Corporate X-Ray

Time for a Blogging Sabbatical

2008-12-01T14:39:00.002-05:00

Monday, December 1, 2008

It's time to take an extended break. Thanks for reading when you could. Take care.

Brian Tolle

Oprah's Culture Club

2008-11-03T12:13:00.002-05:00

Monday, November 3, 2008

Here's another source of inspiration for building your company's culture. Leigh Buchanan of Inc. magazine gives us an inside look at Aegis Living's annual meeting and how Oprah inspired its CEO, Dwayne Clark, to use her model to develop a more caring and supportive culture at the 34 assisted living facilities Aegis manages.

I can appreciate how this type of investment could have huge pay-offs when it comes to employee relations in this type of industry -- historically low margins translating into low interest in developing managers or employees. I just hope Aegis combines the inspiration with skill building to give its managers a well-rounded tool kit for managing and motivating its employees. $50,000 is a lot of money for inspiration that may not have a long shelf life.

Big Culture, Big Pay-off

2008-10-08T16:42:00.001-05:00

Wednesday, October 8, 2008

Just got back from the E2 Detroit event at Wayne State University and was most impressed with the Opening Keynote Presentation by Lisa Stern, founder and President of Big Communications, Inc., talking about building the right culture for the success of one’s company. It was very refreshing to hear from a business owner who “gets it” when it comes to the importance of the right culture to drive business performance. Some highlights from her talk:

• When the company grew to about 25 employees (it’s now just over 100 employees), she and the rest of the leadership team realized they needed to take a step back and think through what made the Big Communications work environment so special so they looked at the qualities of their top performers to identify the values that seemed to make them stand out.
• Those values were good communicator, trustworthy, detailed, collaborative, positive, creative, solution oriented, kind, and champions of change.
• They realized that these were the values they wanted to emphasize as the Big Communications culture.
• Over the years, Lisa, who personally interviews every candidate, has improved her behavioral-based interviewing process to be able to solicit information from candidates to inform her and other BC hiring managers on how well the candidate embodies and has demonstrated these values in prior work.
• In June 2008 magazine publisher Meredith acquired Big Communications and Lisa believes that BC’s culture made it highly attractive to buyers.
• When they evaluated potential suitors they were adamant about making sure there was a cultural match – similar values.
• They had three criteria the buyer had to meet: collaboration, control, and culture. They had to agree to a collaborative approach to joining together and that they gave Lisa and her team control over the BC culture.

So now it’s a $20m business and Lisa attributes that to their values. “Values make you invaluable,” as she pointed out. Nice return on all that touchy-feely stuff.

Steal This Idea

2008-09-11T15:46:00.001-05:00

Thursday, September 11, 2008

Every so often I need to take a break from the world of corporate culture and today is the day. So here’s an idea that came to mind as I was sitting in Ann Arbor Spark’s workshop on guerrilla marketing…

If any of you have connections within Northwest Airlines (soon to be Delta), tell them they should do the following:

Create a version of Google AdWords that appears on the Northwest Airlines web site that links ads to particular travel demographics. For example, as a small business owner trying to get the attention of business leaders who need to either develop the right leaders or the right culture to grow their technology or scientific business, I would gladly pay Northwest Google-comparable fees to have my ad pop up when a traveler books a flight between Detroit and any of the following cities:

• San Francisco
• San Jose
• Seattle
• Portland, OR
• Los Angeles
• NYC
• Boston
• Minneapolis
• Chicago
• Raleigh/Durham
• Austin

I’d be open to paying a premium if the traveler is either traveling first class or is a Platinum or Gold frequent flier. And I think Northwest could make some money off of this.

How about it Delta-west?

Woody’s Debt to Culture

2008-09-05T10:26:00.004-05:00

Friday, September 5, 2008

Check out the article by the president of Pixar and Disney Animation Studios, Ed Catmull, in the September issue of the Harvard Business Review (“How Pixar Fosters Collective Creativity”). Some quotes that caught my eye and some quick commentary…

We must constantly challenge all of our assumptions and search for the flaws that could destroy our culture.

Makes me think about how fragile a strong culture can be.

Good directors not only possess strong analytical skills themselves but also can harness the analytical power and life experiences of their staff members. They are superb listeners and strive to understand the thinking behind every suggestion. They appreciate all contributions, regardless of where or from whom they originate, and use the best ones.

I’m still looking for the word “ego.”

For 20 years, I pursued a dream of making the first computer-animated film. To be honest, after that goal was realized – when we finished Toy Story – I was a bit lost. But then I realized the most exciting thing I had ever done was to help create the unique environment that allowed that film to be made. My new goal became, with John (John Lasseter, Pixar’s chief creative officer) to build a studio that had the depth, robustness, and will to keep searching for the hard truths that preserve the confluence of forces necessary to create magic.

And that my friends, is legacy leadership.

Now if I had a chance to talk with Ed (let me see if he is in my Linked In network) I would want to hear his thoughts on whether you can document and transfer the kind of talent he describes as so critical to Pixar’s consistent success. Given his experience with having to replace the initial Toy Story 2 creative leadership team, what does it take to turn a B Team into an A Team? I would be curious to hear his thoughts on why did the seasoned team see what needed to be changed and not the novice team and how that vision could be transferred to less experienced creative folks. If Ed and John are going to succeed in building a sustainable organization that can consistently deliver magic, that’s the big challenge they’re going to need to overcome.

Margaret Mead meets Tom Peters

2008-08-21T08:31:00.002-05:00

Thursday, August 21, 2008

I don’t think I’ve written yet about the field of anthropology and its role in understanding corporate culture so Scott Berkun’s interview with Grant McCracken in the Harvard Business Review Online this week caught my eye. Their discussion focused more on the connection between marketing and anthropology and less on corporate culture. I would have liked to have read more about McCracken’s take on “how to win by studying corporate culture.” Let me use his story about the Harvard Business School intern at Coca-Cola to make my point.

