once No. 2 is executed, it’s safe to proceed with No. 1.

Adopt the Stakeholder Rule and you can avoid the worst outbreaks of culture clubbing. Willing adoption of changes by your employees will give your transformative ideas a better chance to survive and thrive.

If you’re uncomfortable with the term “culture club,” maybe you’ve heard the expression, “tiger by the tail?” It’s one of several versions of a story about a young soldier who leaves his laager in the evening. His mates and officers hear a great thrashing about in the jungle outside the camp. Then comes the soldier’s voice, calling out for his officer: “Sir! Sir! I’ve caught a tiger by the tail!”

His captain shouts back, “Well done, Private Jones! Bring him into the camp.”

“I can’t, Sir. He won’t let me.” Different metaphor. Same idea.

Photo © Paha from Dreamstime.com. “Stakeholder Rule” © Richard Laurence Baron. All rights reserved.

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