Culture: The Iceberg That Sinks Organizational Change

IBM undertook a study to determine what gets in the way of companies being able to implement the changes that will realize corporate strategy.  The Number One reason, identified by fully half the respondents, was ‘corporate culture’.  (“The Enterprise of the Future: IBM Global CEO Study 2008.” IBM Corporation.  May 2008. www.ibm.enterpriseofthefuture).   Other academic research and consulting studies point to the same major culprit in derailing change efforts.

We all nod our heads.  We’ve had this experience and know the statistics are true.  But then we shake our heads in confusion.  What is this thing called culture, how does it work, and why is it so prominent in limiting our ability to change?  And what can we do about it?

Culture is like an iceberg, with most of its weight and bulk below the surface.

  • It is all about assumptions, beliefs, and social behaviors of the group.  And those are so inculcated that they are hard to even recognize, let alone change.  If a company has been successful over time with tweaks to its market approach, assumptions build up over time that tweaks, rather than overhauls, are appropriate strategy.  And beliefs develop that ‘staying the course’ is the right strategy in a volatile market.  And social behaviors reward conservative viewpoints and punish those deemed risky.
  • These assumptions, beliefs and behaviors are shared, and reinforced by group norms.  The shared nature of culture binds it tightly into the DNA of an organization.  And as in any culture, individuals are held accountable to the rituals and beliefs of the group, or ostracized if not compliant.
  • People have self-limiting mechanisms to resist personal change.  In their book Immunity to Change, authors Robert Kegan and Lisa Laskow Lahey suggest that even when someone sets clear personal goals to change (like learning to use a new system), s/he simultaneously and unconsciously establishes barriers that undermine those plans – competing commitments, assumptions, competing behaviors and beliefs: the ‘knowing-doing gap’.  Thus, people self-regulate to the group norms and to the status quo. 

Even more pertinent for organizations dealing with change are characteristics of culture that are hard-wired to make it difficult to change.

  • Culture is backward-looking, not forward-looking.  It develops over time, made up of data points of what has worked in the past, without reference to the future.
  • Culture is selective.  It provides a lens for understanding the outside world, and for filtering out inconsistent information (such as whether the company’s current strategy is still working).
  • Culture is self-fulfilling.  It provides a structure for understanding information coming into the organization.  When new information comes in, it is interpreted in the known context rather than being seen as a new phenomenon.
  • Culture emphasizes stasis.  Hannan and Freeman (1984) offered a theory of structural inertia.  “They argued that organizations exist because they are able to perform reliably and, if questioned, to account rationally for their actions.  Reliability and accountability are high when organizational goals are institutionalized and patterns of organizational activity are routinized, but institutionalization and routinization also generate strong pressures against organizational change.  Thus, the very characteristics that give an organization stability also generate resistance to change and reduce the probability of change.”  (Resetting the Clock: The Dynamics of Organizational Change and Failure, Terry L. Amburgey, Dawn Kelly, William P. Barnett, Cornell University, 1993)

So the Culture Iceberg has the potential to sink needed change in every phase of an organization’s process for making it happen:

  • Strategy selection – culture strongly influences what internal and external data we select to shape our strategy, and how we interpret information from that data.  It limits the options we will willingly explore.  And it tends to favor change that builds on existing strategies over transformational change.
  •  Mobilization for change – culture is a key determinant of what is deemed to be appropriate reward systems, organizational structures, work norms (competition vs. collaboration; holistic vs. siloed, directive vs. involvement, etc.) and work processes (autonomous vs. closely supervised, hierarchical vs. matrixed, etc.)  These can either help to get a change implemented, or hinder it. 
  • Implementation of change – culture determines how decisions are made – and how quickly; it determines who is involved in developing the ideas and solutions, and what the pecking order is.  Thus culture can inhibit a smooth implementation, or contribute to it. 
  • Obtaining and sustaining the benefits of change – culture determines whether a completed implementation will be accepted, adopted, and fully used by those impacted – and whether they will constructively report suggestions for improvement, or just operate in minimal compliance mode and thus sub-optimize the benefits of change.

If the weight of that Culture Iceberg seems too heavy to budge, you’ve just described why the phenomenon of culture impeding change is so stubborn.  But if you as organizational leaders begin to treat culture change as another company strategy, as a building of solid capability and agility, you stand a chance of towing that iceberg into warmer water where it will morph by itself.  Here are some actions you can take:

  1. Define the culture you need in order to be agile in response to change, and highly capable in getting it done.  A compilation of the themes from research that has been done on cultures that are supportive of change suggests that leaders and employees are more successful at change when they are:
    1. In tune to the market environment, responsive to trends, and innovative in thinking ahead to their next moves
    2. Holistic, integrative, and lean in organization structures and decision-making, marked by boundary fluidity
    3. Collaborative and coordinated in work styles; interactions marked by trust
    4. Inviting of all data points, input, and challenges as part of a healthy dialogue about the organization’s future and best options to get there
    5. Insistent on knowledge-sharing and personal, team and organization development
  2. Assess your culture against the desired one.  A formal culture assessment may be useful, if done by a trained and reputable consultant.  You can also look to clues in your organization’s own documentation.  What can you learn from employee surveys?  From project documentation on lessons learned?  From the risks identified in large projects?  From consultants’ reports on other topics?  You can also organize one-time or ongoing means of obtaining input from the organization – focus groups, intranet sites – to determine what sacred cows are inhibiting forward movement.
  3. Develop formal strategies to modify culture over time.  You already have external strategies and internal strategies (think succession planning).  Identify and prioritize what culture change needs to take place, and set goal statements and a vision of the future state.  Add these strategies to your corporate strategic plan and assign ownership.
  4. Create action plans.  Pronouncements are insufficient.  An action plan to change culture includes changes to reward systems, performance management, promotion criteria, employee development, manager and leader development, team processes and multiple other real-life work activities.  These need to be thoughtfully developed with high degrees of input from those affected, and carefully measured against goals over sustained time (like made part of employee survey data).  The action plans need to be managed and monitored as a program of work, just as any other large undertaking, and accountability clearly spelled out.

Next time you throw up your hands in frustration at the difficulty of change, look to your Culture Iceberg.  Is it attached to your ship and slowing it down?  Worse yet, is it sinking most ships in the fleet?  It doesn’t have to be a long-term menace to your plans for change – if you strategically plan to change it along with other long-term strategies.

Written by Marge Combe, VMC Consultant

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2 thoughts on “Culture: The Iceberg That Sinks Organizational Change

  1. The only culture supporting true excellence is the one people already believe in, the one that is in accord with their nature and their values. Any attempts by management to create some other culture will cause poorer performance, even disengagement.

    This is a law of science, the science of people. That science dictates how people react to what management does and does not do, and why they react as they do.

    “The consummate leader cultivates the moral law and strictly adheres to its methods and discipline. The moral law causes people to be in complete accord with their ruler so that they will follow him regardless of their lives, undismayed by any danger.”
    –Sun Tzu 544-496 BC The Art Of War

    Management’s adherence to the science of people will allow them to achieve the 500% performance gain said to be possible by Stephen Covey senior. I know because I did it several times.

    Best regards, Ben

  2. Ben, I agree that people will not willingly move to – and will undermine attempts to move them to – a culture that is out of synch with deeply held values. You’re right that if the culture is ‘what management wants to create’ without regard for what the members of the organization can believe in, it will fail. I also have seen cultures change dramatically and positively when the changes sought are seen as good for the organization, its employees and its customers. I’m guessing that follows the ‘moral law’ you are referring to. Thank you for engaging in this discussion! Marge

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