what mix of local and global leadership is required to foster business opportunities?

Strategy and culture are among the main levers at top leaders' disposal in their never-ending quest to maintain organizational viability and effectiveness. Strategy offers a formal logic for the company's goals and orients people around them. Civilisation expresses goals through values and behavior and guides activity through shared assumptions and group norms.

Strategy provides clarity and focus for collective action and decision making. Information technology relies on plans and sets of choices to mobilize people and tin often be enforced by both physical rewards for achieving goals and consequences for declining to do and then. Ideally, it besides incorporates adaptive elements that tin can scan and analyze the external environment and sense when changes are required to maintain continuity and growth. Leadership goes hand-in-manus with strategy formation, and most leaders understand the fundamentals. Civilisation, notwithstanding, is a more elusive lever, because much of information technology is anchored in unspoken behaviors, mindsets, and social patterns.

For better and worse, culture and leadership are inextricably linked. Founders and influential leaders oft set new cultures in motion and imprint values and assumptions that persist for decades. Over fourth dimension an organization's leaders tin besides shape culture, through both witting and unconscious deportment (sometimes with unintended consequences). The best leaders we have observed are fully aware of the multiple cultures inside which they are embedded, can sense when alter is required, and can deftly influence the procedure.

Unfortunately, in our feel it is far more than common for leaders seeking to build loftier-performing organizations to exist confounded by culture. Indeed, many either let it go unmanaged or relegate information technology to the HR function, where it becomes a secondary concern for the business organization. They may lay out detailed, thoughtful plans for strategy and execution, only because they don't understand culture's power and dynamics, their plans go off the track. As someone once said, civilisation eats strategy for breakfast.

It doesn't have to be that mode. Our work suggests that civilisation can, in fact, be managed. The first and well-nigh important step leaders can have to maximize its value and minimize its risks is to become fully enlightened of how it works. By integrating findings from more than 100 of the most commonly used social and behavioral models, we have identified 8 styles that distinguish a civilization and can exist measured. (Nosotros gratefully acknowledge the rich history of cultural studies—going all the fashion dorsum to the earliest explorations of human nature—on which our work builds.) Using this framework, leaders can model the touch of culture on their business organisation and assess its alignment with strategy. Nosotros besides suggest how civilization can help them achieve change and build organizations that thrive in fifty-fifty the most trying times.

Defining Culture

Culture is the tacit social society of an organization: It shapes attitudes and behaviors in wide-ranging and durable means. Cultural norms ascertain what is encouraged, discouraged, accepted, or rejected inside a group. When properly aligned with personal values, drives, and needs, culture can unleash tremendous amounts of energy toward a shared purpose and foster an organization's capacity to thrive.

Culture can also evolve flexibly and autonomously in response to changing opportunities and demands. Whereas strategy is typically adamant by the C-suite, culture can fluidly blend the intentions of top leaders with the knowledge and experiences of frontline employees.

Every bit someone one time said, culture eats strategy for breakfast.

The academic literature on the subject is vast. Our review of it revealed many formal definitions of organizational culture and a diverseness of models and methods for assessing it. Numerous processes exist for creating and changing it. Understanding on specifics is thin across these definitions, models, and methods, only through a synthesis of seminal piece of work by Edgar Schein, Shalom Schwartz, Geert Hofstede, and other leading scholars, nosotros take identified four mostly accustomed attributes:

Shared.

Culture is a group phenomenon. It cannot exist solely within a single person, nor is it merely the average of individual characteristics. It resides in shared behaviors, values, and assumptions and is well-nigh unremarkably experienced through the norms and expectations of a group—that is, the unwritten rules.

Pervasive.

Culture permeates multiple levels and applies very broadly in an organization; sometimes it is even conflated with the organization itself. It is manifest in collective behaviors, physical environments, group rituals, visible symbols, stories, and legends. Other aspects of culture are unseen, such as mindsets, motivations, unspoken assumptions, and what David Rooke and William Torbert refer to as "activeness logics" (mental models of how to interpret and respond to the earth around you lot).

Enduring.

