Chapter 1

Understand the Need for Change

The only thing of real importance that leaders do is to create and manage culture. If you do not manage culture, it manages you, and you may not even be aware of the extent to which this is happening.

—Edgar Schein

Recognizing the need for change must be established before undertaking any excellence journey. There has to be an inspiring reason (not a burning platform) that creates a desire to initiate change in an organization. Burning platforms are helpful while running a sprint, not a marathon. A transformational journey undertaken purely on the basis of a burning platform has a very narrow internal focus. It creates an environment of uncertainty where employees fear job loss; protect their own interest; construe management as the enemy; and feel helpless, disengaged, and demotivated.

On the other hand, a need based on a meaningful purpose, expected to positively impact customer, patient, or social outcomes, has a broad external focus. When reinforced and communicated extensively, this need draws much higher commitment. It inspires people to share a common vision, take personal accountability to change behavior, and hold one another responsible—all ingredients in a successful transformation.

If you are not sure about the nature of your need, it is advisable you conduct an assessment to guide your decision making. Some of the assessments, among many others, include the following:

1.Readiness for change assessment

2.Operational assessment

3.Growth assessment

4.Customer/patient/partner experience assessments

5.External environmental scan

6.Strategy assessment

7.Organizational culture assessment

8.Organizational health check

To assist leaders and practitioners in selecting the type of assessment that would be most meaningful to their organization, I created Figure 1.1, which leverages learning from the Competing Values Framework. Let me first provide you an overview of this framework.

The Competing Values Framework (CVF) was developed initially from research conducted by University of Michigan faculty members on the major indicators of effective organizational performance. It has been found to be an extremely useful model for organizing and understanding a wide variety of organizational and individual phenomena, including theories of organizational effectiveness, leadership competencies, organizational culture, organizational design, stages of life-cycle development, organizational quality, leadership roles, financial strategy, information processing, and brain functioning. The robustness of the framework is one of its greatest strengths. In fact, the framework has been identified as one of the forty most important frameworks in the history of business.

The Competing Values Framework explains that every organization is a mix of four culture types, namely, people, process, innovation and growth, and competitive benchmarking. Industries or organizations that are heavily dependent on their people, processes, and existing products/services to increase organizational performance have a more internal focus. Their strategy to optimize processes and resources is through integration and their emphasis is on improving bottom-line results. On the other hand, industries or organizations that choose to be innovative and competitive in the marketplace, to strategically differentiate themselves through new products and services, and to establish partnerships to delight their customers are externally focused. They base their performance on growing the top line.

That said, what was true for an industry to operate in a certain manner in the past is shifting dramatically to keep pace with unprecedented change. The healthcare and education industries have traditionally been more provider focused, when it was acceptable for the care providers and educators to decide on behalf of their patients and students, respectively, what was good for them. Over a period of time, however, with easier access to technology and information; increased competition in the marketplace; and availability of services that are faster, better, and cheaper, patients and students have become more educated and informed. They have wider choices. This has contributed to a shift in decision-making power to the patients, students, and their families. It has forced the healthcare and education industries to provide services that are more patient and student centered and to continuously improve their offerings to meet the constantly increasing expectations of their customers.

I would encourage leaders and practitioners to keep this framework in mind and undertake assessments that will help them in identifying gaps and designing strategies to move closer to the vision of their organization. Also, when the organization is considering an operational excellence journey, it is advisable to conduct a readiness assessment and evaluate the culture of the organization. A good instrument for measuring the current state and for developing the desired future state of your organization’s culture is the Organization Cultural Assessment Instrument (OCAI). It is a validated instrument based on CVF that has been extensively used in many industries across the globe. It is easy to understand, relate, and administer, and a discussion of the quantitative results of the survey engages people at all levels to agree on a shared vision.

Business and Culture

Senior leadership teams spend countless hours on strategy planning and execution, implementing Lean, carrying out project management, and undertaking team-building activities, but they are still unable to get the desired results.

Research has identified that what differentiates a top-performing organization from others is their “culture,” an unseen force that not only drives organizational excellence but also sustains transformational change.

The 2017 PEX Network’s, “Global State of Process Excellence” report indicates that the number one area for an organization to focus in 2018–2019 will be leadership and culture strategy, followed by process redesign work, customer-centric process management, change management strategy, and process automation.

According to a 2015 global survey conducted by Korn Ferry,

“Driving culture change” ranks among the top three global leadership development priorities.

“Organizational alignment and collaboration” is considered the primary driver to improve culture.

“Communications” is the most used strategy to improve culture, followed by “leadership development” and “embedding culture change in management objectives.”

Culture change occurs, ultimately, when a critical mass of individuals adopt new behaviors consistent with their organization’s strategic direction.

The above results are not very different from a previous study conducted by Booz & Company (now PricewaterhouseCoopers), in November 2013 (Figure 1.2).

Even the 2016 McKinsey digital survey of global executives identified shortcomings in organizational culture as one of the main barriers to company success in the digital age. Julie Goran, Laura LaBerge, and Ramesh Srinivasan in their article “Culture for a Digital Age,” published in the July 2017 McKinsey Quarterly, mention that the executives who wait for organizational cultures to change organically will move too slowly as digital penetration grows, blurs the boundaries between sectors, and boosts competitive intensity. They further highlight that executives must be proactive in shaping and measuring culture, approaching it with the same rigor and discipline with which they tackle operational transformations. This includes changing structural and tactical elements in an organization that run counter to the culture change the organization is trying to achieve.

