• BP prided itself on a culture of safety.  Yet, time after time, it appears rig personnel made decisions that increased the risk of a blowout to save the company time or expense.
• While professing a value proposition of “Complete Customer Solutions” based on individual needs, Goldman Sachs executives put “making enough money for the firm” as their highest priority.
• A SUNY Medical University survey found that 55% of medical technicians used either their cell phone, texted or checked their e-mail while performing cardiopulmonary bypass procedures.

1. Abstract and contradictory values.
   Corporate value statements can be so abstract that they can be contradictory, such as when a company claims to be equally concerned about stockholders, employees, and customers, or when it claims to offer the highest quality at the lowest cost.  These types of value statements only confuse employees when they have tough choices to make.  Without clear guidelines, employees frequently choose the behavior they think will please their boss, protect themselves or get the results they expect the organization to reward.
2. Misaligned reward systems.
   Organizations frequently — and inadvertently — reward the wrong values and behaviors.  If you look carefully, you may see this occurring in your own organization.  For example: 

   Leaders Promote	But Reward
   Collaboration ——————————->	Individual behavior
   Long term growth ————————–>	Quarterly earnings
   Employee engagement ——————>	Tight control over operations
   Innovative thinking ————————->	Established error-free methods

3. A culture of fear and blame.
   A punitive culture forces employees to look out for themselves and not their organization or their customers.  They will choose not to identify incidents they believe may get them — or their coworkers — reprimanded.  This discourages organizations from learning from their mistakes so they can prevent them in the future.  Advocated values then become hollow statements creating cynicism rather than inspiration.
4. Adopting the wrong behaviors.
   You see this most frequently with new employees.  They want to know, “How do things REALLY work around here?”  ”What’s important to management?”  ”How do I get rewarded?”  What they see represents the prevailing cultural values.   If a new nurse sees surgeons going in and out of operating rooms without changing their masks, they will soon see this as an acceptable behavior.  Seeing as few as two or three instances of the same behavior, new employees begin to believe that those behaviors are acceptable and/or the “right” ones to be successful.

Step One: To be at the top of your game, determine how you will compete in the market place. I call this “your strategic focus.” Examples include:

• Innovation and product leadership (e.g., Nike, Google)
• Operational excellence and best total cost (e.g., Wal-Mart, Best Buy)
• Customer service (e.g., The Four Seasons Hotel)
• Best customized solutions for a particular market segment (e.g., McKinsey, IBM)

Step Two: Your focus should be driven by your organizational culture – leadership practices, policies, performance metrics, rewards, reporting relationships, and employee behaviors. Truly successful companies hard-wire their culture to support and enable their strategic focus.

Recently, I had an opportunity to work with a large hotel chain that had wanted to improve performance. They had spent millions on renovating each of their key properties. The CEO then invited meeting planners and other professionals to spend a weekend at one of these newly-renovated properties, hoping to draw their business. Sadly, while they had updated their properties, they hadn’t aligned their culture with their strategic focus, so here’s what happened…or didn’t happen:

• The Hotel General Manager did not stop by to welcome the guests
• The Director of Sales and his family placed themselves ahead of the customers on a tour of the lake while the guests had to wait 30 minutes for his return
• A number of the room gifts were delivered to the wrong rooms
• Logistics regarding arrivals and departures were cumbersome and slow

Not only was the fiscal investment wasted on the renovations, but they lost many potential customers. Bottom line, the chain’s culture was not hard-wired for creating a great service experience … which is where the real investment should have been made.

Obvious you say? I’ll bet that if you asked your top 10 managers: (1) what is our strategic focus? and (2) what are the specific organizational behaviors, practices and processes that should make up our cultural framework, you’ll get 10 different answers!

To be an industry leader, like Apple or Nike or Google, your organizational culture — everything about your organization — should be designed to fulfill its strategic focus.

