Preparation Phase
Step 1(a): CT Tools Values Assessment
The first step in the whole system change preparation phase is to carry out a
company-wide values assessment to identify employees’ personal values, their
perception of the current culture values and their desired culture values. This is
known as the baseline assessment. The process should begin by mapping the
values of the leadership group and their direct reports, and getting the
commitment of the leadership group to behavioral change. The rest of the
company is then surveyed. The values survey should include demographics such
as position, business unit, location, and if appropriate gender, age, ethnicity,
length of service, etc. The cultural values assessment will identify opportunities
and obstacles to cultural change and provide guidance in the development of
personal alignment, group cohesion and structural alignment programs. It will
also provide assistance in identifying the key performance indicators that will be
used for values-management. For example, an organization that suffers from
poor internal relationships might focus on building trust; an organization that is
having difficulty producing ideas for new products or services might focus on
encouraging creativity. In these cases “trust” and “creativity” would become key
performance indicators in the process of values-management.
Step 1 (b): Business Assessment
In developing the compelling reasons for change (Step 5), it will be important to
include the business case for change as well as the cultural case for change. The
two, of course, are intimately linked. Usually, the business case for change is
blatantly obvious from the financial results of the organization or key performance
indicators such as employee retention, market share and customer satisfaction.
What is important in making the case for cultural change is to draw the link
between outcome measures such as profitability and causal measures such as
cultural alignment or cultural entropy. The cultural values assessment will help to
make this link. It not only identifies the “causal” reasons why earnings or
productivity are low, why people find it difficult to be creative, and why
performance is under par, it also provides quantitative measures related to these
causes.
Step 2: Create Vision and Mission
The purpose of this step is to give direction to the change process. We frequently
find that organizations either pay no attention to their vision or mission
statements or simply do not have them. If the organization does not have a vision
and mission then this is an opportunity to create one. If the organization does
have a vision and mission, then this is an opportunity to revisit it. Often the vision
and mission were created years earlier by a completely different team operating
under different market conditions. The purpose of revisiting the vision and
mission is to make sure it is still relevant and inspiring to the leadership group,
the executive population, managers and staff. The process we normally use for
revisiting the vision and mission or designing a new one for an organization is the
Four Whys process. This process is described in detail in Liberating the
Corporate Soul. If the leadership team is willing to involve the whole
organization in this process Appreciative Inquiry can be used for this purpose.
The Four Whys process begins with the leadership group. There are three basic
inputs to the process; a) the results of the cultural values assessment, b) the core
motivations of the leadership group; and c) the definition of the core business.
The results of the cultural values assessment provide input from the employee
population about what is working and not working in the current culture. The core
motivations of the leadership group are developed through a simple process of
finding out each member’s deepest motivation for coming to work, and then
finding out what motivations the group has in common. The definition of the core
business is arrived at by simply asking all members of the leadership group to
write down what they believe is the core business of the group. The results are
often fragmented and not sufficiently focused to give the group a clear intention.
Agreement on the core business is essential before moving on. One of the ways
to get at the core business is define the organization’s principal economic engine
– what is it that the organization does that is the main wealth/profit creating
activity? Once the core business is clarified, the core motivations are known, and
the most important current and desired culture values are identified, it is relatively
simple to build an inspiring vision and mission using the Four Whys process.
The uniqueness of the Four Whys Process is that it defines an internal vision and
mission, as well as an external vision and mission. It separates the organization’s
purpose from its character – what it does in the world, from its way of being. The
internal mission describes how the organization is going to grow and develop
internally. The internal vision describes what the organization will look like in 5 –
10 years. The external mission describes what the organization does for its
customers. The external vision describes the impact that the organization wants
to have on society.
The external vision declares the organization’s intention with regard to the
external world and the internal vision declares its intention with regard to its
internal world.
The vision and mission statements should be concise, inclusive and easily
memorized. They should reflect the interest of all stakeholders – employees,
customers, the local community or nation, and shareholders.