I can see why the link between anthropology and marketing would have jazzed this guy – it’s the secret code to grabbing greater market share. I suspect, however, he missed the significance of understanding corporate culture. As "massively talented and unstoppable" as he and most executives are, they can hit a huge brick wall if they ignore or dismiss their corporate culture. I’ve written in previous blogs about the great "case study" that is Deborah Sontag's feature article ("Who Brought Bernadine Healy Down?") in the December 23, 2001 issue of the New York Times Magazine on the battle between a strong CEO (Bernadine Healy) and a strong corporate culture (American Red Cross). My experience is that it takes a wise (and not just talented) leader to appreciate the intangible pull of a corporate culture on why humans do what they do in an organization. Add to this the myth that leaders are capable of independent thought and action – something as soft as culture can’t sway them – and leaders can end up wearing some serious blinders.

So my take is that a leader wins by studying their own corporate culture – taking a more participant-observer role in his or her own organization – paying attention to why people do certain things in some situations and not in others. Being an informal ethnographer. J. McIver Weatherford’s “Tribes on the Hill: the U.S. Congress rituals and realities” is a great book that can open your eyes about “seeing” organizational culture through the lens of anthropology. He published it back in 1981 and it may only be available through used bookstores but I remember reading it back then and thinking it very eye opening.

Visualizing a Culture of Innovation

2008-08-12T09:04:00.004-05:00

Tuesday, August 12, 2008

One of the most difficult things about corporate culture is its invisibility. That's why Betty Plevney's visual depiction of a company's perspective on innovation is eye-catching. I came across this on the VizThink website.

Betty is a graphic facilitator and here's how she described this client situation:

A consumer products company is deepening its understanding of the innovation process. This chart depicts an early one-hour discussion on their own fears and hopes, the process of innovation and change and managing risk and failure.

I think this is a great example of how using visuals brings in a different language into the discussion of how an organization is going to build both a process and culture of innovation. Betty can be reached at betty@plevney.com.

Freedom Fries and Telecom: Au revoir Madame Russo et Monsieur Tchuruk

2008-08-05T17:21:00.003-05:00

Tuesday, August 5, 2008

This week Alcatel-Lucent announced that its CEO, Patricia Russo and Chairman, Serge Tchuruk are moving on.

As the Wall Street Journal reports, the relationship between the two engineers of the 2006 merger had deteriorated to the point that both acknowledged to the Board they could no longer work with the other. Something about him sticking his nose where it didn’t belong and she being incompetent. Another reminder you never outgrow high school. So they both get canned. And the Journal reports that the new CEO will need to “ease cultural tensions after two years of tumult.” Talk about a culture clash – Paris and New Jersey. It boggles the mind.

As a side note, I came across this editorial in NJBiz. I don’t think Ms. Russo’s publicist is real thrilled with the association. This just wasn’t your week, Pat.

Best Ways to Earn Your Employees' Love -- The Results Are In!

2008-07-29T15:53:00.004-05:00

Tuesday, July 29, 2008

A few weeks back I invited folks to rank order 21 ways to earn employees' love for the company and the results are in. Here is how the perks rank (remember, people had to rank order the 21 items so the lower the average score the better). Also, I've included the original descriptions of these perks that appeared on the blog posted by the CEO of SurePayroll, Michael Alter -- the blog that got this whole thing started.

You'll see that you can't buy love on the cheap.

#1 is...Give Them Managers Who Know How to Manage People (average ranking: 2.3) All the perks in the world can’t overcome working for someone who is a jerk. Choose and retain people for management because they can bring out the best in everyone they work with.

#2...Positive Words and Opportunity to Succeed (average ranking: 2.6) Studies show that workers who receive regular praise and are given an opportunity to do what they do best every day are more loyal and more productive workers. As if we needed a study to realize that!

#3...Office Ambiance (average ranking: 5.5) Dingy walls and cramped quarters don't do much for employee love. On the other hand, employees love to work in an office that is stylishly designed with ample room and great furniture.

#4...Ownership (average ranking 6.0) Give employees a piece of the equity pie and everybody's interests are suddenly aligned.

#5...Learn, Baby, Learn (average ranking 6.7) For many people, it's not just what they earn, it's what they learn. Invest in employee training and you'll soon have a more loyal, not to mention more skilled, workforce.

#6...Friends (average ranking 7.5) People who don't have friends at work are more likely to quit. Those who have friends are more engaged at work. So do something that encourages friendships…start an office book club, for example.

#7...Free Parking and Transportation Reimbursement (average ranking: 8.2) Instead of raising salaries, offer to pay for parking or train passes instead. It's a small gesture but employees will appreciate it. And it's tax deductible.

#8...Casual Dress Codes (average ranking: 8.5) If I had a dollar for every employee that's quit a job because the dress code was too formal, I'd be a rich man indeed. At SurePayroll, we are very carefree when it comes to dress codes and our employees appreciate that very much.

#9...Surprise Holidays (average ranking: 8.5) Everybody loves a day off, especially if it's not on the holiday schedule. Want to put smiles on the employees' faces? Announce a day off out of the blue.

#10...Free Food and Drinks (average ranking 11.0) Having free sodas in the fridge and free snacks on the break room counter are tried and true techniques. Keep the snacks healthy and you'll win a few extra points for being concerned about employee wellness.

#11...Proximity to Public Transportation (average ranking: 11.2) Location, location, location! Most folks will trade salary for a shorter, easier commute. If you have a convenient location, you can count on a broader selection of employees.

#12...The Latte Machine (average ranking: 11.7) Throw out the cheap coffee maker and invest in a high-end coffee heaven maker.

#13...Bring in the Masseuse (average ranking: 12.5) Last but not least, when the going gets tough, the tough get a massage. Make your office stress-free by bring in a masseuse once a month — or during your busier, more stressful times.

#14...Great Parties (average ranking: 13.3) Companies that party together stay together. Take time out to celebrate and do it in style.