Over 88 percent of this country’s large organizations are now engaged in some form of strategic planning…and this number continues to expand, reaching across all industry sectors and involves companies of all sizes.
Yet, as business leaders gather to strategically plan their futures, they continue to make fundamental…even fatal mistakes. Here are the top four:

1. Skipping Rigorous Analysis
   Many believe business experience and knowledge, alone, equips them with all the information they need to plan profitable growth. Not true! A more viable approach includes research into how its industry is evolving, identifying emerging trends and opportunities as well as barriers to growth to be found in the current competitive landscape.
2. Believing Strategy Can Be Built in a Day
   Many executives honestly believe effective strategies can be crafted, explored and agreed in the space of a single off-site meeting where the most anticipated events are meals and afternoon golf. While these meetings are excellent forums for addressing key issues and coming up with recommendations for solutions, strategy creation requires time (over weeks) for adequate discussion, problem solving, exploring various courses of action, validation and resolution.
3. Failing to Link Strategic Planning with Strategy Execution
   Where strategic planning requires only the top team, execution of these plans involves the entire organization.  The degree of disconnect between planning and execution in most organizations is astounding. The lack of communication, structure and management processes to build accountability, measure and monitor progress is frequently not there.  Instead, build a dashboard to recognize achievements, note missed milestones, surface major issues and apply corrective actions.  Also, reviewing performance on a bi-weekly to monthly basis accelerates success.
4. Letting the Profit Motive Become Unhitched from the Purpose Motive
   Strategy is typically about increasing profitable growth and that’s a good thing!  Engaged employees, however, want to be committed to a transcendent purpose that gives meaning to their work life.  Because strategy execution is a “whole organization” activity, reinforcing organizational purpose must be part of the strategy as well. Successful organizations maximize both profit and purpose.  When employees lose a sense of contribution and purpose and become driven solely by profit, the development of ethical problems, poor service, and bad products occur — which our economy has been a living example for the last several years (witness from Wall Street to BP).

The title of this piece, as you recall, include the words “Fatal” and “Mistakes” — and that’s exactly what these four points are…and why it’s dangerous to risk making even one of them.  Navigating the journey of strategic planning for profitability growth is often less perilous with an expert guide at your side.

Without exception, the managers of today are under extreme pressure to deliver their products and services as soon as possible.  During the course of a year, I am involved in a dozen or more projects at major corporations around the world.  As I observe these various companies, I can see great differences in the amount of stress that permeates these organizations.

The critical difference between the companies that can handle aggressive schedules and organizational stress versus those that can’t is how well managers, rather than the employees, are performing their job.

The Pressure Lever

As the demands of your job seem ever increasing, you look for ways to get more and more accomplished.  Imagine, for a moment, that you have a huge lever beside your desk.  When you pull on it, pressure is increased on all your people.  When you release it, pressure is reduced.  Pull the lever all the way up and the pressure is at its maximum.

Now, what’s your tactic?

As you consider this question, there’s probably a tiny voice somewhere inside your head telling you to pull the damn thing all the way up and leave it there forever!  If so, you wouldn’t be alone.  An increasingly common bit of organizational folklore maintains that pressure improves performance.  Thus, many managers will:

• Push harder on delivery dates
• Require long hours
• Load on extra work
• Get angry when disappointed
• Be severe about anything other than superb performance

But wait a minute!  Don’t we all know these strategies are not effective in the long run?

The Symptoms of Burnout

Some pressure at work is unavoidable and, perhaps at times, necessary.  Initially, people respond to pressure by adjusting techniques or processes, concentrating on critical work elements and by putting in extra hours.  If excessive pressure continues, the emerging symptoms of burnout are easily recognizable.  These include:

• Fear of risk-taking
• Leader-dominated meetings without much listening or engagement, i.e. submissive followers
• Good people and experienced leaders starting to bail out
• A once-cherished belief in the job and mission is now eroded

Ultimately, burned-out workers have no passion for anything!

The Cure

Anything with moving parts will create energy, and energy will create pressure if it is not expended or relieved in some way.  The same goes for organizations and the people who work in them.  We often simply attribute burnout to increased pressure, but this is an intellectually lazy diagnosis. Burnout can be avoided if pressure is controlled.  Yes controlled.  And, that`s what your job is about.  You have to come up with specific strategies to alleviate burnout.  If you take a deeper look, there are specific actions you can take to address the underlying causes of burnout with the following remedies:

1. In high demand environments, increase employee autonomy and control.
2. Provide employees with time to think.  This allows them opportunities to innovate new ways to increase efficiency and to take ownership in what they do as they provide value to the organization.
3. Provide forums for employees to acknowledge frustrations and air grievances, along with discussing problem-solving recommendations.
4. Ensure there are clear priorities so that every employee has a sense of direction.
5. Clarify roles, responsibilities and accountabilities.
6. Make certain employees are not chronically overstretched and “deadlined.”

