Organizational culture is one of the most important and yet misunderstood aspects in business today.…
In getting their jobs done, executives and managers primarily deal in communications. This includes the spoken and written word, along with the behaviors associated with those words. Words in the English language are full of richness in meaning. Yet for all the richness, we in business tend to bend, borrow and, in some cases, overtly distort the meaning of words to fit our purposes. While this convenient borrowing serves near-term purposes, often the long-term consequences are that the implied meaning of words we use in business are confusing if not compromised. This increases the complication of situations and can lead us astray.
Words are full of meaning and message, and in business are theoretically assumed to describe behavior. When the behaviors of executives and managers are consistent with their words, a powerful dynamic is created. Consider that an operational definition of integrity is behavior that is consistent with words. Doing what we said we would do, or not doing what we said we would not do is an essential part of establishing credibility and integrity as an executive or manager. Conversely, saying one thing and behaving differently is a surefire way to send mixed messages to a group, organization or team. At the end of the day, communication, which is comprised of behavior and words, matters greatly.
The clarity and crispness in the meaning of words is important for executives and managers now more than ever. The challenges and complexities facing businesses continues to grow, which in turn demands accelerated changes, creative strategies, innovative business models, and new models for organizing. Yet many of the words which could be used in accelerating change have been used up. For example, breakthroughs are often what is needed in the business.
In the early days of organizational transformation, our firm piloted the use of language-based breakthrough principles. As an example, using breakthrough principles we contributed to the transformation of Ford Motor company in the 1980’s. Even with this outstanding success, we were very hesitant to use this term since it made many executives uncomfortable. When the word breakthrough was used, it was to delineate and designate an extraordinary accomplishment which would open huge new possibilities for the business. Then the term became widely used to describe products, most of which were anything but a breakthrough. Rather, they were unremarkable if not overtly forgettable. Along the way, a powerful word for use in describing organizational transformation was weakened. The cruel irony is that a word used to describe an important distinction in the transformation of Ford Motor Company was later used to describe a completely forgettable Cadillac product!
It is now widely accepted that an organization’s culture is important. Two leading scholars (James Heskett and John Kotter) from Harvard Business School conducted a study comparing the business outcomes for companies with good cultures and bad cultures. The results were stunning as can be seen in the chart below:
|Average Increase for Twelve Firms with Performance-Enhancing Cultures||Average Increase for Twenty Firms without Performance-Enhancing Cultures|
|Stock Price Growth||901%||74%|
|Net Income Growth||756%||1%|
Most of us agree that a good culture promotes change and success, while a bad culture stifles innovation and promotes bureaucracy which, in turn, inhibits growth and performance. While the word culture is widely used in business, its meaning has been compromised to become synonymous with principles and values. The assumption has become that the way to change culture is to change values. This is not accurate and contributes to many failed change projects. While values are one part of culture, they are not the part that drives most behavior and lays the foundation for culture.
Leadership & Management
Perhaps there is no better example of the misuse of terms than the words leadership and management. A quick glance at a good dictionary will demonstrate that the two terms have quite different meanings.
Leadership: “the actions of leading a group of people or an organization” and “the state of being a leader”
Management: “the process of dealing with or controlling things or people”
Both functions and roles are important in business organizations, yet they are different. Leadership is critical for success in creating strategies and implementing change. Yet in many organizations the two terms are used interchangeably. The management team is called a leadership team, yet all the topics and work are concerned with management, not leadership. The people on the leadership team do not possess leadership skills and show little interest in acquiring them. Calling a team of managers ‘our leadership team’ serves only to confuse the organization and reduce the probability that actual leadership will be exhibited, even when it is desperately needed.
Unfortunately, the two terms organizational design and organizational structure have also become synonymous terms. Both terms describe an important element for executives, yet what I consider the most important element of organizational design has by and large lost its meaning. Organizational structure deals with how formal authority is delegated and managed. For example, is the company organized around business units or does it function as one large company organized around functions? Further, the term organizational structure is also used to describe the reporting relationships within the organization. This is the most common use of the word, which translates to boxes and lines on an organizational chart. This structure is important for administering the functions and reporting relationships as well as providing clarity to employees. The structure is commonly thought of as the boxes and lines which depict the organization.
The challenges facing most business continue to increase because of accelerating rates of change, disruptive innovations and technologies, expanding expectations and sophistication of customers, increasing global competitors, regulatory changes, shareholders who want near term results, etc. In order to act on those challenges, executive must rethink how their organization can see and respond to these challenges. The executive must be intentional in designing their organization to increase its capability to explore possibilities, identify opportunities and threats, and ultimately act in extraordinary ways. Organizational design can be described as:
“Change the company’s most fundamental building blocks: how people in the company made decisions, adopted new behaviors, rewarded performance, agreed on commitments, managed information, made sense of that information, allocated responsibility, and connected with one another.”
The issues or problems come when organizational structure is misused by executives thinking about strategic challenges and creating strategic execution. The executives who confront external dynamics and strategic challenges move quickly to questions of how best to structure the organization. At times it appears that when executives are facing tough external challenges and changes in the market, they instead change the organizational structures, or restructure. It often appears that reorganization is chosen because they are not sure what else to do.
Redeployment is a special case for me. I was working on a book with my colleague and good friend, Francis Vidal. We were developing methods that companies could use to mobilize their organizations during times of change. I relocated my family to Paris so Francis and I could work together as consultants and develop our methodologies. We chose the term redeployment to describe our methods since the word redeployment is the same in both English and French. Unfortunately, during the time we were working on the book and building our common practice methods, the term redeployment took on new meaning in the U.S. Companies began using the term ‘redeployed’ to denote downsizing of employees. The term became synonymous with getting fired and outplacement. That simple change in the meaning of the word was the kiss of death to this practice in the U.S. and the usefulness of the book for KingChapman. So, we published the book in France, but not in the US.
Words are a primary tool for those in business. Words are full of meaning and message. Words are the basis for leadership. We use words to create new futures, bring clarity, raise awareness and inspire people. We must, however, remain alert to when our favorite words and terms have taken on additional meanings or lost their value to properly distinguish our intent.