#15...Dinner for Two (average ranking: 15.1) Don't forget to pamper spouses and partners too. Treat employees to a night out with their loved ones and you'll earn twice the love.

#16...Flu Shots for Everyone (average ranking: 15.9) I wasn't so sure about this one, but after two years of providing flu shots, I’m sure our winters are more productive with happier, healthier employees.

#17...Call In the Ice Cream Truck (average ranking: 15.9) When the ice cream truck pulls up in front of your business and gives your employees free ice cream, you’re sure to earn a few employee loyalty points.

#18...Tickets to the Big Game (average ranking: 16.0) Surprise your employees with an outing to the local ballgame.

#19...The Game Lounge (average ranking: 17.3) Foosball, billiards, air hockey, your favorite game console, or even something as low tech as Checkers or Monopoly -- let the games begin!

#20...Beer (average ranking: 17.5) One reader wrote me that he has a keg tapped in his office every Friday afternoon and that employees love it. I'll drink to that!

#21...Movie Afternoons (average ranking: 18) All work and no play makes for a dull workforce. Fire up the conference room projector every Thursday at 2:00 PM and show a movie. Don't forget the popcorn!

Roche’s Bet on Genentech’s Culture

2008-07-22T17:11:00.002-05:00

Tuesday, July 22, 2008

In case you haven’t heard, Swiss pharmaceutical company Roche announced yesterday that it wants to buy the remaining 44% share of Bay Area biotech company Genentech it doesn’t already own. (In the interest of full disclosure, Genentech is one of my clients.) It’s not surprising that Roche wants all of Genentech’s capabilities when it comes to the business of science – Genentech has been hugely successful with its suite of oncology therapies.

And if you follow some of the pharma blogs, many inside and outside Genentech are predicting a brain drain of scientific talent once mean old Roche (and all its minions in Nutley, New Jersey) get their hands on Genentech’s cherished entrepreneurial, “science is king” culture. All of this may be very true and Roche’s press release announcing its intent mentioned more than once keeping Genentech’s culture intact. But one way to assess the possible effect of a brain drain on Genentech’s ability to continue to perform as it has so far is to look at this situation through the lens of Clayton Christensen’s Resources-Processes-Values (RPV) framework and how the source of an organization’s capability migrates over time.

Let’s start with Christensen’s definitions of resources, processes, and values, in his own words.

Resources include people, equipment, technology, product designs, brands, information, cash, and relationships with suppliers, distributors, and customers. Resources are usually people or things – they can be hired and fired, bought and sold, depreciated or built.

Organizations create value as employees transform inputs of resources – the work of people, equipment, technology, product designs, brands, information, energy, and cash – into products and services of greater worth. The patterns of interaction, coordination, communication, and decision making through which they accomplish these transformations are processes.

An organization’s values are the standards by which employees make prioritization decisions – those by which they judge whether an order is attractive or unattractive, whether a particular customer is more important or less important than another, whether an idea for a new product is attractive or marginal, and so on.

Christensen points out that:

In the start-up stages of a business, much of what gets done is attributable to its resources – particularly its people. The addition or departure of a few key people can have a profound influence on its success. Over time, however, the organization’s capabilities shift toward its processes and values. As people work together successfully to address recurrent tasks, processes become defined. And as the business model takes shape and it becomes clear which types of business need to be accorded highest priority, values coalesce.

Success is easier to sustain when the locus of the capability to innovate successfully migrates from resources to processes and values. It actually begins to matter less which people get assigned to which project teams. In large, successful management consulting firms, for example, hundreds of new MBA’s join the firm every year, and almost as many leave. But they are able to crank out high-quality work year after year because their capabilities are rooted in their processes and values rather than in their resources.

So the big question is whether Genentech has evolved (what would a story about a California company be without at least one use of the word “evolve?”) to the point that its “locus” of organizational capability has migrated from resources to processes and values? If so, we need to remember that processes and values don’t reside in any one person or group of people. It is as though they exist in an alternate universe, to the point that even if in some fantastical circumstance, every single employee were to leave Genentech, there would still be a virtual repository of processes and values that other smart, scientific people could plug into and get comparable results.

So where does culture fit into the RPV framework? Dr. Christensen, if you please.

As successful companies mature, employees gradually come to assume that the priorities they have learned to accept, and the ways of doing things and methods of making decisions that they have employed so successfully, are the right way to work. Once members of the organization begin to adopt ways of working and criteria for making decisions by assumption, rather than by conscious decision, then those processes and values come to constitute the organization’s culture.

So Roche’s real bet when it comes to Genentech’s culture is that is has evolved past a person-dependent capability and resides much more in the company’s processes and values, whether or not they are followed by assumption or consciously. If so, Roche could withstand the loss of an Arthur Levinson (Genentech CEO) or Richard Scheller (Genentech Chief Scientific Officer) and still maintain the organizational performance of Genentech, as long as it doesn’t screw around with its processes and values. But that’s a big “if.” Roche’s leadership team has a big decision to make -- where business and philosophy intersect. Should Roche become more like Genentech or Genentech more like Roche? Quite the wager.

Culture Break: Snagfilms Experiment

2008-07-17T08:44:00.003-05:00

Here's a break from the world of organizational culture. Check out this new site (www.snagfilms.com) for posting documentaries. And why this paricular video? Well, as a baseball fan, I know it never hurts to learn how to hit a curve ball. Check it out.

Leadership Coaching: Perk #21, Part 2

2008-07-16T13:56:00.001-05:00

Wednesday, July 16, 2008

This being a respectable business blog and all, I’m a bit hesitant to include a letter from Dear Abby (I have an editorial policy never to use the word “closure” in my blog) but a Corporate X-Ray reader was kind enough to point out a letter that appeared in Monday’s Dear Abby column this week. In the spirit of serendipity, here it is.

Dear Abby: I read an article in our local paper a while ago that said good employees who leave a company usually do so because of their boss.

