Diverse Paths to High-Performance Organizational Culture

There is no single path or prescription for high-performance organizational culture. Increasingly companies are abandoning the traditional “modern management” practices developed for manufacturing and are moving to post-modern approaches that reflect the changing face of work and  the needs of knowledge workers.

In this post, we compare and contrast five organizations that have moved beyond traditional (archaic) management practices: Zappos, Valve Corporation, Semco, Netflix, and Beyond Budgeting Companies. The results are shown in the matrix below using Harvey Balls:

Comparison of High-Performance Organizational Cultures

As can be seen that for many aspects these organizations, there is no single best way. It can be seen that there are many paths to effective organizational cultures. At the level of individual practices we can see that there is great diversity.

Customer Focus and Engaged Staff

There are two very powerful common threads that emerge around these organizations: customer focus and engaged staff. Although each organization has a unique cultural operating system and supporting practices, they all share this commonality.

Organizational Coherence

Each organization has a powerful driver for coherence around values and behaviour. We consider each of the methods identified in the image below to be roughly equivalent in the sense that perform the same function – namely organizational coherence. In other words, simple rules of behaviour in one organization may be functionally equivalent to values in another organization in terms of it’s ability to guide and unify. Each organization has different values and principles, so this would suggest that there is no one path to success.

Values

Future Investigation

The diagram below is a brainstorm of additional organizational aspects to consider as well as other organizations the have characteristics of post-modern thinking.

Organizations and Aspects

I have recently discovered that Lululemon is another example of break-through organizational culture.

Acknowledgements

I would like to thank the participants in this session: Don Gray, Claudia Melo, Jens Coldewey and Diana Larsen. I would also like to acknowledge the financial contribution of the Agile Alliance for sponsoring this workshop through the Supporting Agile Adoption Program.

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Workshop on Characteristics of High-Performance Organizations

At Agile Tour Toronto last November, I conducted a workshop to get crowd-sourced research into high-performance organizational cultures. The purpose of this workshop was two-fold. First, to understand similarities and differences between organizational cultures. Second, to see if case-studies of high-performance cultures would resonate with Agile-oriented people.

The companies that were selected for study were:

  1. Zappos – amazing customer service
  2. Valve Corporation – everyone responsible for finding a project to contribute to (no hierarchy)
  3. Semco – where people pick their own salary and people choose their managers
  4. Netflix – where staff are managed like a professional sports team – only the best and non-performers are cut
  5. Beyond Budgeting – OK, this isn’t a company, but we used the composite characteristics of companies that move to decentralized control. It’s more about leadership than budgeting.

Each group was given a case study, and asked to summarize the following:

  • Key Organizational Characteristics – What did the organization pay attention to and how did it structure itself?
  • Business Benefits – What material business results were observed in that organization?

Happy Customers and Engaged Staff

When asked what the key benefits these companies found from their high-performance culture the aggregate results across all companies were happy customers and engaged staff. See image below. We played a short version of the game of 35 to arrive at this result.

Key Benefits of high-performance cultures

 

With regard to the second goal of the workshop – the workshop participants were very interested and several indicated that they found learning about these cultures as valuable for understanding how to progress with Agile at an organizational level.

Zappos Characteristics and Benefits

I have photos of the results of some of the groups, but the lighting was terrible so it’s really hard to read. Below are the results for one group that was working on Zappos.

Characteristics:

  • Focused on long-term vision
  • Customer oriented
  • Fun and a little weirdness
  • Team communication
  • Personal and professional growth

Benefits:

  • Delighted and repeat customers
  • Employee retention
  • Long-term growth
  • Positive financial outlook
  • Better ROI

Acknowledgements

I would like to thank all the participants for working together to understand each organization’s structure and to identify the key benefits. Based on the ratings and comments, it looks like people had fun.

I am very grateful for Thiagi for showing me how to create a great workshop out just some handouts so that I can get out of the way and let people learn directly.

