Hearts & Minds
Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
In the view of John Kotter, however, that's getting it the wrong way around. Says Kotter: "How often have you heard the expression 'change management' rather than 'change leadership'? You might say it's semantics. I say, 'No, no.' "
For Kotter, a longtime professor at Harvard Business School who retired in 2001 at the age of 54, and the author of numerous books on corporate culture, change and leadership, including Corporate Culture and Performance, Leading Change and The Heart of Change, leadership by itself isn't sufficient.
At the best companies, those with adaptive cultures that can deal swiftly and successfully with change, leadership isn't a top-down phenomenon. Rather, he wants everyone in the company to see themselves as leaders.
"It always makes me nervous when executives pass around corporate vision statements. I don't want pieces of paper, I want to be able to go up to anybody and ask, 'By the way, what's the corporate vision?' I want them to be able to come up with it without looking at the cue card on the wall."
Editor Edward Baker recently chatted with Kotter about the nexus between culture, change and leadership.
CIO Insight: Why does culture matter?
Kotter: The notion of corporate culture is only about 20 or 25 years old, believe it or not. The phrase showed up in a book around 1980 for the first time, and it struck a chord. Basically, the book claimed that if you have the right culture, you'll do wonderfully.
What you got in the 1980s were a number of companies who said, "There's a problem here. Our culture isn't what we wantas a matter of fact, it's getting in the way. We have this new strategy, and the culture just won't let us implement it." So they created cultural change programs. I watched a number of those during the 1980s, and I thought they made a lot of sense. None of them worked.
With the smarts of 20/20 hindsight, the problem is that you can't go at culture directly. It's not like it's Silly Putty in the wrong shape, and you have to make it in the right shape, so you grab it and push it and shove it. Culture isn't like that. It's invisible; you can't grab it.
How do you define culture?
The way it's most often viewed by people, culture involves norms of behavior and shared values, both of which are invisible. If you go into a group and you say, "Okay, what are your norms of behavior and shared values?" most people will just stare at you. If you are an outside observer and you're really good, a kind of cultural anthropologist, you should be able to figure it out, because norms are easy to define. You just watch people, and in particular you watch what everybody does, and you'll notice that if a new person joins the group and doesn't conform, they get nudged into place.
It's very subtle. People will make a joke about their clothes. They don't say, "No, no, no; we don't dress like that around here." It's much more likely that it'll be little things, and the new person will pick up on it and eventually will change his or her dress. That's culture working.
Shared values are even more below the surface and harder to get your hands around. In a sense, they are the anchors underneath all of these little norms, which you can to some degree observe. They are the culture's fundamental, shared sense of good and bad, right and wrong.
Now most aspects of corporate culture are imported from the outsidenational culture, world cultureand they just get pulled into an organization through the people walking in the door each day. But there are aspects of culture unique to most companies, and they're a function of the company's history. This place takes more risk than that place. This place is more patriotic and values public service, and another place doesn't.
Now because it's this funny fish-in-water phenomenon, these early efforts to change corporate culture failed because they tried too directly: "Give me the hammer, where's the nail, and I'll pound on it." As it turns out, culture doesn't change that way. The way cultures change fundamentallyand this is what the really smart social anthropologists will tell youis that you get a group of people to behave in a new way, and if that new way works by producing benefits for them, and if it works long enough, then it begins to kind of seep into the bloodstream of the organizationwithout having to have meetings on cultural change.
49% of CIOs point to leadership as the top personal attribute required for success at their jobs, significantly higher than any other. Yet just
37% point to leadership as one of their three strongest personal attributes.
Source: CIO Insight, March 2004
If you go into a place that has a risk-averse culture, and you somehow get people to start taking risks and it starts paying off, they start winning. And when they win enough, it becomes tradition, if you will, and people sometimes don't even realize it. If they're on the inside, they won't even notice that the place went from being technophobic to embracing technology. But that's how it happens; it's this indirect thing.
How do you get the process started?
You start by getting enough of a sense of urgency among the relevant people that you have to do something. You get together the right team of people who have the skills and the clout to make something happen. And they have to clarify where they're trying to drive this. They have to ask, "How's the company going to look and operate once we've got this all functioning well, and how are we going to get from here to there?" That's what we call a strategy and vision.
Then they have to get that message out to enough of the relevant people in such a way that they actually buy into it. Now, inevitably you start running into some barriers that are just built in, and they're not necessarily cultural barriers. It could have something to do with the structure of the organization, it could have something to do with the performance appraisal process, it could have something to do with bosses in the middle who are just fighting the whole thing.
Breaking down those barriers is the way to produce short-term wins. You need some unambiguous successes that say, "This path we're going down with this new technology project is actually going to work." And you keep getting the successes until you're done, until you actually create a new way of operating.
But a new way of operating is about more than just hardware that functions. Having somebody back up a truck to the loading platform and push the boxes containing the new machines in and having Deloitte & Touche send 7,000 systems people in to work on it is not the fundamental problem. The whole point is to get you to operate in some new way, and it's not just the electronics, it's human beings. And that's where the problems come in.
