Your organization's culture may be sabotaging its performance

Jim Collins: "Failed corporations are often victims of systemic decay. Cancer can make you sick on the inside and look great on the outside. Whether you endure or die, fall from iconic to irrelevant, depends more upon what you do to yourself than what the world does to you."

Peter Drucker: “ A company beset by malaise and steady deterioration suffers from something far more serious than inefficiency. Its “ business theory" has become obsolete… Every business operates on such a theory. This theory is the basis for all its decisions, actions and behavior… Eventually the theory becomes inappropriate to the realities of the business environment.”
 

I have had the good fortune to have worked as a consultant with many of the leading companies of our time, and have studied most of the rest that have been recognized as being the greatest, and most admired in existence. My observation is that all but a small handful of them are significantly limited in their performance by their cultures and underlying paradigms/belief systems – and don’t know it. If this is true for them, I believe it is highly likely to be true for your organization as well. I encourage you to read on and test this proposition for yourself.

Some Key Questions About Organization Culture:
1. What is culture?
2. What causes it or underlies it?
3. What is its significance? What difference does it make?
4. How can you change a given culture?
5. How can you create a new culture or elements of one?
6. What is the role of leadership in culture change?
7. How can you assess a specific organization culture and its impact?
- what its essential elements are, and how far they’ve evolved?
- how it is enabling you?
- how it is limiting you?

Some Key Distinctions:
Context: The interrelated conditions within which something exists; the distinctions, beliefs, models, and frameworks that shape our ability to perceive and act on reality.

Culture: The pattern of basic assumptions and practices developed by a group for dealing with external adaptation and internal integration – that has worked well enough to be considered valid, and to be taught to new members; the total way of life of any group which is learned and transmuted to new members; includes language, values, beliefs, thought patterns, morals, ideals, laws, customs and manners.

Actual Culture: The culture in existence as a result of the thinking of the past and present.

Intended Culture: The culture intended for the future, which will result from new thinking.

Context of Governing Ideas: The new thinking/the set of empowering ideas (purpose, vision, values, beliefs, principles, goals and strategies) the members of a group choose as the basis for governing themselves and creating a new culture.

Paradigm: The set of beliefs or assumptions about the way the world works that guide the way we think and act. Helps us make sense of the world, but limits us from seeing other perspectives.

Some Basic Premises About Organization Culture and Performance:
1. The business environment is evolving, and is increasingly characterized by:
- global competition
- rapid, relentless change
- escalating customer and other stakeholder demands
- scarce resources.
2. In order to remain competitive and thrive, or even survive, in this environment, companies must have the capability to:
- innovate
- differentiate themselves
- act more quickly, effectively and efficiently than competitors.
3. These capabilities, in turn require:
- very high levels of member commitment and creativity
- very high levels of member alignment and unity of effort
- very high levels of strategic thinking at all levels of the organization
- very high levels of member autonomy of thought and action.
4. Organizations whose cultures do not evolve in concert with their environment will become obsolete, and fall behind those who do, and eventually disappear.
5. Cultures are ultimately based on their underlying belief systems/paradigms/mental models.

Comparing and Contrasting Two Management Paradigms:

COMMAND AND CONTROL AND BEHAVIOR MANAGEMENT PARADIGM:
1. Provides generic standards for BEHAVIOR
2. Has processes to arrest deviation from the standards, or disorder, including:
- policies, procedures and rules
- behavioral training
- behavioral coaching and mentoring and behavior modification
- personality typing
- behavioral feedback
- performance appraisals and ranking
- counseling, disciplining and firing
3. These processes are aimed at CONTROL
4. Their focus is on what we see in existence, or surface characteristics of people, and behavioral competencies
5. They tend to result in dependence, passivity and conformity, and in very low levels of thinking (automatic/mechanical/unthinking behavior, with some sensitivity/adaptation to the situation)
6. The net result is an EXTERNAL LOCUS OF CONTROL (someone else tells me what to do, how to do it, whether I’m doing it right, rewards doing it right)
7. This is a machine model of reality, about approaching perfection relative to a standard of behavior (an asymptotic model with diminishing returns)