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Lululemon – A Stellar Example of Break-Through Organizational Culture

Christine Day, the CEO of Lululemon, gave a compelling account at the Toronto Board of Trade of how Lululemon uses culture as a core competitive advantage. It is woven into the fabric of every interaction and decision, not a bunch of meaningless posters on the wall. Sadly, there is no book yet. But when there is, I believe it will have greater impact than Tony Hsieh’s Delivering Happiness – a landmark book on organizational culture.

Below are my notes from the session.

Lululemon Culture - Christine Day

 

Lululemon shares some characteristics with other break-through organizational cultures:

  • Focus on the long term success
  • Compelling shared vision – “elevate the world from mediocrity”
  • Little or no organizational hierarchy. e.g. Stores drive activity, not head office.
  • Focus on people and their development
  • Having a compelling Why? See their manifesto
  • Coherent and compelling company culture. See some slides to get some more flavour of this.

There are two elements that I notice are unique and striking about Lululemon culture.

Values Value Chain

The first is the focus on the “values value chain”. They seek to create an ecosystem of success: win/win for everyone they deal with from suppliers to staff to local yoga studios. Like Amazon they believe their long term success will not always lie with short-term decisions. And they always make decisions in favour of the long term. A key difference with Lululemon is that it’s not just about the customer, it’s about everyone involved in the value chain.

Creating a Generation of Leaders

The second and more important element is the relentless focus on leadership and personal development of staff. They encourage staff to dream big and to develop both personally and professionally. These are visibly posted in stores and online. The #1 reason for leaving Lululemon is to pursue their personal vision.

After the talk, I sat with some “Educators” – associates who do sales and other activities – and I could see first hand that Lululemon is changing the world by creating a generation of leaders. It is for this second element, almost a side-effect, that I believe that Lululemon will help change the landscape of business to one more habitable by humans.

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Transformation? Leaders Go First!

Let us consider an organization that wants to transform itself. i.e. to change in structure and character.

A simple view would be as follows:

Transformation

 

By state, I mean the complex system that represents the organization. This includes people, culture, customers, infrastructure, etc.

Transformation is in a Direction

Real transformation is about pursuit of a direction, not achievement of a goal. A living, growing systems will continue to pass through a series of many small transformations as per diagram below.

Transformation Many Steps

Each Person Transforms

When we talk about an organization transforming we are are really talking about the aggregate of the transformations of all the individuals. Many people need to transform before one may recognize a change in the organization as a whole. Of course people will transform at different rates as per Moore’s model for diffusion of innovation based on innovators, early adopters, etc.  The diagram below illustrates each person needing to transform.

Each Person Transforms

Leaders Go First and become Attractors

For a given moment of transformation, it will be the case that some people will go first. These people will act as leaders in the context of the organizational transformation. They will become what Siraj Sirajuddin refers to as a symbol of transformation and act as an attractor to facilitate the transformation of others. In the diagram below we can see a leader who is acting as an attractor.

Leaders Act as Attractors

Success Requires that the Leadership Team Go First

If an organization truly wishes to transform, then the leadership of the company need to transform first. This would include the CEO and senior management of a hierarchical organization or perhaps the head of business unit and her management team. Illustrated in the diagram below, we see how a leadership team can become a powerful attractor to a new organizational state.

Leadership Team Goes First

 

In hierachical systems, transformation initiatives will fail if the management team does not transform. In this case, the management team acts as an attractor for the current state. Failure of the management team to fully embrace a change with a sense if urgency is a severe problem in many transformation efforts. If urgency is not in place, it is better to abort a transformation effort and replace it with a less significant change effort.

Change Artists Lead the Leaders

A change artist is someone who works with organizations to support their growth and transformation.

Like the leaders in an organization, the change artist needs to transform first so they themselves can act as a symbol of transformation. It is not possible for a change artist to facilitate a transformation without having gone through the journey themselves. It is for this reason, that people that can play this role have already undergone their own transformation. They need to play the archetypal role of the Wounded Healer.

