Culture Alchemy: The 8 Critical Cultural Characteristics

  • By Gerry McDonough
  • 30 Jan, 2016

In my last post,   Culture Alchemy: The ‘Why’ is the Most Important ‘How’ , I drew upon   LeadFirst ’s three decades of research to identify the business outcomes that our research team has revealed are influenced by organizational culture. These are the “hard” performance metrics that any executive management team must consider when evaluating a portfolio of potential investments. Based upon this research, senior line and human resources managers can feel confident about making a clear and compelling business case for culture improvement, particularly as it applies to promoting “organic” revenue growth.

In this installment of   Culture Alchemy , I will describe what LeadFirst’s research team has discovered as the key characteristics of a performance culture, one that attracts, engages, and inspires people, and liberates a greater proportion of individual and team discretionary effort and accountability.

Using a computer software metaphor, culture is the organizational “operating system” that manages software (people) resources and provides the framework for their functioning, including their attitudes and behavior.

Our research has shown, both desirable and undesirable attitudes and behavior can be traced to the culture operating system, more specifically, to three cultural Causal Factors : (1) Leadership & Management, (2) Structures, Systems & Policies, and (3) Work Design & Processes. To change organizational patterns of attitude and behavior, one or more of these causal factors must be amended in the operating system.

LeadFirst research has revealed four distinguishing characteristics of a highly productive (we call it a “ Dynamic ”) organizational culture. These include, External Focus ,   Proactivity ,   Collaboration , and   Agility . The interplay between and among these cultural characteristics and their antipode characteristics is interesting and relevant, and will be the subject of a future article. But, for now, I will describe these characteristics in more detail, including how they manifest in organizational life.

Externally focused   organizations are characterized by members who see their primary responsibility as serving the needs of their customers, whether they are truly external to the organization or elsewhere in the value chain. The point is that they actually see the value chain and where they and their customers fit. Their focus is more on customer requirements and needs than on internal processes and procedures, though they recognize that such processes are necessary and important to the extent that they serve the customer well.

External   focus, often called customer-centricity, is strongly correlated with the Proactive   characteristic (described below), since being truly customer focused is seen as irrelevant without the willingness and ability to take action on the customer’s behalf. In addition, organizations with an ardent external focus are also keenly focused on market, product and service differentiation. Decision quality tends to be high as customers – internal and external – are central to consideration.

Proactivity   is characterized by people taking initiative. Members in   Proactive cultures see themselves as responsible and accountable for important and specific outcomes. The organization’s purpose, expressed through one or a combination of the big-3 Causal Factors (described above), aligns purpose with actions and actions with outcomes. People in   Proactive   cultures tend to be highly engaged and see significance in their work and their results. They are mindful of hierarchy but are not constrained by it. Their focus is on anticipating needs and issues and taking action to address them.

Members of   Proactive   cultures are generally free of fear, but feel intense accountability for results in order to beat their previous best individual performance, to avoid letting their colleagues down, or both.

Collaborative   cultures are characterized by members who are focused on, and effective at, teamwork and interpersonal communications. Effective collaboration does not mean “getting along” as an end to itself. Avoidance is not the same as collaboration. In fact, highly   Collaborative   organizations can appear, to an outsider, to involve a fair amount of debate and even argument. Members in Collaborative   organizations are willing and able to speak up and put issues on the table. They value honesty, yet remain open to learning and new ideas. Collaborative   cultures are positively correlated with trust.

Decision quality, velocity and execution are hallmarks of   Collaborative   cultures as members are focused on the best answers, as opposed to winning arguments, and are fully involved and invested in outcomes.

Agile   cultures are characterized by a combination of flexibility – the ability to adapt to changing circumstances, and creativity – the ability to develop unique and divergent solutions.   Agility   is most important in organizations or industries undergoing significant change in which the status quo is simply insufficient. Perhaps the most important productive output of an   Agile   culture is its ability to promote true innovation.

Along with the element of flexibility, members of   Agile   cultures are expected to exercise good judgment and act in the best interest of the organization. In this regard, the   Agile   characteristic both promotes and requires a high degree of trust. The   Agile   culture is positively correlated with decision quality and decision support. Members are both highly engaged and creative in solving problems. Decision velocity can occasionally suffer when divergent thinking isn’t sufficiently reigned in relative to the type of decision being taken.

