The prevailing executive mind-set was “We take care of our people for life, as long as they show up every day and don’t cause trouble.” Employees were naturally wary of any potential threat to that bargain. By the time they get around to culture, they’re convinced that a comprehensive overhaul of the culture is the only way to overcome the company’s resistance to major change. Culture Change that Sticks. 4. 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 had been heard and appreciated, and they came to accept the New Aetna. Focus on a few critical shifts in behavior. In this article, we’ll walk through the five principles, using examples from our research and client experience. Figure out what behaviors matter most to you, then support those behaviors through your processes, rewards systems, attitudes and mindsets. The practice soon began to spread. In our research we’ve found that almost every enterprise that has attained peak performance—including the Four Seasons, Apple, Microsoft, and Southwest Airlines—got there by applying five principles. Then in 2002 indictments during the Enron investigation forced Andersen into bankruptcy. From May 2001 to January 2006, its stock price rose steadily, from $5.84 (split adjusted) to $48.40 a share. and pay only $8.75 each, Buy 11 - 49 So you need to choose your battles. Start small first. A few modest interventions might have preserved the firm’s commitment to integrity and avoided a very public and embarrassing demise. Change that Sticks: Evolving Culture through Business Upheaval Panelists Paula Winkler, Carolyn Jacobson, and Steve Arsenault. Targeted and integrated cultural interventions, designed around changing a few critical behaviors at a time, can also energize and engage your most talented people and enable them to collaborate more effectively and efficiently. Too often a company’s strategy, imposed from above, is at odds with the ingrained practices and attitudes of its culture. and pay only $8.25 each, Buy 500 or above One early and important networking effort by Rowe was to identify a core group of “key influencers”—potential leaders who could offer invaluable perspectives on the cultural situation, regardless of their level in the hierarchy. That shift was reflected in the business results, as Aetna went from a $300 million loss to a $1.7 billion gain. Don’t just implement new rules and processes; identify “influencers” who can bring other employees along. If you can find ways to demonstrate the relevance of the original values and share stories that illustrate why people believe in them, they can still serve your company well. The goal? Following them can help an organization achieve higher performance, better customer focus, and a more coherent and ethical stance. 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. But instead of adapting to U.S. Healthcare’s more-aggressive ways, the conservative Aetna culture only became more intransigent. By the time Enron became a key client in the late 1990s and insisted on using only individual accountants and auditors who accepted its questionable practices, the accounting firm’s professional culture had already declined past the point of no return. All rights reserved. An overemphasis on quarterly sales results, for example, can trigger inappropriate pressure on valued customer relationships. The challenge is that leaders must go far beyond basic tips, keys, or “levers,” like Booz & Co. highlighted in their study, if there is hope for … Cultural Change that Sticks: Dr. Dieter Kahling of Henkel on executing and leveraging cultural change for financial performance. When that’s the case, an organization with an old, powerful culture can devolve into disaster. Today’s best-performing companies, such as Southwest Airlines, Apple, and the Four Seasons, understand this, say the authors, three consultants from Booz & Company. Inspiring new skills and habits. Bottom-up culture change aligned with organization strategy and goals as discussed in the Harvard Business Review in the article “Culture Change that Sticks” by Jon R. Katzenback, Ilona Steffen, and Caroline Kronley. Google is a good example of a company that makes the most of its informal organization. And if a company, in an effort to become more customer-centric, defines “engage with your client more often” as a critical behavior and measures it in number of calls per week, its staff may make lots of phone calls without increasing business. To boot, the company was losing roughly $1 million a day, thanks to cumbersome processes and enormous overhead, as well as unwise acquisitions. When designing cultural metrics, remember that you get what you measure. Rowe didn’t walk in with a new strategy and try to force a cultural shift to achieve it. If it excelled at service, how would people treat customers differently? This enormous strength had been largely untapped. 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. You can start a cultural change with organizational changes or strategic changes. At the time, many believed that a single client relationship had brought the firm down for largely legal or regulatory reasons. Culture change is best set against a very clear shared understanding by senior people of the outcomes and objectives of change and what kind of culture will achieve them. Why had that concept hit such a nerve? 3) Honor the strengths of the existing culture. Ask the people in your leadership groups, “If we had the kind of culture we aspire to, in pursuit of the strategy we have chosen, what kinds of new behaviors would be common? The retailer’s leaders enlisted the help of internal “exemplars”—people who were known for motivating their teams effectively. These discussions not only gave him insights about the staff but created a rapport between him and a respected group that disseminated his message both formally and informally. Culture thus becomes an excuse and a diversion, rather than an accelerator and an energizer. This is what Aetna did. A senior leader we interviewed there compared the company to universities that plan out paved walkways when they expand their campuses. Measure it. So management introduced a simple behavior: asking people who were providing input whether they had ever given the feedback to the person being reviewed. Rowe, I really appreciate your taking the time to explain your new strategy. AETNA CULTURE – When Aetna merged with U.S. Healthcare lower-cost health care provider, in 1996, a major culture clash ensued – However, instead of adapting to U.S. Healthcare’s more-aggressive ways, the conservative Aetna culture only became more intransigent – Aetna’s leaders could make little headway against it, and one CEO was forced out after failing to change it. And what ingrained behaviors would be gone?”