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IMPLEMENTING IMPLEMENTING STRATEGY: CULTURE STRATEGY: CULTURE

AND LEADERSHIP AND LEADERSHIP

CHAPTER 11

Screen graphics created by:Jana F. Kuzmicki, PhD, Indiana University Southeast

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Chapter Outline Building a Strategy-

Supportive Corporate Culture Where Does Corporate

Culture Come From? Power of Culture Types of Cultures Creating a Fit Between

Strategy and Culture Establishing Ethical

Standards and Values Building a Spirit of High

Performance

Exerting Strategic Leadership MBWA Fostering a Strategy-

Supportive Culture Keeping Internal

Organization Innovative Dealing With Company

Politics Enforcing Ethical

Behavior Making Corrective

Adjustments

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What Makes Up aCompany’s Culture?

Beliefs about how business ought to be conducted

Values and principles of management Patterns of “how we do things around here” Oft-told stories illustrating company’s values Taboos and political don’ts Traditions Ethical standards

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Where Does CorporateCulture Come From?

Founder or early leader Influential individual or work group

Policies, vision, or strategies

Traditions, supervisory practices, employee attitudes

Organizational politics

Relationships with stakeholders

Internal sociological forces

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How Is Culture Sustained?

Continuity of leadership Select new employees based on how well their

personalities “fit” Systematic indoctrination of new employees Senior employees’ reinforcement of core values Story-telling of company legends Ceremonies honoring employees who

display cultural ideals Visibly rewarding those who follow

cultural norms

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The Power of Culture

Culture can contribute to -- or hinder -- successful strategy execution

Requirements for successful strategy execution may -- or may not -- be compatible with culture

A close match between culture and strategy promotes effective strategy execution

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Why Culture Matters: The Benefitsof a Good Culture-Strategy Fit

Strategy-supportive cultures Shape the mood and temperament of the work

force--positively affecting organizational energy, work habits, and operating practices

Provide standards, values, informal rules and peer pressures that nurture and motivate people to do their jobs in ways that promote good strategy execution

Strengthen employee identification with the company, its performance targets, and strategy

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Why Culture Matters: The Benefitsof a Good Culture-Strategy Fit (cont.) Strategy-supportive cultures

Stimulate people to take on the challenge of realizing the company’s vision, do their jobs competently and with enthusiasm, and collaborate with others to execute the strategy

Optimal condition: A work environment that

Promotes can do attitudes Accepts change Breeds needed capabilities

CanDo!

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Types of Corporate Cultures

Strong vs. Weak Cultures

Low-Performance Cultures

Adaptive Cultures

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Characteristics ofStrong Culture Companies

Conduct business according to a clear, widely-understood philosophy

Management spends considerable time spent communicating and reinforcing values

Values widely shared and deeply rooted Often have a values statement Careful screening/selection of new employees to

be sure they will “fit in” Visible rewards for those following norms;

penalties for those who don’t

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How Does a Culture Come to Be Strong?

Leader who establishes values consistent with Customer needs Competitive conditions Strategic requirements

A deep, abiding commitment to espoused values and business philosophy Practicing what is preached!!

Genuine concern for well-being of Customers Employees Shareholders

ValuesCustomers

EmployeesShareholders

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Hallmarks of Adaptive Cultures

Introduction of new strategies to achieve superior performance

Strategic agility and fast response to new conditions

Risk-taking, experimentation, and innovation to satisfy stakeholders

Proactive approaches to implement workable solutions

Entrepreneurship encouraged and rewarded Top managers exhibit genuine concern for

customers, employees, shareholders, suppliers

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Creating a Strategy - Supportive Cultural Fit

STEP 1Diagnose which facets of present culture are

strategy-supportive and which are notSTEP 2

Talk openly about those aspects of present culture that need to be changed

STEP 3Follow with swift, visible actions -- some

substantive and some symbolic

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Symbolic Culture-Changing Actions