The vision statement(s) declare the organization’s intention with regard to the
future it wants to create: it describes the “end” or what the “destination” looks like.
The mission statement(s) on the other hand describe the “means” to the end –
what the organization needs to focus on to get to the destination. The vision
statement(s) can be characterized as, “this is where we are going,” and the
mission statement(s) can be characterized as, “this is what is absolutely essential
for us to concentrate on or look out for in order to achieve our vision.”
The real purpose of the vision and mission is to galvanize the intentions of each
individual in the organization around the same purpose. Leaders, managers and
employees should have a clear line of sight between their sense of personal
mission and the overall vision of the company. Every employee should know how
he or she makes a difference to the bottom line of the organization and/or its
mission assurance – its ability to deliver its primary services. This alignment of
purpose generates a strong sense of commitment. Work becomes meaningful,
and employees look forward to getting to work. People do not begrudge going
the extra mile if their hearts and souls are aligned with what they do and the
culture supports them in fulfilling their purpose.
Ultimately, the vision, mission and values are guides to decision-making. They
are constant reminders, for the organization and for each individual, about the
outcomes the organization wants to manifest. They are future-oriented. By
keeping the vision, mission and values constantly in focus, the organization
creates a decision-making framework that is self-fulfilling. The organization
consciously creates the future it wants to experience. As Collins and Porras point
out in Built to Last: Successful Habits of Visionary Companies, the distinguishing
feature of long-lasting successful companies is that they use their vision, mission
and values to guide decision-making.
This is not how most organizations operate. They either do not have a vision and
mission or if they do, they are not used to guide decision-making. They are
simply platitudes that are referred to when convenient or things to do that once
done can be ticked off and forgotten as the organization moves its attention to
the next task.
Step 3: Choose Values and Select Behaviors
The values of an organization serve three purposes – they provide guidelines for
acceptable and unacceptable behaviors, they support the organization in creating
the future it wants to experience, and they provide direction in decision-making.
One of our clients has developed two categories of values – cornerstone values
and operational values. The cornerstone values are the values that they regard
as vital for the business to be successful. For example, an oil company might
have profit, employee safety and environmental awareness as cornerstone
values. These are non-negotiable values that they regard as fundamental for the
successful running of their business. Cornerstone values can also be described
as the principles or ideals. Sometimes they are expressed in the form of a credo.
Operational values, on the other hand, are values that emphasize how people
work together (trust, openness, fairness) and what is important on a day-to-day
basis (cost reduction, quality and productivity).
The process of choosing values should not be rushed. The values will become
the “guidelines” or “rules” for decision-making in the organization. Values that are
shared build trust and create community. They create cohesion and a sense of
unity. The results of the cultural values assessment provide significant insights as
to what values leaders, managers and employees consider important. For
organizations operating from the lower levels of consciousness (levels 1, 2 and
3), the chosen values should stretch them to levels 4 and 5.
In Value Shift Lynn Sharp Paine, the John G. McLean Professor at the Harvard
Business School, states that a CEO’s reasons for embracing values tend to
cluster in four main areas:
• Reasons relating to risk management
• Reasons relating to organizational functioning
• Reasons relating to market positioning
• Reasons relating to civic positioning.
She states that a fifth theme is that CEOs simply believe that it is the right thing
to do. They believe that there is inherent worth in the values they are seeking to
encourage.9 We have found from carrying out hundreds of cultural values
assessments that this is true. This intuitive response is backed up by solid
evidence that shows living your values builds bottom-line success. Lyn Sharp
Paine sets out a new value proposition that convincingly links high ethical
standards with outstanding financial results.
The next step is to identify the behaviors that support the chosen values. Once
again, the cultural values assessment helps craft these statements. See the
following examples.