The Challenge to You

As a manager, it is important to realize all of the above is about you, your executive team and the real culprit — poor management strategies.  It isn’t your employees’ responsibility to recognize the problem or to come up with the solutions.  As their leader, that job is yours.  Through aggressive listening, careful analysis and good problem solving, you can create the kind of environment where your people are on fire, not burned out!

A while back, I was talking with Marti Eulberg, previously Executive Vice President of Sales, N.A. for Volvo, about the challenges created by functional silos in an organization. Now Executive Vice President of Sales and Marketing for Jaguar, Marti has been extremely successful in “tearing down walls.”

The Case of the Green Volvos.

Prior to Marti’s arrival at Volvo, a textbook example of functional disconnects occurred.

Volvo had produced a lot of green cars in the mid-1990s but wasn’t selling them. To off-set the problem, sales and marketing started to secretly offer heavy discounts, rebates, and special deals on green cars to their dealerships.

The problem? Volvo’s supply chain people didn’t know about the discounts, so when they saw the green cars selling like hotcakes, they doubled their production plan for the next year.

You guessed it! By the end of that next year, Volvo had a lot of green cars in stock.

Why Silos Happen.

I can’t think of a better example of how function silos hinder communication and lead to costly mistakes.

So, why do silos develop?

Let’s begin with the most obvious reason — turf protection. Managers may fear losing power and control by sharing information…because they all are aware that only so many can make it “to the top.”

From the time we are children, when we are taught the game of “musical chairs” (a prototypical model of scarcity and turf protection), we learn that we have to beat each other out in order to succeed. In musical chairs, when the game dwindles down to one chair and two players, only one person wins…and we call that fun!

Narrowly focused goals and metrics. Accountability is an overarching theme in every sector of today’s business environment. Now, add in the fact that each department is steeped in its own metrics of what they term success.

Strategic and tactical plans tend to develop around these unique goals and metrics with little thought of integrating with other departments to expand leverage strengths…and there’s usually no integration at the senior level to change the status quo.

More often than not, incentive and compensation systems are usually narrowly focused and tend to reward individual behavior. Rewards are typically tied to achievement and achievement tends to be individually-focused rather than team-focused. Ultimately, it is the culture of the organization that has, inadvertently and unintentionally, created silos by rewarding individual behaviors using competitive and narrowly focused parameters.

How to avoid silo development. Three effective strategies I learned from Marti and now practice with clients include:

1. Facilitate integration at the top. Motivate the people at the top to start talking – senior executives, department heads and program managers – and encourage them to look, horizontally, across functions. Facilitate discussions about the differences and resulting tensions between product division goals, supply chain issues and customer goals…and don’t forget to discuss any possible or existing functional disconnects. The key is to keep a horizontal perspective of the organization in addition to a vertical one.
2. Build Joint Accountability. Trust is essential in building integration. It is predicated on working toward joint goals and in an aligned fashion over a period of time — without major surprises. Trust can be developed by having joint metrics associated with incentives.Some organizations adopt an “internal customer-supplier model” rather than a “partnership model.” Unfortunately, with the customer-supplier model, some leaders take the attitude that if the other function does not provide a certain level of responsiveness, they’ll be blamed or rated badly.In a true partnership model, if either party negatively impacts the results of the other, resources are then used to build the relationship – new information systems, joint team education and travel to get people together more often to build communication.
3. Clarify roles, responsibilities and authority levels at the interface level. Processes cut across departments and it is this “white space” (the interface between the functions) that frequently causes problems and leads to the building of individual silos.

Employees may be unclear about roles, responsibilities and authority levels. In our work, we have facilitated discussions between groups that interface with each other to build efficiency and integration. In these groups, we discuss who has ownership and/or authority for various parts of the process.

Jointly, these mangers determine who must be informed of decisions, who should be consulted, and whose support is needed to implement outcomes. This type of planning enables functional areas to identify and resolve points of potential confusion and conflict. The result? Trust is built and operations become significantly smoother and more efficient.