With that in mind, I would like to bring closure to my recent resignation with the following open letter to my former boss:

“Thanks for asking me to stay on, but I respectfully decline. I will be self-employed from now on. However, if in the future I ever feel the need to be publicly humiliated, blind-sided, ostracized and called a spy, be distrusted and disciplined by superiors for no good reason, fight for wages that are rightfully mine, stabbed in the back by fellow employees, used as a pawn in executive rivalries, or (especially) chewed out when you’re having a bad day, I’ll get back to you!”

- Moving on in New Mexico

Hasn’t He Ever Heard of Dilbert?

2008-07-14T16:48:00.003-05:00

Tuesday, July 15, 2008

I’m surfing the web the other day and I come across this blog entry on the Inc. magazine site – 20 perks that will earn your employees’ love. The blogger, Michael Alter, is obviously no slouch – CEO of an $11 million company that the National Association for Business Resources named as one of Chicago’s 101 Best and Brightest Companies to Work For, not to mention McKinsey and Harvard MBA credentials.

So after reading his list, I was struck by one “perk” that was missing that my experience tells me is a huge factor in whether an employee “loves working for you.” That perk is a manager who isn’t a jerk, who doesn’t make their employees’ jobs more difficult, who actually looks out for the best interests of their employees, who isn’t working out childhood issues on company time. Is that too much to ask? Now I recognize that perk #18 down the list -- Positive Words and Opportunity to Succeed – is part of being a good manager but I think Mr. Alter should consider adding a twenty-first perk to make it explicit, and while we’re at it, put it at the top of the list. So here’s my suggestion, Mr. Alter.

Give Them Managers Who Know How to Manage People. All the perks in the world can’t overcome working for someone who is a jerk. Choose and retain people for management because they can bring out the best in everyone they work with.

Besides, your general counsel might be willing to switch this one with the beer perk. Something about having the keg in the manager’s office every Friday afternoon gives me pause.

Hey Corporate X-Ray reader, let me know how you would rank these 21 perks.

Leadership Coaching: Growth Leaders…Know Thy Style

2008-07-07T11:11:00.002-05:00

Monday, July 7, 2008

The Wall Street Journal has a great article this morning (“In Search of Growth Leaders”) about research done by Sean Carr, Dr. Jeanne Liedtka, Robert Rosen, and Dr. Robert Wiltbank on the characteristics of middle managers that have achieved significant organic growth for their companies. I couldn’t help seeing the DiSC behavioral styles in their behavioral descriptions of these growth leaders. What I have seen in my work is that our individual behavioral proclivities have a strong influence on our management approach and actions. So since this research indicates that growth leaders “thrive on accepting challenges, taking action and getting immediate results,” (sounds like the driver-influence style combination to me) here’s some possibilities for our steadiness-conscientiousness style colleagues to consider for personal growth opportunities to drive corporate growth strategies.

Change to Broaden Your Expertise

My steadiness-style compadres often avoid taking on new work experiences out of fear of falling short of expectations and letting their organization or team down. But look at it this way -- by taking these chances and learning new skills in real time, this positions you and your team to contribute significantly to your company’s success by achieving organic growth and at the same time address the unmet needs of your customers, making them very, very happy. Think about it.

Expand Your Definition of “Data”

The research indicated “success was based more often on thoughtful exploration of customers’ needs than on dry market data.” For my conscientiousness style folks out there, stretch your definition of acceptable data to include conversations with clients about unmet needs. Doesn’t sound very scientific but even Margaret Mead did field research.

Lower Your Risk

Neither the steadiness nor conscientiousness styles have a high natural tolerance for risk. So take your natural analytical, collaborative mindset and work with your suppliers and customers to develop ideas (as the research revealed). Also, remind yourself that a degree of testing is part of the analytical process so find ways to experiment in the marketplace to understand what works and what doesn’t work.

You, Too, Are a Pragmatic Idealist

As the article points out,

In assembling teams, growth leaders learned to combine two seemingly opposing forces: holding people ruthlessly accountable for results, and engaging their passion to build something great together.

So as a conscientiousness-style person, you don’t have the ruthlessness of a driver-style person -- big deal. You still know how to hold people accountable, maybe not always for results but definitely for quality. So just move results higher up the priority list. And as a steadiness-style person, you may not have the overflowing passion of an influence-style person, but you know how to work with others, all in the name of accomplishing something great – TOGETHER. Remember, your ego won’t get in the way.

Hope this helps. Now get out there and grow!

Clayton’s Crystal Ball on Chrysler

2008-06-24T16:37:00.001-05:00

Tuesday, June 24, 2008

As far as I know, Clayton Christensen (innovation guru) has not publicly commented on Chrysler’s predicament (fifth place in US sales, sales down 25% in May, only 2 of 21 models listed among Consumer Reports’ recommended models – full disclosure, I own one of those models, the Chrysler 300 and I love it) but his research into the impact of disruptive technology in various industries can give us somewhat of a crystal ball look into Chrysler’s future – and its not pretty.

Chrysler’s migration up the sustaining technology curve in search of greater and greater margins and profits mirrors the actions of many other big players in different industries. It’s no surprise that Chrysler, along with GM and Ford, all fell in love with pick-ups and SUV’s for the primary reason of the bigger margins they commanded than smaller cars, leaving that market to smaller, start-up car manufacturers looking to gain a foothold in the US auto market. So while the Big Three went after these higher margin vehicle sales (wouldn’t you if your internal cost of capital forced you to look for more and more profitable vehicles?), the foreign car manufacturers focused on the smaller car market, honing their cost structure to be profitable in such a tight market.

Christensen’s research revealed that these disruptors started by offering an adequate product or service that met most of the needs of an underserved consumer population. Once the disruptor start-ups established themselves at the down market, they started working up the sustaining innovation curve, getting closer and closer to matching the established companies’ product offerings, all the while honing their cost structure to remain profitable in whatever market they were in. The established companies would end up competing by adding even more functionality to their up-market offerings in order to entice a shrinking, highly demanding customer.