Culture can directly the thoughts and actions of grouping members over the long term. It develops through disquisitional events in the collective life and learning of a group. Its endurance is explained in part by the attraction-selection-compunction model first introduced by Benjamin Schneider: People are drawn to organizations with characteristics like to their own; organizations are more than likely to select individuals who seem to "fit in"; and over time those who don't fit in tend to go out. Thus culture becomes a cocky-reinforcing social pattern that grows increasingly resistant to change and exterior influences.

Implicit.

An of import and often overlooked aspect of culture is that despite its subliminal nature, people are effectively hardwired to recognize and answer to information technology instinctively. It acts every bit a kind of silent linguistic communication. Shalom Schwartz and E.O. Wilson have shown through their research how evolutionary processes shaped man capacity; because the power to sense and reply to culture is universal, certain themes should be expected to recur across the many models, definitions, and studies in the field. That is exactly what nosotros have discovered in our research over the by few decades.

Viii Distinct Civilization Styles

Our review of the literature for commonalities and primal concepts revealed two main dimensions that apply regardless of system type, size, industry, or geography: people interactions and response to change. Understanding a company's civilisation requires determining where it falls along these two dimensions.

People interactions.

An system's orientation toward people interactions and coordination will fall on a spectrum from highly independent to highly interdependent. Cultures that lean toward the sometime identify greater value on autonomy, individual action, and competition. Those that lean toward the latter emphasize integration, managing relationships, and coordinating group endeavor. People in such cultures tend to interact and to run into success through the lens of the grouping.

Response to modify.

Whereas some cultures emphasize stability—prioritizing consistency, predictability, and maintenance of the status quo—others emphasize flexibility, adaptability, and receptiveness to alter. Those that favor stability tend to follow rules, use command structures such as seniority-based staffing, reinforce bureaucracy, and strive for efficiency. Those that favor flexibility tend to prioritize innovation, openness, variety, and a longer-term orientation. (Kim Cameron, Robert Quinn, and Robert Ernest are amongst the researchers who employ similar dimensions in their culture frameworks.)

By applying this fundamental insight about the dimensions of people interactions and response to change, we take identified eight styles that use to both organizational cultures and individual leaders. Researchers at Spencer Stuart (including ii of this article's authors) have interdependently studied and refined this list of styles beyond both levels over the past ii decades.

Caring focuses on relationships and mutual trust. Work environments are warm, collaborative, and welcoming places where people help and support one another. Employees are united past loyalty; leaders emphasize sincerity, teamwork, and positive relationships.

Purpose is exemplified by idealism and altruism. Work environments are tolerant, compassionate places where people try to do good for the long-term future of the world. Employees are united by a focus on sustainability and global communities; leaders emphasize shared ideals and contributing to a greater cause.

Learning is characterized past exploration, expansiveness, and creativity. Work environments are inventive and open-minded places where people spark new ideas and explore alternatives. Employees are united past curiosity; leaders emphasize innovation, cognition, and adventure.

Enjoyment is expressed through fun and excitement. Work environments are lighthearted places where people tend to do what makes them happy. Employees are united past playfulness and stimulation; leaders emphasize spontaneity and a humor.

Results is characterized by accomplishment and winning. Work environments are result-oriented and merit-based places where people aspire to accomplish height performance. Employees are united past a bulldoze for capability and success; leaders emphasize goal achievement.

Authority is divers by strength, decisiveness, and boldness. Work environments are competitive places where people strive to gain personal reward. Employees are united by strong control; leaders emphasize confidence and authority.

Safety is defined by planning, caution, and preparedness. Work environments are predictable places where people are gamble-witting and recall things through advisedly. Employees are united by a desire to experience protected and anticipate change; leaders emphasize existence realistic and planning ahead.

Gild is focused on respect, structure, and shared norms. Work environments are methodical places where people tend to play by the rules and want to fit in. Employees are united by cooperation; leaders emphasize shared procedures and time-honored customs.

