Each new measure, while defensible, made it a little easier to compromise the firm’s values. This last area is usually the slowest to show improvement. Culture trumps strategy every time, no matter how brilliant the plan, so the two need to be in alignment. The same surveys of employee behavior, in-depth interviews, and observation that you use to diagnose your culture’s weaknesses can also clarify its strengths. 4) Integrate formal and informal interventions. Don’t just implement new rules and processes; identify “influencers” who can bring other employees along. The secret is to stop fighting your culture--and to work with and within it, until it evolves in the right direction. When, in an off-the-cuff response to a question at a town hall meeting, he highlighted pride as a reason employees should get behind change, he received a spontaneous standing ovation. They adjust reporting lines, decision rights, processes, and IT systems at the outset but overlook informal mechanisms, such as networking, communities of interest, ad hoc conversations, and peer interactions. (For a menu of tools, see the exhibit “Mechanisms for Getting the Most from Your Culture.”) Only a few companies understand how to do this well. While on the surface revenues remained strong, its rapport with customers and physicians was rapidly eroding, and its reputation was being bludgeoned by lawsuits and a national backlash against health maintenance organizations and managed care (which Aetna had championed). Amidst a turbulent business environment, change truly is the only constant. Cultural Change that Sticks: Dr. Dieter Kahling of Henkel on executing and leveraging cultural change for financial performance. When a major change initiative runs aground, leaders often blame their company’s culture for pushing it off course. That was an appealing proposition but would require significant restructuring; no one’s job was guaranteed. A strategy that is at odds with a company’s culture is doomed. Figure out what behaviors matter most to you, then support those behaviors through your processes, rewards systems, attitudes and mindsets. Another way to harness the cultural elements you want to support is by acknowledging them. And Aetna’s financial performance reflected that. But until the operations change, nothing will stick. Start small first. These included social visits, ad hoc meetings, impromptu telephone discussions, and e-mail exchanges. Where do you start? Have specific intervention milestones been reached? Culture Change that Sticks. The secret is to stop fighting your culture—and to work with and within it, until it evolves in the right direction. At Aetna a major turning point came during one question-and-answer session, when a longtime employee said, “Dr. In some cases, it may also be worth focusing on interactions within key subpopulations—such as midlevel managers or those in business-critical functions—whose own behaviors have a disproportionate impact on the experiences of others or on business success. But instead of adapting to U.S. Healthcare’s more-aggressive ways, the conservative Aetna culture only became more intransigent. All rights reserved. Aetna had always had a strong record of responding to natural disasters (including the Great Chicago Fire of 1871 and the 1906 San Francisco earthquake). The world’s most influential CMOs tackle the topic of diversity and inclusion in business head-on. Focus on a few critical shifts in behavior. “Arthur Andersen, once the world’s most admired auditing and professional services firm, descended through level after level of self-destructive decline to its ultimate death,” he says. July 01, 2012. Once openly known among workers as “Mother Aetna,” the culture encouraged employees to be steadfast to the point that they’d become risk-averse, tolerant of mediocrity, and suspicious of outsiders. The company used a 360-degree evaluation mechanism, but employees were often unpleasantly surprised by the results. From May 2001 to January 2006, its stock price rose steadily, from $5.84 (split adjusted) to $48.40 a share. We’ve known for a long time that it takes years to alter how people think, feel, and behave, and even then, the differences may not be meaningful. First observe the behavior prevalent in your organization now, and imagine how people would act if your company were at its best, especially if their behavior supported your business objectives. Begin implementing little changes that fall in line with the stated values and fill the … With practices in more than 30 countries, it was once the envy of professional service firms. They try to forge ahead by overhauling the culture--a tactic that tends to fizzle, fail, or backfire. Otherwise you can't identify backsliding or correct course. Most cultures are too well entrenched to be jettisoned. As GM was emerging from bankruptcy, the company decided to spur innovation by placing a renewed emphasis on risk taking and the open exchange of ideas. That shift was reflected in the business results, as Aetna went from a $300 million loss to a $1.7 billion gain. Most people will shift their thinking only after new behaviors have led to results that matter—and thereby been validated. It’s tempting to dwell on the negative traits of your culture, but any corporate culture is a product of good intentions that evolved in unexpected ways and will have many strengths. When Aetna merged with U.S. Healthcare, a lower-cost health care provider, in 1996, a major culture