So here is where Chrysler finds itself in the midst of a $4.00+/gallon US market – its big model debut this fall is the overhauled Dodge Ram pick-up with satellite TV, a carlike ride and a bin in the cargo box for hauling 10 cases of beer. I don’t know about you, but I can’t think of anyone who is looking to pay $40,000 to get 15 mpg in city driving. But it’s hard to get off that track of chasing greater and greater margins when you’re on it. So if I were to guess Dr. Christensen’s prediction for Chrysler, it would be the corporate equivalent of hospice.

All of which makes last week’s Wall Street Journa l article (“Nardelli Tries to Shift Chrysler’s Culture”) that much more revealing. In it Mr. Nardelli blames Chrysler’s woes on its “Old Detroit mind-set” and he himself is leading the charge on building a customer-driven corporate culture. It’s hard not to see this as re-arranging the chairs on the deck of the Titanic because all signs point to the Principles of Disruptive Innovation (see Introduction in Christensen’s “The Innovator’s Dilemma”) winning again.

My Chrysler 300 is looking more and more like a Packard every day.

Somebody Get This Guy Some X-Ray Glasses

2008-06-19T14:46:00.001-05:00

Thursday, June 19, 2008

Scott Olson of Ann Arbor SPARK recently recommended to me Keith McFarland’s book “The Breakthrough Company.” Using a similar research methodology as Jim Collins’ “Good to Great,” McFarland wanted to find the answers to the following questions:

Why do most companies start small and stay that way?
What is special about the handful of companies that successfully “break through” the entrepreneurial stage of development?
What can a leader do to ensure that his company maximizes its chances for breakthrough?

Overall, I found the results of his research interesting and the time to read the book worthwhile (probably the biggest test of utility these days). Where I have some significant disagreements is with his chapter entitled “Building Company Character.” Being a self-professed culture guy, I was eager to hear what he had to say. Unfortunately, I think his insights don’t add up. Here’s why. This is his defining statement regarding the difference between corporate culture and character.

Some may wonder why we use the term “character” instead of “corporate culture” – it seems to us that the idea of a corporate culture brings with it too much baggage. Borrowing the term from the field of anthropology, many business observers have given the impression that culture is something largely beyond the control of individuals in an organization. Culture is viewed as something out there, to be studied and rectified by consultants. The idea of organizational character is different. Since character measures how we are as a group of individuals act, we are reminded that each of us has an individual responsibility for determining our company’s character. This point was driven home to us when, during our fieldwork, one executive told us, “There is no such thing as corporate culture, there is only how we treat each other.”

Putting aside the minor slam on consultants, here’s my beef. Just because culture is hard to get your arms around doesn’t mean it’s not relevant -- probably more so. Another thing, I don’t know who Mr. McFarland is talking with, but plenty of work has been done to measure the characteristics of corporate culture and link it to bottom-line results. For me, culture is all about behavior, specifically, patterns of behavior that are expressed in the absence of explicit expectations or that contradict explicit expectations or values. So it’s not just about how people act, it’s also about the way people behave that contradicts what the company espouses as its values or character, as well as what they say or don’t say depending on particular circumstances.

And then McFarland seems to contradict himself. Twelve pages later he is describing a case study featuring Shamrock Foods of Phoenix, Arizona:

A quick survey in early 2007 of the top thirty-five people in the firm identified one of the problems: People in the firm weren’t saying what they really thought. Perhaps owing partly to history (Shamrock is a 100-year old firm still owned by the founding family), people at Shamrock are nice, sometimes too nice. And in the interest of niceness, sometimes people avoided confrontation. It turned out the team didn’t agree as much as thought about what the firm’s key strategic imperatives should be, which caused a lack of focus.

Hello, that is culture! What was causing people not to speak up? Instead of brushing off this behavior as a family-owned business phenomenon (might be a big reason, might not be), McFarland needs some x-ray glasses to see through the actions to the underlying behavior and even further to the reasons behind these behaviors. This is the messy digging up process of an organizational anthropologist, Mr. McFarland. You might want to hang out with us for a while.

Intel’s Atom: Disruptive Innovation in Action

2008-06-10T10:28:00.003-05:00

Tuesday, June 10, 2008

If you’re familiar with Clayton Christensen’s research into sustaining and disruptive innovations and the forces that can make established companies turn a blind eye to going “down market” to take advantage of a disruptive innovation, then the news coming out of Intel last week was all the more revealing. Don Clark’s article in the June 3 Wall Street Journal (“Intel Looks to Power Bottom of Market: Atom Chips Will Serve In Notebooks, Desktops Priced as Low as $200) appears to be a highly unusual case of an established company finding a way to go against the grain and produce a lower margin product to be able to compete in a tighter margin but potentially high growth market. In this case it is the low price laptop and desktop markets. This is apparently a classic case of companies taking advantage of “performance oversupply” and offering a solution that has trade-offs more appealing to an underserved market. In “The Innovator’s Dilemma,” Christensen uses Intuit as a case study in how to exploit such an opportunity.

By watching for small hints of where the product might be difficult or confusing to use, the developers direct their energies toward a progressively simpler, more convenient product that provides adequate, rather than superior, functionality.

Clearly the computer manufacturers of Nettops and Netbooks, (Acer Inc. and Asustek Computer Inc.) recognize that the trajectory of focusing on the most demanding customers (computer geeks who demand more and more functionality) can distract a manufacturer from a market where adequate functionality would actually end up exceeding their expectations. As for Intel, I can only imagine the battles that ensued in its resource allocation process to justify going down-market where margins are low and markets relatively unknown. If Christensen’s research provides a crystal ball, the Atom chip will go through a series of sustaining innovations over time and eventually supplant the higher priced (and margin) chips as the chip-of-choice for established manufacturers.

An Unnatural Culture

2008-05-28T13:16:00.002-05:00

Wednesday, May 28, 2008

One of my clients recently adopted Clayton Christensen’s model of organizational innovation and so I thought it best to get myself up to speed on his ideas. The Innovator’s Dilemma, published in 1997, is his original work and so I started there. It was there that I came across his principles of disruptive technologies and thought about their relevance to an organization’s culture. First, here is some background on Christensen’s work.

