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Adaptability

BlogCultureCulture Series

Culture – The Other Two of the Four Halves

by Ron Potter

In the last post, I discussed balancing the right side vs the left side of the Culture Survey, Stability vs Flexibility.  This week we’ll look at the top vs the bottom, External Focus vs Internal Focus.  You can see from the chart that the top half (External Focus) is driven by the Vision and Adaptability quadrants.

External Focus

Again, for very natural reasons, I often see more focus on the external than I do the internal.  For one, it’s easier to speak with external suppliers, press, buyers than it is to face the internal issues of making sure everyone is involved and engaged, living by accepted core values and reaching agreement and alignment across an organization run by many “type A” leaders.

One of my interesting observations through the years has been to see the CEO and COO work together as a team.  One of them often functions as “Mr. Inside” while the other one functions in the role of “Miss Outside.”  Don’t make the mistake of assuming the CEO functions outside while the COO functions inside.  The best transitions I’ve observed during a CEO retirement is when the COO takes over but still functions as the inside force.  The new COO is good at the outside connection.  This creates the smoothest transfer and keeps the company headed toward the future they’ve been preparing for.  Failure seems to happen when the board assumes that because the retiring CEO was a great visionary, they must hire a new CEO that’s also a visionary.  However, the new vision is often very different from the existing vision and the company has not prepared itself to move forward at the necessary speed.  A rotation that keeps the current vision in place and moving along at the right speed seems to work the best.

Internal Focus

Too often there is not enough effort to keep the people involved and consistency maintained to keep the company moving in the right direction at the necessary speed.  Never stop empowering the people, building teams and developing the strength and skills necessary to move into the future.  Involvement is critical to future success.

Consistency is tough to build but easy to lose.  If you:

  • Allow Core Values to be violated without consequences,
  • Don’t require a commitment to decisions that impact the entire company or
  • Allow departments and divisions to make decisions that help them but ignore the other teams

you’ll quickly lose consistency and the required, strength, resiliency and unity that is needed to create a great company in difficult times.

Balance, Balance, Balance

Great cultures required balance.  At any point in time, your company may require special strength and commitment to a particular part of the Culture Chart in order to deal with special market situations.  But even in that case, don’t let your chart get too far out of balance.  Balance, Balance, Balance.  It’s a requirement.

3rd Quartile

Regardless of the situation, you must have good culture scores in every element of the chart.  I would suggest that if you score in a range below the 50th percentile in any element, you work there first to correct the situation before moving on to the culture as a whole.  There may be particular strengths required for different market conditions (see next week’s blog about particular market conditions) but I believe that every element of the twelve should be in the 3rd quartile first before moving on to work on a particular situation.

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BlogCultureCulture Series

Culture – Involvement: Adaptability

by Ron Potter

Adaptability and Involvement

Adaptability and Involvement are the two quadrants that make up the left side of the Denison Culture Chart.  This side of the chart identifies “Flexible” cultures.  Cultures that adapt well.  Cultures that respond quickly to customers and markets.  In today’s fast-paced environment, flexibility is a requirement.  (Just as a heads-up, we’re going to talk in a couple of weeks about Stability being a required element as well.  Makes your head hurt doesn’t it?  That’s just one of the reasons that Leadership is hard.  It doesn’t just come with the title.

External Focus

So now we’ve seen that Mission and Adaptability (top of the chart) indicates an External Focus for the companies.  Companies strong in these two areas tend to sustain growth and are constantly listening to and looking at the marketplace.  They’re good at spotting the next big thing in the market place and making decisions that help them take advantage of those coming changes.

Flexible

The Flexible Cultures (Adaptability and Involvement noted above) indicated companies that are constantly changing.  Or maybe it indicates that the companies are good at working in ever-changing markets.

One company had a culture score that was lowest in the Vision and Strategic Direction and Intent areas while being quite strong in all of the Flexible areas on the left side of the chart.  We asked about the low scores in the Mission quadrant, wondering how they kept going without much vision or strategic thinking for the future.  They indicated that their market was changing so rapidly that figuring out a vision and direction was almost useless.  If they didn’t keep up with the rapid changes in the marketplace, they weren’t going to be around to worry about long-term (even 24 months) vision.  They were right.

