Why most culture change fails (And what works)

Speaker A: When Louis Gerstner first took over IBM in 1993, the company was dying. And the first thing he told the leadership team was, the last thing that IBM needs now is a vision. Now this is a slightly insane thing to say. And every consultant, every board member, every business school graduate in the building was like, no, this is exactly what we need. We need the vision. But here's what Gerstner realized. IBM had plenty of words on walls, plenty of mission statements, plenty of values. But what they didn't have is a culture that matched any of them. The words on the walls and the behavior in the hallways were living in different companies. Now, I want to talk to you today about this because if I depict the one concept in leadership that's being completely butchered by modern management culture, it's culture itself. Everybody talks about it. Almost nobody understands it or what it actually means or how it actually changes. And I mean nobody. I've, uh, sat in rooms with very smart, very well paid people who were convinced that culture change meant rewriting the values and putting up a new poster on the wall or running another off site. That's not what does it. Today I'm going to explain what culture actually is, why cultural change almost always fails, and the two things you actually need to shift in order to change it. No off sites required. Hello and welcome to another episode of the Inner Propaganda Podcast. I'm Owen Fitzpatrick and today we're going to talk about yogurt. Do you get it? Because culture. Yogurt. Yogurt, culture. Anyway, we're going to be speaking about culture and we really are talking about not just business culture, but could be the culture of a family, the culture of a group, the culture of community, the culture of a country even, or a nation. I want to explore what the culture is actually made of. And, um, I want to start by talking about the two elements I believe really comprise most stories and behaviors. The stories that people tell about what happens and the behaviors that people engage in on a repeated basis. That's it. Now, I know some people are going to be turning around and say, oh, and you're missing out a lot. There's the experience they have. There's the, uh, people they surround themselves with. There's the rituals. But I would argue the rituals are forms of behavior. And I would argue all the experiences that we have with the people around us, they translate into the stories that we tell ourselves about what that means. So it's not about the value document, it's not about the mission, it's not about the posters or the off site. It's not about everyone agreeing that this is the culture. It doesn't matter how many times you tell people, we have a great culture. Everyone's open minded, everyone is able to have their own autonomy, everyone gets to give their opinion. Now repeat what I said and make sure everyone knows that. The reality is that if we truly want to understand the culture, we need to watch what people do and we need to listen to the stories that people tell. And it's the same two ingredients that make up identity. Because organizations are in many ways collective identities. Cultures are identities scaled up to a degree. You got Irish culture, you got Japanese culture, your family's culture, your church's culture. It's all pretty much the same machinery. You've got cultures in different areas, different industries, different specialty areas. But if you want to know the actual culture of a place, you don't read the value statement because there's so much of an intangible quality that you can't get from that. But if you watch how people act, how people treat each other, how people talk to each other, that gives you a sense. If you listen to the stories that people tell, the memes that people share, the narratives that are discussed within an organization, that'll help you understand a lot more about what the culture really is all about. So if you ask someone who's been there for 18 months, what story do people tell new hires about how things really work? What do people complain about? What do people champion? That answer gives you a sense of culture. The rest of us just advertising or just like we had perceived identity and desired identity, we have perceived culture and desired culture. And so the first thing for us to do is to start to understand, to the best of your ability, what is the culture of the team that you're on? Maybe ask a couple of people on your team separately to describe the story that people tell about what happens when somebody fails, what happens when somebody succeeds. Don't look for positives, don't interrupt, try to allow them to express it fully. And if the answers match, it gives you a sense that this is a culture. There's a consistency there where there's a number of people that all are sharing the same story about what it means to work for that organization, about how that organization deals with failure or challenges or problems. But if they diverge, well, maybe you don't have as much of a culture as you think you have. Maybe you've got a marketing document. And so in order for us to be able to change culture, for us to be able to experience cultural change, we need to recognize what makes a culture so impactful. So if you take Ireland, for example, what makes Ireland Irish? Well, it's not the flag, not the tricolor. It's not the music. It's not the Proclamation of 1916, which is our founding document. It's a bundle of stories. It's the stories