But once you've got the stuff in and working, and the people operating in the new way, if you do what you can to keep it in placeand that includes, for example, not doing something dumb like promoting the champion of the whole thing out before it really has sunk in, a typical mistake people makeit will start to sink into the bloodstream, and you will end up with a culture that is compatible with this new way of operating, and the IT to help drive it.
What are the conditions that mitigate against that succeeding?
I've seen too many technology projects get dumped on project teams and task forces that simply don't have enough clout, enough credibility, connections, you name it, to be able to do a difficult job, and so, surprise, surprise, they start getting frustrated and the powerful people in the company just ignore them or do what they want to do anyway.
Maybe it's an enterprisewide project, and the team that ought to be driving it is the CEO, his IT guy and a couple of others. And do they drive it? No. They give it to some group of suckers who kind of dribble into their meetings every once in a while to report. Well, it doesn't work.
Also, on a lot of the IT projects I've known, if you go up to the typical line manager and say to him, "You've got this big thing going on here. What's the vision? Paint a picture for me. How's the company going to be different in 18 months when this is all done?" They can't even see it. So of course they haven't bought into it. And if they haven't bought into it, are they going to cooperate?
I remember sitting in some conference room at some company five or six years ago. I was there to make a speech, and they asked me if I'd spend a few minutes with the task force that was in charge of this huge IT project. I asked the team, "Where are you going with this? Describe to me, in terms that I can understand, and a middle manager could understand, how this company is going to be different in three years." Dead silence. Unbelievable.
You make it sound impossible.
It can be done. We've seen it done. The problem is that most people have not seen it done well. They haven't been taught, and therefore, they haven't developed the right instincts. So they fall into perfectly logical traps. Once you see it, once you've got the glasses to be able to see it, you're thinking, "Oh, no. There he goes, he's about six inches from the manhole . . . five . . . four . . . threeoops, he's gone." It becomes that predictable. And it's not idiots who are falling into these open manholes. It's perfectly smart people.
So how do you get these changes done?
Leadership, leadership, leadership. If you look at the pattern we found among these major changes, including the IT changes that worked well, it's critical to remember that leadership is not managementthey're different. They're both important. But leadership is much more associated with changing stuff, and management is much more associated with keeping stuff under control the way it is right now. If you look at the change process I've been describing and put it into two binsthe leadership bin and the management binit comes out about 75 percent leadership and 25 percent management. The critical variable in making it work is much more of a leadership thing than it is a management thing.
Leadership, as much as anything, creates the culture, and culture helps shape the leadership. It's a chicken-and-egg thing. Consider Enron. The same success forces that helped create an arrogant leadership inside Enron also created an arrogant culture, and an arrogant culture, of course, reinforces the arrogant leadership, and the arrogant leadership reinforces the arrogant culture. And once you start getting that arrogance, that's poison.
How can you foster good leadership?
Given the way the world is evolving, the rate of change, the rate of complexity, internal interconnectiveness, if there's any fundamental belief I've drawn, any fundamental conclusion I've drawn from the last 20 years of hanging around a whole lot of people and a whole lot of businesses, it's that we need a lot more people at a lot more levels providing a lot more leadership. It's better now than it was 20 years ago. But the need is moving at least as fast, if not faster, than the improvements we're making in quality and quantity of leadership in most firms.
Suppose we went into a typical firmnot a great firm, not a bad firmand we got the head IT guy and all the people that report to him or her. And let's say we couldn't talk to them, so we put probes into their brains and, hence, get truth. And the question we asked is "How important is it for you and the people who work for you as a part of your jobs to provide really good, strong leadership and to become better at that every single year?" What do you think we'd get back from those probes?
Say the word "leadership," and it's almost like there's this little person in their brains who immediately points upward. It's the guy above them. You can find executive vice presidents in companies who think this way: "Oh, no, that's the CEO's job." Well, you've got enough of that going around, and you can imagine what that alone does.
One of the reasons the CIOs I talk to are so frustrated is that they have far too many people underneath them who a) don't value leadership; b) don't know how to do it; and c) aren't interested. And that won't work.
You've got to get people to believe that the critical part of their jobs is the leadership part. It starts with some understanding of what that means, and some emotional commitment, if you will, and belief that it's possible to do something about it. A lot of this stuff is really just, "You gotta believe." If you don't believe, then it doesn't matter how many skills you've got. If you do believe, even with weak skills, it's amazing what people can do.
Can you teach people leadership?
I think people can, under the right conditions, develop whatever leadership potential they have, or can take whatever skills they've got, and with the right encouragement actually do it. People's potential, of course, varies widely. But turning that potential into actual skill, and then getting people to use that skill, are the two things we've got some control over. Unfortunately, by and large, most companies don't do a great job at that. They do other things that are a little easier to do. I mean, teaching somebody to learn code may seem complicated, but it's nothing compared with helping them draw out their leadership capabilities.
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