Remarkably productive,   Dynamic  cultures are characterized by their   External Focus ,   Proactivity ,   Collaboration   and   Agility . Conversely, low-performing, Static , cultures are characterized by their   Internal preoccupation ,   Passivity , Combativeness , and penchant for   Stability   and the status quo.

Progressive executive leaders who grasp the reality that organizational culture “happens” by design or by default – and the default option is rarely a good one – rigorously measure their organization’s culture against these eight defining characteristics.

I invite you to share your ideas and experience. To learn more about   LeadFirst Learning Systems , our research and practice, please contact Dan Lynn ( Dan@LeadFirst.com ).

Thought Leadership

By Dan Lynn 22 Nov, 2016
According to Deloitte’s 2015 Global Human Capital Trends survey, organizational culture issues are now the number one challenge companies face around the world. The survey found that more than half of respondents say their organizations have either a poor program or no program at all to measure and improve culture. As coaches, we very often find leading culture to be a core challenge faced by the leaders we are coaching. We further find that leaders often operate with assumptions about culture that turn out to be inaccurate. In this week’s episode, guest host Randy Chittum will talk with Gerry McDonough, CEO of LeadFirst, a human capital consulting firm in DC. In this conversation, we will learn from LeadFirst’s culture studies now spanning more than thirty years, with almost 650 cultures studied and developed. Another key topic for discussion will be the impact of culture on performance and if there are cultural factors that indicate a greater likelihood of success.

https://www.voiceamerica.com/episode/95767/understanding-what-really-matters-about-organizational-culture-a-conversation-with-gerry-mcdonough
By Dan Lynn 15 Apr, 2016

According to Deloitte's 2015 Global Human Capital Trends survey, organizational culture issues are now the no. 1 challenge companies face around the world. Culture formation and development is difficult to manage effectively because it doesn't lend itself to "templated" approaches. The survey found that more than half of respondents say their organizations have either a poor program or no program to measure and improve culture and engagement. In working with hundreds of companies to create high performance cultures, we've found these mistakes to be the most common in their efforts to create a high performance culture.

Mistake #1 - Being too "philosophical"

Many times executives aren't clear what they mean by "culture" or, more importantly, what culture they are trying to create and they get stuck in philosophical debates without any forward movement.  Research has revealed conclusively the cultural characteristics that correlate with organizational success , including financial results, and these behavioral characteristics can be rigorously measured. Research also shows that a company's stated values only impact performance when they are expressed through specific behaviors. It is important to be philosophically aligned, but in the end the question is "what  behaviors  define the culture we need to execute our strategy?"

Mistake #2 - Launching culture change initiatives without data

Nearly everything affects culture, so there are a huge number of potentially useful actions organizations can take to shape and improve it. But not everything equally moves the needle.  Without real data, organizations are spending time and resources with no guarantee of any real return .  Culture is an intangible asset of enormous value. Executives would never settle for such lack of rigor in measuring and managing their other critical assets.

Mistake #3 - Spreading themselves too thin

A lack of real measures means many initiatives seem like good ideas. So instead of picking the top 3 or 4 things that will move the culture toward the strategically defined culture of the future, organizations do "a little of a lot of things" thus diluting their results and squandering the opportunity to make significant, fast and measurable progress.

LeadFirst regularly helps organizations address these and other culture development issues. Whether your organization is new to strategic culture management or has been measuring culture for years, let us help you track and/or improve the ROI of your culture development efforts.

By David Lynn 15 Apr, 2016

Increasing numbers of organizations are embarking on serious culture change/culture shaping initiatives.  LeadFirst  has been on the forefront of this issue for 30 years. We’ve worked with scores of organizations, from FORTUNE 100 behemoths to fast growth startups to forward thinking non-profits. We’ve witnessed, and contributed to, the evolution of such efforts. Below is a distillation of what we have learned are the Critical Success Factors in successful culture shaping; a report from the front lines of culture change. In 30 years of intensive culture shaping work, we have uncovered seven Critical Success Factors:

1.   Define your Future Culture in terms of your organization’s strategy and outcomes. Culture is more than an effort to "continuously improve the workplace" as some try to characterize it. It is also more than an attempt to "live our values", though this is essential. The question is, "What culture is required for successful execution of our strategy?" The are many legitimate reasons to care about culture; a compelling culture is appealing for everyone and contributes to well-being, employee engagement and the ability to attract top talent, for example. But these may not, in themselves, be reasons enough to take it on. In the end, we ask our clients to care about culture only because it drives strategy execution and business outcomes. Executives must be involved in defining the Future State culture in terms of what will support the execution of their business strategy.