Focus

In general, it’s always good to expand the Culture Survey as much as possible in every direction.  However, there are “seasons of life” and moments of focus that may require expansion in a particular area.

Maybe you’re in need of growth which will require an external focus.  You may need to expand some or all of the Vision and Adaptability quadrants.

Maybe you’re in the need to keep up with or get ahead of a rapidly changing market or a disruptive competitor.  You may need to focus on the Adaptability and Involvement quadrants (Flexible).

Be aware of your surroundings, history, and future.  Which quadrant needs the most attention at the moment?

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BlogCultureCulture Series

Culture – Adaptability: Summary

by Ron Potter

It’s easy to see but often challenging to implement an adaptable organization.

It takes

Humility is required because it forces you to suspend your belief about what is the right direction to learn, listen, and change.

It also requires respect.  I’ve talked about Jordan Peterson and his 12 Rules for Life.  One of my favorite rules is number nine, which states “Assume that the person you are listening to might know something you don’t.”  Live by that rule alone, and you’ll experience change and growth.

But, now that we’ve looked at the first two quadrants, Mission and Adaptability, I would like to think about them as a pair.

Mission and Adaptability are at the top of the Denison Culture Survey.  If you look at the very top of the circle, you’ll see

the words “External Focus.”  External Focus means that the quadrants of Mission and Adaptability look “outside.”  They are not focused on what goes on internal to the organization, but what is going on beyond the walls of the organization.

Organizations who have high scores in these quadrants at the top of the chart tend to be focused on and achieve growth and market share.

What I find interesting is the research behind these two quadrants.

Research indicates that during down times when market share and growth shrink, companies who have high scores in these two quadrants seem to be less impacted by the negative situation.

If growth and market share is your goal, make sure the people of your company score you highly in these two quadrants.

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BlogCultureCulture Series

Culture – Adaptability: Creating Change

by Ron Potter

One of the more impactful aspects of this Creating Change sections is summed up in the statement:

“We respond well to competitors and other changes in the business environment.”

One of my first experiences with the Denison Culture Survey was with a company that had been the undisputed leader of their industry for over 100 years.  However, over the last few years, they had been losing market share to new start-ups in their industry.  By the time they needed outside help, things had fallen to critical points, and their profitability had all but disappeared.

First Culture Survey

When we saw the results of their first survey, it was immediately obvious from a consulting point of view.  They scored highest in the Consistency quadrant.  Meaning they had been doing things in a very consistent way for over 100 years (we’ll look at the Consistency quadrant in more detail in future posts).

They scored lowest in the Creating Change section of Adaptability.

And on the statement “We respond well to competitors and other changes in the business environment,” they scored in the bottom 10% of all companies.  They did NOT respond well to competitors and other changes in the business environment.

Why had they not responded?

After gathering the results of the survey, we displayed the overall graph of their results.  The leadership team went silent after reviewing the results.  It was not because they were in shock.  It was because the results revealed what they suspected was the problem all along.   They had continued to function just as they had done for over a century in spite of knowing that the market place was rapidly changing around them.

But, this visual representation of their situation allowed them to open up and be honest with each other for the first time.

We’ve always done it this way

Their first response was to admit they knew they were in trouble over three years ago when they first experienced a loss of market share and a drop in their profits.  At their annual leadership retreat, they decided that the drop would be overcome if they just buckled down and did a better job.  After all, they had been successful for over 100 years.  If they just did a better job of doing what they did well, they would pull out of this tailspin.

We don’t have a better solution

At their leadership retreat two years ago the results had continued to drop but they decided it must be a temporary issue and if they just continued to stay focused and work harder, this would be overcome like many dips throughout their history.  They didn’t have a better answer.

Now we see the problem

While they were stunned with the results of their culture survey, you could almost detect a sense of relief on many of their faces.  They were all exhausted from working hard and long.  They had sacrificed their personal lives including family and health just because they didn’t have a better answer.  Now they could see the issue more clearly which allowed them to talk about and work toward a more feasible solution.

Coherent Change

Other areas of the Creating Change section referred to issues such as:

  • Flexibility
  • Improved processes
  • New ways of doing things
  • Lower the resistance to change
  • Get the entire organization pulling together in the new direction

These things they could begin to plan around.  The Culture Survey had added a new vitality to the leadership team.  You could feel the energy rising in the room as they began to talk about and plan for change and a new way of doing things.