Without a doubt, functional silos hinder communication and efficiency, and many companies struggle to tear them down, once they appear. Key to this issue is the challenge of incorporating trust between departments or functions.

Under Marti Eulberg’s leadership, once the walls had been torn down, Volvo has continued to emerge as a world leader in the very volatile and fickle playing field of the automotive industry.

Establishing transparent processes to govern how departments work together, share accountability and increase horizontal communication will, ultimately, create and build more productive relationships and deliver increased value to the organization.

Summary: In most companies, managers are so stretched, they don’t have a spare moment to plan or think. Just time to do. This tip is based on providing employees on the F-35 program the “time out” to think and innovate. The results were outstanding and guidance is given on how you can make “time out” part of your own culture.

During a recent conversation with Admiral Steve “Smiley” Enewold, Program Executive Officer of the F-35 Joint Striker Fighter, about the pace of today’s business world, he made this analogy:

“It’s like being in a grain silo and the grain is pouring down on you at a terrific speed from the top. You have a small shovel and you are working like heck to dig your way out. You see a bigger shovel leaning against the wall, but you think to yourself, if I go over there and get it, I’ll drown!”

We both agreed. Unless we take time out and get a “bigger shovel” — translated as taking the time to think, reflect, innovate, collaborate and change — there will be no way to fulfill complex and demanding missions like the F-35 Joint Strike Fighter.

The F-35 Joint Strike Fighter (JSF) program is the most advanced and complex enterprise ever with the purpose of building a next generation fighter aircraft.

The mission of JSF is to provide the U.S. Air Force, Navy and Marine Corps, and the United Kingdom`s Royal Navy and Royal Air Force with an affordable and stealthy tactical aircraft for the 21st century.

The program includes eight international partners – the United Kingdom, Italy, Netherlands, Turkey, Canada, Denmark, Norway and Australia.

Lockheed Martin is the F-35 prime contractor, while Northrop Grumman and BAE SYSTEMS are principal partners in the project.  In addition to the principal partners, Pratt & Whitney and the GE Rolls-Royce Fighter Engine Team work with the JSF team to design and build interchangeable engines for the F-35.

Despite the overwhelming demands of schedules, costs and quality on this expansive and complex program, project managers have been able to tap into innovation by using “Time Out” as a competitive advantage.

“Time Out” can be rapidly expressed as X/O.

Unfortunately for most of us, the pace of work is so fast, the X/O advantage is elusive. People say they don’t have time to think…don’t always take time to consider other options. This mantra seems to be, “Pile more work on fewer people, increase efficiency, and cut costs.”

In fact, this mantra is the sound of an organization going wrong.

In most companies today, managers are so stretched and stressed, they don’t have a spare moment for anything…no time to plan or think. Just time to do…to get the job done. There’s no time for analysis, innovation, training, strategic thinking, contemplation…or, sometimes, even lunch.

How JSF Improved Performance!

There was a time at JSF when adherence to timelines was the only momentum, the only obvious goal. Processes balancing cost, quality and schedule were not always clearly defined. People were hesitant to share “bad news.” Taking this track, the JSF project became a whopping 3500 pounds overweight and would cost millions of dollars and months to get back on track.

Over the next year, the entire project team focused on thinking, reflecting, imagining and envisioning ways to reduce the aircraft’s weight while maintaining performance parameters. Specialists could not make the necessary adjustments. The project’s shortcomings had to be remedied by the very people who were doing the work. The antidote had to be ongoing and everywhere, throughout the entire project. That’s when X/O became part of the culture.

By involving everyone and allocating time to think, discuss, discover, collaborate and explore — rather than just being busy — the F-35 project team was soon back on track with the most advanced next-generation strike fighter for the Navy, Air Force, Marines, and allies across the globe.

Successful organizations — like JSF – lead the way in the creative use of “Time Out.” Underperforming businesses can only obsess about removing it!!

When a company can’t change or innovate, it is usually because their people are too damn busy.