clash ensued. When a major change initiative runs aground, leaders often blame their company's culture for pushing it off course. These interventions led to small but significant behavioral changes that, in turn, revitalized Aetnas culture while preserving and championing its strengths. Rowe began interacting with a cadre of about 25 influencers and within a few months expanded the group to include close to 100. And how would employees react when they actually saw colleagues doing things differently? Today’s best-performing companies, such as Southwest Airlines, Apple, and the Four Seasons, understand this, say the authors, three consultants from Booz & Company. They had been heard and appreciated, and they came to accept the New Aetna. Cultural inclinations are well entrenched, for good or bad. The stores that have introduced the new behaviors are already beginning to see results, including improved same-store sales in key product areas and fewer customer complaints. A senior leader we interviewed there compared the company to universities that plan out paved walkways when they expand their campuses. After one colleague complimented another on his performance in a meeting, their team lightheartedly began a practice of handing out “gold star” stickers to recognize colleagues exhibiting strong character and candor. 2. In our experience, most corporate leaders favor formal, rational moves and neglect the informal, more emotional side of the organization. LEADERSHIP Cultural Change That Sticks by Jon R. Katzenbach, Ilona Steffen, and Caroline Kronley FROM THE JULY–AUGUST 2012 ISSUE I n the early 2000s Aetna was struggling mightily on all fronts. With other members of the senior team, they sought out employees at all levels—those who were well connected, sensitive to the company culture, and widely respected—to get their input on the strategy as well as their views on both the design and execution of intended process changes. For instance, the New Aetna was specifically designed to reinforce employees commitment to customersreflected in the firms history of res… Its operating income recovered from a $300 million loss to a $1.7 billion gain. At Google, he said, “we would wait to do the walkways until the employees had worn informal pathways through the grass—and then pave over only those getting the most use.”. Coherence among your culture, your strategic intent, and your performance priorities can make your whole organization more attractive to both employees and customers. This has happened at organizations like Washington Mutual, Home Depot (before its recent turnaround), and the U.S. Marine Corps during the Korean and Vietnam wars. Most cultures are too well entrenched to be jettisoned. In fact, its fall stemmed from a creeping cultural erosion that had begun decades before the Enron debacle. Abstract When a major change initiative runs aground, leaders often blame their company's culture for pushing it off course. All rights reserved. At least that was the conclusion of analyst and journalist Charles Ellis, who studied the Andersen failure in depth and described it in an unpublished manuscript, What It Takes. He declared that instead of just cutting costs, the organization would pursue a strategy he called “the New Aetna.” It would build a winning position in health insurance and a strong brand by attracting and serving both patients and health care providers well. and pay only $8.50 each, Buy 50 - 499 In late 2000, John W. Rowe, MD, became Aetna’s fourth CEO in five years. Another strength companies can leverage is the employees who are already aligned with their strategy and desired culture. Culture trumps strategy every time. These organizations follow five principles for making the most of their cultures: 1. Don't just implement new rules and processes; identify "influencers" who can bring other employees along. Indeed, during the next few years it became clear, from surveys, conversations, and observation, that a majority of Aetna’s employees felt reinvigorated, enthusiastic, and genuinely proud of the company. They might include a deep commitment to customer service (which could manifest itself as a reluctance to cut costs) or a predisposition toward innovation (which sometimes leads to “not invented here” syndrome). The list is too vague and too long to tackle. 3) Honor the strengths of the existing culture. Can you tell me what it means for someone like me?”. Not an easy question. Cultural Change That Sticks 3. What kinds of interactions would be visible in any new offices you opened? ‘Culture change that sticks: start with what’s already working, by Jon R Katzenbach, Ilona Steffen and Caroline Kronley’) The authors of this Review believed that culture change often fails because it’s poorly conceived and executed. The overall change effort will be far less jarring for all concerned. This is often the most difficult part of the change … Cultural Change that Sticks Start with what’s already working By Jon R. Katzenbach, 1Hona Steffen2, and Caroline Kronley3 In the early 2000s Aetna was struggling mightily on all fronts. Unfortunately, it can feel like a millstone when a company is trying to push through a significant change—a merger, for instance, or a turnaround. Companies should also use their tracking efforts to remind people of their commitment. , while defensible, made it a little easier to compromise the firm’s values company had to the shared of! 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