Leaders' actions define organizational culture.
Leaders shape culture. The organization mirrors the people that lead it.
In a meeting with the management board of a multi-billion dollar company, the leaders sat around the table bemoaning the fact that "we just don't make decisions fast enough", "those new little guys can make decisions faster than we can."
When asked "Who is "we"?" the answer of course was "all of them, out there" in the organization who just couldn't get it right.
After not too much talking, the group realized that in reality "WE" were sitting right there in the room. The leadership team's inability to make quick decisions was having a cascading effect on the organization. The "we" in the room needed to start making decisions faster if the organization was going to speed up.
Sure, making decisions faster doesn't sound hard, but it meant that the leaders had to be more tolerant of failure in themselves and in others; and that they had to make decisions using the best available data in a defined period of time.
When the leaders started demonstrating the new paradigm through their words and actions, others followed. Projects in the product development cycle started moving faster, critical positions were filled in the organization in weeks as opposed to months, and market research was completed in months rather than years.
A smaller client was founded 15 years ago by a charismatic man that never met a customer he didn't want to serve. If someone had money they wanted to spend for his kind of product, he was going to make sure he got the business.
A hundred million dollars a year and a hundred employees later, he has built a remarkable organization that serves some of the most sought after clients in the industry. But during the last few years profits have stalled, turnover has increased, and a sense of defeat permeates the organization.
What went wrong?
Well, in a nutshell, the leadership style and the culture that nurtured growth during the startup phase are now strangling profitability in the larger organization. The leader that couldn't say no to a customer 15 years ago still can't say no to a customer today...even customers that ask for things the organization can't do profitably.
That attitude trickles down to the rest of the organization - and sometimes with devastating effects. Saying "no" is just not done in the organization.
Besides the unprofitable customers, people don't say no to suppliers that are no longer providing quality products at a price as low their competitors are getting from other suppliers. The organization doesn't say no to employees who aren't working out - instead, hiring more people rather than having the right people.
And individuals don't say no to work that just won't fit on their plates - they eventually quit because of burn-out instead.
How can they fix it? It will start with the leader. To get to the root of the problem, the leader needs to take a good long look in the mirror and face up to the role he has played in their current situation. None of this is to say the company founder is consciously doing anything wrong. He built a profitable hundred million dollar business for goodness sake! It is just that, now that the business has grown, he needs to start behaving differently.
There are other steps the organization can take to address some of their issues - such as implementing more guidelines around what customers they will serve and how, and improving standards for underperforming suppliers and employees. But if the leader demonstrates a culture appropriate for the organization's current growth phase, those steps really are not necessary. And if the culture does not change, any efforts to add more rules or guidelines will fail.
Once leaders are modeling the new culture in what they say and do (or don't say and do), the organization can start to shift behavior patterns and norms until the strategy and the culture are once again aligned.