2. Define culture in terms of the  behaviors  you want to encourage.Organizational culture is complex. It’s such a big topic that seemingly everything affects, and is affected by, it. Related to the factor above, it is critical that culture be defined in terms of behaviors. There is more than one way to define culture, but to make the most progress the fastest, take a behavioral view. The question that everyone in your organization shares, whether consciously or not, is, "What behaviors does it take to survive, thrive and fit in around here?" Culture can be seen as the symphony (or cacophony) of voices "spoken" through senior leaders’ behavior as well as through the myriad policies, processes, structures and systems (e.g. the performance management system or typical processes for making decisions) that employees hear every day. They all serve to define and reinforce the behaviors required for success. Are they the behaviors you need for successful execution of culture? How do you know?

3. Make a clear and compelling business case.  The jury is in with regard to culture’s role in driving outcomes . Culture is not just an enabler. It is, in fact, essential to the successful execution of strategy. There is also growing clarity about which cultural characteristics are most associated with these outcomes. We have found that many (but not all) executives theoretically agree with these statements. But even those who agree may lose their conviction without compelling evidence. And the depth of their conviction will largely determine an organization’s success. This evidence exists. This case can be made more convincingly now than at any time in the past.

4.  Directly and vigorously engage the Executive Team.  Success in culture change requires the informed commitment of the executive team. This may seem obvious as this is true of most important initiatives. But we have seen, far too often, forward thinking human resources executives try to tackle substantive culture change with only tacit "approval" for doing so. Culture shaping requires changing leadership behavior, often profoundly, at the top of the organization. If executives think this is a "program" or "an HR thing" your impact will be minimal. Also, executives have to demonstrate they are unwavering in their commitment to changing the culture. They have to be clear and consistent in their messaging about both  why  the culture must change as well as to  what  it is changing.

5. Bring data. Armed with strong executive commitment, the question becomes what, specifically to change. If everything affects culture, what will make the biggest impact the fastest? This is where culture measurement should contribute. And not all culture measures are designed to deliver on this. Most reputable culture measurement systems can help you understand what type of culture you have and can also help you define the culture you need. But most cannot tell you, with any depth or reliability, what to  do  about it. Select a culture measurement system designed to do so, one that can help you make the business case, as well as point the way to the changes that must be made.

6. Think big and act fast. Your task is not only to promote or instill the preferred Future culture, it is also to defeat the existing one. You will meet with all kinds of resistance, even from well-meaning employees and leaders who understand the limitations of the existing culture. Their reactions will range from strong support, through tacit resistance to outright sabotage. Small, incremental measures are the easiest to resist. For example, if your culture is too bureaucratic, as so many are, the bureaucracy will find a way to survive small efforts to change it. The culture plan (yes, you need a Plan) should be built upon the data (see above) that reveals the most significant barriers to realizing the Preferred Future culture. It is far easier to take aggressive action when your action is focused on the highest priority issues . If the data reveal that you must move decision making downward, then you need an aggressive plan for doing so.

7. Involve everyone. There will be a temptation to hold the culture data (which is often unsettling) close to the vest and to treat the culture change as primarily a top/down initiative. To be sure, culture change cannot be an entirely democratic process. Some decisions will be difficult and must be driven deep into the organization whether people "like" it or not. But it is a mistake to use only older, autocratic methods(which represent the "old" culture) when trying to bring about a more contemporary and sustainable one. In short, it is critical that people at all levels are asked for their feedback and guidance throughout the process.

If you’re looking for a best-in-class way to address culture that includes the 7 Critical Success Factors and results in a measurable ROI that can be proven to your Board, CFO and/or Executive Team, we invite you to demo LeadFirst's Diialog Culture Management System. The system combines years of organizational culture consulting expertise and culture migration plan development processes with a safe, secure and highly engaging executive dashboard platform upon which to define your organization's preferred culture, as well as your present culture, sub-cultures and counter-cultures

If there is a gap between the culture you have and the one you need to execute your business strategy, Diialog will isolate and rank order the issues that stand in your way. If you need help developing initiatives that will address culture-restraining issues, switch on the Ideation™ function to fully. Diialog includes periodic accountability measurements, both broad and targeted, to track the progress of your unique initiatives, and create accountability for your culture improvement at all levels of the organization

Take the first step and get a baseline measure of your culture today. Then, unleash the power of the continuous Diialog Culture Measurement & Management System to objectively manage the culture change process, track your success and keep your executive team focused on the progress. The process is easy to pilot. Click here to schedule a call today!

