CHAPTER 8

Culture, values and leadership

Much of our focus so far has been on the individual Change Agent. We have considered the skills and personal traits of the individual during change but haven’t yet considered the impact of organizational culture. This has such a powerful impact on the success of any initiative that people will often cite it as being the leading cause of change failing. Therefore, however well thought out the technical and project-related aspects of change, we can still encounter insurmountable resistance if we don’t address the cultural aspects of change. To help us do this, we need to be able to conceptualize the prevailing culture, despite it being a nebulous concept. We will start with a definition and then explore some cultural models, including those defined by Edgar Schein (quoted above), which we can use as a reference point for our own cultural change. Schein is clear that leadership and culture are intrinsically linked (2004) and we go on to explore these views, along with looking at a selection of cultural models that we can use as reference points for our own cultural change.

Defining culture

While researching this book, I was struck by how many definitions for culture there were. Here is a small selection.

It is the collective programming of the mind which distinguishes the members of one group or category of people from another.

(Hofstede, 1994)

Culture is a fuzzy set of basic assumptions and values, orientations to life, beliefs, policies, procedures and behavioural conventions that are shared by a group of people, and that influence (but do not determine) each member’s behaviour and his/her interpretations of the ‘meaning’ of other people’s behaviour.

(Spencer-Oatey & Franklin, 2009)

‘How we do things around here’ is a commonly used shortcut for culture, usually attributed to Charles Handy (1981). This statement emphasizes the unconscious and unspoken aspects of culture, illustrating how deep-rooted and therefore potentially hard to change it is.

Cultural models

The first model that we will explore is Edgar Schein’s (1984) ‘Onion Model’. He originally divided culture into three different levels: artefacts and symbols, espoused values and basic underlying assumptions. I have adapted the model here to show how closely interlinked leadership and values are when it comes to recognizing culture.

Figure 8.1 The ‘Onion Model’

Symbols and artefacts

The outside layer of culture is demonstrated through symbols and artefacts. These are visible to the outside world but are just the tip of the iceberg. They are things like logos, branding, corporate offices, job titles, hierarchies and some processes. Formal examples may be recognition schemes or a company website. Less formal examples may be the way people dress or communicate when making decisions.

The modern symbols and artefacts of many of the highly successful software firms in Silicon Valley, such as bright décor, beanbags and pool tables, are synonymous with a young, innovative culture. Other companies have introduced similar features in the hope of emulating the success of these businesses, only to realize that they are just symbols of the culture, not the cause. Simply changing a logo or brand or making other symbolic changes is not the same as actual culture change, which needs to originate from within the deeper layers of an organization. When we dig beneath the surface of these highly successful businesses, we should find that it is the leadership behaviours and espoused values of the company that drive the creativity and innovation rather than the table football or indoor deckchairs.

Espoused values

This leads to the second level, the ‘espoused values’ of a company. Simply put, values are the core beliefs and commitments that provide the foundation to the way a company conducts business. The reality is that every company has values, even if they aren’t written on the wall. They are recognizable through the behaviours that are demonstrated daily and are particularly visible in the actions of leaders and key influencers.

Sometimes these values are baked into the company from the start by the founders. Elsewhere, they evolve over time as the company grows and differentiates itself from the competition. Values should be the bedrock of a company’s culture. They can establish behavioural standards and help employees to understand the best decision to make in the absence of guidance. As a company grows, core values can help it manage change without compromising the factors that have made it successful. The processes, activities and metrics used on a regular basis will also become representative of the culture and values. Many of these mechanisms may represent the style of past leaders or may have been established in response to historic market forces or events. It is important that we remember to change these to be reflective of the culture we aspire to, rather than the culture we used to have. Schein calls them primary embedding mechanisms:

• what we measure on a regular basis – think dashboards and KPIs

• the way emergencies or critical incidents are handled

• the way resources are allocated

• the behaviours that are role-modelled, recognized and encouraged by leaders

• the allocation of reward and promotion

Leadership and influencers

The behaviours of key leaders, espoused values and symbols are interlinked layers of an organizational culture and it is unlikely we will change one without affecting the other. Of course, this means that many values-based change initiatives are received with cynicism, particularly if they are perceived to be imposed from the top down or leaders are seen as paying ‘lip service’ to them. The bottom line is that the behaviours of the leaders and managers will reinforce or undermine any defined values and in turn make or break any culture change.

Consider the example of a sales organization within a business with an outspoken and charismatic sales director. He has established a well-known but generally unspoken cultural rule that men in sales have to wear a suit and tie in the office, and not only that – the shirt must be white. Females must also be ‘suited and booted’. As you would expect, the sales director always dresses this way and while he cannot demand that others do the same, he ridicules anyone who steps out of this norm. It is a powerful symbol of the sales culture. No matter how many times people try to introduce ‘dress-down Fridays’ or informal dress codes, those who want to get on in the sales organization emulate the dress of this individual.