His original research focused on trying to understand the apparently paradoxical phenomenon of “well-managed companies that have their competitive antennae up, listen astutely to their customers, invest aggressively in new technologies, and yet still lose market dominance.” What he learned was:

Good management was the most powerful reason they failed to stay atop their industries. Precisely because these firms listened to their customers, invested aggressively in new technologies that would provide their customers more and better products of the sort they wanted, and because they carefully studied market trends and systematically allocated investment capital to innovations that promised the best returns, they lost their positions of leadership.

Christensen observed that when good companies failed, it was often because their managers either ignored particular principles or chose to fight them. He calls these rules the principles of disruptive innovation. He distinguishes between sustaining technologies (new technologies that foster improved product performance) and disruptive technologies (new technologies that under-perform established products in mainstream markets but have other features that a few fringe (and generally new) customers value, such as cheaper, simpler, smaller, and more convenient to use.) He builds on an age-old notion that “we exercise power most effectively when we understand the physical and psychological laws that define the way the world works and then position or align ourselves in harmony with those laws.” So here are his five principles of disruptive technologies:

Principle #1: Companies Depend on Customers and Investors for Resources
Principle #2: Small Markets Don’t Solve the Growth Needs of Large Companies
Principle #3: Markets that Don’t Exist Can’t Be Analyzed
Principle #4: An Organization’s Capabilities Define Its Disabilities
Principle #5: Technology Supply May Not Equal Market Demand

It was when these principles were combined with his observation that “every company in every industry works under certain forces – laws of organizational nature – that act powerfully to define what that company can and cannot do,” that the idea organizational cultures could be thought of as “natural” or “unnatural” popped into my head. So how can a culture be “unnatural” when it comes to these principles? Let’s take one at a time.

Principle #1: An unnatural culture would be one where the spoken or unspoken attitude is “we know what’s best for our customers” or in a similar vein “our customers need to be satisfied with what we make available to them.” Variations on this theme all point to a skewed view of dependency; it is not customers who depend on the organization but the exact opposite. But too many organizations have held this belief right up to the grave.

Principle #2: Mental models of the value of growth, time, sizes of markets, and organizational structures have the potential to distort an organization’s perception and assessment of where and how to invest in new, smaller markets for future growth. An unnatural culture would be one that puts on its own blinders as to what is possible as well as desirable.

Principle #3: A culture characterized as analytical, rational, methodical and focused on the tangible, concrete and predictable will struggle with giving itself the freedom and permission to explore rather than plan, to experiment rather than execute. An unnatural culture is one that fights these impulses as an organism fights an infection.

Principle #4: Christensen points out that an organization’s capabilities reside in two places – in its processes (“the methods by which people have learned to transform inputs of labor, energy, materials, information, cash, and technology into outputs of higher value”) and in its values (the criteria that managers and employees in the organization use when making prioritization decisions.”) An unnatural culture is one where its processes and values can’t change in response to the dynamics of the external world. In these cases, the organization declines through rigidity as any organism would with clogged arteries.

Principle #5: Hubris can dominate an organizational culture that holds up the tenet “build it and they will come” as the guiding truth. It is the chance to offer “the possible” rather than “the desired” that energizes such organizations. They load on features that usually add more complexity and fewer benefits to the end user. Driven by the “cool factor,” such unnatural cultures end up being detached from the very people they depend on -- their customers -- and end up worshipping at the feet of technology and progress.

Microsoft and Yahoo: Can You Merge Philosophies?

2008-02-20T15:42:00.001-05:00

Wednesday, February 20, 2008

On so many levels, Microsoft’s potential purchase of Yahoo is mind-boggling. The price tag alone, $44 billion, makes one’s head spin, not to mention the logic of how two also-rans to Google could combine to become number one. But what really got my attention was an article in the New York Times this past Monday by John Markoff and Matt Richtel (“Of All the Hurdles to a Merger, View on Technology Is the Highest”). In the article, Messrs. Markoff and Richtel point out that Microsoft and Yahoo have very different philosophies when it comes to software technology and have built their respective Internet data centers on very different platforms. As the authors point out, “while Microsoft has built its Web services largely using its proprietary tools like the .Net programming system, Yahoo has a well-known open-source culture.” For the non-techies in the audience, this is a wide gulf in philosophy that carries with it a fair amount of value judgments. Both companies have built their corporate identities on their software philosophies and I suspect have heaped their fair share of scorn on the other during their respective happy hours.

Add to this comments from an interview with Bill Gates on Wednesday of this week, as reported by Ina Fried on her blog, Beyond Binary. Mr. Gates points to Yahoo’s engineering talent as the big prize of the $44 billion purchase to help Microsoft build tools for advertisers, mobile, and video products as well as improve its core search algorithm. "The amount of computer science it is taking to do that is phenomenal," he said. "As you get more scale of engineering you can just pursue that agenda more rapidly. Yes, the advertisers and the number of end users is good, but we'd put the people and the engineering as the key thing." So its all those bright engineers that Microsoft really covets. It sounds like the Yahoo servers are headed to the recycling bin.

Just with those two things in mind, think of the cultural hurdles still to come. For instance, you are a Yahoo engineer who works there because it has, and values, open-source software. Here comes your own version of Darth Vader in the form of Microsoft to take over your world. So you start looking around for more hospitable surroundings, some place more in line with your technical values. But that is the last thing Microsoft wants to see happen. It wants you to stay. “But you’ll need to think like us,” comes the message. “And welcome to our inner sanctum of proprietary software. Together we will destroy Google.”

This is going to be some twisted marriage.