Acknowledgements

Thanks for Siraj Sirajuddin for mentoring me in his model of transformation via Temenos and private conversation. Many of the ideas here are either directly from him or were strongly influenced.

Thanks to the person or persons who told me that people have to transform one at a time – I wish I could remember who!

Thanks to Jon Stahl for helping me crystallize the notion of leaders going first through his presentation Agile from the Top Down.

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Why We Need to Care About Empathy

There is a really great RSA animated video explaining Jeremy Rifkin’s idea of the Empathic Civilization. He argues that we are neurologically wired for human relatedness and empathy through mirror neurons: we are soft-wired for sociability, attachment, affection and companionship – we have a deep drive for belonging.

Epathic Civilization - not Aggression.tiff Epathic Civilization - Sociability.tiff

 

 

 

 

 

Rifkin believes that we need to cultivate empathy to survive and thrive as a species. We can do this by extending our empathy to the entire human race. Over our history as a species, empathy has grown in scope from: blood ties –> religious ties –> national identity. We just need to extend one step further to embrace the whole world.

Enjoy the video.

People, Profit, Purpose

I like how Rifkins’s ideas are aligned with the triple bottom line of people, planet, profit. When we focus on building high-performance organizations by cultivating empathy skills (profit motive), we also better ourselves to help the people around us and the planet as a whole.

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Hierarchy = The Matrix

The hierarchy is at the very center of our lives. We have experienced it in our school years and later when working in organizations. It’s existence and function is tacit in our understanding of reality.

At the Agile Alliance Change Agents workshop in Chicago in November, it became clear to me that the existence of hierarchy was greatly influencing the sessions. I sensed that there were two broad themes that emerged from the sessions.

One theme was around exploring Agile in the Enterprise. In this context, hierarchy was assumed. And much of the attention and energy seemed to be about finding ways to rise above and minimize the constraints it imposed. For example, how to shift focus on end-to-end flow.

Perhaps, the most insidious aspect of this is that our default assumptions around the hierarchy – it’s existence and requirements form the context of our thoughts. Just like how people are constrained to perceive reality in the movie the Matrix: we do not see or question it.

A second theme that emerged was around considering ways to create workplaces of joy – environments that foster an Agile mindset rather than constrict it. Agile provides a clear compelling model for organizing work and people. It does not, however, address the problem of organizational design: how to hire, promote and fire. How responsibility and leadership is enacted and enabled. This is an open problem. Included in this theme are questions such as team self-selection vs. deploying known patterns (e.g. Scrum). We need to find solutions to this so we can escape the Matrix.

Acknowledgements

First and foremost, I would like to thank the Agile Alliance for sponsoring this workshop and Diana Larsen for inviting me. I would also like to thank the whole group since these themes were an emergent result of all our combined questions, sharing and curiosity.

As a caveat, I am not trying to summarize all that happened, but rather provide one perspective.

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Tactics, Strategy, & Culture – A Model for Thinking about Organizational Change

The following diagram is a powerful mental frame to help understand change efforts within organizations. It makes the discernment between tactical, strategic and cultural levels. One way to use the diagram is to position each change item or activity on the line to show what aspect it is focussed on.

More importantly, I use the diagram to engage with clients to explore what they want to achieve, why they want to achieve it, and how invested they are in the outcome.

Some typical benefits are listed above the line. Most importantly, break-through results only come from culture –  not tactical or strategic approaches.

  • Tactics – “How do we work?” is about day to day practices and process elements. These are things that a team or organization can adopt.
  • Strategy – “What do we want to achieve” is about aligning the company around key goals and initiatives.
  • Culture – “Who do we want to be?” is about clarifying the organizations reason for existing as well as it’s values and vision.

Relationship between the levels

Culture is the foundation that Strategy and Tactics sit on. But culture is like an iceberg – a powerful force that is underwater where you can’t see it. Sure it’s possible to work at the levels of tactics and strategy, but that is unlikely to make any lasting change or draw great benefits. Lasting change requires working at all three levels so that the tactics and strategy support the culture.

