With over 350 “unicorn” companies in the world, many CEOs of large, long-tenured companies are nervous. Unicorns generally have one thing in common: They disrupt a staid industry with a new business model, a new technology or both.
If your company isn’t already in the crosshairs of a young upstart, it soon will be.
Take the auto industry as one example. Ride-sharing, autonomous vehicles and tariffs are just some of the disruptions to traditional auto manufacturers, who have had to quickly adapt with workforces that are often very traditional and partially unionized. It’s not an easy task.
The question for any business, especially large organizations that have been market leaders for decades (but could just as easily apply to a 20-person company), should be: How do we iterate fast and learn, and how do we work more collaboratively and effectively?
The answer to this loaded question lies in recharging its culture to make the organization more agile and adaptable going forward, without losing the qualities that have sustained it up until this point.
Ensuring that your organization has an agile, innovative culture often does not require a total teardown. Rather, a culture renovation entails identifying the elements that have served the organization well in the past while determining where you must evolve and improve. And indeed, a blueprint for this type of renovation does exist.
If you’ve ever built or remodeled a house, however, you know it rarely goes as planned. Of the thousands of companies that we surveyed for our report, “Culture Renovation – A Blueprint for Action,” less than 20% of leaders who had undergone cultural transformations declared their efforts to have been highly successful. McKinsey, meanwhile, reports that 70% of transformations fail.
But, of those triumphant companies, there was a clear blueprint. A successful culture renovation occurs over three distinct phases:
One of the first steps should be to define what the culture is today. However, the worst thing an organization can do is have the senior team lock themselves in a conference room to determine this. It’s almost a guarantee they will get it wrong. Instead, listen to the employees.
This is not done through an annual engagement survey, which may be a false proxy for the health of an organization’s culture. Rather, it’s done through more frequent channels such as pulse surveys and “always-on” listening technologies to gather up-to-date, in-the-employee’s-own-voice opinions.
Next, in the spirit of renovation, decide what to keep before you agree on what to change. The company has been successful due to certain products and services, but also values and cultural attributes. Don’t throw those away. Instead, embrace them and enhance them with goals and behaviors designed for the future.
What’s also important to do is define how you’ll measure the success of your renovation efforts. Specify what the indicators of a successful renovation should be, and put in place mechanisms to monitor the renovation’s progress. For example, you may want to track retention of critical/top talent, employee referrals and inclusion, in addition to bottom-line measures that would be expected to improve with a more agile, innovative culture.
One thing that can’t be avoided: This must be led from the top. Our study found that 78% of successful culture changes started with clear CEO commitment. However, it’s important to engage employees in developing and building the new culture, particularly the influencers and energizers spread throughout the workforce.
But uncovering those influencers is not always easy. Every company has go-to people — critical talent who makes everything work on a daily basis. But ask senior management to identify them, and they will often miss the majority. Many companies that successfully change their culture utilize the organizational network analysis (ONA) technique to uncover those hidden stars and potential blockers who can derail a culture initiative. By our count, more than one-third of successful organizations removed skeptics and non-believers from senior leadership early in the process.
As the culture change is rolling out, it’s clear that top companies double down on one key area of HR: learning and development. Learning cultures are suddenly taking shape as a preferred model for the future workplace, and a key element in handling disruption. It’s important to ensure that managers at all levels — not just executives — are included to ensure the leadership behaviors necessary for real change are embodied throughout the organization.
Other talent areas also prove important to sustaining culture change over time. Successfully renovated organizations ensure that onboarding new employees into the culture isn’t solely focused on administrative items. They are more likely to focus on establishing a network of subject matter experts to help that new employee quickly become successful, and properly immersed in the culture. Using ONA, they also ensure that those network connections remain strong over time.
These same companies typically change their performance management practices to align with the behaviors and values expected in the new culture. They focus much more on talent mobility — moving employees into other divisions, departments and roles, as well as internal promotions. Cracking down on “talent hoarders” in management through mobility is a great way to improve engagement, collaboration, communication and cross-training in a renovated culture.
Unicorns beware: While new construction gets headlines, established institutions are figuring out the winning formula for long-term, successful renovation.
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