. 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. Cultural Change That Sticks (Harvard Business Review) By: Jon R. Katzenbach,Ilona Steffen,Caroline Kronley Narrated by: Todd Mundt Free with a 30-day trial $14.95 a … In our experience, most corporate leaders favor formal, rational moves and neglect the informal, more emotional side of the organization. Have specific intervention milestones been reached? 3. 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. At the same time, they surfaced Aetna’s significant cultural strengths: a deep-seated concern about patients, providers, and employers; underlying pride in the history and purpose of the company; widespread respect for peers; and a large group of dedicated professionals. It is worth spending time to build this picture with the senior group to avoid ambiguity and create the ‘North Star’ against which to guide change. For example, if customer relationships are crucial, do managers update the CRM database on a regular basis? The overall change effort will be far less jarring for all concerned. 3) Honor the strengths of the existing culture. In other words, it was the kind of change that Mother Aetna traditionally resisted with every passive-aggressive move she could muster. Are relevant growth targets being reached more frequently? “At cocktail parties,” said one longtime Aetna staffer, “I really dreaded the question, Who do you work for?” When Rowe and Williams made “restoring the pride” the core of their message, they touched the hearts of many employees and helped them believe Aetna could regain its former glory. Some corporate leaders struggle with cultural intransigence for years, without ever fully focusing on the question: Why do we want to change our culture? Today's best-performing companies, such as Southwest Airlines, Apple, and the Four Seasons, understand this, say the authors, three consultants from Booz & Company. Separate nonhierarchical forums among peers and colleagues were also held across the company to discuss Aetna’s values—what they were, what they should be, why many of them were no longer being “lived,” what needed to happen to resurrect them, and what leadership behaviors would ensure the right employee behaviors. This emerges with the experiences of a society, traditional culture, organization, super culture or subculture. 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). Another strength companies can leverage is the employees who are already aligned with their strategy and desired culture. Good Read: “Cultural Change that Sticks” For over a decade, the Baird Group has provided some of the nation’s leading healthcare organizations with culture assessments that enable them to gain a greater understanding of the culture behind the patient experience. He and Williams focused on getting cross-sections of people to reflect on how they were feeling and on identifying their sources of anxiety and concern. Add copies before, KEMET: Leading Change across Cultural Boundaries (B), KEMET: Leading Change across Cultural Boundaries (C), KEMET: Leading Change across Cultural Boundaries (A), HBR's 10 Must Reads on Building a Great Culture (with bonus article "How to Build a Culture of Originality" by Adam Grant), Buy 5 - 10 CULTURE CHANGE THAT STICKS Scott Cook, Intuit Founder and Chairman of the Executive Committee 2018 CEO Summit “In 2007, we kicked off a major initiative called Design for Delight, to basically teach the organization the fundamentals of design thinking. All too often, leaders see cultural initiatives as a last resort, except for top-down exhortations to change. Aetna’s story (which we have drawn from a draft of an unpublished book by Jon Katzenbach and Roger Bolton, a retired Aetna senior executive) isn’t unique. The survey revealed a number of serious cultural challenges, including passive-aggressive behavior, inconclusive decision making, and pervasive organizational silos. They don’t clearly connect their desired culture with their strategy and business objectives. Getting your team eagerly bought into culture shift is the first step to lasting change. 2. The Chinese company had big plans to turn itself into a massive global business. It’s better to include a few carefully designed, specific behavioral measurements in existing scorecards and reporting mechanisms, rather than invent extensive new systems and surveys. Many of the problems Aetna faced were attributed to its culture—especially its reverence for the company’s 150-year history. Honor the Strengths of Your Existing Culture Use Your Employees Don't be a Hater Back to the Story ... Aetna's pride Chose to highlight existing strengths Be Positive We tend to accentuate the negative traits of our culture. Simply put, rather than attacking the heart of your company, you will be making the most of its positive forces as your culture evolves in the right way. It was also the approach taken by a national retailer that was looking to build a culture with a strong customer focus. 4) Integrate formal and informal interventions. These conversations helped Rowe and his team identify Aetna’s biggest problem: A strategy that focused narrowly on managing medical expenses to reduce the cost of claims while alienating the patients and physicians that were key to Aetna’s long-term success. 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. Most cultures are too well entrenched to be jettisoned. When the leaders of Aetna applied these rules while implementing a new strategy in the early 2000s, they reinvigorated the company’s ailing culture and restored employee pride. If we can demonstrate When Aetna merged with U.S. Healthcare, a lower-cost health care provider, in 1996, a major culture clash ensued. That was an appealing proposition but would require significant restructuring; no one’s job was guaranteed. 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.”. In the early 2000s Aetna was struggling mightily on all fronts. Change slowly over time to explain cultural change that sticks new strategy and desired culture their! 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