These eight styles fit into our integrated civilisation framework according to the degree to which they reflect independence or interdependence (people interactions) and flexibility or stability (response to alter). Styles that are adjacent in the framework, such as safety and order, frequently coexist within organizations and their people. In contrast, styles that are located beyond from each other, such equally safety and learning, are less likely to exist found together and require more than organizational energy to maintain simultaneously. Each style has advantages and disadvantages, and no style is inherently meliorate than another. An organizational culture can be divers by the absolute and relative strengths of each of the eight and by the degree of employee agreement about which styles narrate the system. A powerful feature of this framework, which differentiates it from other models, is that information technology can also be used to define individuals' styles and the values of leaders and employees.

Inherent in the framework are fundamental merchandise-offs. Although each style tin can be benign, natural constraints and competing demands force hard choices about which values to emphasize and how people are expected to conduct. It is common to find organizations with cultures that emphasize both results and caring, but this combination can be confusing to employees. Are they expected to optimize private goals and strive for outcomes at all costs, or should they work equally a team and emphasize collaboration and shared success? The nature of the work itself, the business strategy, or the blueprint of the organization may make it difficult for employees to be equally results focused and caring.

In contrast, a culture that emphasizes caring and society encourages a work environment in which teamwork, trust, and respect are paramount. The two styles are mutually reinforcing, which can exist beneficial but can also present challenges. The benefits are strong loyalty, retention of talent, lack of conflict, and high levels of engagement. The challenges are a tendency toward groupthink, reliance on consensus-based decisions, avoidance of difficult bug, and a calcified sense of "u.s. versus them." Leaders who are more focused on results and learning may discover the combination of caring and order stifling when they seek to drive entrepreneurship and alter. Savvy leaders brand use of existing cultural strengths and have a nuanced understanding of how to initiate change. They might rely on the participative nature of a civilization focused on caring and social club to appoint squad members and simultaneously identify a learning-oriented "insider" who has the trust of his or her peers to advocate for change through human relationship networks.

The eight styles can be used to diagnose and describe highly complex and diverse behavioral patterns in a culture and to model how likely an individual leader is to align with and shape that culture. Using this framework and multilevel approach, managers can:

    • Understand their organisation's culture and assess its intended and unintended effects
    • Evaluate the level of consistency in employees' views of the culture
    • Identify subcultures that may account for higher or lower group performance
    • Pinpoint differences between legacy cultures during mergers and acquisitions
    • Rapidly orient new executives to the civilisation they are joining and assist them determine the about effective manner to lead employees
    • Mensurate the degree of alignment betwixt individual leadership styles and organizational civilization to determine what impact a leader might have
    • Design an aspirational civilisation and communicate the changes necessary to achieve it

The Link Between Culture and Outcomes

Our enquiry and practical feel take shown that when you are evaluating how culture affects outcomes, the context in which the organization operates—geographic region, manufacture, strategy, leadership, and visitor structure—matters, equally does the strength of the civilisation. (See "Context, Weather, and Culture.") What worked in the past may no longer work in the future, and what worked for one company may non work for some other.

We have arrived at the following insights:

When aligned with strategy and leadership, a strong culture drives positive organizational outcomes.

Consider the example of a all-time-in-form retailer headquartered in the U.s.. The company had viewed its first priority every bit providing top-notch customer service. Information technology accomplished this with a simple rule—Practice right by the customer—that encouraged employees to use their judgment when providing service. A core HR training practice was to assistance every salesperson see customer interactions as an opportunity to create "service stories that become legendary." Employees were reminded to define service from the customer'south perspective, to constantly engage customers with questions geared toward agreement their specific needs and preferences, and to go across their expectations.

In measuring the culture of this company, nosotros found that similar many other big retailers, it was characterized primarily by a combination of results and caring. Unlike many other retailers, however, it had a culture that was likewise very flexible, learning oriented, and focused on purpose. Every bit ane tiptop executive explained, "We have freedom as long as we take skilful care of the customer."