Psychologists George Litwin, Richard Stringer, and David McClelland refer to six key factors that influence an organization’s working environment (climate) and therefore its culture: its flexibility—that is, how free employees feel to innovate unencumbered by red tape; their sense of responsibility to the organization; the level of standards that people set; the sense of accuracy about performance feedback and aptness of rewards; the clarity people have about mission and values; and finally the level of commitment to a common purpose.

Considering the decreasing tenures of the CEOs at any one organization, the irony, however, is that their focus tends to be on delivering short-term tangible benefits with heavy reliance on change management, continuous process improvement methodologies, and HR initiatives, instead of building a long-term organizational culture, which is typically understood as warm and fuzzy. Time and again, it has been proven that investing in culture assessment and alignment

pays rich dividends over the entire life of your strategy plan

assists you to align your strategy and operations with the desired culture

helps you in prioritizing projects that will deliver best value to customers/patients and their families

increases staff morale

generates remarkable growth

improves bottom-line results

optimizes use of your organization’s resources

Choice of Models in the Realm of Culture

While several models and their associated instruments are available to measure culture, the following models are often discussed in the literature:

Competing Values Framework

Denison culture model

Hofsede culture model

Barrett model

Human synergistics circumplex model

Deal and Kennedy’s culture model

Trompenaars and Hampden-Turner’s culture dimensions model

An Approach to Organizational Culture Assessment

I am sharing below a unique approach to culture assessment and alignment that I designed and implemented at several organizations across different industries. This approach is based on the Competing Values Framework and is explained using five stages to manage the implementation (Figure 1.3):

A.Initiate and assess

B.Plan and design

C.Enable and execute

D.Evaluate and sustain

E.Integrate and spread

I will detail the first three stages, which pertain to assessing organization culture, in this chapter, and the last two stages will be addressed in Chapter 5, where I describe how to align and integrate culture with organizational strategy. The sets of activities undertaken in each stage, as detailed below, are very engaging and structured but at the same time flexible and agile. They can be adapted to the needs of the stakeholders to deliver the expected outcome.

A. Initiate and assess

1.Understand, review, and confirm the mandate.

2.Establish a steering committee for the overall initiative.

3.Identify stakeholders.

4.Conduct one-on-one meetings and structured conversations with all key stakeholders.

5.Draft a charter that clearly defines expectations, goals, deliverables, in-scope, out-scope, stakeholders, relevant metrics, and timeframe.

6.Finalize a small planning group that includes a single point of contact (POC) for coordinating all logistics, scheduling meetings and workshops, and assisting in data requests and retrievals for the initiative.

7.Review the current strategic plan, vision, and values of the organization.

8.Review and analyze operational reports of departments.

9.Understand the strengths and weaknesses of the organization.

10.Review the current structure of the organization.

B. Plan and design

1.Ascertain the number of stakeholders and the most meaningful configuration in which to group them for conducting the culture assessment.

2.Develop a comprehensive communications plan along with the organization’s communication team that outlines objectives, tactics, target audiences, and a multiplatform strategy for engagement.

3.Finalize dates and logistics for conducting workshops.

4.Plan for circulating educational and reference material for self-reading to groups prior to participating in the workshops.

5.Prepare the education material for teaching stakeholders about

a.The initiative and approach,

b.The different types and attributes of change,

c.The definition of the organization’s culture and its types and attributes,

d.The relationship between culture and strategy,

e.The role of leadership in an organization’s culture, and

f.The application and benefits of the Competing Values Framework.

6.Plan and design the approach for administering the OCAI in a live setting during the workshops.

7.Plan for sharing the results with all stakeholders to understand the current state of perspectives of different groups and individuals.

C. Enable and execute

1.Conduct education sessions for all identified stakeholders.

2.Provide operational definitions for all six dimensions of the OCAI.

3.Administer the OCAI in a live workshop setting to understand the current state (Table 1.1).

a.Quantitative assessment:

i.Measure the current state of the organizational culture.

ii.Analyze the results of the current state, demonstrate similarities and differences in different groups, and share them with all stakeholder groups.

b.Qualitative assessment:

i.Facilitate open discussion with teams to share their thought processes on the reasons for those differences and similarities.

ii.Facilitate structured discussions for teams to diverge and then converge on what the desired culture of the organization should be in the future state.

4.Administer the OCAI in a live workshop setting to understand the desired future state.

a.Quantitative assessment:

i.Measure the future state of the organizational culture.

ii.Analyze the results of the future state and demonstrate the differences between the current and future states.

b.Qualitative assessment:

i.Facilitate open discussion with teams to share their thought processes on how to bridge the gap between the current state and the desired future state.

ii.Facilitate structured discussions for teams to diverge and then converge on a shared desired future state of the organization’s culture.

5.Agree upon the cultural quadrants of the Competing Values Framework that the organization needs to focus on to build congruency and leverage its strengths (Figure 1.4).

6.Facilitate a workshop to develop an action plan and align the current projects/initiatives with the desired culture.

7.Share best-practice management system frameworks and the infrastructure changes required to build a sustainable desired future organizational culture with senior management.

Sensei Gyaan: Hire a Lean sensei to guide you through the excellence journey. It will be the most wise investment decision that you as a leader will make in your organization. An experienced sensei will keep the organization focused and help the organization navigate its unique cycle in the change curve.