When organizations get into big trouble, fixing the culture is usually the prescription. That’s what most everyone said General Motors needed to do after its recall crisis in 2014—and ever since, CEO Mary Barra has been focusing on creating “the right environment” to promote accountability and head off future disasters. Pundits far and wide called for the same remedy when it came to light that the U.S. Department of Veterans Affairs, deemed a corrosive bureaucracy by federal investigators, kept veterans waiting months for critical health care. Cultural reform has likewise been proposed as the solution to excessive use of force by police departments, unethical behavior in banks, and just about any other major organizational problem you can think of. All eyes are on culture as the cause and the cure.
Culture Is Not the Culprit
When organizations get into big trouble, fixing the culture is usually the prescription. That’s what most everyone said GM needed to do after its 2014 recall crisis. Cultural reform has likewise been proposed as the solution to the corrosive bureaucracy at the Veterans’ Administration, unethical behavior in banks, and the excessive use of force by police. But interviews with successful change makers, conducted by Harvard Business School’s Jay W. Lorsch and Emily McTague, suggest that culture isn’t something you “fix.” Rather, cultural change is what you get when you put new processes or structures in place to tackle tough business challenges.
Organizations are complex systems with many ripple effects—and reworking fundamental practices will inevitably lead to new values and behaviors. In this article, the authors explain how this played out during four major transformations: the remake of Ecolab into a diversified corporation three times its original size; the postbankruptcy merger of Delta and Northwest; the turnaround of Ford; and Novartis’s shift to a diversified health care portfolio. Each firm’s CEO took a different approach for a different end. Ecolab’s Doug Baker pushed decisions down to the front lines to strengthen customer relationships. Delta’s Richard Anderson got airline workers on board by focusing on meeting their needs. Ford’s Alan Mulally broke down barriers between units to improve collaboration and efficiency. Novartis’s Daniel Vasella decentralized to unleash creative energy. But in every case, when the executives used tools such as decision rights, performance measurement, and reward systems to address their particular business challenges, organizational culture evolved as a result, reinforcing the new direction.
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