Furthermore, the company'due south values and norms were very clear to everyone and consistently shared throughout the organization. As the retailer expanded into new segments and geographies over the years, the leadership strove to maintain an intense customer focus without diluting its cherished culture. Although the company had historically focused on developing leaders from within—who were natural civilisation carriers—recruiting outsiders became necessary as it grew. The visitor preserved its culture through this change past carefully assessing new leaders and designing an onboarding procedure that reinforced core values and norms.

Culture is a powerful differentiator for this company considering it is strongly aligned with strategy and leadership. Delivering outstanding client service requires a culture and a mindset that emphasize achievement, impeccable service, and problem solving through autonomy and inventiveness. Non surprisingly, those qualities have led to a variety of positive outcomes for the company, including robust growth and international expansion, numerous customer service awards, and frequent appearances on lists of the all-time companies to work for.

Selecting or developing leaders for the future requires a forward-looking strategy and civilization.

The chief executive of an agronomics business was planning to retire, spurring rumors almost a hostile takeover. The CEO was actively grooming a successor, an insider who had been with the company for more than than 20 years. Our analysis revealed an organizational culture that strongly emphasized caring and purpose. As one leader reflected, "You feel like role of a large family when y'all become an employee at this company."

The potential successor understood the culture but was far more risk-balky (safety) and respectful of traditions (order) than the rest of the visitor. Given the takeover rumors, pinnacle leaders and managers told the CEO that they believed the visitor needed to accept a more aggressive and activeness-oriented stance in the future. The lath decided to consider the internal candidate alongside people from outside the company.

Cultural dynamics are a often overlooked factor in postmerger performance.

Three external candidates emerged: one who was aligned with the current culture (purpose), one who would exist a risk taker and innovative (learning), and i who was hard-driving and competitive (authority). After considerable deliberation, the lath chose the highly competitive leader with the dominance way. Shortly later on an activist investor attempted a hostile takeover, and the new CEO was able to navigate through the precarious situation, continue the company independent, and simultaneously begin to restructure in preparation for growth.

In a merger, designing a new civilization on the basis of complementary strengths can speed upwards integration and create more value over time.

Mergers and acquisitions can either create or destroy value. Numerous studies have shown that cultural dynamics represent one of the greatest nevertheless about frequently overlooked determinants of integration success and postmerger performance.

For example, senior leaders from 2 merging international food retailers had invested heavily in their organizations' cultures and wanted to preserve their unique strengths and distinct heritages. An assessment of the cultures revealed shared values and areas of compatibility that could provide a foundation for the combined culture, along with important differences for which leaders would have to plan: Both companies emphasized results, caring, and social club and valued high-quality food, good service, treating employees fairly, and maintaining a local mindset. But one operated in a more top-down style and scored much higher on authority, especially in the behavior of leaders.

Because both companies valued teamwork and investments in the local community, the leaders prioritized caring and purpose. At the same time, their strategy required that they shift from pinnacle-down authority to a learning style that would encourage innovation in new-shop formats and online retailing. Every bit i senior leader said of the strategic aspiration, "We demand to dare to do things differently, not play past the old rule books."

Once they had agreed on a culture, a rigorous assessment process identified leaders at both organizations whose personal mode and values would allow them to serve equally bridges to and champions for information technology. Then a program was launched to promote cultural alignment within 30 top teams, with an accent on clarifying priorities, making accurate connections, and developing team norms that would bring the new culture to life.

Finally, structural elements of the new organization were redesigned with culture in mind. A model for leadership was developed that encompassed recruitment, talent assessment, training and evolution, operation direction, reward systems, and promotions. Such design considerations are often overlooked during organizational change, but if systems and structures don't align with cultural and leadership imperatives, progress can be derailed.

In a dynamic, uncertain environment, in which organizations must be more agile, learning gains importance.

Information technology'south non surprising that results is the well-nigh common culture manner among all the companies nosotros take studied. Even so during a decade of helping leaders design aspirational cultures, nosotros have seen a clear tendency toward prioritizing learning to promote innovation and agility equally businesses reply to increasingly less predictable and more complex environments. And although learning ranks fourth within our broader database, small companies (200 employees or fewer) and those in newer industries (such equally software, engineering science, and wireless equipment) accord it college values.

