Why Culture Change Is One of the Most Important Challenges in Business Today

By Christopher Smith , Director of Consultancy, Strategy, Organization and Leadership Development

Is your business changing at least as fast as its environment? If not, you are going backwards. If you hope to both respond to market change and shape it, then continually realigning your strategy, culture, and leadership is essential for business survival and success. The biggest challenge facing most businesses now is transformational change in the context of the volatile, uncertain, complex, and ambiguous (VUCA) world, especially with digital technologies reshaping business models and patterns of working across the world. We know that most acquisitions and mergers fail to achieve in full their intended goals and that organization culture is the most significant obstacle.

 

Given this, you might expect that business leaders and their advisors would be well versed in leading culture change. Our experience is that this is rarely the case. Why is culture change so hard? There are many reasons, but a few of the common themes we have noticed include:

 

  • It is hard to see your own culture fully when you are working in it.
  • Corporate culture is not consistent; it varies between functions, geographies, etc.
  • Our “mental models” of both organization and change limit our capacity for leadership.

 

It is probably the last of these, mental models, that is the most challenging. A mental model is a way of seeing the world, sometimes called a mindset, that is often a long-established habit that is unexamined and out of the leader’s awareness. An unexamined mental model limits our ability to shape the challenges we face or to develop new responses. Instead, we are destined to repeat the same mistakes endlessly.

 

One example of an outdated mental model, which is common in our experience, is when business leaders fall into the trap of seeing their organization as a machine. You can hear this through the language leaders use around change, as they search for “levers” and “toolboxes” or seek to “drive” change. This mental model of organization as an industrial-age machine leads to a belief that if they can figure out how it is working and just find the right tools, then they can make the changes needed to modify the pattern of working. Also, that it is a repeatable and measurable process; that there are reliable levers for making change happen. They often focus on organizational structure, which is comparatively easy to rearrange. Or they focus on some of the key processes, both in how the business operates and HR processes such as reward.

 

In fact, all such processes both influence and are a function of organizational culture. It can be discomforting for leaders to realize and accept that the culture is not controllable in this way. Many business leaders have grown through their functions as experts who can fix issues and make things happen using established methods. These leaders may experience anxiety while working through ambiguity and uncertainty, when others turn to them expecting answers.

 

A New Mindset for Changing Cultures

 

When business leaders let go of the machine metaphor and start to develop a different mental model of organizations, culture, and change, they can immediately create more options about how to respond. We find an organic model more helpful than a mechanical one in understanding the nature of organizations and how best to generate change. Culture is the complex patterning of relationships between members of an organization and its stakeholders, for example, customers, suppliers, regulators, society, and the environment. For leaders, it is a significant shift from trying to “make” change happen to “enabling” change or “creating the right conditions” for change to flourish. For this, leaders need to continually notice the emerging patterns of interaction and experiment with how best to influence them. They need to stay curious and open to how else they might disrupt the patterns to generate change.

 

So, what are some of the things you might do, as a leader, to enable culture change in your business? In our experience, they include the following:

 

  • Generate an outside-in view of the culture. Those around you have invaluable insights. Draw on the data you already have, for example, customer surveys, and continually seek out more—through data and dialogue with those at the boundaries of your business and in unrelated fields.
  • Be purpose-led. Take a future-back perspective. Be clear about your business purpose, your future vision and the opportunities and risks in the market. Use these to energize change.
  • Be aware of history—what led the business to where it is now. Many of the myths and assumptions current in the business and in yourself come from this legacy.
  • Share the challenge rather than the solution. Involve your team in what is happening and have them explore what this means for how you work together and with stakeholders.
  • Focus on the stories you share. Develop the narrative of where you have come from, where you are now, and what is exciting about the future.
  • Build on the positive energy. Notice and celebrate examples of positive behavior and ways of working that herald what is needed in the future.
  • Above all, start with the changes in yourself and your leadership team—your own mindsets and behaviors. If you do not change the leadership team’s pattern of behavior, then you will not see others change. Be open about your own challenges, and ensure this is a real priority for the whole team, not just another thing on the to-do list.

 

We have experience of working alongside businesses as they face the challenges of culture change. In the same way as a leader cannot make change happen in a business, so we as consultants cannot prescribe an approach. We need to work with you as consultants, bringing our expertise to your context. We can help you hold the mirror up to your existing culture but are wary of quick, generic categorizations, because a business culture is always complex and dynamic. We help identify areas to focus, ways to influence the pattern of relationships, and the impact of changes you make. Given the complexities and dynamic, you need to remain responsive and ready to adapt after every step.

 

We are at a time of unprecedented and accelerating change in the world. Changing cultures is one of the hardest challenges facing business leaders, but it is essential if an organization is to learn quickly and adapt rapidly to the changes in its environment. The role of leadership is to articulate the purpose and focus on generating the environment, including the culture, which releases the talent for people to deliver business success.