Emphasize frugality Eliminate executive perks Require executives to spend

time talking with customers Alter practices identified as cultural

hindrances Visible awards to honor heroes Ceremonial events to praise people and

teams who “get with the program”

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Substantive Culture-Changing Actions

Benchmarking and best practices Set world-class performance targets Bring in new blood, replacing

traditional managers Shake up the organizational

structure Change reward structure Increase commitment to employee training Reallocate budget, downsizing and upsizing

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Establishing Ethical Values

A culture based on ethical principles is vital to long-term strategic success

Ethics programs make ethical conduct a way of life

Approaches to establishing ethical standards Word-of-mouth indoctrination

and tradition Written codes of ethics

Our ethicsprogram

consists of . . .

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Topics Covered in Value Statements and Codes of Ethics

Topics in Value Statements Customer importance

Commitment to quality

Commitment to innovation

Respect for individual employee

Importance of honesty

Duty to stockholders

Duty to suppliers

Corporate citizenship

Protecting the environment

Topics in Codes of Ethics Honesty observing the law Conflicts of interest Fairness in marketing

practices Using inside information Supplier relations Corrupt practices Acquiring information Political activities Use of company assets Proprietary information Pricing, contracting, & billing

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Instilling Values and Ethics in the Culture

Incorporate values statement and ethics code in employee training programs

Screen out applicants who do not exhibit compatible character traits

Communicate the vales and ethics code to all employees

Management involvement and oversight Strong endorsement by CEO Word-of-mouth indoctrination

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Building a Spirit of HighPerformance Into the Culture

Emphasize achievement and excellence

Promote a results-oriented culture

Pursue practices to inspire people to excel

Desired outcome:

Produce extraordinary results with ordinary people

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Approaches to Building aSpirit of High Performance

Treat employees with dignity and respect Train each employee thoroughly Encourage employees to use initiative Set clear performance standards Use rewards and punishment to enforce

high performance standards Hold managers responsible for employee

development Grant employees autonomy to contribute Make champions out of people who excel

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Six Roles of theStrategy Implementer

1. Stay on top of what’s happening

2. Promote a culture energizing organization to accomplish strategy

3. Keep firm responsive to changing conditions

4. Build consensus and deal with politics of crafting and implementing strategy

5. Enforce ethical standards

6. Take corrective actions to improve overall strategic performance

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Leader’s Role in MatchingCulture and Strategy

Create events where all managers must listen to Angry customers Dissatisfied stockholders Alienated employees

Energize employees to make new strategy happen Repeat desired cultural values again and again Reward people exhibiting desired cultural norms

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Leader’s Role inEmpowering Champions

Encourage people to be creative and imaginative Tolerate mavericks with creative ideas Promote lots of tries and be willing to accept

failures -- every idea won’t pan out Use all kinds of organizational means to support

experimentation (teams, task forces, “skunkworks” and individual champions)

See that rewards for successful champions are large and visible

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Leader’s Role inDeveloping New Capabilities

Responding to changes requires top management intervention to establish new Organizational capabilities Resource strengths and competencies

Senior managers must lead the effort because Competencies reside in combined efforts,

requiring integration Clout is needed to enforce necessary

networking and cooperation

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Political Tactics ofSuccessful Executives

Let weakly supported ideas die via inaction

Establish hurdles for strongly supported ideas that shouldn’t be opposed

Keep low profile on unacceptable ideas by getting subordinates to say no

Let most negative decisions come from group consensus

Lead the strategy but don’t dictate it

Stay alert to symbolic impact of one’s actions

Ensure all major power bases have access to top managers

Inject new views when considering major changes

Minimize political exposure on highly controversial issues

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Leader’s Role inEnforcing Ethical Behavior

Set an excellent ethical example

Provide training to employees about what is ethical and what isn’t

Reiterate unequivocal support of ethics code

Remove people from key positions if found guilty of a violation

Reprimand people lax in monitoring ethical compliance