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By Pamela S. Harper
In the course of my meeting with the CEO of a five million dollar company, I asked him to describe characteristics of his company’s culture. His answer: “Oh, I haven’t put one in yet.” While this entrepreneur hadn’t consciously been shaping his company’s culture, it certainly existed. Even if no one realizes it, every business has a culture that’s been evolving since Day One.
It’s no secret that no matter what the state of the economy is, cultural issues have a substantial impact on business success. This includes everything from entering new markets, to mergers and acquisitions, to outsourcing, and even to introducing new technology. However, often times, I find that CEOs and entrepreneurs are blindsided by the impact that their culture has had on strategic commitments they’ve made.
The earlier and more consistently you evaluate your business culture, the more you can evaluate the fit of a strategy or initiative and shape your culture to get more of the business results you need, even in a turbulent economy. Use the following steps as a guide.
Culture consists of all of the values, beliefs, and practices that exist in your business, and is the primary force shaping key strategic decisions and how things get done.
Think of business culture as your organization’s “personality.” It has as strong an impact on strategy and operations as an individual’s personality has on how he or she uses specific strengths and weaknesses. Your business culture dictates everything from vision and mission, to level of risk tolerance, to purchasing decisions, to how many rings it takes to answer the phone. As such, culture is a huge, even controlling impact on your business success.
Many business leaders tell me about the great effort they’ve put into designing their culture. Yet despite policies, edicts, speeches, and process diagrams they tell me that things still aren’t working the way they want. This may be because they’ve focused on many aspects of what I call the “formal” culture, while many elements of the “informal” culture diligently resist their efforts to implement change.
Overlooking or underestimating the duality of cultures in even the smallest businesses can cause unexpected problems during implementation. For example, one company decided to enter a new market that required fast turnaround of orders to their customers. While their policies and procedures (formal culture) made it seem that the organization could easily perform at this level, the reality was that the informal culture resisted moving at a faster pace and orders took significantly longer than new customers expected. The moral of the story: when formal and informal cultures clash, the informal culture wins every time.
Regularly evaluating the degree to which your formal and informal cultures are aligned puts you in a better position to more quickly and realistically assess potential opportunities to grow your business.
As you identify opportunities to grow, it’s essential to first answer a deceptively simple question: “What would my organization specifically need to do to pull this off?” At this point in strategic thinking, the question focuses more on identifying specific organizational competencies (such as the ability to turn orders around in 24 hours) rather than on individual performance. In some cases, this ability is already in place, but in other cases your organization may need to do things differently to perform at the required level.
One of the best ways to identify the specific performance that would be needed is back into the competencies that would be required. For example, “Can we currently turn orders around in 24 hours?” If the answer is “no,” the next question is “What would we need to be able to do in order to perform at that level?” The question keeps getting repeated until you can answer with confidence that your organization already has the specific competency that you need.
After you’ve identified the organizational competencies that would be required to deliver on your objectives, the other issue to consider is the extent of the fit with the organization’s formal and informal cultures. For example, while written procedures on decision-making can change overnight, the values and beliefs reflected in how people really make decisions take much longer to change.
As a rule of thumb, the bigger the change to the informal culture, the more time, energy, and resources it will take to successfully achieve your objectives.
Once you’ve decided to tackle a growth opportunity, you’ll need to decide which factors in your formal and informal cultures will help you accelerate progress and which ones will block progress.
For example, an entrepreneurial organization with ambitious plans for growth had a number of formal elements in place that reinforced the value of teamwork, even extending to “teamwork” posters on the walls. However, their informal culture actually rewarded independent decision-making and a “Lone Ranger” mentality by giving praise and career advancement to individuals who stood out.
While the values of action orientation and risk taking were organizational strengths in many respects, the tendency to single out individuals for rewards and recognition provided a strong motivation to horde information and grandstand. In several respects, then, the organization’s informal values and beliefs did not support its formal values and beliefs of information sharing and teamwork.
