Lean manufacturing is like dieting. Everyone knows that it is not good to be overweight. But how many overweight people actually ever permanently lose weight? This is because all the diets and advice in the world will do nothing unless the eating and exercise culture changes. People can jump from one program to the next, read book after book, but until there is a true change of habit and mentality, the weight will just keep coming back on.
As organisations implement enterprise-wide Capability Transformation programs that impact growth and profitability, senior leaders realize that true Transformations are rooted in cultural change. Senior leaders own the vision, architecture, and direction of the transformation. True cultural change actually drives the transformation and is an enabler for sustainable success. A culture’s transformation increases an organisation’s speed, its ability to create value and its capability to consistently deliver.
Culture change: Understanding the complexity
Most people in an organisation cannot define what the organization’s culture really is, let alone define how to change it. As a result, attempts to leverage culture change as part of an overall capability transformation have typically yielded inconsistent results. The complexity of driving a successful culture transformation lies in understanding the following areas:
1. The current culture and how it impacts business performance
2. Linking strategy and business objectives to the culture change
3. Identifying the leadership skills necessary to drive a culture change
4. Developing talent at all levels in order to perpetuate the culture
5. Establishing and rooting a new set of expectations around behaviour and performance
6. Articulating a change message that is understood organisation-wide and is reinforced in all aspects of how the business operates
ICON, LEXICON, CODE: A systems model for culture transformation
Successful Organisation Cultures are managed through true systems that integrate all business functions in order to provide an enterprise-wide business cadence, that consistently link key behaviours to the performance levels necessary to profitably achieve strategic imperatives.
Successful cultures have a system that connects Icons, a Lexicon, and a Code:
Organisation cultures have icons; these are individuals who are held up and promoted as embodying how to lead and drive results in an organization. They know what winning looks like and, equally as important, how winning happens. These leaders are the architects of how customer expectations are translated into superior business performance. Think of an individual in your organisation who, through their leadership, has transformed a function, or delivered year over exceptional results using the right process. This is iconic behaviour.
2. Organisation cultures have a common lexicon, where continuous improvement and performance become the spoken language for all functions, locations, and business units. This lexicon sets not only the expectations around results, but the processes by which one must achieve the results. It represents the complete body of standard language and standard process across the business that drives sustainable performance. One can walk a true lean organization and see that all employees talk the same language around 5S, visual management, and daily management. They truly understand the Toyota Production
System (TPS) principles and live them every day.
3. At their foundation, organisation cultures have a code. This code is basically the set of core values and guiding principles that dictate how individuals in an organisation should interact internally and externally.
A successful culture identifies, implements, and enforces the necessary behaviours that seamlessly convert Voice of Customer (VOC) inputs into highly satisfied customers. In that regard, a cultural transformation not only drives the business transformation, it is chiefly responsible for isolating the optimal human performance imperatives necessary to generate superior cash flows and profit margins.
With culture as the guiding force that delivers sustainable results across the enterprise, senior leadership, as the chief cultural architects (Icons), have two critical responsibilities both to external shareholders and internal associates that ultimately determine long-term success.
They must be deliberate in developing and implementing:
Armed with key tools and core business strategy, senior leaders have the responsibility for delivering a cultural agenda that clearly communicates: a) change expectations, b) change implications and c) the application of process and performance disciplines across the enterprise. In so doing, the organisation is consistently provided with a galvanising agenda promoting consistent processes and results expectations
What gets measured gets done. Once the cultural change agenda has been communicated, leaders across the enterprise must closely monitor and scrutinise the organisation’s reactions to their expectations. What leadership is truly paying attention to must be aligned with the cultural change agenda. Are the high level business metrics focused on the critical few levers of success? Are they regularly and deeply reviewed? Are daily performance metrics captured and reviewed daily? Ultimately, superior alignment between leadership expectations and inspections will drive performance and organisational buy-in. Leadership rigor and discipline are fundamental to this process.
Relentless, consistent performance: Understanding the transformation model
In order to drive a successful culture transformation one must have a model and a standard process. in my opinion, the best Culture Transformation model should begin with a deep examination of the organisation’s mission and core values. The messages that emanate from the mission and core values will then become the Code that drives the organisation’s internal and external behaviours.
This process step forces the need for fundamental changes in internal communications, leadership skills, organisation structure, performance management, reward and recognition systems and most critical, how an organization develops talent to perpetuate the new culture. In most cases, senior leaders evaluate the transformation journey holistically by creating a guiding set of principles, translating strategic goals into required process changes, backed by appropriate skills and behaviours as well as ensuring that the organisation has the talent required to perpetuate the culture. While each transformation will unfold as dictated by market factors and growth requirements, understanding each component of the model and its integration into a system can serve as a useful tool to ensure that management attention is properly focused on the processes. Leaders must also relentlessly pursue alignment and improvement in order to experience the benefits of a culture transformation.
Value capture: Where a culture transformation leads
Ultimately, the complete integration of the enterprise-wide business strategy and cultural transformation combine to yield the framework necessary to generate sustainable results and superior financial performance. Basically, true Lean transformations are culturally driven and yield quantifiable benefits including employer-of-choice status, accelerated acquisition integration, greater employee retention rates, and superior stock performance as a result of increased stability and earnings predictability.
In summary, therefore, Culture Change must be at the forefront of an organization’s lean transformation journey. It is the enabler of rapid change and enterprise-wide capability improvements. Adopting a systems approach coupled with standard processes provides an organisation the ability to sustain these capability improvements through the true alignment of human capital to the strategic imperatives of the business. This sustained improvement will result in greater shareholder value. A Culture Transformation is the most powerful lever that senior leadership can pull in their efforts to improve business performance. Until we meet again next week, do have a waste-free week.