Peter Finkelstein MD Director of Action Learning, Stanford Graduate School of Business, California Changing the Culture in your Organization

2 Executive Leadership Behavior Information Symbolic action Strategy What work are we in ? How will we succeed ? What’s our vision ? Strategy What work are we in ? How will we succeed ? What’s our vision ? Critical Tasks What specific tasks have to get done to implement the strategy? Critical Tasks What specific tasks have to get done to implement the strategy? Culture What are the norms, values, attitudes, and behaviors needed? People Do people have the nec- essary competencies? Are they motivated? People Do people have the nec- essary competencies? Are they motivated? Formal Organization Structure? Controls? Rewards? Careers? Fit Performance How do we need people to behave in order to successfully execute our strategy? How do we need people to behave in order to successfully execute our strategy?

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Where Does Control Come From? 4 “Control comes from the knowledge that someone who matters to us is paying close attention to what we do and will tell us when we are doing well or poorly.” Culture is a social control system

Nothing can stop a cultural trans- formation quicker than a CEO who permits a high level executive—even a very successful one—to disregard the new behavior model.” Nothing can stop a cultural trans- formation quicker than a CEO who permits a high level executive—even a very successful one—to disregard the new behavior model.” Lou Gerstner Who Says Elephants Can’t Dance? Harper Business, 2002, p. 208

This approach: Fits our intuition Makes us feel good Doesn’t work very well As individuals we have Values Interests Needs Personality Expectations Goals Attitudes Feelings These shape our Consistent choices and behavior Which lead to Personality Attitudes Behavior

This approach is less intuitive more useful to managers more powerful We work in settings with Which get us focused on Which shape our Strategies Structures Reward systems Leaders Specific tasks Subunit objectives Salient information Coworkers Expectations Choices Interpretations Behavior Attitudes Behavior Context

Attitudes and Behavior Attitudes and Behavior Personality Values and Beliefs What we actually observe What our intuition says that drives behavior Demographics These can be managed only through selection These can be managed only through selection

Attitudes and Behavior Attitudes and Behavior Personality Values and Beliefs What we actually observe What our intuition says drives behavior What we don’t “see” because of our focus on the individual Rewards Roles Background Organizational Culture Situational Pressures Demographics These can be managed only through selection These can be managed only through selection These can be managed by designing the context These can be managed by designing the context

When we watch people behave, we tend to “see” their behavior as being “caused” by something about their personality or dispositions. When we explain our own behavior, we are far more conscious of the pressure of the situation (e.g., deadlines, rewards, the opinions of others.) In general, we are not sensitive to how powerfully our behavior and that of others is shaped by the situations we are in. When we watch people behave, we tend to “see” their behavior as being “caused” by something about their personality or dispositions. When we explain our own behavior, we are far more conscious of the pressure of the situation (e.g., deadlines, rewards, the opinions of others.) In general, we are not sensitive to how powerfully our behavior and that of others is shaped by the situations we are in.

Visible90% Not Visible16% Visible90% Not Visible16%

Question What proportion of a group of normal adults would voluntarily deliver what they believed to be a fatal electric shock to another human being? Question What proportion of a group of normal adults would voluntarily deliver what they believed to be a fatal electric shock to another human being? Learner Teacher Experimenter

Much of what we accept as “true” or “important” in organizations comes only from a consensus of others. To “know” what is important we often rely upon information -- from our own past behavior (e.g., what we are vested in), our peers and other group members (e.g., approval and disapproval), and clear signals from those of higher rank (e.g., what’s rewarded and punished). Much of what we accept as “true” or “important” in organizations comes only from a consensus of others. To “know” what is important we often rely upon information -- from our own past behavior (e.g., what we are vested in), our peers and other group members (e.g., approval and disapproval), and clear signals from those of higher rank (e.g., what’s rewarded and punished). Information is the key!

Since much of what we accept as “true” or “important” in our organization comes largely from a consensus of others who matter to us, culture can be affected by: Management Actions - that set goals, focus our attention, and help us interpret events. Participation - which can lead us to feel responsible and to justify our actions. Information From Others - especially those who matter to us and tell us what’s really important. Rewards - such as recognition, approval, and pro- motions that are targeted at specific attitudes and behaviors Management Actions - that set goals, focus our attention, and help us interpret events. Participation - which can lead us to feel responsible and to justify our actions. Information From Others - especially those who matter to us and tell us what’s really important. Rewards - such as recognition, approval, and pro- motions that are targeted at specific attitudes and behaviors

Think of yourself and your team as “signal generators” whose words and actions are constantly being scrutinized and interpreted by others, especially those below you. Calendar management - spend time Ask questions Follow-up Public statements Meetings Agenda control Summarization Ceremonies, symbols, language Physical settings Calendar management - spend time Ask questions Follow-up Public statements Meetings Agenda control Summarization Ceremonies, symbols, language Physical settings

YOU = YOUR CALENDAR * * Calendars never lie. Your calendar knows what you really care about—do you?

The levers needed to shape the culture within your business are low-cost and largely under your control. “Remember, culture is nothing more than the behavior of the leaders.” Larry Bossidy Former CEO Allied Signal/Honeywell

Nothing can stop a cultural trans- formation quicker than a CEO who permits a high level executive—even a very successful one—to disregard the new behavior model.” Nothing can stop a cultural trans- formation quicker than a CEO who permits a high level executive—even a very successful one—to disregard the new behavior model.” Lou Gerstner Who Says Elephants Can’t Dance? Harper Business, 2002, p. 208

Commitment is enhanced by designing systems that encourage people to make choices and get involved. For example: Emphasize intrinsic rewards as well as extrinsic Obtain step-by-step choices Encourage the development of social relations Publicize the individual’s activities among peers, families, clients, and friends Use group approval and feedback Make the commitment process a serious one. Emphasize intrinsic rewards as well as extrinsic Obtain step-by-step choices Encourage the development of social relations Publicize the individual’s activities among peers, families, clients, and friends Use group approval and feedback Make the commitment process a serious one.

Since much of what we accept as true or important in organizations comes from a consensus among people who matter to us, we are always looking for clear, consistent information. Whenever there is inconsistency or noise in the signal, our natural inclination is to wait until the uncertainty is resolved. This means managers must help manage the information flow to ensure: Relentless communication from superiors A minimum of contrasts and inconsistencies which can undermine shared interpretations Vivid illustrations of the desired attitudes and behaviors needed in the new culture. Relentless communication from superiors A minimum of contrasts and inconsistencies which can undermine shared interpretations Vivid illustrations of the desired attitudes and behaviors needed in the new culture.

1. What do people in your organization really want as rewards for their efforts? 2. Who controls these? 3. What do people have to do to: Get senior management’s attention? Get approval from their colleagues ? Get promoted? 4. Are these consistent with the critical tasks and the norms needed for execution? 1. What do people in your organization really want as rewards for their efforts? 2. Who controls these? 3. What do people have to do to: Get senior management’s attention? Get approval from their colleagues ? Get promoted? 4. Are these consistent with the critical tasks and the norms needed for execution? [What is really rewarded within your organization?]

23 Can the leaders who brought you column A bring you column B?

These important themes come up time after time: Need for true understanding Better real dialogue/dx Care for nurses=care for patients Need for a valid psychology…. Teams/Meetings Removal of fear Getting beyond slogans (“Be the..” Time, time, time (reflection) Need for true understanding Better real dialogue/dx Care for nurses=care for patients Need for a valid psychology…. Teams/Meetings Removal of fear Getting beyond slogans (“Be the..” Time, time, time (reflection)