By Dan Lynn 02 Feb, 2016

There is such a great yearning for more true leadership in the world – in business, in politics, and in our communities.   And we are once again reminded of this based on the updated  Deloitte study  that reinforces we are facing a crisis of leadership in the world and in business.

This crisis of leadership is not in place due to a lack of resources to develop leadership. For example, if you search the word “leadership” in Amazon.com you will find close to a quarter million titles on the subject.  In addition, there has been an explosion in the number of consultants and consulting firms offering executive coaching and a variety of other services dedicated to developing the leadership required. Finally, there is a growing body of research showing a direct correlation between the quality of leadership and the quality of results that are achieved by an organization. The return on investment of developing leaders is no longer in question.  

With a clear need for more effective leadership, a clear ROI on developing it and so many resources standing in wait for those wishing to develop greater leadership – why aren’t more business executives embracing their own part in the development of their own leadership, for themselves and for their other leaders?   I believe a number of illusions are standing in the way:

  1. The “time is not right” illusion. Many executives see the value of leadership yet feel other pressures that seem to counter investing the necessary resources in their own development. It might seem like something to do when they have more time and resources to invest in themselves. There is a sense that “If I take the time now it, somehow will interfere with what I am trying to accomplish.” In other words, it’s important but not as urgent as whatever is getting in the way. Yet, there is never a better time to develop leadership then when you feel pressured to generate better results and there is no better investment then when you feel pressured to  cause a change in outcomes critical to your success.  
  2. The “It’s them, not me” illusion. Some business executives feel it is better to focus development on others in their organization rather than investing in their own continuing development. They see leadership development interventions as a way to “fix” their direct reports or to get others to do a better job at following their directives. This is certainly a safer way to develop leadership and at least some development might be better than none. Yet, if a business executive truly wants to increase their impact then they must walk their own talk and continuously up their game. As was mentioned above, there is no better investment than in developing leadership and when others see you continuously developing, it inspires them to do the same.
  3. The “there is not business case” Illusion. Again, this notion has been thoroughly dispelled by research. There is a direct correlation between leadership and greater business success. That said, there is another side to this. If we are throwing people into leadership programs only for the sake of the business rather than starting with a purer desire to empower them towards their own personal growth and helping them to find the personal value in becoming a better leader – our leadership programs will fail to meet expectations. Why? Because, while leadership is expressed as a series of skills – leadership is not merely a skill set. The development of leadership requires a transformation in a person’s heart and mindset. This shift in heart and mind is the process through which leadership expands in the person. Leaders are born out of a kind of awakening that happens at a deeper level. Unless organizations value this first – their investment in leadership will not be fully realized.
  4. The “I already am a great leader” illusion.   Bottom line, the best leaders have humility. For example, when it comes to Leadership 360 degree feedback, it is typical for strong leaders to score themselves lower than others on leadership competencies and for average to poor leaders to score themselves higher than others on leadership competencies.   In short, arrogance allows many leaders to resist the development path. This is a tough one to overcome because, unless leaders are coachable, it is highly unlikely they will benefit from the developmental journey.

There may be other illusions not mentioned here and I invite you to add any you see in the comments section below.

In my view, the leadership crisis will resolve itself one way or the other. Either more business executives will wake up from these illusions with a willingness to evolve or we will face a global business crisis that will inspire the growth of leadership out of necessity.   Which will it be?  Well if any of the illusions above resonate - a more proactive shift might just start with you committing to your own development.


David Craig Utts, MS

Expert in Developing Engaged, High Performing Cultures and Leaders

By Gerry McDonough 30 Jan, 2016

In my last post,   Culture Alchemy: The ‘Why’ is the Most Important ‘How’ , I drew upon   LeadFirst ’s three decades of research to identify the business outcomes that our research team has revealed are influenced by organizational culture. These are the “hard” performance metrics that any executive management team must consider when evaluating a portfolio of potential investments. Based upon this research, senior line and human resources managers can feel confident about making a clear and compelling business case for culture improvement, particularly as it applies to promoting “organic” revenue growth.

In this installment of   Culture Alchemy , I will describe what LeadFirst’s research team has discovered as the key characteristics of a performance culture, one that attracts, engages, and inspires people, and liberates a greater proportion of individual and team discretionary effort and accountability.

Using a computer software metaphor, culture is the organizational “operating system” that manages software (people) resources and provides the framework for their functioning, including their attitudes and behavior.