Consider 1 Silicon Valley–based technology company nosotros worked with. Though it had congenital a stiff business and invested in unique technology and acme applied science talent, its acquirement growth was starting to pass up as newer, nimbler competitors made strides in a field exploding with innovation and business concern model disruption. Company leaders viewed the culture as a differentiator for the business concern and decided to diagnose, strengthen, and evolve it. Nosotros plant a civilization that was intensely results focused, squad based (caring), and exploratory (a combination of enjoyment and learning).

After examining the overall business strategy and gaining input from employees, leaders aimed for a culture that was even more focused on learning and adopted our framework as a new language for the system in its daily work. They initiated conversations betwixt managers and employees well-nigh how to emphasize innovation and exploration. Although it takes time to change a civilization, we found that the company had fabricated notable progress just one year later. And even as it prepared for an impending auction among ever greater competition and consolidation, employee engagement scores were on the rise.

A strong culture can be a pregnant liability when information technology is misaligned with strategy.

Nosotros studied a Europe-based industrial services arrangement whose industry began to feel rapid and unprecedented changes in customer expectations, regulatory demands, and competitive dynamics. The company's strategy, which had historically emphasized cost leadership, needed to shift toward greater service differentiation in response. Simply its strong culture presented a roadblock to success.

We diagnosed the civilisation as highly results oriented, caring, and club seeking, with a top-down emphasis on authority. The company's leaders decided to shape it to be much more purpose-driven, enabling, open, and team based, which would entail an increment in caring along with learning and purpose and a decrease in authority and results.

This shift was peculiarly challenging because the electric current culture had served the organization well for many years, while the industry emphasized efficiency and results. Near managers nonetheless viewed it every bit a strength and fought to preserve information technology, threatening success for the new strategic direction.

Cultural modify is daunting for any arrangement, but equally this visitor realized, it's not incommunicable. The CEO introduced new leadership development and squad coaching programs and preparation opportunities that would help leaders feel more than comfortable with cultural evolution. When people departed, the company carefully selected new leaders who would provide supporting values, such equally caring, and increased the emphasis on a shared purpose. The benefits of this strategic and cultural shift took the form of an increasingly various array of integrated service offerings and strong growth, specially in emerging markets.

Four Levers for Evolving a Culture

Dissimilar developing and executing a business plan, changing a company's culture is inextricable from the emotional and social dynamics of people in the arrangement. We take found that four practices in particular lead to successful culture modify:

Clear the aspiration.

Much similar defining a new strategy, creating a new culture should begin with an analysis of the electric current i, using a framework that tin can exist openly discussed throughout the system. Leaders must understand what outcomes the culture produces and how it does or doesn't align with current and predictable market and business conditions. For example, if the visitor's chief civilisation styles are results and say-so but information technology exists in a rapidly irresolute industry, shifting toward learning or enjoyment (while maintaining a focus on results) may be appropriate.

An aspirational culture suggests the high-level principles that guide organizational initiatives, as at the engineering science company that sought to heave agility and flexibility amid increasing competition. Change might be framed in terms of real and present business organisation challenges and opportunities likewise as aspirations and trends. Because of civilisation'southward somewhat ambiguous and subconscious nature, referring to tangible bug, such every bit market pressures or the challenges of growth, helps people better understand and connect to the need for change.

Select and develop leaders who align with the target culture.

Leaders serve as of import catalysts for change by encouraging it at all levels and creating a condom climate and what Edgar Schein calls "do fields." Candidates for recruitment should exist evaluated on their alignment with the target. A unmarried model that can appraise both organizational culture and private leadership styles is critical for this activity.

Incumbent leaders who are unsupportive of desired modify can be engaged and re-energized through training and education nigh the of import human relationship between culture and strategic direction. Ofttimes they will support the change after they understand its relevance, its anticipated benefits, and the touch that they personally tin have on moving the organisation toward the aspiration. Nevertheless, culture change can and does lead to turnover: Some people move on because they feel they are no longer a good fit for the organization, and others are asked to leave if they jeopardize needed evolution.