Culture’s Drag on Big Pharma

2008-01-17T09:35:00.000-05:00

Thursday, January 17, 2008

Last night I attended a program sponsored by BioArbor, our local biotech industry group. The speaker was Dr. Gus Watanabe, former head of Eli Lilly’s R&D, and the talk was advertised as “The Future of Big Pharma R&D: Moving from FIPCO to FIPNET.” I’m always up for learning new acronyms. He started off by painting the same grim picture of Big Pharma’s R&D performance over the past ten years. Bottom line -- not very good. It seems like everyone’s pipeline is pretty thin and the days of the blockbuster drug is over. And then he shared some comparable data regarding some biotechs that he is involved with and showed a dramatic difference in the length of drug discovery between the smaller biotechs and the larger pharma companies.

So he asked, why is biotech so much more efficient that Big Pharma? The reason for him is primarily cultural. He pointed out that in biotech there is less bureaucracy, quicker decision-making, and less distraction. In Big Pharma, very talented scientists can spend a lot of their time on committees and consultations with other business units that may not be directly related to drug discovery. He pointed out that in most Big Pharma companies, scientists spend about 1/3 to 1/2 their time doing drug discovery work, whereas in biotech companies, they can spend most of their time in the lab.

He sees no reason why the trend to outsourcing drug discovery work to biotechs won’t continue and will probably accelerate. He expects this outsourcing to spread to other Big Pharma functions, leaving sales and marketing, large drug studies, and regulatory (among others) as their core business units.

So to let you in on the acronym of the day, Dr. Watanabe sees Big Pharma moving from a model of “Fully Integrated Pharmaceutical Company” (FIPCO) to a “Fully Integrated Pharmaceutical Network” (FIPNET). Just think about all the implications from an organization development perspective.

Integrating Cultures: 2008 M&A Forecast

2007-12-19T10:26:00.000-05:00

Some of you in the Merger & Acquisitions world might be interested in this video from the Wall Street Journal featuring Chris Williams of Harris Williams Co. and his forecast for M&A activity in 2008.

Wall Street Journal 2008 M&A Outlook

In case I don't get to my next blog on Goldman Sachs during this holiday season, best wishes to you and yours for a prosperous 2008.

Leadership Coaching: Helping Them Visualize

2007-11-20T17:21:00.000-05:00

Tuesday, November 20, 2007

Three recent client situations reminded me that most of us find it very difficult to visualize something intangible like teamwork or a feedback-rich culture or a new business model. It’s difficult to verbally answer the question, “what would you hear people say or see them do that would indicate to you this organization values feedback?” when you don’t have a picture of that possible state in your mind.

So here are two products I’ve come across to help leaders visualize what they are trying to create in their organizations. I recently used the VisualsSpeak product with a team recently designated a “leadership team” as a way to help them describe who they are individually and what they bring to the team. VisualsSpeak co-founder Christine Martell was very helpful in getting me up to speed on how best to structure the exercise and facilitate the discussion. The 200 photos were visually engaging and stimulated some great insights from the individual leaders about their role and contribution to the team. The team indicated that the exercise was very helpful in communicating another dimension of each member’s personality and goals, all of which is going to help them continue to build trust with each other. I think this tool is very adaptable and would work great in any situation where a leadership team is trying to make a possible future as concrete as possible.

By the way, Christine is one of the facilitators who will be at the inaugural VizThink Conference scheduled for late January in San Francisco. I’m going to it to learn more about how I can use the visual world to make leadership and organization development come alive. And because you are fortunate to be a reader of this blog, here is a discount code (ACBT1 – that’s a number one at the end of the code) to use to get $100 off your registration price (it pays to know the right people.)

The second product is a video production company called Silver and Goldie that specialize in the production technique called “machinima.” As they describe it, machinima (a word combining "machine animation" and "cinema") is the art of making real movies in virtual worlds that exist as 3D computer-generated imagery (CGI). They have built a studio in Second Life (a virtual world that has gotten a fair amount of press over the past year or so) and create videos without a lot of the limitations the real world imposes and for a cost that is often much more cost-effective as well. Even if you’re not into the virtual world, I find Second Life fascinating because it is giving us a glimpse of what a 3-D Internet is going to look like. Here’s a sample of a video they did for Intel.

What’s great about this technology and product is that it can help leaders communicate a visual picture of what a future state of the company or its culture will look and sound like. So instead of individual employees needing to fill the usual “picture” vacuum (often a source of some very outrageous but creative rumors), they can instead react to a visualization of what the new business model or culture will look and sound like. And a key to motivating people to move forward into the future is to give them a clear picture of what it will look like. Technology now allows you to visually create the future for a very reasonable price. Very cool.

M&A Due Diligence: Company Culture from the Inside Looking Out

2007-11-12T12:38:00.000-05:00

Friday, November 9, 2007

I read with interest David Harding and Ted Rouse’s guest column in the October 2 issue of the Wall Street Journal entitled “Human Due Diligence.” In it, they discuss the importance of paying attention to what they call human due diligence during the merger and acquisition (M&A) process. Under “human due diligence,” they group understanding the culture of the organization, the roles that individuals play, and the capabilities and attitudes of its people. In this article, most of their discussion focuses on the importance of identifying key employees to be retained during the due diligence process. I agree completely. The new organization will need the right talent and an integrated, consistent leadership voice to make the merger successful. But when it comes to how to factor in the two cultures into a new organization, leaders need to identify something more substantive than “decision making styles” to better understand the role of culture in making or breaking the merger.

Therefore, I would add as a critical element of the due diligence process an assessment of how well each company is doing in executing key management practices that have been proven to be linked to bottom line results. One company may be stronger in some practices than the other. When working with companies who are looking to merge or acquire the other, I would want to know how the two companies measure up individually in executing these management practices. This assessment will tell me where the gaps might be that the leaders will need to address before, during, and after the merger. Otherwise we may be looking at what we call “culture” and find out only later that it was more window dressing than substantive business concerns.