of how we were colonized for 800 years. It's the story of what our ancestors went through. It's the story of the famine. It's the story of the resistance, the multiple rebellions that, uh, came over different centuries. It's the story of 1916. It's the story of the war of independence, the Civil War. It's the story of the north of Ireland. It's the story of this occupation. These are the stories that make up who we are. But it's also the stories of the musicians, the great authors. It's the story of what kind of people people experience when they visit our land. How everyone describes Irish people, or most people describe Irish people as being so friendly, so welcoming, so warm. It's the story of our weather. It's the story of all of these things that makes up who Ireland is. The culture of my own, the behaviors that occur as well, the conversations that happen, the sense of humor that happens, the laugh, going to bars, having what we call the crack. All of this is what makes Ireland Irish. The same is true in terms of what makes Japan Japanese, what makes America American, what makes Germany German. It's the behaviors, the rituals, the actions, the stories, the tales, the legends, the history that determines what makes a culture a, uh, culture. And so as they're repeated over time, the same is true in family cultures and corporate cultures. Every group that stays together long enough tends to develop a culture. They tend to develop a series of stories and behaviors and rituals that are practiced over and over again. And so when we talk about cultural change, that gives us a clue as to why cultural change often tends to fail. Because what they try to do is they try to change the poster, they try to change the memo, they try to change the logic of what that culture will be from now on. And they make promises. But the real culture is stored in the thousand small behaviors and the stories that are told behind the scenes when nobody's watching. So to help us to be able to deal with this, a good starting point is to begin to start to pick one behavior that you want to be true of your team. So since culture is a set of behaviors and stories, start with the behaviors that you want. The new Culture to have what is one specific behavior that you want the team engaging in. And sometimes when we talk about behavior, we have to think about what is known sometimes as behavioral affordances. This means what needs to be there in order for the behavior to engage. And years ago, I was working with a financial organization, and they had a policy called the Speak up policy. And it was trying to encourage folks that were, uh, the first few years of their career to speak up, to talk to power, and to tell people what was going on. Uh, the only problem was, is that when they spoke up, they got admonished, they got. They got in the bad books, they got in trouble. And so the incentives weren't there for it. They didn't have the right affordances that encouraged the kind of behaviors they needed to engage in. So the first step is to identify what is an example of the behavior that you want to be true of your team. Now, uh, I'm not talking about a value here. I'm saying an actual behavior. Maybe it's. People tell each other when they disagree in the meeting, not necessarily in the hallway afterwards, they're able to feel psychologically safe to describe it. But then when actually someone does this, what's the story that gets told? Do they get celebrated? Do they, uh, call the troublemaker? Whenever we make the decision to change a culture, we need to be very clear that the behaviors that we want, they need to be supported, they need to be incentivized. There needs to be space made for them. Because if you speak up or if you disagree and you become known as a troublemaker, then instantly you become less likely to perform that ritual again. And so before you know it, you have a bunch of people acting as if the culture is one way, but actually what's going on behind the scenes is very, very different. The culture is actually what prevents us from changing. But that begs the question, why do cultures resist change so much? And, uh, to answer this, we go to a concept known as identity protective cognition. And this basically suggests that when new information tends to threaten our sense of who we are, we don't process it as information. We process it as an attack, and we defend ourselves against that attack. And this operates at the group level, exactly like it, uh, operates at the level of identity. Because when a new behavior is introduced, it threatens the identity of everyone who organized themselves around the old one. So we have a group of people that are all used to doing it in a certain way, and that's also part of who they are. Let's take AI for instance. If you're used to doing things in a certain way, and all of a sudden, AI is upsetting the apple cart. It feels like this is a threat to your belonging, it's a threat to your identity, it's a threat to yourself, and it's a threat to you as a group. So therefore, you resist, you rebel. And that's why sometimes outsiders can see what insiders can't, and why changing culture from the inside can be harder. Because it's not that you're arguing with people over what should be done. Everyone might agree of the behavior, but still, when the behavior changes, it doesn't always work out that well for people, because people feel their identities are being threatened. So what is the solution? Well, the solution is to recognize what are the consequences