IPPTChap012

INSTILLING A CORPORATE CULTURE CONDUCIVE TO GOOD STRATEGY EXECUTIONCorporate CultureIs the meshing of shared values, beliefs, business principles, and traditions that imbues a firms operating style, behavioral norms, ingrained attitudes, and work atmosphere.Is important because it influences the firms actions and approaches to conducting business.12*

CORE CONCEPT

Corporate culture refers to the shared values, ingrained attitudes, core beliefs and company traditions that determine norms of behavior, accepted work practices, and styles of operating.12*

KEY FEATURES OF A FIRMS CORPORATE CULTUREStrength of peer pressure to conform and observe normsActions and behaviors encouraged and rewardedTraditions and stories and how we do things around hereHow the firm treats its stakeholdersFeatures of a Corporate CultureValues, principles, and ethical standards in actual useManagement practices and organizational policesAtmosphere and spirit embodied in the firms work climate How managers and employees interact and relate to one another12*

STRATEGIC MANAGEMENT PRINCIPLE

A companys culture is grounded in and shaped by its core values and ethical standards.12*

FIGURE 12.1The Two Culture-Building Roles of a Companys Core Values and Ethical Standards12*

TRANSFORMING CORE VALUES AND ETHICAL STANDARDS INTO CULTURAL NORMSRecruit and hire applicants with values and ethics compatible to those of the firm.Incorporate the values statement and the code of ethics into orientation and training programs.Have senior executives frequently reiterate and stress the firms values and ethical principles.Use values statements and codes of ethics as benchmarks for the firms polices and practices.12*

STRATEGIC MANAGEMENT PRINCIPLE

A companys values statement and code of ethics communicate expectations of how employees should conduct themselves in the workplace.12*

TRANSFORMING CORE VALUES AND ETHICAL STANDARDS INTO CULTURAL NORMS (CONTD)Use core values and ethical principles when evaluating each persons job performance.Encourage all employees to help enforce the observance of core values and ethical standards.Periodically have ceremonial occasions to recognize individuals and groups who display the firms values and ethical principles.Institute strict ethics enforcement procedures.12*

PERPETUATING THE CULTURE12*

FORCES THAT CAUSE A FIRMS CULTURE TO EVOLVE12*

Strong-Culture FirmHas deeply rooted widely-shared values, behavioral norms, and operating approaches.Insists that its values and principles be reflected in the decisions and actions taken by all company personnel.Weak-Culture FirmLacks values and principles that are consistently preached or widely shared.Has few or no traditions, beliefs, values, common bonds, or behavioral norms.COMPANY CULTURES CAN BE STRONGLY OR WEAKLY EMBEDDED12*

CORE CONCEPT

In a strong-culture company, deeply rooted values and norms of behavior are widely shared and regulate the conduct of the companys business.12*

DEVELOPMENT OF A STRONG CULTUREStrong CultureClosely aligning corporate culture with the requirements for proficient strategy execution merits the full attention of senior executives.12*

STRATEGIC MANAGEMENT PRINCIPLE

A strong culture that encourages actions, behaviors, and work practices that are in sync with the chosen strategy and conducive to good strategy execution is a valuable ally in the strategy execution process.12*

WHY CORPORATE CULTURES MATTER TO THE STRATEGY EXECUTION PROCESSA culture well matched to the requirements of the strategy execution effort focuses the attention of employees on what is most important to this effort.Culture-induced peer pressure induces personnel to do things in a manner that aids good strategy execution.A culture consistent with the requirements for good strategy execution can energize employees, deepen their commitment to execute the strategy, and enhance worker productivity.12*

STRATEGIC MANAGEMENT PRINCIPLE

It is in managements best interest to dedicate considerable effort to establishing a corporate culture that encourages behaviors and work practices conducive to good strategy execution.12*

HEALTHY CULTURES THAT AID GOOD STRATEGY EXECUTIONGood Strategy ExecutionAdaptive CulturesHigh-Performance CulturesCommitment to achieving stretch objectives and accountabilityWillingness to accept change and take on challenges12*

STRATEGIC MANAGEMENT PRINCIPLE

As a companys strategy evolves, an adaptive culture is a definite ally in the strategy-implementing, strategy-executing process as compared to cultures that are resistant to change.12*

UNHEALTHY CULTURES THAT IMPEDE GOOD STRATEGY EXECUTION12*

CHANGING A PROBLEM CULTURE:THE ROLE OF LEADERSHIPA strong, out of sync, or unhealthy culture must be changed in order to execute strategy successfully.Competent leadership at the top is necessary for culture-change efforts to succeed.