Basic underlying assumptions

According to the Onion Model, the deepest level of culture is the basic underlying assumptions of an organization, which are generally unconscious behaviours or beliefs. They tend to be so deep-rooted that they are hard to recognize from within the organization or in an individual, but new starters may find them noticeable. Take the example of someone joining a start-up from a long-standing corporate role. In their interview they may have been assured of full training and support to guide them through induction. Their expectations are based on their corporate background and they might expect a formal training and induction programme. However, the start-up mentality is one of self-sufficiency. People are happy to help but there is an assumption that the learning will be on-the-job, informal and owned by the individual. Depending on the aptitude of the new starter, this may or may not be a great fit for them personally, and is an example of the importance of recruiting for attitudes and beliefs that are a good fit with company culture.

Takeaways

So, what are the key takeaways for us as Change Agents in relation to Schein’s model? Fundamentally, the principle should be to make change from the inside out, rather than the outside in. Basic assumptions may be too deep-rooted to change, but leadership and values are a better place to start. It is only after we have got the leadership on board and the values aligned that making symbolic changes is worthwhile. These should be the finishing touches rather than the starting point.

However, although leadership behaviours and values are intrinsically linked to culture, this isn’t the only place to start if we want to change a culture. In fact, some experts believe that we shouldn’t focus on culture change as an end in itself. Instead, we should start with the business strategy or problem, align the values and allow the culture change to develop from there. The logic here is that the business need is likely to provide the all-important motivation for behaviours to change.

After all, an organization’s culture will almost certainly have developed over time, possibly as a response to external market forces. Consider the PESTLE forces: political, economic, social, technological, legal and environmental. A business may have developed a culture of being fast-moving and innovative to take advantage of technology, allowing it to enter a new economic market. On the other hand, a business in a very highly regulated marketplace may appear to be risk-averse and focused on quality. If market forces change, we may need to behave in ways that are counter to our culture in order to be more competitive. We talked about connecting with strategy earlier. Making the link with market forces helps everyone to understand why the change is necessary and motivates people to move in a new direction.

The Competing Values Framework

Figure 8.2 Competing Values Framework

From their research into what makes organizations effective, Robert Quinn and Kim Cameron came up with the Competing Values Framework (CVF) (Quinn & Cameron, 2006). They identified two dimensions: flexibility versus stability, and internal versus external orientation, which resulted in four quadrants with distinctly different corporate cultures, as shown in Figure 8.2.

Clan culture

As the name suggests, the value here is about doing things together. The culture is built on personal relationships or loyalty, particularly to the founder or clan leader. The company may be referred to as having a ‘family feel’, which may be positive, although like a family there can be infighting and bickering too. In addition to the value of ‘doing things together’ the organizational values are likely to be disproportionately affected by the personal values or behavioural style of the founder or family. While these values are appropriate to the marketplace the culture will work, but it can be problematic as the company grows. Think of start-ups, family businesses or small ICT companies. When founder- or family-led businesses want to scale up or sell, the clan culture can become the sticking point, unless the clan leader is able to model and embed new, more appropriate values.

Our role as Change Agents here is to hold a mirror up to the clan leader’s behaviours if they aren’t supporting the new way of working. We may need to help bring in new leadership roles or establish more formal processes and ways of working. Sometimes, the best option is for the clan leader to move on if they can’t take on a less influential role.

Hierarchical culture

On the other hand, hierarchical cultures are formal and structured with embedded processes and procedures and little room for flexibility. The prevailing values are ‘do things right’ and ‘follow the rules’ because these provide stability and control, resulting in quality and efficiency. The challenge for this culture is speed to adapt to change. For example, a competitor may disrupt the marketplace, generating a requirement for innovation or cost savings. Risk-averse, hierarchical cultures can be slow to change, which could ultimately affect their ability to survive. There are many manufacturing and retail examples of this culture failing when the market changes. The hierarchical businesses that do well are those that manage to ‘bake in’ innovation as part of their processes and values, e.g., large German engineering companies and Japanese car manufacturers. Admittedly, they often have deep pockets and retained profits, which means they may be able to survive cultural evolution rather than revolution, whereas younger companies may not.

Our role as Change Agents in a hierarchical culture is about rolling out textbook-style change. We need to plan and communicate the change well, enlist a league of fellow Change Agents in support and should ensure that realistic timelines are set for the delivery of change.

