Tuesday, March 12, 2024

Who is minding the change and culture store?

 In my last two blogs, I made the argument that given how fast change is happening, your strategy must incorporate and address external change and the ability to change internally.  Otherwise, you are creating strategy that ignores exceptionally powerful forces that are creating change and shifting the competitive markets in real time.  In the more recent blog, I wrote about what I consider the most difficult thing to change in an organization - its culture.  People can change, business models and financial models can be changed with some difficulty.  Products and services can be reworked or redirected.  These changes could be difficult but possible, but only if the prevailing sense of how the business sees itself is open to change as well.  This is why understanding how organizational culture works, and how to encourage it to change, is so important.  Unlike people or products, a leader cannot place his or her finger on culture or pull one lever to change existing culture.  Changing culture takes emphasis, time and commitment.

So, if change is accelerating and it threatens your strategy, and you need to shift your strategy and your organization, improving your change models and change capacity is critical.  What's critical to enabling and accelerating change in your organization is getting a better sense of the culture, how it works, how it is influenced and becoming far more intentional about the culture.  So, with all that said, here's the key question:  who is minding your ability to change, and influencing what the culture cares about?

The likely answers are no one and everyone, respectively.

Who focuses on change capacity?

Everyone in your company's leadership team is concerned about change.  There is an external pace of change that is hard to match and often hard to understand, since change occurs in many different dimensions.  Existing competitors are taking actions, while new entrants force new market dynamics.  New alternatives or new solutions threaten to disrupt the existing market.  Customers and prospects are constantly shifting their demands.  External change can be influenced but cannot be controlled.

What can be controlled is the internal capacity and pace of change, which depends on two factors:  what the company believes is a winning proposition in the near future, based on market trends and anticipated shifts in the market, and where the biggest change barriers or challenges exist within the existing culture.  Leaders need to create a reason and a direction to change based on reasonable predictions about future competitive positions and threats, and we need to reduce internal resistance to change.

Creating a reason to change isn't too hard.  Identifying trends in the marketplace and designing potential scenarios to determine where the company wants to position itself and how it will compete, these are not difficult tasks but require time and focus.  Acting on these interpretations is the difficult component, because these actions have risk associated with them.  Acting could mean developing a new product or business model before the market emerges, as an example.

Identifying and influencing cultural or capability change barriers, is much more difficult.  Corporate culture resists change because it takes effort to change, and change is risky and uncertain.  Corporate cultures have successfully resisted and waited out change before and have learned that most change can be delayed or avoided.  It's only when management defines a burning platform and leaves no options other than change that change occurs.  

Burning platforms or change capacity

Most people involved in change programs will tell you that change occurs when all other options are exhausted.  That is the burning platform argument.  What this fails to address is that organizations and people may WANT to change but don't know HOW to change, so they fail to act until there are no other options.  What leaders need to do is help people and cultures understand HOW to change, creating change knowledge, change skill and change capacity, and then using those skills to change more regularly.

The fact is that in the past, change happened seldom and with some warning.  Of course, even then, companies were slow to react.  Now, change is happening frequently and often without a lot of warning.  Companies that cannot change effectively will find themselves offering products that people do not want, or business models that people no longer request.  Just look at the shift from "ripping" CDs for music on the original iPod, to solutions like Spotify and Pandora.  The entire "as a service" model is radically reshaping how businesses work, and yet many are unprepared for a new reality.

Who minds the store?

So, who in your organization minds the culture and who minds change capacity?  Culture is actually minded and reinforced by everyone, all the time.  To change a culture, everyone needs to be of one mind, willing to implement new models of behavior, new decision-making criteria, new reward systems and new risk tolerances, and then reinforce those changes.  Change capacity isn't managed by anyone.  HR often owns training, which could improve change skills.  Leaders usually direct change programs but often are distracted by more important activities.  System and process owners dislike change because it means reworking established processes or core systems.  Most organizations have little or no support for ongoing consistent change, or to build change skills or capacities.

Yet that's what's needed most in the new competitive environment.  What we need is the ability to understand markets, customers and competitors, anticipate future competitive opportunities and shift strategies and capabilities quickly.  This means that organizations need to be far more adaptable and flexible, but also able to anticipate the future and act accordingly.  It means that corporations should be building change capacity into their teams, people, processes and systems.

Corporations have CFOs who manage the financials, and CMOs who manage marketing, and other "C" level officers who manage key functions.  What corporations lack is a concentrated effort and centralized leader or leadership team that focuses on building change capacity and on preparing the culture for the change that is necessary.  Please note that I am NOT arguing that we need a Chief Culture Officer.  Culture and change capacity does not belong to one individual.  It is a collective leadership team effort.  The risk is that when everyone owns something, then no one owns it.

Corporations need to adapt to more rapidly changing market conditions and consumer expectations. They need to become more adaptable, more nimble and more responsive, if not predictive.  This cannot happen without building change skill and change capacity, and cannot happen without creating a corporate culture that expects and anticipates change.

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posted by Jeffrey Phillips at 7:50 AM


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