If you have read some of my earlier columns, you know I’m a fan of the Denison Culture Survey for these reasons. This instrument can give both companies a clear picture of how well each of them is doing in four critical areas that reflect both an external and internal focus:

• Adaptability
• Mission
• Consistency
• Involvement

I would be more concerned about a merger that indicates that neither organization has a particularly strong ability to adapt to market changes and customer needs (Adaptability) than how similar are the dress codes or benefits packages. Not to say that the merger should be abandoned but instead such an assessment will present the post-merger challenges and risks more clearly and concretely to the decision makers. In my mind, this makes for a more robust due diligence, focused on the key management practices that will ultimately determine the success of the merger and, more importantly, bottom line business results.

Otherwise, the two companies run the risk of falling into the trap of assuming the acquiring company or larger company’s culture will be the culture of the new company. This could end up perpetuating, or even exacerbating, the deficient management practices in the new company. Better to find out where each company stands during the due diligence process by asking up front the people who see the company’s culture from the inside looking out. No matter how challenging an M&A can be to the executives in charge, it’s that much more complicated in the trenches. All the more reason to concentrate on assessing and understanding the culture from a grass roots perspective. Otherwise, leaders retained will squander their talent by assuming culture means one thing when it really means another.

The Proof is in the Fluffernutter

2007-10-22T14:19:00.000-05:00

Friday, October 19, 2007

I’m not a foodie but I live with one so it wasn’t a surprise when we ended up at one of Portland, Maine’s best restaurants, Five Fifty-Five, during a recent vacation. What qualifies this story for this column is that I believe my positive experience had as much to do with the restaurant’s culture as it did with its food. When done right, a business can take on a personality, one that stems from its culture – values, aspirations, and shared expectations. And just like any other appealing personality in a relationship, it can draw you in. How does this happen?

First, the business has to be congruent. In other words, all parts of the operation have to fit together, seamlessly. In Five Fifty-Five’s case, the parts are service, atmosphere, menu, price, and attitude. I have been to plenty of restaurants that have the service down pat but the menu is uninspired. Or a fantastic menu but the actual meal doesn’t match expectations. Or how about those restaurants that have a fancy decor and are obviously projecting the attitude of “we are upscale” and one day you see some tacky sign in its window advertising two-for-one specials. Or lackluster wait staff surrounded by beauty and elegance. It takes a lot of forethought and effort to make sure all the pieces fit together.

But getting all the operational parts to fit together is not enough to create a personality. The business also needs to know “who they are.” Some of this comes from matching the parts well but I believe an experience of personality comes from thoughtful, purposeful design on the part of the business owners. And this personality isn’t necessarily an extension of the owner’s personality. Rather, once you combine operational congruency with a concrete vision -- that is when a personality can emerge that can draw you in. My sense from Five Fifty-Five is that if the owners walked away tomorrow, the staff would carry on the culture because it is that palpable and satisfying to them.

I think the biggest business payoff is that a consistent personality throughout the experience builds trust along the way, implicitly and imperceptibly. In the case of Five Fifty-Five, the consistency of each contact point we had, whether with a staff person or the actual product, was so powerful that we ordered more and enjoyed more than we would ordinarily. By the time we got to the dessert menu, there was no doubt we were going to order the homemade marshmallow fluffernutter because we had complete trust in what they would serve us. And we were not disappointed. It reminded me that a great dining experience has a symphonic quality to it.

So think about this if you’re having trouble attracting and keeping customers. How congruent is your company’s personality? How fragmented? Does it turn customers off or draw them in further? Who are you?

Poisoning a Culture

2007-10-12T07:00:00.001-05:00

Friday, October 12, 2007

I wanted to follow up on my blog from last week about the sexual harassment guilty verdict against the New York Knicks, including its head coach Isiah Thomas and its owner, James Dolan. Even though the conventional wisdom says that Mr. Dolan is in no jeopardy of losing his position (his father would have to fire him), nor is the parent company, Cablevision, likely to lose customers over this, no one should fool themselves into thinking “no blood, no foul.” Leaders who create and perpetuate a culture of intimidation, secrecy, and retaliation ultimately poison their own organizations. This happens because rather than attracting and retaining talent that can drive organizational performance, such a culture attracts and retains people who often are motivated more by self-interests than the interests of the organization. Sometimes it’s a matter of survival, in others a matter of ego. But when it happens with the people in positions of responsibility, the contamination spreads fast and wide.

What kind of talent is going to be attracted to such a work environment, especially when talent is in such short supply in most industries? Who would want to put up with such behavior? One profile is the talented person who takes a big salary with the intent of sticking it out for a year or two and leaving with their resume and bank account upgraded. Then there is the lesser talented person who gets hired because real stars have no interest in such shenanigans. And even more deadly is the person who actually agrees with such leadership practices. Add in those already in the company who feel their only option is to stick it out and so they withdraw as a means of survival. Let this dynamic go unchecked and the poisonous culture becomes more and more embedded in the organization’s fabric and mindset. Then see how ugly this is when new leaders attempt to administer a strong antidote.

I must confess two separate examples that came my way this past week made this story all the more extreme to me. One was the article on leadership in the October 1 issue of Fortune magazine that my colleague Rob Pasick passed on to me. Fortune teamed up with Hewitt and RBL Group to “conduct new research into the ways companies around the world are developing leaders and which are doing it best.” They identified nine best practices that these companies shared when it comes to developing leaders. I checked, “encourages a hostile work environment” wasn’t one of them.

Then on Wednesday I had the distinct pleasure of hearing Joe Dumars, NBA Hall of Famer and now general manager of the Detroit Pistons, speak on leadership at the Detroit Regional Chamber’s Small Business Conference. (Personal plug...I followed Mr. Dumars with a break-out session on how to develop your company's leadership pipeline. Videos of all the presentations are supposed to be eventually posted on the Chamber's website.)Mr. Dumars exudes integrity. (The NBA named its sportsmanship trophy after him.) His three keys to effective leadership? Have the conviction of knowing who you are; set the tone by letting your passion come through; and be the most unselfish person in the room. The irony that his back court team-mate for many years was Isiah Thomas was not lost on many in the crowd. Compare and contrast. That’s a lesson every leader should learn.