Improvement

While they never fully recovered the overwhelming market share they once held, they did become a much more competitive force in the market place.  They were suddenly fighting for and scrapping for every inch of growth in the market place, and the “new” competitors were fighting a new approach from an old competitor.  They were now forcing changes in the industry, and the “new” competitors had to respond.

Blockbuster

If I tried to list all of the companies that were once a force in the industry but no longer existed, there would be too many to include in a blog.

I read the other day that Blockbuster (the DVD company with thousands of retail stores) had a chance to purchase Netflix for a very reasonable amount.  They passed.  It would have eaten into their retail store, walk-in business.

Today, Netflix is one of the hottest companies in the market place.  Blockbuster doesn’t exist.

Change or Die

We’ve used this adage many times in the last several blog posts.  But it’s true.  If you’re not changing and adapting, you will soon be nothing more than an empty store in a strip mall with a faded outline of your logo and former glory.

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BlogCultureCulture Series

Culture – Adaptability: Customer Focus

by Ron Potter

Customer focus is an interesting topic to me.  Henry Ford is quoted as saying “If I had asked people what they wanted, they would have said faster horses.”  He was inventing the car.  People didn’t know they needed a car.

Entirely new Product or Service

“I think there is a world market for maybe five computers.”  Thomas Watson, president of IBM.  This was the quote from Tom Watson Sr.  It was Tom Watson Jr. that turned the punch card company toward computers of the future.

I believe Customer Focus must be driven by the Mission quadrant.  If our mission is to create something the world has never see or doesn’t know they need yet, then Customer Focus must be very selective.

I’m involved with a wonderful team attempting to create something that doesn’t exist yet.  We’re trying to take years of consulting experience from myself and a couple of other consultants and boil down the essence of building teams, being great leaders and developing great cultures into an app.  We’ve titled it GPS4Leaders.  Even though we have a great concept on how the app will work, our goal right now is to put the app in the hands of customers and let them tell us how it should look, feel and react to their use.  We’re trying to listen to the customer.

Existing Product or Service

But,

  • once the car has deeply penetrated society
  • everyone is working with computers daily (sometimes it even resides on your wrist)
  • giving you access to your Team, Leadership, and Culture progress instantly on whatever device is available at the moment

how should you then listen to your customer?

Listen to the customer from the companies position, not just your job

I recently received notice from my insurance company that my policy would be discontinued if I didn’t submit a payment immediately.  However, that particular policy is set up for automatic withdrawal, and it is the insurance company that initiates payment.  I called the company, brought the payments up to date and then asked, “Why didn’t you (the insurance company) make the automatic withdrawal?”  The answer was “I don’t know, but I’ll have someone contact you.”  I was never contacted!  The person I was talking with did their job of receiving payment and didn’t care if it happened again or not.

Listen before the customer asks

In another example, I received a regular shipment, but the shipment was short two critical pieces.  After waiting a week I called the company.  The person I talked with immediately corrected the problem and sent me the missing parts.  Did that person listen to the customer?  Sort of!

In correcting the improper shipment, the person said: “Yes, we had several shipments with this same issue, I’ll correct that for you.”

Wait a minute!  You knew you had this problem.  If fact you have several examples of it, and yet you didn’t correct my issue until I called you to see why there was a problem!

Companies that are good at listening to their customers make corrections before the customer calls them.

Listening may be unique, but it requires focus

Each company may have unique issues around listening to its customers.  An emergency room will have very different issues from a vitamin company.  A parts supply company will have different issues than a new car dealership.  You will likely need to customize your listening skills to your particular situation.  Just make sure this is a leadership issue, it’s everybody’s job; it is not the domain of a customer service department!

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BlogCultureCulture Series

Culture – Adaptability: Organizational Learning

by Ron Potter

Organizational learning requires much more than a procedure, a checklist, or even a department.  Organizational learning needs to be deeply embedded in the organization.  It must be a deeply held belief, part of everyday processes, and highly rewarded.

Reward Failure

Does your boss (or you as a boss) look for and reward those moments when learning takes place?  People learn more from failures then they do from success.  Let those two concepts sink in for a minute.  We reward learning.  Learning is the greatest from failure.  Therefore (if I still remember my algebra) we reward failure!