By asking questions about how they could build cultural reinforcement for the performance their company needed, the leadership may have decided to make adjustments in both their formal and informal cultures. For instance, they might have modified the compensation system so that career advancement was tied more strongly to tangibly demonstrating teamwork than to individual contributions. They may also have looked at ways of leveraging the action oriented, competitive nature of their informal culture by giving praise and creating special celebrations when team goals are met.
When you are clear about the organizational performance you need to reinforce, you can better adjust the practices that reflect these values and beliefs.
If you set out on the path of understanding and working with your business culture, be patient. Shaping entrenched values, beliefs and practices does not happen overnight. However, the effort is well worthwhile. Addressing these issues on a consistent basis will not only minimize problems; it will prevent others form occurring in the first place, and help you maximize both top and bottom line results, regardless of the economy.
About the author: Pamela S. Harper is an internationally known business performance expert, professional speaker, and author of the book Preventing Strategic Gridlock® (Cameo Publications). Since 1992, she has helped companies of all sizes to accelerate progress toward their growth objectives.
By Pamela S. Harper
Congratulations! The deal is done and you’re leading a merged business with the potential to become an industry powerhouse. Now you’re faced with needing to integrate the two organizations as quickly and effectively as possible. Over the years, numerous studies have shown that shared values are at the core of the most successful mergers and acquisitions. The challenge is, there’s an increasing disconnect in companies between their stated values and what happens on a daily basis. Left undetected, significant gaps in value systems can result in confusion, unnecessary conflict, cynicism and distrust that can grind your integration to a halt.
Even if your company’s values are strongly established, it’s unrealistic to expect that simply handing new executives and employees a copy of your values statement will be enough to produce meaningful changes in their values and behavior. The purpose of this special report is to provide you with practical steps for creating shared values so that the words on your values statement are actually reflected what happens on an everyday basis.
In my work with merging organizations, I’ve noticed that different individuals often attach entirely different meanings to the same words and phrases. Complications occur when everyone thinks they are referring to the same thing while the multiple perspectives are left unspoken and undiscovered. For instance, try this test with a colleague: does the term “innovation” mean incremental improvements, breakthrough thinking, both, or something else entirely? The way each person answers this question provides a clue regarding the types of decisions he or she makes on an everyday basis. Multiply that by the many diverse aspects of your organization, and you can appreciate how complicated matters can get if disconnects are left to grow into missed goals, power struggles, and outright conflict.
Defining values can be especially challenging in multi-national mergers, where language and national cultures can impact understanding. Appreciating and addressing these differences can go a long way toward heading off difficulties caused by different interpretations. For example, one newly formed executive team handled this dilemma by jointly writing explicit definitions for each stated value. While this approach caused some eyeball rolling in the ranks, everyone was able to clearly and consistently describe their company’s values.
As your organization merges, values need to be revisited to reflect changes that occur as the organization gels. Problems occur when people see a stated value as irrelevant to them in the here and now and don’t agree with or don’t care about it. For example, the values of the famous “HP Way” of Hewlett Packard, that promoted long term performance and employee retention changed considerably with the acquisition of PC maker Compaq. In order to promote consistent decision-making and interactions, top-level leadership needs to agree on why each value is important, and how it needs to be reflected in everyday business conduct. Is it significant because of company history? Does it reflect a competitive reality? Remember, as your organization grows, values need to be revisited to reflect changes that have occurred over the years.
The best way to discover what your organization truly values is by assessing how well stated values are reflected not only in various policies, procedures, but also in the practices, behaviors, customs, and other elements of your organization’s culture that can be observed in daily life. A few examples include:
In addition to observation, it’s helpful to use interviews, focus groups and surveys to gain perceptions of employees, customers, suppliers and other significant stakeholders. Although at times it may seem as though people are “wrong” about the feedback they provide (as one CEO said to me), remember that even mistaken perceptions trigger real action. Once this CEO was willing to look more objectively at the situation, he and his executive team were able to take actions to improve the mistaken perceptions of their employees so that they could continue to accelerate progress toward their integration.
If you observe discrepancies in any area, work with your executive team to determine whether the value itself needs to change to reflect new realities, or whether the value is important enough to you for you to address the issues in the organization that are causing the disconnect. Often times, there are multiple reasons for the gaps, ranging from simple misunderstandings and old habits to truly different ways of perceiving the world.