How “Time Out” Can be Part of Your Culture

1. Consider “X/O” as an investment with a high ROI. “Time Out” distinguishes organizations “in business” from those organizations that are merely busy.
2. Recognize that people under time pressure don’t think faster. Think rate is fixed. No matter what you do, no matter how hard you try, you can’t pick up the pace of thinking. Instead, you must allocate time to think.
3. Focus on the lower levels – the people who do the work. If there is alignment, if the people who do the work are focused and executing, then astounding results can be achieved. They will be the first to surface the barriers and issues to performance if they are held accountable for targets.
4. Give people targets to go after and time to think on how to achieve them. In 30 years of consulting, I have rarely seen workers given both targets and the time to figure out how to reach them. “X/O” is the missing ingredient required for all change and innovation.

The Bottom Line

The bankruptcy of innovation often results from a failure to set aside the resources necessary allow change to be a natural part of the organization’s culture. Ever increasing “busyness” diminishes individual performance, and workers know it.

“Time Out” is the space in which change and innovation takes place.

While there’s a cost in implementing new ideas, the X/O’s benefit is an increased vitality, a healthy and robust culture as well as a firmer grip on the future.

I recently heard Mitch Weatherly, an Executive Vice President at Pier 1 Imports, make the statement that half of the hires that fail at the Director Level and above fail because they do not fit the culture.  At Pier 1, culture is important.  It is healthy and well managed and you can`t make it there unless you learn to work within it.

When we talk about corporate culture, it is helpful to think of it at two levels.  The first is more invisible and harder to change.  This includes important values, beliefs and ideology that are shared by most of the people.  This underlies the second level which is more visible. This level includes common or pervasive ways of behaving.  These behaviors persist because group members teach these practices to new members, reward those who fit in, and sanction those that do not.

While we all know that culture is important, does it have a real and tangible impact on the bottom line?  You bet it does.

The Numbers

Organizations with the “right” kind of culture significantly outperform firms that do not have these cultural traits by a huge margin.  Examples from an 11 year Harvard Business School study show a variety of areas in which companies with the “right” culture outperformed their counterparts:

• Revenues   4.1 times higher
• Stock price:  12.2 time higher
• Net income: 756% improvement vs. 1%
• Return on investment:  15 times higher

In a Stanford University study, higher performing companies matched to a top competitor compared favorably in the following ways.

• In 61% of the higher performing companies, there was stronger indoctrination of new hires into the Culture, Guiding Principles, and Practices
• In 72%: Greater tightness of fit around their Culture – “Buy In or Get Out”
• In 72%: Greater emphasis on elitism and living the Guiding Principles to create a sense of pride and belonging to something special and superior
• In 75%: Employees are more satisfied, more loyal, and have a greater sense of pride in their company than do employees in other organizations. They look forward to coming to work.
• In 78%: Greater alignment between their culture and what the company believed it needed strategically to succeed in the market place now and in the future.
• In95%: Winning companies involve their people. Ninety-five percent of the improvements at National Quality Award winning companies come from the recommendations of their own people.

What makes for the “right” culture?

While there is no prescription, the following Four Factors Make the Difference. The keys to success are:

1. A strong Culture: clearly articulated values or guiding principles that are deep and pervasive throughout the organization.
2. A Strategically Appropriate Culture: The values and operating practices of the organization are strategically appropriate.  They represent what must happen behaviorally for the organization to be successful.
3. An Adaptive Culture: This means that it is risk taking, proactive and trusting.  Non adaptive cultures are reactive, risk averse, and slow to share information and make decisions.
4. “Stakeholders are King” philosophy”: Leaders passionately identify, balance, and meet the needs of key constituencies including customers, employees and shareholders.

Note that even if you have a strong culture, if it is not strategically appropriate, it does not enhance performance!  All of these factors must work together to produce outstanding results.

Over the next few months, I`ll share some corporate examples of extraordinary efforts to build a performance enhancing culture.  I believe you will find some exciting ideas and applications to your own organization.

True Story: Melburn McBroom was a domineering boss, with a temper that intimidated those who worked with him.  That fact might have passed unnoticed had McBroom worked in an office or factory.  But McBroom was an airline pilot.

One day in 1978, McBroom’s plane was approaching Portland, Oregon, when he noticed a problem with the landing gear.  So McBroom went into a holding pattern, circling the field at a high altitude while he fiddled with the mechanism.

As McBroom obsessed about the landing gear, the plane’s fuel gauges steadily approached the empty level. But his co-pilot was so fearful of McBroom’s wrath they he said nothing, even as disaster loomed.  The plane crashed, killing ten people.