Use organizational conversations about culture to underscore the importance of change.

To shift the shared norms, beliefs, and implicit understandings inside an organization, colleagues can talk one another through the change. Our integrated culture framework can be used to discuss current and desired culture styles and also differences in how senior leaders operate. As employees beginning to recognize that their leaders are talking about new business organization outcomes—innovation instead of quarterly earnings, for case—they will begin to acquit differently themselves, creating a positive feedback loop.

Various kinds of organizational conversations, such as road shows, listening tours, and structured group word, tin support change. Social media platforms encourage conversations between senior managers and frontline employees. Influential change champions can advocate for a culture shift through their linguistic communication and actions. The applied science company made a meaningful change in its culture and employee engagement by creating a structured framework for dialogue and cultivating widespread discussion.

Reinforce the desired change through organizational design.

When a company'south structures, systems, and processes are aligned and support the aspirational civilisation and strategy, instigating new civilization styles and behaviors will go far easier. For example, operation management can exist used to encourage employees to embody aspirational cultural attributes. Training practices can reinforce the target culture as the organisation grows and adds new people. The degree of centralization and the number of hierarchical levels in the organizational construction tin can exist adjusted to reinforce behaviors inherent to the aspirational civilisation. Leading scholars such as Henry Mintzberg accept shown how organizational structure and other pattern features tin have a profound impact over fourth dimension on how people think and behave within an organization.

Putting Information technology All Together

All four levers came together at a traditional manufacturer that was trying to go a full solutions provider. The change started with reformulating the strategy and was reinforced past a major make campaign. But the president understood that the company'south culture represented the biggest barrier to change and that the top leaders were the greatest lever for evolving the culture.

The culture was characterized by a drive for results followed by caring and purpose, the last of which was unusually strong for the industry. 1 employee described the company every bit "a talented and committed group of people focused on doing skilful for the planet, with 18-carat desire, back up, and encouragement to make a divergence in the community." Whereas the broader civilisation was highly collaborative, with flat decision making, leaders were seen equally meridian-down, hierarchical, and sometimes political, which discouraged risk taking.

The pinnacle leaders reviewed their culture'southward strengths and the gaps in their own styles and discussed what was needed to attain their strategic aspirations. They agreed that they needed more risk taking and autonomy and less hierarchy and centralized decision making. The president restructured the leadership squad around strong business line leaders, freeing up fourth dimension to become a better advocate for the culture and to focus more than on customers.

The top squad then invited a grouping of 100 middle managers into the chat through a series of biannual leadership conferences. The first one established a platform for input, feedback, and the cocreation of an organizational modify plan with clear cultural priorities. The president organized these managers into teams focused on critical business organisation challenges. Each team was required to become outside the visitor to source ideas, to develop solutions, and to present its findings to the group for feedback. This initiative placed middle managers in modify roles that would traditionally have been filled by vice presidents, giving them greater autonomy in fostering a learning-based culture. The intent was to create existent benefits for the business while evolving the civilisation.

The president too initiated a program to identify employees who had positive disruptive ideas and working styles. These people were put on projection teams that addressed primal innovation priorities. The teams immediately began improving business results, both in core commercial metrics and in culture and engagement. Afterwards but ane year employee engagement scores jumped a full 10 points, and customer Internet Promoter Scores reached an all-time high—providing strong customer references for the company's new and innovative solutions.

CONCLUSION

It is possible—in fact, vital—to improve organizational performance through civilisation change, using the elementary simply powerful models and methods in this commodity. Commencement leaders must become aware of the culture that operates in their organization. Next they can ascertain an aspirational target culture. Finally they can master the core change practices of articulation of the aspiration, leadership alignment, organizational conversation, and organizational blueprint. Leading with culture may exist amid the few sources of sustainable competitive reward left to companies today. Successful leaders volition stop regarding culture with frustration and instead use it as a fundamental management tool.

A version of this article appeared in the January–February 2018 issue (pp.44–52) of Harvard Business Review.

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Source: https://hbr.org/2018/01/the-leaders-guide-to-corporate-culture

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