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FIGURE 12.2Changing a Problem Culture12*

MAKING A COMPELLING CASE FOR CULTURE CHANGESelling the ChangeExplain why and how certain behavioral norms and work practices are obstacles to good execution of strategic initiatives.Explain how new behaviors and work practices will be produce better results.Cite reasons why the current strategy has to be modified, if the need for cultural change is due to a change in strategy.12*

SUBSTANTIVE CULTURE-CHANGING ACTIONSReplace key executives who are stonewalling needed organizational and cultural changes.Promote individuals who advocate for cultural shifts and can serve as a role model for the cultural behavior.Appoint outsiders with the desired cultural attributes to high-profile positions.Screening candidates for positions carefully, hiring only those who appear to fit in with the new culture.Mandate that all personnel attend culture-training.Design compensation incentives that boost the pay of teams and individuals.12*

SYMBOLIC CULTURE-CHANGING ACTIONSTop executive and upper management behaviorsCeremonial events to honor exemplary employeesPhysical symbols that represent the new cultureChanging the culture of an organization12*

HOW LONG DOES IT TAKE TO CHANGE A PROBLEM CULTURE?Changing a problem culture is never a short-term exercise.A sustained and persistent effort to reinforce the culture at every opportunity through word and deed is required.It takes time for a new culture to emerge and prevail; it takes even longer for it to become deeply embedded.Fixing a problem culture and instilling a new set of attitudes and behaviors can take two to five years.12*

LEADING THE STRATEGY EXECUTION PROCESSLeading Strategy Execution Requires:Staying on top of what is happening and closely monitoring progress.Putting constructive pressure on the organization to execute the strategy well and achieve operating excellence.Initiating corrective actions to improve strategy execution and achieve the targeted performance results.12*

ILLUSTRATION CAPSULE 12.2Changing the Old Detroit Culture at ChryslerWhat is meant by culture is not part of the gameit is the game?How did Doug Betts background prepare him for leading the cultural change at Chrysler?What culture-changing actions did Doug Betts take to produce cultural change at Chrysler Group LLC?12*

CORE CONCEPT

Management by walking around (MBWA) is one of the techniques that effective leaders use to stay informed about how well the strategy execution process is progressing.12*

STAYING ON TOP OF HOW THINGS ARE GOINGManagement by Walking Around (MBWA)Is used by leaders to stay informed about how well the strategy execution process is progressing.Involves spending time with people at company facilities, asking questions, listening to their opinions and concerns, and gathering firsthand information about how well aspects of the strategy execution process are going.12*

MOBILIZING THE EFFORT FOR EXCELLENCE IN STRATEGY EXECUTIONTreat employees as valued partners.Foster an esprit de corps that energizes members.Use empowerment to create a fully engaged workforce.Make champions out of the people who spearhead new ideas and/or turn in winning performances.12*

MOBILIZING THE EFFORT FOR EXCELLENCE IN STRATEGY EXECUTION (CONTD)Set stretch objectives that require personnel to give their best in achieving performance targets.Use benchmarking, reengineering, TQM, and Six Sigma to focus attention on continuous improvement.Use motivational techniques and compensation incentives to inspire, nurture a results-oriented work climate, and enforce high standards.Celebrate individual, group, company successes.12*

LEADING THE PROCESS OF MAKING CORRECTIVE ADJUSTMENTS A thorough analysis of the situationGood business judgment in deciding what actions to takeGood implementation of the corrective actionsMaking corrective actions successfully requires:12*

A FINAL WORD ON LEADING THE PROCESS OF CRAFTING AND EXECUTING STRATEGYIt is difficult to separate leading the process of executing strategy from leading the strategy process.Crafting, implementing, and executing strategy is a continuous process that requires much adjusting and fine-tuning of the strategy to fit changing circumstances.The tests of strategic leadership are whether the firm has a good strategy and business model, whether its strategy is competently executed, and whether the firm is achieving its performance targets.If these three conditions exist, then the firm has good strategic leadership and is a well-managed enterprise.12*

***Ideal culture from 560 individuals 56 randomly-selected organizations across many industries and nations.

We all want the same predominantly constructive culture.

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