Executive Summary

In Great Company

This book details the results of in-depth qualitative research undertaken to identify the major drivers of successful culture change in Australian organizations.

The research was lead by Professor Dexter Dunphy, Distinguished Professor, University of Technology Sydney, in order to answer a series of questions regularly posed by clients of Human Synergistics International:

  • How do organizations transform their cultures?
  • What creates cultural transformation?
  • What is the evidence about what works?

Each year Human Synergistics compiles research referencing organizational culture and leadership behavior in Australia and New Zealand. Each year the results show little improve­ment in culture change. Staff and leaders consistently report their organization’s cultures are more Defensive than Constructive. This finding parallels Turner and Crawford’s (1998) groundbreaking Australian research that showed 67% of change initiatives faltered. While many organizations know how to affect culture change, precious few actually do so. This frus­trating dynamic is described by Pfeffer and Sutton (2000) as the ‘knowing-doing gap’.

To determine how and why some organizations succeed in transforming their cultures, Human Synergistics examined a data set of 40 organizations that had not only measured their organization’s culture using the Organizational Culture Inventory® but had also remeasured it. A small number of these organizations had achieved a quantum change so significant that the term ‘transformation’ could be used to describe it. They shifted their profiles from a predominance of Passive/Aggressive Defensive styles to being dominated by the Constructive styles. Five of these organizations agreed to take part in the study to determine the drivers of cultural transformation. While sharing the ability to transform their cultures, these organizations—Adshel, MasterCard Australia, Balmain Leagues Club, Yarra Valley Water, and Lion Nathan—are otherwise very different from each other in terms of their size, industry, and corporate strategy.

The research methodology was designed to fully explore what it was about these organ­izations that allowed them to successfully transform themselves, with a particular focus on interviewing CEOs, change agents, and selected staff through focus groups.

The research team also reviewed:

  • The rationale for undertaking cultural transformation
  • Each organization’s mission, philosophy, structures, systems, and technology
  • Details of the cultural interventions undertaken and their impact
  • The challenges faced and lessons learned
  • The impact of the cultural transformation on performance

The research finds that the challenge of changing human behavior within organizations cannot be underestimated. While the research validates existing knowledge about organiza­tional change and confirms that it is hard to achieve, it also challenges accepted paradigms.

The vital role of leaders in sponsoring change is reinforced. Through the case studies, decisive leadership from the CEO is seen as a prerequisite for transformational change, not an option. In particular, the CEO needs to demonstrate a personal commitment to changing his/her own behaviour and modeling the behavioural styles needed in the new culture. But the CEO can’t work in isolation; the support of the leadership team and internal and external change agents all working together creates a core team that provides the support and high levels of energy needed to maintain the change process.

This core team must clarify the mission, purpose, and values of the organization and ensure everyone understands his/her role within it. In practice this means creating coherence on a personal level and consistently reinforcing behaviours that support the new culture, not the old one.

The research also reinforces the importance of effective internal communication. Listening to and respecting all staff members are identified as key change management skills. The language of change is also important: Creating a common, shared change language within the organization helps to ensure that everyone attributes the same meaning to change initi­atives. Effective change programs use evocative language, rich in emotional symbolism, to capture the hearts as well as the minds of organizational members and help them make sense of the change taking place.

Change is unlikely to happen all at once. The research finds that transformational change does not follow a distinct or uniform set of phases. The leadership team needs to set the prior­ities for the change program, develop a transformation strategy specific to its organization, and be prepared to alter and adapt that strategy to match changing circumstances.

This uncertainty about the nature of change leads the research team to conclude that those organizations that successfully transform themselves also possess another important attribute: They are willing to take a step into the unknown. They are open to learning new things and have the ability to learn how to learn and to proactively seek out and manage change. This means they learn to be comfortable with uncertainty, emotional confrontation, and turbulence.

The case studies also illustrate that moving to a Constructive Culture creates more open communication, improved staff motivation and effectiveness, increased initiative taking, greater creativity and innovation, better teamwork and collaboration, and happier, more pleasant workplaces. The research strongly suggests that these improvements carry across into improved performance levels.

The research concludes that the key to long-term organizational sustainability lies in developing a capability that allows the organization to continue to learn and grow. This meta-capability of learning to learn also needs to be present at a personal level within the leader­ship team so that the leaders of the organization can continue to reflect on and improve their personal behavior in a way that mirrors that of their desired organizational culture.