Relationship to Leadership Agility

Bill Joiner has identified a number of distinct mindsets that can be found with managers/leaders. and his work on Leadership Agility. The following are one to one mappings from types of leaders/mindsets:

  • Experts focus on Tactics: problems and work execution.
  • Achievers focus on Strategy: outcomes and the system.
  • Catalysts focus on Culture: vision and break-through culture.

Acknowledgements

The deepest inspiration comes from Bill Joiner and his work on Leadership Agility and the different levels of focus. This served as the basis for my model.

I would like to thank a variety of sources for the notion of Culture being mostly hidden – I have seen or read this in a number of places but most vividly from the folks at Crucial Conversations and their book Influencer in particular.

I am grateful for Mike Cottemeyer for helping me understand the difference between Agile Adoption (Tactical) and Agile Transformation (Cultural).

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An Influencer’s Playbook

(Joint post with Pascal Pink)

I was extremely privileged to share a day with Pascal Pinck and learn his “playbook” as a powerful influencer. His lessons span mental models, coaching stance and tools for effecting change.

The infographic above expresses the key concepts – I will tie them together below.

Situational Awareness (Stance)

The place to start as an influencer is as a “co-sufferer”: to approach a system with deep respect and humility. Siraj Sirajuddin refers to this as “supplication”. I have experienced that this is the single most critical ingredient for success. More on this in coming posts.

When connecting with a system is essential to “Listen to the music, not the words” (Quote from Gerry Weinberg). This is because language may transmit conflicted sentiments and channel residue from past traumas, whereas the underlying spirit knows what is needed to create a resonant future.

One expression of respect for a system is detachment from the outcome – accepting the will of a system to choose it’s own destiny.  Pascal says this has gotten much easier for him since he accepted the reality that systems will not generally let influencers move them in a direction that is counter to their underlying orientation or DNA anyway.

Think of the organization as a person

An organization is a biological, organic system. We can use the metaphor of a human body as way to think about making interventions. We may also think of a system as having a personality: what are it’s hopes, fears, dreams and ambitions? See KrisMap for a workshop to explore this.

Homeostasis in the human body is a very powerful force that keeps us healthy. In systems, the status quo is expressed through the invisible and powerful force of organizational culture. It’s like the water we are swimming in that we can’t see. What can draw us away from homeostasis?

Compelling Shared Vision is a Critical Attractor

A shared vision is not enough. It needs to be a compelling shared vision to create a strong enough attractor to shift away from the status quo. Values and purpose intertwine with the vision to create a powerful attractor. A particularly powerful vision is that of a breakthrough organizational culture.

One purpose of compelling shared vision is to help induce relational flow so that the parts of the system are constantly aligning and self-synchronizing, which allow multiple sources of energy to pull in the same direction.

Intervene with Leading Indicators

One problem with organizations that focus (at a strategic level) on goals is that outcomes are by definition lagging indicators. Influencers get better results by focusing on the leading indicators. A simple example of this is whether to focus on team trust, alignment, and communication patterns (leading indicators) or budget variance, “lessons learned” and “best practices” (lagging indicators).

Pascal uses the metaphor of acupuncture where you poke the body in one place to get a result in another. For this to work we actually have to have some sort of model of the connections between things. In line with Cynefin framework for complex environments we can’t fully understand situations but can conceptualize “probabilistic directionality” to reason about interventions.

Oscillate between future and current state

A good influencer will oscillate between current state and future state. We need to connect with the current state to have empathy for the system and we need to connect with the future state to provide direction and sense mismatches. It also provides a great source of questions.  Pascal recommends The Three Laws of Performance by Logan and Zaffron as an excellent way to develop a deeper understanding of this topic

Acknowledgements

I would like to thank Pascal for inviting me to LA last year to experience one of the most insightful days of my life and for sharing the secrets of his success. And then for co-writing this post with me.

