Managing change is an increasingly important challenge for today’s organisations. Yet the majority of leaders struggle to really change their company’s culture. In fact, 70 per cent of change programs fail. Here’s why.
Rob Murray, former CEO of Lion, one of Australia’s leading beverage and food companies, described its culture journey as “long and relentless”, saying: “You do not build positive, constructive cultures through nice, soft, cosy behaviours. You get there through really confronting, challenging issues that go to the heart of trust and authenticity in people, and having difficult conversations.”
Lion has been on an 18-year cultural journey and its approach has been characterised by an integration of leadership and cultural development to drive the performance outcomes of the business.
This has been continually driven and championed by the CEO and executive team and, over time, has led them to build a business where people, processes and systems are shaped and informed by constructive mindsets.
Don’t copy the high achievers
Most leaders want change to happen quickly and try to learn from the organisations they admire. However, looking at the intricacies of culture change, it’s clear that the process of transformation is neither linear nor directly transferrable. Instead, it’s a steep and rocky climb.
Rather than looking at where Lion is now and what it’s currently doing, the real learning for management is to begin its journey by identifying where the organisation is at and looking back to what successful organisations, like Lion, did when they were at a similar point. At that earlier point, Lion management thought differently about their organisation, as they were at a different level of consciousness.
Put simply, it is not as easy as taking what worked for others and assuming it will work for another organisation. The true cause of failure is that organisations look too far ahead and miss laying the foundation required for effective personal and organisational change.
Six stages of organisational consciousness
By analysing the data from nearly 2000 organisations (see note below), it demonstrates the road that an organisation travels as it slowly changes its culture. There are six distinct stages:
Many organisations get stuck in denial. Management gets locked into short-term thinking and focuses only on immediate wins. Overall, they don’t value culture change and instead see it as a waste of time. If they stop at this stage, they are left with unsustainable performance and are unable to adapt to their environment.
The majority of those tasked with leading change find themselves stuck at this stage. They remain unconvinced by the importance of culture and continue to act in a reactionary way. Those who stop here only preserve the status quo.
To go from non-responsive to compliance is a big jump, but at this stage management often still only see culture change as information gathering and the results as ‘nice to have’. Culture continues to be seen as an HR issue and those who stop here have only assessed their problems.
At the efficiency stage, there is finally a belief in the need for change, but it’s restricted by the expectation that change only means adapting what already exists. Companies that stop here will have made some incremental improvements to systems and processes and will have improved staff engagement.
5. Strategic proactivity
At this stage, the organisation is committed to the journey and change is seen as integral to improving performance. Culture change is owned by the business and leaders lead by example. However, culture change is still seen as a cost. Nonetheless, an organisation at this stage enjoys a level of continuous improvement with measurable results for the business.
At this point, culture change becomes culture development. It stops being just ‘the right thing to do for the organisation’ and becomes part of the organisation’s identity and an investment, rather than a cost. The few organisations – currently just 3 per cent – that reach this stage will achieve a level of performance that is sustainable through good times and bad. They will continue to invest in culture because they value the people in the organisation.
Why make the effort?
We know that realising a constructive culture is essential to the long-term success of any organisation. In a rapidly changing world, the ability to adapt is everything. The more constructive organisations show a greater ability to adapt to changing demands and remain competitive in all circumstances.
As Chris Beer, Asia-Pacific president at Luxottica, said: “At the end of the day, culture is what really makes a company unique and gives you a competitive strategic advantage – something no one else can copy.”
Special note: Human Synergistics has worked with over 2000 organisations in Australia and New Zealand, charting the progress of those organisations towards a constructive culture using its integrated diagnostic system based around the Circumplex.