Trust Is open and candid in all relationships
Cooperates with colleagues to achieve common goals
Inspires commitment through living the values
Innovation Introduces new ideas that support continuous improvement
Empowers team members to bring forth their ideas
Encourages creative teamwork for improving performance
The behavior statements are written in such a way that they can be easily used
in some form of performance monitoring process. They can also be used in the
Leadership Values and Behaviors Assessment (LVBA). The feedback from this
assessment provides a measure of the compliance of the leaders to the both the
espoused values and their associated behaviors.Once the values have been chosen, the technology we use to identify the behaviors associated with the values is known as Appreciative Inquiry.
Step 4: Evaluate Organizational Resilience
Before completing the preparation phase it is important to examine the long-term
sustainability of the organization by carrying out a baseline evaluation of the
organization’s resilience. The objective is to find ways to enhance the
organization’s ability to withstand shocks and anticipate risks – find ways to build
its adaptive capacity.
In Corporate Culture and Performance, Harvard Business School researchers
Kotter and Heskett stress the importance of adaptive cultures.
“An adaptive culture entails risk-taking, trusting, and a proactive approach
to organizational and individual life. Members actively support one
another’s efforts to identify all problems and implement workable
solutions. There is a shared feeling of confidence: the members believe,
without a doubt, that they can effectively manage whatever new problems
or opportunities will come their way. There is widespread enthusiasm, a
spirit of doing whatever it takes to achieve organizational success. The
members are receptive to change and innovation.”12
The focus of Steps 1 through 3 in the whole system change framework is to
identify the parameters that will support the building of enterprise-wide cultural
resilience. The focus of Step 4 is to identify the parameters that support the
building of enterprise-wide structural and operational resilience. To this end, the
baseline resilience assessment should include a whole system mapping of the
organization’s operational footprint, including critical network alliances, core
business value chains, key business processes, strategic operational nodes,
critical operational nodes, important assets, historical threats, and current highimpact
risk issues associated with key business areas. The objective is to assess
the organization’s core capabilities with regard to managing both historical risk
patterns and current low probability, high-impact risks that may not yet be on the
organization’s radar screen.
Step 5: Develop Compelling Reasons for Change
It is important before starting a process of whole system change involving cultural
transformation that the Chief Executive and the Board have compelling reasons
for change. There must be a clear understanding among the executive
population, mangers and staff why the organization is embarking on a whole
system change process. The establishment of the compelling reasons for change
begins at Step 1 and is not completed until the end of Step 4. It is a process of
ongoing discovery as the organization takes a hard look at itself in the mirror.
For unsuccessful companies, who are suffering from low performance, the
compelling reasons for change are usually obvious. The cultural issues that
underlie the poor performance can easily be identified from the results of the
cultural values assessment. A convincing link must be made between the
performance issues and the cultural issues. Usually, this is not difficult to do. The
CEO and the leadership team should present a clarifying story so the reasons for
the whole system change effort are clearly understood and the support of the
executive and employee populations can be enlisted.
For successful companies, the compelling reasons for change are not usually
about improving current performance; they are more about how they can position
themselves to take advantage of future opportunities and build long-term
resilience and sustainability.
The results of an organization-wide cultural values assessment provide
significant inputs for the storyline of the compelling reasons for change,
particularly when the cultural entropy of the organization is over 20%. Ultimately,
the compelling reasons for change must be so convincing that they unite
everyone behind the whole system change process. The change process must
be grounded in reality and driven by realistic optimism that provides the
employee and executive populations with a hope for a better future.
Step 6: Survey of Worldviews and Key Drivers
The final step in developing a whole system change implementation strategy is to
identify the worldviews and key drivers of the employee population. The purpose
of this diagnostic is threefold:
a) to customize the design of the communications surrounding the whole
system change initiative, particularly the compelling reasons for change,
so that they align with the worldviews and key drivers of the employee and
executive populations.
b) to customize the methodology and content of the cultural transformation
program so that they too align with the underlying drivers and worldviews
of the employee population, and
c) to provide executives and managers with personal feedback for coaching
purposes.