STRATEGIC SELF-MANAGEMENT PARADIGM
1. Has generic standards for THINKING processes
2. Has processes to create a higher order of thinking and action, i.e., to:
- create a comprehensive context of governing ideas: purpose, vision, beliefs, values, principles, goals and strategies that bring out the best thinking and behavior in everyone
- provide everyone with complete business information
- develop higher order thinking and interaction capabilities in everyone
3. These processes are aimed at CONSCIOUSNESS, COMMITMENT, ALIGNMENT, UNITY AND SELF-CONTROL
4. The focus is on people’s essence/who they can be, and their thinking about work
5. They result in independence and uniqueness in people, proactiveness, and in very high levels of thinking (conscious, creative, uniting (perspectives), transcending (limitations))
6. The net result is an INTERNAL LOCUS OF CONTROL (based on my understanding of the business, and ability to think and interact at high levels, I decide what is best for the customer and enterprise, act, and assess its effectiveness for continuous improvement)
7. This is a generative model of reality, about limitless improvement against stakeholder needs.

Research on Organization Paradigms, Cultures and Performance

Organizations whose cultures have evolved to the highest levels have achieved performance improvements and levels that are multiples of those less advanced. Five independent studies of over 700 organization improvement efforts found that most of them achieved measurable, but typically temporary, improvements of around 10%. Those that adopted the Strategic Self-Management paradigm described above achieved, and continuously improved on, increases of 100-200%, and became leaders in their markets/industries. These results have not been widely publicized, because the organizations that achieved them considered them to be a competitive advantage, and kept them confidential. Examples of these kinds of organizations include businesses or groups of businesses in P&G, Clorox, Du Pont, Imperial Chemicals, Sherwin Williams, A.E. Staley, Consolidated Diesel and Tektronix. The efforts they have made, when described in the literature, have been held up as models of business architecture.

Leadership and Culture Change

The role of the leader, especially the leader of a whole organizational entity, includes being the architect/designer and builder of the future organization, and the conductor of the present organization. This means s/he should craft the context of governing ideas that will guide the building of the organization infrastructure and capability, from which the culture will emerge. S/he should be a model citizen and champion of the desired culture, and a coach from whom others can learn.

As the people in the organization become more and more capable over time, they can participate in increasingly significant ways in organization leadership processes.

Assessing Your Organization and Culture

Where do you think your culture is, relative to these paradigms, and where does it need to be? What would the business impact of such a shift be? (Note: When making a culture/paradigm shift, we retain those parts of the old world that will still add value in the new one.)

My own observation is that almost all companies are riddled with Command and Control and Behavior Management principles and practices. This paradigm, though having fallen somewhat out of favor in the search for commitment versus compliance, still seems to be a part of most people’s work experience, as most leaders have not figured out how to create the conditions for self-control.

One of my colleagues, Bill Veltrop, said that, “All organizations are perfectly designed to get the results they get.” I have created survey instruments that can enable you to assess the degree to which your organization has the design elements that underlie the cultures in the highest performing organizations: the purpose, vision, beliefs/paradigms, values and principles; the processes, systems, structures; the capabilities; the life-giving forces/climate. Some of these can be found at sites.google.com/site/yostassociates/self-assessment-tools. I recommend you begin with the Levels of Organization Evolution, Survey on Organization Context Design, Survey on Organization Infrastructure Design, and Survey on Common Organization Problems Resulting From Lack of Capability. My article on the mental capabilities and tools needed for high performance can be found at www.examiner.com/examiner/x-20018-SF-Workplace-Issues-Examiner~y2009m8d20-Your-Organizations-Mental-Software-May-Be-Obsolete.