Our research has shown, both desirable and undesirable attitudes and behavior can be traced to the culture operating system, more specifically, to three cultural Causal Factors : (1) Leadership & Management, (2) Structures, Systems & Policies, and (3) Work Design & Processes. To change organizational patterns of attitude and behavior, one or more of these causal factors must be amended in the operating system.

LeadFirst research has revealed four distinguishing characteristics of a highly productive (we call it a “ Dynamic ”) organizational culture. These include, External Focus ,   Proactivity ,   Collaboration , and   Agility . The interplay between and among these cultural characteristics and their antipode characteristics is interesting and relevant, and will be the subject of a future article. But, for now, I will describe these characteristics in more detail, including how they manifest in organizational life.

Externally focused   organizations are characterized by members who see their primary responsibility as serving the needs of their customers, whether they are truly external to the organization or elsewhere in the value chain. The point is that they actually see the value chain and where they and their customers fit. Their focus is more on customer requirements and needs than on internal processes and procedures, though they recognize that such processes are necessary and important to the extent that they serve the customer well.

External   focus, often called customer-centricity, is strongly correlated with the Proactive   characteristic (described below), since being truly customer focused is seen as irrelevant without the willingness and ability to take action on the customer’s behalf. In addition, organizations with an ardent external focus are also keenly focused on market, product and service differentiation. Decision quality tends to be high as customers – internal and external – are central to consideration.

Proactivity   is characterized by people taking initiative. Members in   Proactive cultures see themselves as responsible and accountable for important and specific outcomes. The organization’s purpose, expressed through one or a combination of the big-3 Causal Factors (described above), aligns purpose with actions and actions with outcomes. People in   Proactive   cultures tend to be highly engaged and see significance in their work and their results. They are mindful of hierarchy but are not constrained by it. Their focus is on anticipating needs and issues and taking action to address them.

Members of   Proactive   cultures are generally free of fear, but feel intense accountability for results in order to beat their previous best individual performance, to avoid letting their colleagues down, or both.

Collaborative   cultures are characterized by members who are focused on, and effective at, teamwork and interpersonal communications. Effective collaboration does not mean “getting along” as an end to itself. Avoidance is not the same as collaboration. In fact, highly   Collaborative   organizations can appear, to an outsider, to involve a fair amount of debate and even argument. Members in Collaborative   organizations are willing and able to speak up and put issues on the table. They value honesty, yet remain open to learning and new ideas. Collaborative   cultures are positively correlated with trust.

Decision quality, velocity and execution are hallmarks of   Collaborative   cultures as members are focused on the best answers, as opposed to winning arguments, and are fully involved and invested in outcomes.

Agile   cultures are characterized by a combination of flexibility – the ability to adapt to changing circumstances, and creativity – the ability to develop unique and divergent solutions.   Agility   is most important in organizations or industries undergoing significant change in which the status quo is simply insufficient. Perhaps the most important productive output of an   Agile   culture is its ability to promote true innovation.

Along with the element of flexibility, members of   Agile   cultures are expected to exercise good judgment and act in the best interest of the organization. In this regard, the   Agile   characteristic both promotes and requires a high degree of trust. The   Agile   culture is positively correlated with decision quality and decision support. Members are both highly engaged and creative in solving problems. Decision velocity can occasionally suffer when divergent thinking isn’t sufficiently reigned in relative to the type of decision being taken.

By Dan Lynn 23 Jan, 2016

In my last article,   Culture Alchemy: The Insignificant, Vital Factors , I drew upon LeadFirst ’s three decades of research and practice to identify and differentiate the statistically relevant   Causal Factors   and, paradoxically, the potentially potent Indirect Factors   of organizational culture formation and development.

In this post, I will zoom out to a macroscopic view to identify the business outcomes that LeadFirst’s researchers have revealed are influenced by organizational culture. These are the “hard” performance metrics that any executive management team must consider when evaluating a portfolio of potential investments. Based upon this research, we believe senior line and human resources managers interested in making a business case for organizational culture improvement should go confidently into discussions with all but, perhaps, their most short-term-minded executive colleagues. In this regard, the ‘why’ of culture improvement can be their most important ‘how’.