Market culture

These businesses will say they are customer-focused; however, this is more of a means to an end. The real value in a market culture is winning or beating the competition. This sort of culture is predominantly externally focused, which means that employees can feel like an afterthought or a means to an end. Market cultures are focused on goals, results and clearly align themselves with the external marketplace. They aim to predict and respond to customer needs in order to beat the competition, achieve profitability and market dominance. Customer retention and satisfaction are terms that all employees are aware of and potentially measured against. Change in this culture needs to be strongly aligned with the company strategy, potentially highlighting the relationship between employee wellbeing and customer satisfaction. It is likely that the culture is set by a handful of key influencers, particularly in sales and marketing, so winning over key individuals for any culture change will be essential.

Adhocracy culture

These businesses are also externally focused, but they focus on winning new business through innovation and creativity. We often hear the term ‘disruptive’ being applied to businesses that are shaking up traditional marketplaces through innovation. They may be winning business from traditional hierarchical cultures or they may be creating new markets. They value creativity and speed to market, which means the management style needs to be empowering so that people feel able to take the initiative.

Power is again likely to be dispersed in these cultures and it may not necessarily sit with those who are most senior. Individuals with key technical skills can be extremely powerful and change can be initiated or resisted from anywhere in the organization. Because this culture is so individualistic, we have to take everyone with us during change, which means our communication needs to be widespread and extremely influential.

It is possible to obtain a cultural questionnaire for the CVF, which can be used to diagnose the current cultural position of the leadership of an organization. In planned change work this can be a helpful tool.

The Cultural Web

We will explore one final model of culture, Johnson, Scholes and Whittington’s Cultural Web (1999), because it is a helpful model for planning our future desired culture. At the core of the web is the organizational paradigm: the core values, mindset or motivation of the organization. One of the four cultural types outlined above could fit into this centre point, giving us a cultural perspective to look through. This is surrounded and supported by six cultural influences.

Figure 8.3 The Cultural Web

• Organizational structures. These refer to the hierarchy of the organization and will illustrate where the power lies, how decisions are made and where communication flows.

• Control systems. The systems and mechanisms that report on and control the organization. What we measure tends to drive behaviour.

• Power structures. These are the people and systems that have power and influence and can get things done, with both formal positional power and informal personal power.

• Symbols. The official and unofficial visual representations of culture, e.g., logos, offices, uniforms.

• Stories and myths. Past events and stories about the organization and its people that continue to be shared both internally and externally.

• Rituals and routines. The habitual activities, norms and ways of working.

What is nice about this model is the way in which we can use it to analyze our current culture – ‘as is’ – and to help define the culture that is ‘to be’. This helps provide clarity about the required change, both structural and cultural, which helps us decide what changes need to be made to embed it.

Table 8.1 An example of a Cultural Web

	As is	To be
Organizational paradigm	Financially stable, trustworthy, quality- and research-driven	Innovative, responsive, customer-focused
Organizational structures	Hierarchical roles with formal reporting into a parent company	Matrix or team-based structures focused around market requirements
Control systems	Board of directors and non-execs make decisions. Formal annual cycles of budgeting, headcount and objective cascade	Disseminated decision-making and financial controls and business-case-driven resourcing and budgeting
Power structures	CEO and CFO and influence of the parent company	Individual empowerment and accountability with local team leaders and managers
Symbols	Traditional brand and logo, parking spaces for top execs, status related to size of office and formal business attire at work	Open-plan buildings, hot desks, ‘chill-out zones’ and online collaboration tools
Rituals and routines	Annual business planning, board meetings, sales conferences, annual reports and long-service awards	Team huddles, weekly one-to-ones, informal Skype chats and fish-and-chip Fridays
Stories and myths	The CFO values the company car fleet above people, there is gossip about the executive board and board meetings never finish on time	Reward and recognition linked to customer impact, innovation suggestion schemes and individual success stories

You can download a template of the above Cultural Web analysis from our online toolkit (see below) and use it to analyze the ‘as is’ and ‘to be’ culture of your own organization. You can then consider the changes that are required in each area to deliver the desired change.

Culture is one of our biggest Change Challenges. This is because it is multifaceted and so tightly interwoven with leadership, values and behaviours. Change will only occur if we adjust enough of the many variables and align leadership behaviours against them for long enough. However, once the culture has shifted, the change is here to stay.

Quick recap on culture, values and leadership • Culture, values and leadership are all intrinsically linked when it comes to change. • There is no point in changing cultural symbols and expecting it to result in change. • Leadership behaviours are the strongest manifestation of organizational values. • Focus on business need for change rather than culture change as the objective. • When we understand the paradigm of the organization, we can choose the best approach to make change.

Online toolkit The following free change resources can be downloaded via: www.changesuperhero.com • Cultural Web template