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How To Create A Culture Of Change

2014 June 22
by Greg Satell

Tony Hsieh, the phenomenally successful CEO of Zappos likes to say that, “your brand is your culture” and believes so strongly in preserving his that he offers new recruits $1000 to quit.  Anybody who doesn’t fit in will happily take the money and run.

While few managers are as steadfast in their resolve to build and maintain a strong corporate culture, it’s hard to find anyone who doesn’t believe in its importance.  It’s the third rail of corporate life.  You simply don’t mess with a company’s culture.

Yet a culture can also hold you back.  Blockbuster and Kodak both had strong corporate cultures and in both cases, ingrained attitudes contributed to their demise.  Excessive reverence of culture makes it difficult to adapt to new realities and therein lies the dilemma. We need to honor a culture’s values even as we adopt new ideas and practices.

The Poverty of Historicism

Most of my regular readers know that I spent much of my adult life running media companies in Eastern Europe.  So, while I’m not a reporter and don’t write about my political views, I felt it was appropriate for me to write about the events in Ukraine. I was one of the first western writers to do so.

Mostly, it was well received, but I got a fair number of angry comments from Russia supporters.  Many said that I didn’t understand anything about Ukraine, pointing to the fact that Russia and Ukraine share common ancestors—the Kievan Rus, ancient slavic tribes that founded both Kiev and Moscow in the 9th-12th centuries—and are therefore one culture.

Of course, a lot can happen in a thousand years.  Western Ukraine was part of Poland before World War II and still retains many Polish cultural traits (I’ve found that it’s better to speak Polish than Russian in Lviv).  Southwestern Ukraine has heavy Romanian influences.  Yet despite this patchwork of identities, most Ukrainians support a unified country.

Anybody who has spent significant time in Ukraine can’t miss the paradox—diversity and unity are very much ingrained in the culture as is the need for change.  It is common for Ukrainians to say that “everywhere else people wake up to a new day, why do we always have to wake up to yesterday?”

What Russians see as an anchor, Ukrainians view as a straitjacket.

How Success Can Lead To Failure

Culture is not a singular element, but is made up of two mutually reinforcing elements—values and practices—which are easy to confuse.  Mistaking practices for values is why success so often breeds failure.

Xerox, for example, had a culture devoted to technical excellence and produced the world’s best performing copiers.  It built up a great sales and service organization so that its customers could get the most out of their products.  Yet that all came to naught when Canon and Ricoh started selling simpler, cheaper copiers that needed less maintenance.

Blockbuster built an outstanding retail culture and dominated the video rental industry for years, but that same commitment to brick and mortar stores proved to be its downfall.  In much the same way, Kodak’s excellence in film impeded its ability to transition to digital photography, even though it held some of the first patents in the field.

So culture can be very much a double-edged sword.  It can be a springboard, but it can also weigh you down.

The Culture Trap

In Creativity, Inc., Pixar President Ed Catmull recounts standing in front of his employees to announce the merger with Disney.  Knowing that many were fearful about the effect that it would have on the company, he vowed that Pixar’s culture would not change.

He later called it one of the dumbest things he ever said.  Before long, change of any kind—from the production of sequels to the opening of an office annex across the street—was being questioned as a betrayal of Pixar’s culture, even if it had nothing to do with the Disney merger.

The situation got so bad that Catmull had to do a series of new talks to explain that of course Pixar would continue to change, just as it always had.  It was, in fact, Pixar’s innovative culture that made it such an enormous success.  A failure to adapt and evolve would not honor Pixar’s heritage, but betray it.

Even in a high performing, creative organization like Pixar, culture can be a trap.

The Dignity of The Enterprise

The 19th century philosopher Immanuel Kant believed strongly in the notion of dignity, which he defined as treating people as ends in themselves, rather than as means to an end. As I explained in an earlier post, the same principle applies managing teams.  Nobody wants to be a cog in somebody else’s machine.

Yet despite what some may believe, corporations are not people.  They are a means to an end and so is corporate culture.  That’s why Catmull was able to sell through the changes in practice at Pixar, because they enabled Pixar to make better movies—the central value of the enterprise.

And that’s how you build a strong culture of change.  Culture, after all, has nothing to do with retail stores, photographic film or large, complicated machines, any more than it has to do with ping pong tables, casual workdays or pet friendly policies.  Rather, it is how an enterprise honors its mission.

Culture without a purpose, on the other hand, has no value.  It’s just a bunch of stuff that people have gotten used to.

– Greg

6 Responses leave one →
  1. June 22, 2014

    Flexibility of mind is a rare commodity and one that is lost easily. Inertia is also a base physical force. The combination undermines over time as reality itself keeps moving along. Thanks Greg.

  2. June 22, 2014

    Thanks Robert. Have a great week!

    – Greg

  3. July 9, 2014

    I would have loved to hear your viewpoint on “how to…”. Not seeing that here. 🙁

    – Bob

  4. July 9, 2014

    Sorry to disappoint, Bob. My point was that you create change not by any specific set of practices, but through commitment to a mission:

    “And that’s how you build a strong culture of change. Culture, after all, has nothing to do with retail stores, photographic film or large, complicated machines, any more than it has to do with ping pong tables, casual workdays or pet friendly policies. Rather, it is how an enterprise honors its mission.”

    That may seem somewhat abstract, but I can’t tell you the number of times I’ve asked companies that I’ve worked with what their mission was and just got blank stares. Truly innovative companies, at least in my experience, are extremely mission focused and specific practices flow from that.

    – Greg

  5. December 14, 2014

    Great article. Super impressed and inspired.

  6. December 16, 2014

    Thanks Zach. Have a great holiday.

    – Greg

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