How many organizations will survive is they reward failure?  Not many, you might say.  But if you remember our last blog, if we don’t change we die.  You must figure out how to fail successfully to change and grow.

I remember one CEO in particular that seemed to have a good knack for successful failure.  At his leadership meetings, his direct reports began to understand that if they brought an idea forward on how to do something differently, he would “reward” them with great attention and questions.  For a moment they would get the center ring.  When someone proposed a new idea, he would ask all of the “mission” questions from the first quadrant of the Culture Survey to make sure they were headed in the right direction.  If so, he would grant permission to go ahead but with frequent updates, progress reports, and budget projections.

Noticed that he didn’t just turn them loose with no guide rails.  The idea needed to further the mission, and he also set parameters in place that would assure quick small failures before things got too out of hand if the idea didn’t work.

But the ideas were rewarded, and the person who brought the idea forward was rewarded with a “job well done” and went on to the next topic with a nice grin on their face.

Innovation and Creativity are not the same

I hear many top executives proclaim that they want more creativity from their people.  However, when people propose true, pie-in-the-sky, out-of-the-blue creative ideas are brought forward, they are often shot down for all the standard reasons.

Innovations are usually small, easily executable, quick ideas that help the organization change and adapt rapidly to a changing marketplace.  Innovation often falls in the category of rewarding failure.  Top executives love innovation (or at least they should).  It doesn’t have the risk of creativity, and it’s easier to make sure it fits with the guard rails described above.  Even if they call for creativity, corporate leaders are asking for innovation.  Respond accordingly.

Generational Differences

One final note is probably worth mentioning.  I grew up in the older generation.  Our generation that would ask “Why am I taking calculus?  Will I ever need it?”  The only answer I ever received was “You’ll better understand how things work.”

The younger generation grew up with electronics and access to more information than we’ll ever use or need.  They don’t need calculus; they Google it.  (Interesting how Google has now become a verb.)  Learning to them is very different from the learning process we went through.

How do we develop a culture of organizational learning in today’s environment?  My answer to that question is to ask.

  • Ask your employees about what they need to learn.
  • Ask them what they want to learn.
  • Ask them how they learn.
  • Ask what you can do to help them learn.

How do we learn?  Ask, don’t tell!

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BlogCulture

Culture: Adaptability

by Ron Potter

The next quadrant of the Denison Culture Survey we’re going to explore is Adaptability.

Photo credit: Denison Consulting

This quadrant is divided into the three sections of:

  • Organizational Learning
  • Customer Focus
  • Creating Change

You can easily see how an attitude of learning, customer focus and one of creating change will certainly make an organization adaptable.

What are some signs that we are NOT an adaptable organization?  I’m sure you can come up with a lot more examples than I could ever possibly list but here are a few that I’ve seen through the years.

  • There’s a belief in the organization that we’ve been successful for 100 years.  If we just keep doing things the same way, we’re sure we’ll pull out of this slump.
  • The industry is producing products that make our product look old.  But, we’ve gone through an extensive competitive bidding program and the cheapest supplier we’ve chosen is not capable of providing the new look.
  • Our customer feedback has dried up because we never seem to respond to the customer stated needs.  It’s just too expensive for us to manufacture it that way.
  • Everyone is doing a great job but the feedback from the customer never makes it out of the customer service department.
  • We tried to make a change but were punished for “making a mistake.”  We’ll never try that again.
  • The leadership team seemed to be focused on that issue, they just neglected to inform the rest of us.

As I said, you can probably come up with many more reasons for not being adaptable.  Those are just a few of the many that I’ve experienced with my consulting clients through the years.

It’s easy to say we’re adaptable.  We might even make an attempt at being adaptable.  But do our actions support change and innovation?  Or do people feel like they get punished or labeled for being a trouble maker if they try to make changes?  Adaptability requires organization and cultural support.

I believe it was Alan Deutschman who coined the phrase, change or die.  When the environment is changing faster than we can blink (my grandkids don’t remember a world without an iPad) that saying was never truer.  Just ask the people who ran and worked for many of the largest corporations in the world that are now nothing be memories.

The average life-span of Fortune 500 companies in the 1950s was over 60 years.  The average life-span of the companies on that list today is less than 20 years.

Change or die!

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