Step 7: Develop an Implementation Strategy
A strategy is a plan for achieving a specific outcome. It keeps everyone moving
in the same direction towards the same goal. At this point in the whole system
change initiative the CEO and leadership team have sufficient information to
develop a detailed implementation program. They have compelling reasons for
change; they have customized this communication so that it aligns with the
worldviews and key drivers of the executive and employee population; they have
a clear sense of collective direction – the vision and mission; they know their
cornerstone values or principles; and they have a set of operational values and
behaviors that guide their day-to-day decision-making and actions.
Now, the consultant/change agent must assist the CEO and leadership team in
making the vision, mission, values and behaviors pervasive throughout the
culture. As discussed in the previous chapter, there are three major components
to the change process – personal alignment, group cohesion (values alignment
and mission alignment) and structural alignment.
The purpose of the personal alignment and group cohesion programs is to kick
start the whole system change process by focusing on the values alignment and
mission alignment of the top team and the teams that report to the members of
the top team. This group usually comprises between 50 and 100 executives.
These executives are the guardians of the culture. They are the ones who must
walk the talk if the culture is to change. Without their whole-hearted support there
will be no whole system change and no cultural transformation.
In larger organizations, it will be necessary to take the personal alignment and
group cohesion programs further down the executive chain. For budget reasons,
the personal alignment and group cohesion programs usually morph into a
shorter, less resource-intensive values awareness programs as you move down
the hierarchical chain of command (see Stage 14).
It is important not to get locked into “the one right way” of implementing whole
system change. There are many paths to the summit. The most important rule is
you have to begin where people are if you are going to lead them to where they
want to go.
Step 8: Develop Objectives and Key Performance Indicators
Measurement matters. It is vitally important to set targets for the whole system
change initiative: not just performance improvements, and bottom-line
improvements, but also cultural and individual leadership improvements.
We can categorize key performance indicators into three types – “causal” –
indicators that relate to values and behaviors; “output” – indicators that relate
directly to performance such as efficiency and productivity; and “outcome” –
indicators that relate to the end results such as profitability and shareholder
value.
“Causal” targets are set for values and behavior improvement at both the group
level (organization-wide and business units) and at the individual level.
Indicators of values and behavior improvement at the organization-wide and
business unit level include: a decrease in cultural entropy, a reduction in
potentially limiting values in the top ten current culture values, an increase in the
alignment of personal values with the current culture values, and an increase in
the alignment current culture values with desired culture values. All of these
indicators are provided by the cultural values assessment.
Indicators of values and behavior improvement among the leaders and executive
population include: a decrease in personal entropy generation (fear-based
behaviors), a reduction in potentially limiting values, an increase in the number of
matching values between the assessors and assessee, and a shift toward fullspectrum
leadership consciousness. All these indicators are provided by the
Leadership Values and Behavior Assessment.
“Output” targets refer to indicators of performance improvement such as
productivity, efficiency, quality, innovation, creativity, and employee and
customer satisfaction. These are lead indicators for the satisfaction of the
outcome targets.
“Outcome” targets refer to indicators of business improvement such as market
share, profitability and shareholder value.
The basic premise is that changes in values and behaviors lead to performance
improvements (outputs), which in turn lead to lead to business improvements
(outcomes).
What is new and significant is the ability to accurately measure, against base-line
data, year-by-year changes in the Causal KPIs at the group and individual levels
using the results of the CT Tools cultural values assessment and the leadership
values and behaviors assessment instruments. Measuring and mapping the
values of an organization and individual leaders on a regular basis to monitor and
guide cultural change is known as values-management.
Values-management begins with the baseline cultural values assessment at the
start of the whole system change process. A second “reading” of the culture to
map the changes in values is usually carried out once the implementation phase
of the whole system change process is well underway – approximately 12
months after the first cultural values assessment or 6 months after the start of the
implementation phase. Organizations that practice values-management generally
monitor their cultures every 9 to 12 months. It is desirable to monitor the
values/behaviors of the executive population more frequently.
