Define, Align and Build: The First Steps to Culture Change

Editor's Note: Carolyn Hendrickson, founding partner of Tandem Group, will be presenting at the 2021 Manufacturing &Technology Show, along with Richard F. Dauch, advisor to BorgWarner and former CEO Delphi Technologies. The M&T Show will be held in Cleveland, Ohio, Nov. 9-11, 2021.

It’s time to re-evaluate the culture in manufacturing.  Not just because we are in the midst of a global pandemic, but because of the critical role manufacturing plays in our society and the unique challenges it faces. Manufacturing leaders are responsible for ensuring their plants are ready for the next generation coming into the industry. 

“Culture change starts at the top with the CEO, CFO and CHRO. They establish the ‘tone at the top’ and need to lead by example,” says Rick Dauch, former CEO of Delphi Technologies. Here are the most important steps to build the foundation for culture change.

STEP 1:  Define the Adaptive Challenge

In any cultural or transformational change, the first step is to identify and articulate the adaptive challenge. Ron Heifetz, professor at Harvard University and author of Leadership Without Easy Answers, distinguishes adaptive challenges from operational, or technical, ones.  Adaptive challenges require fundamentally different ways of thinking and working, whereas operational ones can be solved using existing know-how. Leaders who tackle culture change as an operational challenge are typically disappointed by the results.

The first step is to identify the adaptive challenge your business faces that changing the culture will help address.

There has to be a business reason to shift the culture of an organization that is significant enough to require new mindsets and ways of working. If you can’t identify and clearly articulate the adaptive challenge your business faces, then it will be difficult to change the culture of your organization. 

Years ago, the CEO of a major automotive parts supplier felt they were leaving shareholder value on the table. All the business units had strong presidents at the helm and were top-tier players in their respective markets.  However, the CEO felt they were losing significant value by not working across the business units. At the time, the mindsets and ways of working – the culture – were focused on the silos of each business unit rather than looking across the corporation for new sources of value. 

Identifying the adaptive challenge was not done through months of research and analysis, but by digging deep into what the CEO and his team thought might be possible for the company based on their decades of experience. After much reflection, they came up with the idea of doubling the size of the company in the next five years – in a flat market. That goal felt like a significant adaptive challenge that would require a fundamentally different way of thinking and working – and it was something they could each commit to personally. They believed it would bring forth the cultural shift necessary for the company to reach the next level of performance.

In addition to naming the adaptive challenge, they had to shift how they approached their role as senior executives.  Through facilitated conversations, they agreed to think of themselves as an internal board of directors. That would make it possible for them to look across each other's business units and bring the best they had to offer to their peers on the senior leadership team. Historically, the unwritten rule was “Don't get into my business and I won't get into yours.” Intentionally shifting their thinking to being an internal board provided the permission they needed to explore what was possible in the white space between the business units.

STEP 2:  Align the Senior Leadership Team

Once the adaptive challenge is identified, clarify the shifts in the culture to focus on. “In cultures that are quite well-established, red flags can go up when you start talking about changing it.” explains Ed Magee, a manufacturing executive at Fender Musical Instruments and formerly at Harley-Davidson.

“People in established companies like Fender and Harley like the culture and take pride in it. The thought of changing it can be difficult for some.” He explains that at Fender, leaders call it “renovating” the culture, a term they learned from author Kevin Oakes.  The idea of renovation has been a more palatable idea than whole-scale change because it highlights the need to keep certain aspects of the culture while changing others.

Articulating the specific aspects of the culture that leaders want to change and what they want to keep can help people wrap their heads around the case for change.

A Midwest manufacturing company that prided itself on its culture for over 100 years started to recognize that new employees did not appreciate the culture like the longer-tenured employees did. People were leaving because they said managers were not open to change, it was difficult to get things done, and the workload was not in line with younger people’s expectations. 

However, not all members of the senior team saw the culture as the source of the problem.  So, the CEO and senior team took on a three-month project to build, and get aligned on, a case for change. They knew it was essential for the senior team to be aligned if they had a prayer of changing the culture. Clear themes emerged from interviews, focus groups, and exit interviews that made it easier to align on the ONE mindset, ONE behavior, and ONE way of working that needed to shift. Focusing on a few critical areas to change enabled the senior team to develop a path forward that they felt confident would make a difference. 

STEP 3:  Build the Roadmap

Once the senior team is aligned on the adaptive challenge and the specific parts of the culture that need to shift, it is time to build the roadmap – and engage the next level leaders.  “Clarity of direction and plans motivates people. They feel like they are part of the team and do not want to let anyone down,” explains Dauch. 

Even during the global pandemic, companies are convening large groups of leaders virtually to engage them in the culture-change process. Innovative collaboration technologies such as Idea Flip and  Miro have made it possible, and fun, to build roadmaps together. These events also help ensure the top 75-100 leaders in the organization know what is expected from them to shift the culture.

As Alan Kay, a pioneering computer scientist, says, “The best way to predict the future is to invent it.” Using a methodology we call the Merlin Method, our client leadership teams build their culture roadmaps “from the future back.” This perspective, combined with new virtual collaboration tools, enables them to build actionable roadmaps that lay out the path to the culture they want to create.  As Magee reminds us, “Factories are people businesses. As leaders, our job is to make manufacturing engaging and help people see their work as value-added.”  And doing that starts with culture – our mindsets, behaviors, and ways of working.

In the final article in this series we will share CEO and executive perspectives on how to successfully change the culture and make it stick in a manufacturing environment.

Carolyn Hendrickson, Ph.D. is CEO and founding partner of Tandem Group, a firm that specializes in strategy, organization, and leadership.  She has over 30 years of experience in working with CEOs, senior executives, and boards of directors to achieve and sustain breakthrough results in their businesses through accelerated growth and change.  She is known for her work in strategic planning, leadership alignment, large-scale organization change, and cultural transformation.