7 Principles for increasing your chances of effective culture change
For many organisations today, culture has become a liability. Although culture is essential for organisational performance and health, a pervasive inability to understand and manage culture in support of business performance has become a significant strategic risk. Indeed, recent research finds that 46 percent of financial services senior leaders rank ineffective culture and behaviour change as the most critical barrier to pursuing their digital strategies (1). And these leaders are right to be worried, with 70% of all transformation failures linked to culture-related issues (2).
As business strategies evolve to meet the challenge of disruption, the importance of culture has escalated. Employees are being asked to radically rethink what success looks like and to adopt very different collective behaviours and mindsets in support of this new definition of success. It is in this context that the power of culture becomes clear: it is culture that ultimately says 'yes' or 'no' to strategic success, because culture dictates what employees will and won't do, how they do it, and their openness to change.
Understandably, this has led many to seek to meticulously investigate and describe their existing and aspired cultures - what they are, and how they feel. This approach has led to a multitude of well-intentioned but failed investments: from detailed culture narratives that never make it out of the executive suite, to wonderfully described yet meaningless values, and ambitious large-scale agile transformations that seem to create new ways for people to do, or not do, the same things. Indeed, research shows investment in 'culture change programs' has not been particularly effective, with such programs well represented in the approximately 70% of organisational change initiatives that fail to achieve meaningful impact (3).
While the picture for culture change appears challenged, research and practice offer a different perspective, showing the key principles for culture change that have been demonstrated in research and practice to dramatically increase the chance of culture change success (4)(5)(6). They are:
- Connect your culture to strategy:
Ultimately the power of culture is not in its uniqueness or face-value desirability, but its ability to align employee mindsets, behaviours and practices to deliver on strategy. It is not what the culture is, but what it does for organisations that is important.
- Measure what matters:
Leverage models and tools that enable measurement of culture in relation to well evidenced areas of work practice and behaviour that support organisational performance. Don’t spend time developing unique frameworks that lack an empirical basis. The Denison Organisational Culture is the model we advocate for. It is practical, based on organisational science and practice and is easily understood.
- Pay attention to competing demands:
All organisations have competing priorities, for example, many find a conflict between behaviours that prioritise investment in people, and behaviours that emphasise performance in a competitive business environment. Supporting employees to develop the skills and awareness to balance these tensions is at the heart of adaptable organisations and sustainable performance
- Turn data into action (and do it quickly):
Don't focus on obtaining the perfect interpretation of your data before moving to action. Search your data for key actions and behaviours that can prompt change. Using a diagnostic that links culture to specific work practices that support organisational performance can help you move quickly to action.
- Involve people and teams in planning and ideation:
Many leaders are hesitant to let employees get involved in shaping the aspired ‘perfect’ culture. Yet humans are wired to resist change imposed upon them, so give your people and teams meaningful opportunities to contribute.
- Don’t go 'big' with change actions: prioritise habit shifts that will make the biggest difference and connect them to core business practices:
Strong cultures are resistant to invasive attempts to change them. Focus instead on the new habits and small changes to work practices that will have cultural ripple effects. These are usually small changes to behaviours, practices and reinforcement mechanisms that influence critical behaviours (e.g. communication, collaboration, decision making).
- Monitor the change process, don't just measure its effects:
Identify the lead and lag indicators of successful culture change in your organisation and pulse them regularly. This will allow you to track culture shifts as they happen, iterate and pivot and generate change momentum.
These 7 principles are good news for organisations. Culture can be a powerful force for competitive advantage when managed well. The opportunity of the moment is to start applying well-evidenced principles for culture development and bring your strategically aligned culture to life – before it becomes a liability.
- Catlinand Goran (2017). Building momentum for cultural change. McKinsey & Company.
- Dagan et al. (2019). Back to the not-so-basics of managing change. McKinsey & Company.
- Leonard and Coltea (2013). Most change initiatives fail -- But they don't have to. Gallup Business Journal.
- Keller and Schaninger (2019). Beyond Performance 2.0. John Wiley & Sons Inc, NY: New York.
- Denison and Nieminen (2014). Habits as change levers. People & Strategy, 37(1), p23
- Ulrich et al. (2017). Leaders as paradox navigators. Leader to Leader, 86, p 53-59.