LeadFirst routinely studies leadership, employee satisfaction and engagement data at the individual employee level, however, analyzing organizational culture data at the business level has enabled us to better understand the linkages to outcomes that are directly relevant to most line executives. Although findings of causal direction and timing (lead-lag effects) vary, our individual studies generally suggest that there are strong, positive relationships between and among the dependent variable of   organizational culture   and the independent variables of   customer loyalty ,   revenue ,   profitability   (EBITDA),   productivity ,   employee turnover ,   shrink rates   (in the retail industry), and   safety compliance   variables.

Meta-analytic techniques have enabled LeadFirst’s research team to pool studies together to clarify the strength and the extent to which they can be generalized. The correlations between organizational culture and business outcomes, including financial outcomes, do generalize across organizations for most business outcomes. That is, these correlations do not vary substantially across organizations, and in particular, there are few organizations with zero or negative correlations (interestingly, one exception was a company in a near-monopolistic environment).

In our own client-company tracking studies, in which we monitor improvement in   Diialog ™ Culture PROfile scores and various business outcome measures on a three-year, rolling average basis, we have found:

  • Per employee increase of 11.6% in sales; valued at $61,288 per employee
  • Per employee increase of 9.1% in earnings (EBITDA); valued at $5,815 per employee
  • Average per employee increase of 8.3% in market value (or proxy); valued at $43,814 per employee
  • Decrease of 27% in employee attrition; valued at $104 million
  • Team-level safety compliance improvement of 27%
  • Improvement ROIs in the range of 304% to 3,180%
  • Decision effectiveness iprovement of 18%

We conclude from these studies that organizational culture is related to meaningful business outcomes at a magnitude that is important to most companies and that these correlations generalize across companies. We have found the strongest effects relative to employee retention, customer engagement, decision-making, retail shrink rates, and safety compliance. Correlations are positive and generalizable relative to employee productivity (revenue per employee) and profitability (EBITDA per employee) criteria but are of lower magnitude, perhaps because these outcomes are less proximate and are also effected by other variables, including macroeconomic factors.

So, the good news if you are a line manager or human resources executive who is intuitively inclined to invest in organizational culture development as a means of improving business performance is that you have statistics squarely on your side. Organizational culture measures are related to business outcomes and these relationships are strong and generalizable. And, when it comes to launching and sustaining culture shaping initiatives, having a rigorous answer to the question, “Why are we investing in this?” should be the most potent “How” for sustaining the effort.

In my next installment of Culture Alchemy , I will describe the four essential characteristics of a Dynamic culture, how they align to promote performance, and how to shape these characteristics in an organization.

I invite you to share your ideas and experience. To learn more about   LeadFirst Learning Systems , our research and practice, please contact Dan Lynn (Dan@LeadFirst.com).

By Dan Lynn 20 Jan, 2016

In an earlier post , I suggested greater rigor must be brought to culture change initiatives by ensuring you engage two pathways as you shape your culture.   These pathways involve

  1. Measuring and analyzing your culture from the perspective of all of the policies, structures, systems and processes that shape your people’s behavior.
  2. Developing leadership from the top down that models and inspires the behaviors that most matches and fosters the culture you desire to create.

 Our CEO,  Gerard McDonough , shared about the first pathway in his post entitled Culture Alchemy: Leveraging the Causal Factors  This post will center on your organization’s approach to leadership that ultimately directs and sustains culture.

In short, your leadership culture is the source of your overall culture because it determines the mindset and approach of those who most intimately engage your employee population. It is the more challenging of the two pathways to engage because it is far easier to fix a causal factor like a policy or benefits plan than it is to inspire an executive to become more self aware and engage a new set of habits. To be clear, success requires that you address both pathways. Yet, unless an organization is committed to leadership transformation, starting at the top of the organization, it cannot expect to achieve the return on investment that a robust culture shaping initiative will bring.

To fully gain the benefits from a culture shaping process, you must engage a leadership development program that includes:

  1. The full and informed commitment of the C-Suite to demonstrate what leadership in the culture of the future requires of all leaders.
  2. A culture shaping process following the two pathways noted above.
  3. The development of the senior team so that they are operating at a higher level as a team.
  4. A proven leadership development program starting in the C-Suite that includes 360 degree assessments, coaching and appropriate training.
  5. The willingness to cascade the leadership development down through the organization.
  6. A feedback mechanism that tracks progress of the culture and leadership change you desire.

 Organizations have seen great returns from following such a robust approach. A shift in leadership has been shown to have a direct correlation to improvement in key business metrics.   It is a significant investment yet, if you understand the value of aligning your culture, strategy and brand so that you are true force in the market place, the return is . Once you commit to this course the key to your success is locating a firm that can bring all the necessary experience and tools to the table to get you there.