If you and your new executive team do have a conflict over values, it’s important not to rush to solutions. This can increase the risk of getting “lip service” agreement that gets little or no support on a daily basis, and only compounds your troubles. Instead, find out the reasons behind each person’s position on the issue and drive for dialog that can increase understand and commitment to seeking resolution. Getting beyond positions can help you come up with new solutions. For example, one newly formed executive team disagreed about the definition of “quality.” In this case, the conflict was based upon executives from the acquired company relying upon their traditional definition of quality rather than looking at the current needs of their customers.
It takes patience and persistence to uncover the root of a conflict. If you are truly gridlocked, an outside consultant can help you break out of the jam by helping your group move away from positions, gain new perspectives, and make decisions that they’re willing to act upon.
While meetings, training sessions and postings are helpful for initially communicating messages about values, your organization perceives a multitude of cues every day and decides whether these official messages are credible. According to the types of interactions you have with a particular stakeholder group, here are a few ways you can increase the likelihood of being perceived as credible:
It takes more than posting documents and handing out policy manuals to integrate value systems, even when it appears on the surface that two companies are compatible. The more that you and your newly formed executive team work together in the early stages to clarify definitions, evaluate relevancy, and model values on a daily basis, the more you’ll be able to transform your statements into actions that result in a quick and effective integration and a deal that produces a high return on investment.
Pamela S. Harper is founder and president of Business Advancement Inc., a professional speaker, and author of the critically acclaimed book Preventing Strategic Gridlock: Leading Over, Under & Around Organizational Jams to Achieve High Performance Results (Cameo Publications).
by Pamela S. Harper
Have you ever wondered what enables some entrepreneurs to exponentially grow their businesses while others go flat, or worse? Their secret lies in their ability to find and lead what I call their “hidden” organization. You may think you don’t have an organization, hidden or otherwise, especially if your business consists of a “gang of one” or there are only a few employees on staff. But the fact is that even the smallest businesses have an organization, and your success or failure is determined by your ability to find it and then lead it in a way that gives you more of the results you want.
This may be a totally new concept to consider. It’s easy to think of giant corporations as having organizations. These are the “internal stakeholders” consisting of employees, departments and committees on the payroll. However, large companies are realizing that independent consultants, suppliers, outsource providers, alliance partners, customers and other “external stakeholders” also play a critical role in their organization’s ability to achieve high performance results.
Just as your business is part of your customers’ external organization, it also has external stakeholders of its own that make up your hidden organization. The better you become at recognizing and leveraging the power of these many relationships, the more likely it is that you’ll survive unexpected twists and turns in the economy, minimize problems, and take your business to the next level of growth.
It can be challenging to identify the many stakeholders who impact your business. While some of these relationships are obvious, it’s easy to overlook and underestimate the impact of others. However, if you think of an external stakeholder as any person, group or organization that has a stake (whether they recognize it or not) in the success of your business, your organization includes, but is not limited to:
When you uncover the wide variety of support, knowledge, skills, capabilities, and resources that are available through your stakeholders, you can offer services and products in ways that you may never have considered before. For example, a specialty-clothing designer with one store location teamed up with an online distributor so that she now runs a global business, reaching customers around the world. Even competitors have found that there are a number of ways to benefit through limited collaborations. The possibilities for growth are there if you look for them.
While large companies have organizational charts that map out functions of departments and roles of employees, you can also create your own “organizational chart” to map out how external stakeholders fill essential functions and roles that are essential for conducting business. For instance, your accountant, attorney, and insurance agent are important parts of your “executive team.” Your organization also includes your customers, along with the alliance partners, outsource providers, and sub-contractors who may work with you to deliver products and services.
As you continue to identify stakeholders, be sure to update your organization chart on a regular basis. Depending upon, your own goals, customers’ objectives and needs, new technology and shifts in the economy, some stakeholders will take on increased importance while others play a less important role for a period of time.
Realigning your vision of your organization so it includes these and other external stakeholders will enable you to think about new ways to reach your customers, expand your capabilities, and discover new opportunities for increased revenue and profitability.