of the new behavior. And, um, what does the culture need to reward, what does the culture need to celebrate, what does the culture need to accept? And how can we start to cultivate new identities for everyone? Because the real secret to changing culture is being able to recognize the changing of identity, the enhancement of identity, how your goal is to help everyone to grow into the new culture. And that's really what it is. We're growing into a new culture. That's how cultures actually change. And they change from the behaviors that we start out with, the affordances we create, the way in which we reinforce and incentivize these changes, and then the stories we tell about those changes, how we interpret the meaning we give to those changes. When we get all of that right, that's when culture changes. That's when we find that we've built a culture where they're able to engage in the new behaviors. Because once you decide something's important enough, then you organize everything around it, and you make sure you're clear of the desired culture, the behaviors, and you make sure that they're reinforced. Now, when you decide on these behaviors, it's really important to be specific. You don't say, oh, uh, we want you to be more collaborative. Well, what does that even mean? We want real, clear actions. People share bad news within 24 hours. Decisions are documented in writing. Whatever the specifics are, we need to describe them as clearly as possible. We need to tell new stories about the behaviors. We need to describe the new behaviors as positive. Every time someone demonstrates what behavior you want, you want to make sure that that story gets told publicly. Specifically, not, great job, but calling out. I want to call out what Sarah did on Tuesday, because it's exactly the kind of culture we're building. You reinforce it. You point it out, you celebrate it, you retire the old stories. Because when you do so, all of a sudden, now people think differently, people believe differently. And ultimately, if you want a new culture to occur, people need to change their beliefs. Their beliefs about who they are, the beliefs about what they're supposed to do, their beliefs about the best way to do things. And as long as you do this, as long as you decide to organize things like this, you have a shot at changing the culture. When you don't, if someone still gets punished, for example, for speaking up, for disagreeing, then the crises from the last few years will keep circulating. You'll keep finding yourself reinforcing the old culture. We need to surface it, we need to replace it. We need to model relentlessly, demonstrate the kind of behaviors you want, demonstrate the stories you want told. Create fireside chats where you share your perspective, you share the importance, you share what changes you're going to make. You share why they matter. You give specific examples, you get specific examples. You hear from them, you listen for them, you give them autonomy, you hear their perspective, and you make it so. It's not just that you talk about psychological safety. If you talk about psychological safety and then you just punish people that dissent, well, the culture doesn't change. Nothing else matters until you model it consistently. So it's better not even to mention the psychological safety. Just make people feel psychologically safe. And when you do, people respond. A good starting point is to think about the last few moments where you praised or criticized someone. What behaviors were you actually rewarding? Sometimes we become myopically focused on simply performance, which is important. But if it's at the cost of everything else, well, uh, that's not necessarily long term success. So recognize whatever you've punished, whatever you reward, that tends to reinforce the kind of behaviors you want to engage in, and that will dictate the kind of cultures that you built. But if you can start to focus instead on the identity, then your team starts to learn, the individuals of your team start to learn, and they start to become better. Gerstner turned IBM around not by writing a new vision statement, but he changed. And, um, sometimes painfully, one meeting at a time. The stories that got told about what mattered and the behaviors that got reinforced. Every family, every team, every culture, every company is running on the same machinery. The stories and the behaviors. And if you know where to look, then you can transform things. So the next time someone says, our culture is great, we just need to communicate it better. The problem isn't communication. That's a, uh, performative culture. If the culture were great, you wouldn't need to communicate it. The story would just be told about what the experiences were of people. It's not about communication. It's about behavior and it's about better stories about the behavior and that's available and anyone can do it. The question is, when will you do it? So when we focus on this, it will help you as a leader to cultivate a better culture, whether it's in your family, whether it's in your social group, whether it's in your team, or indeed whether it's something that is part of your organization. So I hope you found this useful and valuable. I hope you've got some tools that you're going to use to be able to cultivate a more powerful, more impactful culture. But for now, take care. Be well. May the force be with all of you. Please do subscribe if you can, to the Channel and, uh, I look forward to seeing you again very, very soon. Bye for now.