An organization’s culture can be described as “the way we actually do things around here.” Transforming an enterprise regularly requires changing the way employees think and behave in an organizational context. However, corporate culture cannot be re-designed and adjusted like technology or organizational structures and processes; thus, this area of action is often neglected when planning and executing a business transformation. This is unfortunate, as it represents a core lever for transformational success.  

Corporate culture reflects the norms and values of a company that constitute the employees’ way of thinking and acting in the context of an organization. These cultural attributes rest on three pillars. The first is shared social characteristics, which often develop as regional or national traits. The more common these social properties are within a group of employees, the stronger the impact on the company’s character. The second pillar consists of an organization’s formal rules and policies that have been defined to guide and align contributing individuals’ behaviors within. And the third factories that the development of corporate culture is influenced by shared personal experiences, formal and informal communication, and observed leadership behavior within the organization.

Do not neglect the Impact of Corporate Culture on Transformation

Representing a broadly shared pattern of attitudes, beliefs, and paradigms, corporate culture is conveyed to all contributing stakeholders, and serves as an unofficial guideline for adapting and integrating effectively within an organization. As a collection of behavioral blueprints, corporate culture affects the collaboration of internal staff, external freelancers, and partner resources, and thus becomes a visible representation of a company’s character. Moreover, enterprise culture is a major determinant of the organization’s response to change.

In contrast to other factors like technology, organizational structures or processes, and staffing, corporate culture cannot be easily re-designed or exchanged. However, given its significant impact on enterprise performance, it should not be ignored or neglected when planning and preparing for a transformation initiative. In fact, it should be quite the opposite. Especially in the context of a business transformation, corporate culture is an important factor to consider in order to achieve the goals of your strategic change.

Corporate Culture Can Go a Long Way in Supporting Change

Corporate culture, much like water, is an elusive element. It is difficult, if not impossible, to shape permanently, but it is able to carry a heavy load over quite a distance. Still, it is necessary to consider and apply the basic principles of balance and displacement. Just as a child who is throwing rocks into a lake will only create a splash and some waves, a change initiative that is mindlessly put on top of an organization's culture is bound to cause trouble and eventually sink. In order for a transformation to permanently float, you need to assess whether the changes will eventually be supported by the prevalent mindsets and behaviors in your organization, or if you need to build a vessel to steer through troubled waters.

When aiming for a thorough business transformation, entrepreneurs, executives, and transformation managers must consider corporate culture as an important area of action. Changes in any other area, be it organizational, technological, or with regard to staffing, will likely create waves and shakeup the company’s foundations, potentially causing individual resistance and avoidance strategies on the employee level. Whether the targeted change will float or capsize ultimately depends on the manner in which it is placed on top of corporate culture.

Changing Corporate Culture Requires Caution and Patience

In order to ensure that the “ship being sent out on the transformation journey” will successfully reach its destination and achieve its objectives, corporate leaders and transformation managers must not only consider, but also influence or even change certain aspects of an enterprise’s culture. There are, at minimum, three dimensions that should be emphasized and actively handled in the context of significant organizational change:

Openness to change – Transformations trigger multiple fundamental changes, including to the value proposition of created products and services, organizational structures and processes, or technology used within the production process. By nature, human beings strive for continuity and security, and change is a potential threat to these goals. In order to mitigate this risk, it is recommended that enterprise executives address employees’ potential fears early and promote openness to change as a visible part of the organizational culture.

Willingness to learn – Embracing change is much easier when you have a positive attitude towards learning and personal growth. Unfortunately, many individuals possess a negative bias towards learning. Creating a business environment that fosters personal development and growth can help to overcome this “historic burden” and build a foundation for future change. If employees are able to gain valuable knowledge in advance, they are increasingly keen to apply this know-how and yield the corresponding benefits in the context of a transformation.

Tolerance of failure – Learning, changing, and developing implies making mistakes. A corporate culture that considers failure as unacceptable and puts the avoidance of errors at the top of the list is torpedoing any attempt to develop and grow. Company executives must establish fault-tolerant leadership, not necessarily to the largest possible extent or at any cost, but in a way that balances the benefits of change and growth against the risks and costs of errors. If the overall impact of a failure is neither epic nor catastrophic, it is probably beneficial to err on the tolerant side.

Culture Is a Result of Executive Gravity and Consequence

The most powerful way to actively develop corporate culture as a leader is to provide a living example of the values and norms you want to promote. It is not enough to tell your employees what they should think and how they should behave. If your actions speak another language, and if the consequences of adhering to or deviating from communicated values and norms are invisible or contradictory, your staff will adapt to reality and no longer believe the fictional story told.

Hence, as a leader of a transformation, you must get it right yourself, ideally before telling others that they need to change. As a chief executive, apply your authority and get others to follow your lead. As a middle manager, show empathy, act diligently, and provide visible statements of change by acting differently.

Be sincere in your attempt to influence peoples’ mindsets and behaviors.If you aren’t, your employees will notice and significantly discount any later statements that inform them they need to change.

The Trexcelerator Transformation Board can help you understand the multiple ties that corporate culture has with other areas of action in a transformation. It provides a comprehensive structure to develop, elaborate, assess, and improve corporate culture in the context of your transformation strategy. When using it to evaluate the Area of Action Culture, consider the following questions:

A supportive corporate culture can go a long way in transforming a business successfully.

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• What is the current cultural self-perception of organization members, especially with regard to technology, corporate structures, or social aspects ?
  Is it consistent across your organization, or do you have cultural hubs or silos?
• Which challenges and hurdles do you perceive with regard to the current corporate culture and the targeted transformation journey?
• Which aspects of the employees’ mindsets and behaviors do you need to improve to execute change and successfully complete the transformation journey?
• Which short-term activities can you trigger that create visible impacts and lead the change?

To learn more about the other building blocks of the TransformationBoard, check out the blog on our website, or participate in one of our training seminars.