Now that you’ve discovered your hidden organization, the next challenge is to lead and manage it so that you are achieving your growth objectives.
Clients often tell me that unexpected and persistent problems seem to come out of nowhere (this is what I call “strategic gridlock”). However, when we look back, it’s possible to trace the source of problems to one or more common but mistaken assumptions that we all make about our organizations, based upon our individual perceptions of reality.
As you lead and manage your hidden organization, here are three questions to ask yourself on a regular basis to begin to uncover assumptions, avoid gridlock, and grow your business:
What is the uniqueness of each stakeholder? Just as no two people are alike; no two stakeholders are alike. Yet it’s easy to adopt an approach to dealing with others that doesn’t allow for these variations. This can lead to persistent problems, especially if their values and practices are different from yours. Understanding the uniqueness of each stakeholder will help everyone get the most out of each relationship.
Are my stakeholders capable of doing what I want? Since external stakeholders have other priorities outside of yours, unexpected changes in direction can easily happen. Consistent communication with your external stakeholders minimizes the risk of being blindsided by these issues, and allows you to make contingency plans. It also alerts you to developments that could result in new opportunities for your growth.
Are my stakeholders willing to do what I want? External stakeholders don’t always share your objectives or sense of urgency. The more that you understand how they perceive your objectives and what their needs are in relationship to yours, the more likely it is that you can head off conflicts, improve decision making, and negotiate solutions that represent a “win” for everyone.
To fully meet organizational challenges and lead your organization to high performance results, it’s essential to know not only who your stakeholders are, but also what issues they face and the impact those issues may have on you. When you seek out the perceptions of your stakeholders on a regular basis, you’ll be able to address any potential challenges from a position of organizational reality, not individual assumption.
Many entrepreneurs, especially those who are used to working as “gangs of one”, overlook and underestimate the many ways that they can leverage and grow their businesses by working in collaboration with their external stakeholders. .
Once you recognize that you are the architect of your own organization, the issues of leading and managing organizations of all sizes are the same; the same organizational principles apply to mega-corporations as well as to solo entrepreneurs, because even the very smallest businesses have “hidden” organizations within them.
Harnessing the power of your hidden organization will help you to discover untapped opportunities, avoid organizational jams, and grow to new heights of success
Pamela S. Harper is Founding Partner and CEO of Business Advancement Inc. She is an internationally known business performance advisor, professional speaker, and author of the critically acclaimed book Preventing Strategic Gridlock®: Leading Over, Under & Around Organizational Jams to Achieve High Performance Results.
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by Pamela S. Harper
Today’s roller coaster business climate is filled with enough twists and turns to make some amusement park rides look tame. As a result, companies in nearly every sector mirror this state of affairs, launching a variety of strategies and initiatives in order to respond to the economy’s highs and lows. They may take simultaneous actions like laying off hundreds of workers while they outsource non-core functions and hire hundreds of others with different skills to start up a new product line. Or, they may concurrently undertake a management reorganization while doing a push for quality improvement. These and other rapid shifts in direction often leave companies spinning in circles.
While every leader needs to be flexible in order to move their businesses forward, often even the best strategies or initiatives can throw your organization for a loop if they’re planned in a vacuum and executed in a way that clashes with an organization’s unique and multi-faceted reality. When this occurs, persistent problems pile up and can grind progress to a halt, in what I call “strategic gridlock.” Minimizing this situation starts with systematically thinking through and planning strategies and initiatives in a way that takes into account your organization’s current circumstances, capability, willingness and relationships.
Before you commit your company to a plan of action in response to a business challenge, here are key questions that you need to ask in order to determine whether a particular strategy or initiative that should work actually will work for your organization:
As the business environment continues to evolve, no organization can sustain long-term growth without shifts in direction along the way. To maximize the benefits and minimize the risks of encountering strategic gridlock, it’s vital to systematically think through your execution plans in a way that incorporates these often overlooked or underestimated issues of your organization’s reality. By doing so, you can balance what should work with what will work to accelerate your company’s progress despite the economic terrain.