David Craig Utts, MS

Expert in Developing Engaged, High Performing Cultures and Leaders


By Dan Lynn 16 Jan, 2016

n my last article,   Culture Alchemy: Leveraging the Causal Factors , I drew upon LeadFirst ’s 30-years of research to identify the drivers, or   Causal Factors , that have a statistically relevant impact on promoting a performance culture. In this installment, I’ll present other factors that, perhaps paradoxically, are statistically insignificant, yet practically speaking, very potent in shaping an organization’s culture.

If I were to tell you that your carefully-deliberated and well-written declarations of organizational objectives such as your mission, purpose, vision and values are inconsequential to promoting a performance culture, how would you feel?

Recently, I raised this possibility while speaking at a conference attended by 60 senior executives and they were notably agitated by my question. One participant – I later learned that she had recently returned from an offsite meeting during which she and her colleagues crafted a hierarchy of organizational statements including values, vision and mission – interrupted me and said, in a spirited voice, “That’s impossible; everything we’ve learned about organizational performance and culture converges on the importance of purpose, mission and values.” My audience affirmed her perspective with their body language and even some applause.

As the room quieted, I assured them that I too believed these factors mattered, but that our research clearly showed the need for a more nuanced understanding of the dynamics of these factors in culture formation.

For three decades, we have been conducting research and analysis in the areas of leader, team and organizational performance. Much of this research is aimed at determining the factors causal to shaping a high-performance culture, one that sustainably produces desirable business outcomes, including financial performance. The statistical methodology for this is called regression analysis. In statistical modeling, regression analysis is a process for estimating the relationships among variables. It includes many techniques for modeling and analyzing several variables, when the focus is on the relationship between a dependent variable and one or more independent variables (or “predictors”).

As I described in my previous article,   Culture Alchemy: Leveraging the Causal Factors , LeadFirst’s Analytics Team set a high-performance culture (we call it a “Dynamic” culture) as the dependent variable and then loaded the regression equation with variables or presumed predictors of culture. These included factors such as organizational structure, design, policies, compensation, leadership, stated values, mission, purpose, etc. As the team ran the regression models, several of the presumed predictors were revealed as statistically significant, but others “fell out” of the equation as insignificant.

Three factors were confirmed as significant, “meta-predictors” of a Dynamic culture:

  1. Leadership & Management   (e.g., direction and accountability; communication, respect and motivation; coaching & development)
  2. Structures, Systems & Policies   (e.g., decision making & influence; compensation systems; promotional systems)
  3. Organizational Design & Processes   (e.g., work processes; job design)

However,   Mission, Purpose   and   Organizational Values   fell out of the regression equations indicating their insignificance AS DISCRETE FACTORS. This surprised our research team causing it to dig more deeply into the results with additional quantitative and qualitative research.

On the qualitative side, employee focus groups revealed that having clearly stated mission, vision, and values are only significant when these are consistently expressed through one or a combination of the big-3 meta-predictors:   Leadership & Management ,   Structures, Systems & Policies , or   Organizational Design & Processes .

If, for example, a stated leadership value is to collaborate with others across the organization, but the discretionary compensation system “racks-and-stacks” these same leaders in a zero-sum, competitive contest, the collaborative value will likely go unexpressed in the culture. Indeed, the misalignment between a stated value and a system or policy reality is often counterproductive to culture and organizational performance. In this example, the culture would probably be characterized by internal competition, not collaboration.

Typically, scores of these misalignments are revealed when we conduct   Diialog ™ culture assessments for client-companies. There is, in effect, a cacophony of “voices” speaking to any randomly selected employee that shape his or her perception of “what it takes to survive and thrive around here.” When stated values, vision, mission and other organizational statements are not consistently activated by policy, process, systems, decision-making and structures, they are, at best, a mere whisper.

So,   Indirect Factors   such as mission, purpose and stated organizational values are insignificant by themselves, but extremely consequential when expressed through one or more of the big-3 causal factors. What messages are your big-3 causal factors sending to your employees at all levels? Are these messages congruent with your hierarchy of organizational statements? Are your expressed values, mission and purpose merely a whisper amidst the din? For the master alchemist companies like UPS, Panera Bread, Adobe and Cognizant, they are not.

In my next installment of Culture Alchemy , I will continue to draw upon our repository of   Diialog ™ organizational culture data to shed light on the financial and other business outcomes that a high-performance,   Dynamic   culture can produce.