Unfortunately, McBroom’s cockpit is a microcosm of many of the leadership suites I have witnessed over the years where managerial domination and a culture of not sharing “bad news” contributes to producing intimidated and silent employees.

The Cost of Silence

The cost of employee silence and the withholding of their thoughts and feelings is often difficult to determine.  Think, however, of the decreased productivity, loss of teamwork, missed deadlines, rework and mistakes that occur simply because people often work in settings where they find it more painful to speak up than to be silent.

In many of the meetings I have attended, there seems to be two conversations going on: The politically correct one at the table where people are nodding their heads and the unobserved one, which may be very different, going on within people’s own thoughts and feelings. Do you need proof of this? Just follow the group who attended the meeting back to their office area. There is where the “real conversation” is publicly spoken!

Cures for Silence

The cure starts with you. Your ability to listen carefully and respectfully creates authenticity. Reflect on your own style of leadership. What are you doing to create an open and safe environment for people to communicate?

Become intolerant of sarcasm, putting people down, personal labeling, and all the other ways we create fear in our people.

Teach employees to teach you. Reverse the top-down communication structure in a physical, visible and immediate way. Assign a non-management coach from deep inside the organization to each of the senior managers. Train these coaches to drum up grassroots feedback. Are managers accessible and responsive in the eyes of the employees? Do they invite feedback? Does management listen closely to challenges and questions and respond quickly and thoroughly? Meet with your coaches once a quarter as a management team and receive their reports.

Tell the whole truth to the rank and file and, in exchange, ask for their help in solving company problems – both employees` and management`s.  Talk about your financial performance, product milestones, successes, failures, goals for that quarter and whether you made them or not and why.

Mythologize truth tellers and truth telling in stories and rituals.  Tell and retell vivid stories about defining moments that made a difference and solidify a culture of honesty.

Become the model of honesty. Be willing to be vulnerable.  You don`t have to talk about every issue or concern that crosses your mind; but you must do what you say you`re going to do, think before you judge harshly, avoid pointing fingers, and own up to your mistakes and your weaknesses.

Within your group, build mutual accountability and honest communication. Be willing to have forums where you give each other feedback – both positive and corrective as well as suggestions for improvement.

True story: I recently asked 35 executives of a large commercial aircraft manufacturing firm to each describe a change project they regarded as unsuccessful. Approximately 55% said the reason the project had failed because they did not have the buy-in of key stakeholders.

Unfortunately, many leaders don’t even get to first base with their “call to action.” Why is that?

Reasons for resistance

• People typically don’t understand what the change is really about. This is because no context has been created – the purpose and impact of the change have not been articulated.
• A shared recognition of the problem among employees, based on a good business case, has not been developed.
• The vision and call to action has been under-communicated – no one understands the goals or direction of the change.

To get buy-in, you must give people the right context. “Context” points to the fact that people have to “know-why” ahead of “know-how.” It is the context, the shared understanding, meaning and interpretations behind a call to action that creates a sense purpose for people. It gives them a reason to get on board.

Greg Rake, VP of Global Distribution and Patti Rebeil, Director of Human Resources, both of Pier 1 Imports, have done a terrific job in getting buy-in on the vision, values and strategies of their operation. They’ve worked hard on the following steps:

1. Develop a business case for the change – one in which the need for change – the threat or the opportunity – is greater than the pain or cost of not changing.
2. Share the data and information about the current reality, but go beyond that. Telling people the facts is not enough. With facts alone, they will make up their own interpretations or “stories” about them. Ninety percent of the time, it will be negative. Help them understand the importance of the numbers.
3. Enroll the “opinion leaders” first. Those are the people that others go to and say, “What do you think of this?” These are frequently the middle managers. Get their input. Develop the context with them.
4. Provide people with the interpretations you want them to understand and support. Tell them the impact of current reality. Let them know the difference their behavior makes in achieving the vision. Touch them personally and emotionally. Don’t manage to the numbers. Manage the people to get the numbers!
5. Communicate. Research suggests that of all the communication employees receive, less than 1% addresses the call to action and the reasons behind it. Use the 7-by-7 rule. That is, if you want your employees to get a real understanding of your message, you must say it at least seven times in seven different ways … or they won’t get it.

By the way, last year they achieved record results in the areas of cost, quality, safety and service!