Organizational culture is an integral part of business strategy. Yet many leaders struggle to evolve their cultures effectively.
Turning the word "change" to "chance"
Personal development and career growth.
Introduction
It’s widely understood that organizational culture is an integral part of a successful business strategy. Yet, many senior leaders admit that their culture is not aligned with their vision or business goals. In a recent PwC Global Culture Survey of 3,200 executives and employees, 67% of respondents agreed that culture is more important to an organization than strategy or operations. However, as companies grow, culture tends to evolve accidentally and organically, often taking on traits from the personalities and interactions of senior leadership.
In my work as an organizational consultant, I have seen many leaders struggle to understand and direct their companies' cultures. Year in and year out, they observe and even complain that their culture is holding the company back. They aren’t alone: Research from McKinsey indicates that only about 30% of organizational transformation efforts succeed, and this number has remained stubbornly consistent over time. The fact is cultural transformation is a long-term process, often taking years to fully implement and embed. But with intention, ongoing effort, and buy-in from every level of the organization, it can be done.
Considerations for Shifting Culture
Take an honest look at your current culture and how it got to be that way
Culture in an organization is often driven by senior leaders' personalities and behaviors—as anyone who has worked for a micromanager or people-pleaser knows too well. Many personality traits, which may be simply inconvenient or annoying at lower levels of management, become amplified at the C-Suite level to such an extent that they start to change how decisions are made and work gets done throughout the organization. It takes good data and self-reflection for leaders to understand what’s really going on.
Culture surveys can provide valuable information on how people experience the culture. However, they may not identify why people behave the way they do. To change culture, leaders must look beyond surface-level data and delve into the historical context, personal dynamics, and other underlying factors shaping organizational culture. Additionally, leaders should consider how their own backgrounds, biases, and decision-making patterns contribute to the cultural landscape. By combining quantitative data from surveys with qualitative insights from in-depth interviews, focus groups, and careful observation, leaders can better understand the "why" behind cultural norms and create a solid foundation for implementing meaningful and lasting change.
Recognize that culture is not a monolith
If culture is "the way things get done" in an organization, it makes sense that few organizations have just one. In fact, organizational norms are expressed in dozens of ways within different teams or workgroups. These “microcultures” are usually beneficial. According to a Deloitte survey, 71% of respondents believe focusing on these microcultures is the best way to influence the overarching culture. Half of the executives surveyed reported that organizational culture is most successful when it allows for slight variations in how it’s expressed. It’s also important to make an effort to understand the various microcultures within the company, because these different groups will relate to leadership in their own unique ways.
Engaging members of each microculture may require new and different leadership styles. The flexibility afforded by microcultures allows teams to develop their own norms and work practices that best suit their specific needs and challenges. Fostering a healthy ecosystem of microcultures is complex work, but worth the effort. Deloitte found that organizations that successfully do so are 1.6 times more likely to achieve desired business outcomes than organizations that don’t.
Know how you want your culture to change and why
Change efforts often fail due to a lack of clear direction, and culture is no exception. When defining your desired culture, it is important to know what outcomes you are looking for and articulate the vision. Ask yourself: What new behaviors would you expect to see if you can make this transformation? How do they align with your business strategy? How will this change help drive desired outcomes? The more specific you are, the more likely you are to succeed.
For instance, Netflix's culture of "freedom and responsibility" is clearly articulated and tied directly to its business model of rapid innovation and adaptation, encouraging independent decision-making, open communication, and a high-performance environment that marries the freedom to innovate with accountability for results. Whatever your culture, a strong, aligned, and clearly defined cultural framework helps employees understand the "why" behind cultural initiatives and how to embody the culture in their daily work.
Ensure Leadership Alignment and Commitment
Research indicates that organizational transformations have a significantly higher chance of success when top executives effectively communicate the vision. According to McKinsey, CEOs who articulate a compelling narrative about transformation are nearly six times more likely to succeed. When leaders fully embrace and embody the desired cultural shifts, it sends a powerful message throughout the organization. If there is a disconnect between the stated cultural goals and leadership behavior, it can lead to increased cynicism, decreased trust in leadership, and greater resistance to future change efforts.
In some cases, it may be more effective to start with smaller, more achievable cultural shifts and build momentum, rather than attempting a dramatic overhaul. With strong leadership alignment and a well-thought-out communication strategy, organizations can significantly increase their chances of successful cultural transformation and avoid the pitfalls of a failed high-profile attempt.
Measure Progress Effectively
Peter Drucker's wisdom, "What gets measured gets managed," definitely applies here. Develop specific metrics to track progress on your cultural transformation, using tools like pulse surveys to gauge employee sentiment, tracking behavioral indicators like cross-functional collaboration or other meaningful metrics, and monitoring business outcomes linked to cultural change.
Changing organizational culture is undoubtedly challenging, but organizations can navigate this complex process with a clear understanding of the current culture, a well-defined vision for change, leadership alignment, recognition of microcultures, and effective measurement. As the business environment continues evolving, intentionally shaping and adapting organizational culture will likely become an increasingly critical leadership skill.