I invite you to share your ideas and experience. To learn more about   LeadFirst Learning Systems , our research and practice, please contact Dan Lynn (Dan@LeadFirst.com).


By Dan Lynn 09 Jan, 2016

In my last article,   Culture Alchemy: How to Change an Intangible Asset into Tangible Value , I cited how master corporate alchemists like Southwest Airlines, Autodesk, Costco, Disney and Chubb transmute the organizational culture “intangible asset” into substantial tangible value that can be reported on their corporate balance sheets. In this installment, I will draw upon   LeadFirst ’s primary and secondary research to identify the drivers, or   causal factors , that have a disproportionate impact on promoting a performance culture.

Our research includes multi-rater (360°) assessment results for 34,000 managers/leaders, team assessment results for 320 teams,   Diialog ™ organizational culture profiles for 650 organizational units, and meta-analyses, i.e., statistical integration of data accumulated across many studies.

For those executive leaders responsible for creating corporate value and who know that organizational culture is key to strategy execution, prioritizing investments of time, money and intellectual attention to create a performance culture can be perplexing. This should come as no surprise as most events in organizational life have some, at least small and localized, impact on culture. Certainly, an historic event, a merger for instance, has a profound impact on culture; but the departure of a junior executive manger two levels deep in the organization can have a significant, localized impact. So, what really matters; what should a well-meaning executive leader invest in?

Our working definition of culture is “What behavior does it take to survive and thrive around here?” Employees’ perceptions of what it takes to fit in and flourish in a culture is shaped by thousands of events, decisions, actions policies and behavior. So, it is fiscally important for executive leaders to isolate the vital few causal factors that are worthy of culture shaping investments.

There is no “silver bullet” when it comes to promoting a culture that creates balance sheet value, but patterns have emerged in our research data that point to the causal factors that, when acted upon, will generate the highest returns. Of course, these factors vary across industries, enterprises and even business cycles, so it is crucial for executive management to identify their specific culture drivers. Looking at   Diialog ™ composite data, the Meta-Drivers are three:

  • Leadership & Management
  • Structures, Systems & Policies
  • Work Design & Process

It is, however, at the next level of causal factor taxonomy where the real insights come. These insights can guide the investment in culture formation and shaping and dramatically improve both the effectiveness and the efficiency of investments.

The chart below reveals the order and relative magnitude of a partial list of Diialog™ causal factors drawn from a cross-industry database of more than 650 organizational units.

By Dan Lynn 05 Jan, 2016

In my last post , I highlighted the four competing values that we have found through our research to be most relevant to building high performing cultures. In short, our research has shown that high performing cultures are more   Externally focused, Proactive, Collaborative, and Agile.

Building such a vision for culture typically involves the senior team engaging in a facilitated dialogue about what kind of culture is required to optimize their business strategy. The executive team must be clear in the culture it seeks to create and committed to doing what is necessary to bringing such a culture to life. They must also be armed with a clear understanding of the culture as it is – the current state - as defined by its entire employee population. This requires the organization to engage an assessment mechanism that will provide a valid snap shot of their culture’s current state.  It is never sexy to understand how to assess something well but in the case of culture there are elements that must be included for an assessment to measure everything it must to help you continuously improve your culture.

 A cultural assessment mechanism must be:

  1. Built on a model that highlights factors proven to be most supportive of high performing cultures.
  2. Grounded in empirical data that is built from a pool of hundreds of organizations.
  3. Allows the executive team to compare themselves to similar types of organizations.
  4. Made up of questions that have been consistently shown to map to key causal factors aligned with the model used to assess your culture.
  5. Able to be delivered easily and online.
  6. Able to prioritize the most critical issues so that the culture change team can determine what interventions will generate the most immediate and impactful shift towards your ideal culture.
  7. Flexible enough to reveal data form all relevant data segment such as functional areas, divisions and regions, etc. This enables effective action to be taken at the proper level.
  8. Able to generate updated feedback on changes made so that the organization can regularly assess its progress in shaping the culture envisioned.
 Certainly, there are many nuances and subtleties in culture.   Yet, a culture can be transformed when an organization has fully committed to creating a great culture, grounds it in a proven framework, envisions the culture and engages an effective means to assess it.   Yet, now that you have assessed it we must actively engage in the change efforts. Over the next couple posts I will revisit the two pathways of culture change in more detail.

 David Craig Utts, MS

Expert in Developing Engaged, High Performing Cultures and Leaders


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