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May 2014

The Culture of Operational Change

Culture: I truly did not understand its implication back then. It was the mid-1990s. I was interviewing to be the President/CEO of a manufacturing company. Passing muster after the first interview, I was invited back for a second session. On the agenda that day was a tour of the facility. I was blown away. I had not seen an active factory so clean and organized as this one. No wonder the company had survived successfully for over 70 years. I knew then I wanted the job. I was ultimately hired.

Fast forward a dozen years later. I am now several years into my consulting career. I secure an engagement with a skin care manufacturer to overhaul their custom formulation processes plus bring efficiency to daily operations. Two months into the project, progress was slow. Truth be told, it was virtually undetectable. Why? It was a simple answer. Culture. Whereas the company described above was open to change, the culture of this company was tamping down any opportunity for corrective measures to take root.

The right culture, one steeped in common beliefs and values, communicated consistently and with clarity, holds the key to ultimate success. Research and practical observations of successful companies have established a direct link between strong corporate cultures and high performance. In 1992, two Harvard Business Review professors conducted an extensive research project detailing how corporate culture affected economic performance. The results were eye opening. Companies with cultures deemed to be performance-enhancing saw their Net Income grow by an average of 756% over an 11 year span!

Operational improvement activities, otherwise known as Continuous Process Improvement (CPI), fail for any number of reasons. Organizations may have extensive quality control measures in place but not everyone lives and breathes them. Old habits, formed not out of purposeful intent but years of poorly-modeled practices by management, stand in the way. Do any of these sound familiar?
  • It is the best we can do.
  • I don't have enough time.
  • Not my worry.
  • The customer doesn't have a clue.
  • Relax, we hit the goal.
  • It is as good as it can be.
  • And my recent favorite. A public company engaged me to help improve operational practices. Part of the effort included creating two new key committees to evaluate opportunities and risk. During kick-off meetings, committee members offered, "It's not part of my day job."

Start counting. If you have passed your fingers and are onto your toes remembering all the times that you have heard such folly, your company has some degree of cultural dysfunction.. And if so, imagine for a moment how much more challenging it will be to successfully complete any CPI initiatives.

Let's go back a step and look at some common definitions of corporate culture.
  • The way we do things around here.
  • The set of norms and values that are widely shared and strongly held throughout the organization.
  • The way employees behave, think and believe.
  • What employees do when no one is watching.
  • The degree of awareness, commitment, collective attitude and behavior of the organization with respect to quality.

Every organization has its own unique culture and value set. Culture is not a one-size-fits-all proposition. However, there are definite commonalities shared amongst companies viewed as having a healthy culture. Firms with strong cultures are usually seen by outsiders as having a certain 'style' � the Proctor & Gamble or Johnson & Johnson "way of doing things." See if any of what follows rings true within the halls of your company.
  • Quality does not take time, it saves time.
  • What gets measured gets managed.
  • Continual improvement is the foundation for success.
  • The only bad mistake is a hidden mistake.
  • It is the process, not the people.
  • Better is better than best.

Developing the right organizational culture is the responsibility of top managers of every organization. Corporate culture can and will have a major impact on employee morale and productivity. My first day working with an aerospace and defense manufacturer proved this point. Ushered into a meeting evaluating a potential new opportunity, I was dumbfounded to watch the attendee behavior. No agenda. Raised voices. Multiple people talking simultaneously. No setting of follow-up responsibilities.

For the next meeting, best practices were employed. The meeting ran smoothly and effectively. Afterwards, at least half of the attendees came to me expressing relief. "We've been waiting a long time for this to happen." Morale changed dramatically. Subsequent meetings throughout the company adopted the new practices. Meeting productivity soared.

Continuous Process Improvement thrives when the organizational culture is deep-rooted and embraced by all team members. In a firm with a strong culture, employees tend to march to the same drummer. Companies with shared values and behaviors make people feel good about working for a firm; that feeling of commitment or loyalty is said to make people strive harder. One CEO of a medium-sized organization shared the following: "I cannot imagine trying to run a business today with a weak or non-existent culture; why, people would be going off in a hundred different directions."

Operational improvements will succeed far more frequently when the culture of the firm is one that encourages and embraces change.

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About the author

Lee Schwartz, Principal and founder of the Schwartz Profitability Group (, is a consultant, author and speaker who has been uncorking operational bottlenecks for manufacturing and distribution companies for almost 13 years, saving them time and money, and boosting their bottom line. His consulting and operational turnaround work helps clients find solutions related to process improvement, supply chain management, inventory control, workflow design and operational performance improvement. Prior to launching his consulting practice, Lee spent over 20 years with manufacturers and distributors, many in senior management positions of CEO and President. Lee can be reached by phone at (310) 450-2628 or by e-mail at [email protected].

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