A Scientific Approach to Leadership
and Management Development

"Leadership Matters"
— A Management Newsletter —

Changing Culture — One Activity at a Time

We've all seen the signs: the posters and coffee mugs and desk plaques reminding us to Innovate and Win, that the Customer Comes First, that Quality is Everything. Good CEOs ensure that the people at corporate "talk the talk." But corporate communication does not do the work nor guarantee results. How do managers create or change culture? What does it really take to "walk the talk" in your group or team so as to achieve exceptional results?

Corporate Culture
Although people at work often talk about the company's culture, it is not something they can do much about. At IBM, former CEO Louis Gerstner tackled an entrenched and increasingly dysfunctional culture, which had employees acting and thinking in counterproductive ways (e.g., "respect for the individual" had been transmuted into "entitlement for the individual"). Gerstner made it his job to sow new sentiments in the entrenched, bureaucratic culture. He thought it would take five years to change IBM's culture, but reflected later that he underestimated how long it would really take.1

While corporate executives must be keenly aware of the company culture — the common ways people act and think at work — they cannot change or create culture via edict or by simply rewriting mission and values statements. Culture is abstract from the actual work as it describes a general state of the enterprise. Ultimately, the accepted and reinforced behaviors of people doing the work determine culture.

Building Culture from the Bottom Up
Changing culture is a function of managers leading teams (working on specific activities) to achieve specific results. While a negative corporate culture may have a clear impact on people's performance, when people are effectively organized (think of a group working on a specific activity or function), the influences of the immediate work context will usually supersede any negative, prevailing cultural norms of the company. That is, high-performing work groups can succeed regardless of the larger corporate culture.

In late 2001, the biotech firm ImClone was denied FDA approval for its highly anticipated cancer drug, Erbitux. By mid-2002, ImClone was within hours of being delisted from Nasdaq. In addition, the company was pilloried in the press for an insider-trading scandal involving the firm's founder, Sam Waskal, and his famous friend, Martha Stewart. Yet by 2004, and with the most of the same people, ImClone had come all the way back to post a profit and move their stock back from a low of $5 back above $80 — mostly because they got Erbitux approved. Despite a toxic corporate culture, the employees involved in the complicated drug approval process kept working to get the drug approved — to the benefit of future patients and the firm's shareholders.2

Management: Focusing People on the Work
Although the corporate culture takes years to change, the good news for managers is that they can change the culture in specific work activities fairly quickly through effective organization. In addition to establishing clear common goals, effective team leaders inject the work context with purpose and then focus people on performance, avoiding messages that end up confusing or misdirecting.

Managers should avoid phrases like "I want..." or "You need to..." or other phrases that focus people on individual perspectives rather than team goals. They can misdirect through statements like "How do you feel about..." or asking employees about preferences unrelated to the actual work. By inserting personal questions like, "How was your weekend?" when people are actually focusing on work, managers can disrupt focus and undermine effectiveness.

Effective managers are consistent and disciplined about how they set up situations for team activities; eventually, a culture (expectations and sentiments) develops that guides future activities. They do it by thinking carefully about what they say and what they do — before they say or do it. Usually, they are able to establish cooperative situations, where members can communicate, where they have common understandings, and where they are committed to achievement of the required results.

Employees at ImClone were committed to the cause of a drug they believed would treat cancer. For IBM's Gerstner, corporate culture gradually changed because managers down the chain were changing the culture in their own contexts, one by one, leading teams that were focused on results. Yes, Gerstner talked the talk by forming values statements, slogans and new corporate mantras, but IBM's culture change was achieved by those doing the work, one activity at a time.

1Gerstner, Jr., Louis. 2002. Who Says Elephants Can't Dance? HarperBusiness.
2Tischler, Linda (Sept., 2004). The trials of ImClone. Fast Company. http://www.fastcompany.com/magazine/86/imclone.html

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