I would like to thank Siraj Sirajuddin who developed or co-developed several of the ideas expressed in this post.

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Change your Culture or Die

Great Organizational Culture is Key to Thriving

Deming said that “Survival is Optional”. Organizations can change their mindset and culture or they can become extinct.

Companies are at Risk

Steven Denning  makes a great case for why companies are at risk: Only 21% of employees are fully engaged, Customers are dis-satisfied and bureaucracy is killing innovation. “Deloitte’s Shift Index shows, the average life expectancy of a Fortune 500 company has declined from around 75 years half a century ago to less than 15 years today, and heading towards 5 years if nothing is done.”

We can see new companies creating opportunity by using organizational culture as the competitive advantage. Some examples are: Zappos, Morningstar, Valve.

Choose your Level of Risk

The graph above shows that the risk of extinction for an organization depends on the rate or ability of the organization to change. As discussed about, traditional corporate culture poses a high level of risk as it only tolerates a low rate of change. Organizations that use culture as a competitive advance have a lower risk of extinction. The two lines show that different organizations have differing risk profiles based on industry and markets they are involved in.

We can think of a fitness landscape of organizations: some are very robust to environmental changes and others are brittle. The top reason to change the culture of your organization is not because of this quarter, this financial year, but to create a lasting future and avoid the extinction event that is perhaps a few years out. Sadly, few companies invest time into thinking about how can we be great and how can we go out of business – the status quo is a powerful attractor.

What Culture?

OK, let’s say I want to change my culture. Now what?

There are a number of related and complementary approaches. Stephen Denning argue that the single organizational focus needs to be Customer Delight. Senge advocates the need for a Learning Organization. The Agile mindset is about people with a shared vision collaborating and learning together. A key misunderstood value from Lean is Respect for People. There are also recent movements and ideas converging on what thriving organizations look like: Stoos NetworkWorldBlu and Future of Work Manifesto.

What is best? Many are good and share common characteristics. My current investigation is to clarify and refine cultural differences between various approaches. The most important thing to remember is that: Perfection is a direction and not a target. Use KrisMap or another approach to define your ideal culture and then pursue it.

Acknowledgements

This post is inspired by conversations and a session with Saleem Saddiqui at Agile Coach Camp in Minneapolis earlier this month. It was Saleem who shared the quote “Survival is Optional” to start a great conversation. Key ideas in this post are Saleem’s – not sure what he shared and what I imagined.

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Culture Profile: Hacker & Open-Source

At CultureCon in Philadelphia I had the opportunity to interview Eric Raymond about hacker and open-source culture.  Eric is a spokesperson for a rather amorphous community and is well-known for books such as The Cathedral and the Bazaar and more recently The New Hackers Dictionary.

Eric sees a union of hacker and open-source culture so that these have become essentially the same thing. I’ll just call it hacker culture…

Eric shared that hacker culture is ancestral to Agile as the manifesto was there in folk practices but not explicit. Eric was invited to the Snowbird conference where Agile was defined but missed it.

The most important point that Eric wanted to share is that hacker culture is expressed through language, jokes and common stories about history. For more reading on hacker culture, please see Eric Raymond’s FAQ on hacker culture and history.

The interview question is based on the KrisMap workshop and is brilliantly simple:

If you expressed the culture of a typical hacker organization as a person, what would she be like?

Hacker Persona is playful, purposeful and self-managed

Eric described the following attributes for the hacker persona:

  • Intense focussed playfulness (Neoteny)
  • Distrust of Authority
  • Self-managed
  • Rage against the machine
  • Sense of mission/purpose
  • Introverted
  • Shadow autist/Asperger’s syndrome
  • Hates being lied to

Observations

I can see from Eric’s persona how this would sew the seeds of Agile culture. The part of Agile culture that would be a stretch would be introversion and Asperger’s which are not well supported in the team environment that Agile promotes.

Acknowledgements

I would like to thank Eric for taking the time to share his thoughts and Olaf Lewitz for the wonderful photo.

 

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