Pamela S. Harper is president of Business Advancement Inc. She is an internationally known business performance expert, professional speaker, and author of the critically acclaimed bookPreventing Strategic Gridlock®: Leading Over, Under & Around Organizational Jams to Achieve High Performance Results (Cameo Publications, 2003)
For more information, call (201) 612-1228
by Pamela S. Harper
As companies look for new ways to grow in a turbulent economic climate, strategic outsourcing of large scale business operations up to the level of core functions is gaining popularity. While many companies have found strategic outsourcing highly beneficial in increasing their flexibility and reducing long-term commitment to infrastructure, the most successful strategic relationships are crafted with a careful eye to the unique and changing circumstances of both parent and the outsource partner companies.
There’s more to successful strategic outsourcing than deciding what to outsource, finding a capable partner and crafting an agreement. On the one hand, having suppliers handle entire functions from research and manufacturing to accounting, human resources, and information technology services can accomplish a variety of business objectives while enabling you to control costs and quickly respond to the rapidly changing marketplace. However, it’s easy to underestimate the value of thinking through and planning for critical organizational reality implications at the earliest stages of considering this approach. The result is often a phenomenon that I call “strategic gridlock”: persistent organizational problems that can pile up and cause the company’s progress to grind to a halt.
Consider the case of “Company A,” a technology company that decided to outsource their research function. This strategy should have worked. After all, they contracted with a highly regarded supplier, and had crafted a detailed contract and work agreement. However, Company A’s executives overlooked the fact that their organization’s informal culture of secrecy and departmentalized functions did not encourage information sharing. Consequently, the outsourcing arrangement became bogged down by distrust and poor communication between the two companies. Conflicts and errors became commonplace as the supplier worked with missing data. Strategic gridlock built up as these errors caused a series of problems in departments throughout Company A, ultimately damaging their relationship with several key customers. Within a year, the outsourcing arrangement was terminated by mutual agreement.
This scenario did not have to happen. Yet unfortunately, it’s a common occurrence. Too many executives believe that outsourcing is a cut and dry issue and that it’s up to the outsource provider to make the outsourced business function successful. However, successful outsourcing requires much more than simply handing over a business function to an outside party. When executives don’t analyze their organization’s reality and incorporate their company’s starting point into the strategic thinking phase of the initiative, disastrous results can occur beyond an unsuccessful outsourcing partnership. Depending on the function you decide to outsource, customers can be lost, profits can plummet, and good employees can become disgruntled and leave.
By incorporating organizational reality guidelines into the strategic thinking process, companies can make any outsource initiative a rewarding experience in terms of both profits and productivity. The following questions will help you think through and plan for some critical issues associated with outsourcing various company functions.
It’s critical to understand the magnitude of the change that strategic outsourcing represents for your company and the employees. That’s why you must make certain that you’re outsourcing the most appropriate function in the most ideal way to deliver the results you desire. Frequently, CEOs and executives bring into the picture assumptions that don’t match their organization’s reality. They assume that all they need to do is delegate the function to an outsource provider and that it will be a quick and easy transition. This can result in unanticipated problems as new workflow patterns disrupt entrenched habits. In reality, as an entire function gets moved to an outsource partner, current employees will have to take on new roles as liaisons and perform their jobs in different ways. Your organization may or may not have the competencies and resources readily available in order for this to happen. This information will also impact your decision on which functions are most suitable to be outsourced. Additionally, because outsourcing has been used for so long as tactical support, some companies may not be used to thinking of their outsource provider as a partner rather than a vendor. This is a tremendous mindset change, from an “us / them” mentality to an “us / us” one. Both parties must have a “we’re in this together” attitude to succeed.
Overt and covert resistance from your managers and employees who don’t understand and buy into the outsourcing strategy can seriously undermine the success of the effort. They will have questions about how and why this is happening, as well as how it will impact their jobs and compensation. Tapping into and addressing stakeholders’ concerns before launching an agreement will help move the strategy forward. Knowing the various perspectives beforehand can keep you from getting unpleasant surprises later on. For example, one company learned that they had to resolve union issues before they could outsource their manufacturing function. As you’re developing your partnering arrangement, don’t forget to address stakeholders’ concerns in the provider’s organization as well. Many times outsource employees have a dotted line relationship with the client company’s managers. Because they aren’t actual employees and don’t fall under the usual reward and reprimand policies, it’s easy for them to ignore your rules and follow their own company’s guidelines. It’s important to reach clear, up front agreements on expectations, roles, and relationships between the two organizations in order to avoid wasteful conflict and resistance.
Because strategic outsourcing is an extension of your company, cultural compatibility takes on an increased importance. Be sure to look beyond the formal culture—the written mission, values, practices, and policies of the company. The informal culture—what really happens—may be very different. For example, “Company A’s” formal culture stressed openness and teamwork, but the informal culture rewarded secrecy and not working across departments. For a successful outsourcing partnership, CEOs and executives must identify their own company’s formal and informal cultures in addition to the potential outsource company’s. The next step is to make sure the cultures of the two companies complement each other. If not, the outsourcing strategy may take longer to complete or will present future challenges down the road, as policies and practices in each company begin to clash. In order to choose the right outsource partner, identify the culture that prevails in each organization and whether or not they can mutually support your goals.
Both the client company and the outsource company have their own issues that need to be factored into the equation. CEOs and executives need to look at the realities of both companies to determine what needs to happen first and how that will impact other key initiatives that are occurring. Do employees in one or both companies need to learn new skills? Does there need to be a new system of rewarding and compensating both the client company employees as well as the outsource company employees? Does the morale need to be increased before outsourcing takes place? Additionally, it’s important to realize that just because an outsource provider comes highly recommended, they may not be the best choice for the company’s goals, especially if the prospective partner has issues that can’t be worked out as quickly as necessary. In fact, you may need to “interview” many prospective outsource partners before finding one with not only the technical capabilities to get the job done, but also the goals, priorities, and action plans that are in line with yours.
Misunderstandings and confusion can bog down even the best-planned outsourcing strategy. Therefore, CEOs and executives must determine ahead of time how they will credibly communicate information about the arrangement. In order to be credible, the messages must meet the organization’s needs. Not only do they need to be consistent, they also must come from a channel the employees use. For example, if there’s substantial information about the outsource strategy on the company’s intranet, but employees don’t use that as an information source, they won’t get the details they require to ease their fears. Above all else, your communications must match your actions. Realize that if there is already low trust in the organization, employees may rely on sources they do view as credible, such as the grapevine, to receive information. This not only fuels rumors, but it also lowers morale, spreads misinformation, and creates unnecessary fear. Putting together a communication plan that meets the unique needs of your organization can greatly reduce and even completely eliminate many problems.
Just as with any strategy or initiative, flexibility between the client company and outsource provider is just as important as the focus. Whenever there are two separate organizations—each with their own objectives—trying to come together to create one uniform goal, there needs to be frequent checkpoints to gauge the progress. At pre-designated times, scrutinize the results to date along with the current circumstances. Because every organization has a different style, you may need to adjust the way you do things in order to come to a happy medium. The goal is to of course stay focused on the big picture, but be prepared to adjust your plan if necessary. To some degree, the checkpoint reviews will be experimentation, especially since you’re evaluating the results according to two different company’s perspectives. The idea is to plan for the unexpected, and to evaluate the arrangement frequently enough that problems don’t escalate out of control.
Incorporating organizational reality considerations at the earliest stages of considering strategic outsourcing enables you to more accurately weigh the benefits and risk factors that will be associated with this arrangement. It also provides you with a more focused process for execution.
With a thorough strategic thinking and planning effort, outsourcing an entire business function can be a cost-effective and highly productive way to expand your company. When you examine your assumptions and anticipate and address issues as early as possible, you can maximize the chances of a smooth outsource transition.
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Pamela S. Harper is president of Business Advancement Inc. She is an internationally known business performance expert, professional speaker, and author of the critically acclaimed book Preventing Strategic Gridlock®: Leading Over, Under & Around Organizational Jams to Achieve High Performance Results (Cameo Publications, 2003)
For more information, call (201) 612-1228
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