To Change a Culture, Change The System

Turning around ‘Big Company Syndrome’

Published: Tuesday, January 7, 2014 - 17:48

Just before the holiday break, I broached the subject of systems. Given the current management rage focusing on the power of distinctive corporate culture as the key enabler of constant innovation, it’s worthwhile to think about how systems and culture intertwine.

My friend Michael Shrage likes to talk about “innovation ecosystems,” and in a recent talk he made the point that “culture trumps strategy.” So let’s think through this a bit.

The best and most consistent innovators have the ability to think through all the conditions and connections required to allow a given solution to fit seamlessly into the everyday beat of those who will use it. That kind of thinking is systems thinking.

It’s the ability to provide solutions within the current context, or providing a new one along with the solution.

I happen to believe that systems thinking isn’t natural, intuitive, or easy. Nowhere in our formative years do we get schooled in systems thinking, but it can be learned.

Systems thinking

Thomas Edison was a systems thinker. He had to be to turn his invention into an innovation. He knew his little invention—the light bulb—wouldn’t change the world on its own. He knew, because incandescent lighting had already been developed on the other side of the Atlantic. He knew the gas lighting industry (the existing system) held the real power, and a light bulb alone wasn’t going to dethrone it. He knew the real solution was about providing on-demand light and power to everyone.

And that required a whole new ecosystem to provide the proper context in which the light bulb could flourish.

In less than three years and mostly with his own money, Edison built the entire electric power system. He designed, engineered, and manufactured everything down to the wiring: constructing power stations to convert steam power to electricity, digging and laying miles of wiring, insulating the wires to prevent damage and discharge due to moisture, and connecting the conduits in a workable network. He built and installed electric motors in the various types of machinery that would use the new power source, along with all the infrastructure needed to support the use of electricity, like meters, fuse boxes, lamp holders, switches, and sockets.

But here’s the thing: we aren’t all Edisons. We’re not that good at systems thinking. All you have to do is read the headlines and tune in to a late-night talk show every now and again. The lack of systems thinking can be downright funny.

I still remember how United Airlines’s $700 million high-tech automated baggage system became the butt of jokes as it delayed the opening of Denver International Airport well over a year and then regularly chewed up or lost luggage. The system featured miles of underground track with cart-to-computer communication via radio frequencies, and promised to revolutionize the airport experience. Television crews covering the debut split their sides as they watched carts overshoot luggage onto the tracks and get sliced up by other carts.

After a rather painful ten years and nearly a billion dollars in operating costs, United’s chief operating officer was quoted as saying, “We have come to the conclusion that going to a manual approach is best.”

Some stories aren’t so funny, though. What strikes me is how in the near-perfect vision of hindsight, “culture” is often blamed for the most devastating of disasters and tragedies.

It’s been a decade since The 9/11 Commission Report cited the most important failures as being “lack of imagination” and “cultural asymmetry,” explaining that “To us, Afghanistan seemed very far away. To members of Al Qaeda, America seemed very close.”

Really? Wasn’t it more that a small, highly organized, well-funded, and extremely inventive organization successfully accomplished a goal because their systems and structures were properly focused to do so, while the U.S. intelligence systems and agency structures were simply no match, because they were at that time designed primarily for enforcement, not prevention?

It’s also been a decade since the Columbia space shuttle exploded over Texas, followed by the report of the Columbia Accident Investigation Board which blamed “broken safety culture,” “can-do culture,” and “perfect place culture” as being behind the neglect of early warning signs and clear equipment failures discounted as “in-family” events.

Really? Wasn’t it more that NASA’s key processes were inherently biased to operate on inputs designed to produce the desired output: lift-off?

Here’s the interesting thing: In both cases, the remedies revolved around bolstering systems and structures. They were not aimed directly at “culture.”

In the case of 9/11, the commission’s recommendations were to “routinize” and “put in place systems” and “provide a framework” for analyzing improbable scenarios. That sounds like systems thinking. They suggested having a “coordinating mechanism” to ensure that intelligence goals are met. The cabinet-level Department of Homeland Security was formed. That sounds like structure.

Likewise, in the case of NASA, when the near-miss (foam separating from the external tank) of the 2005 Discovery mission reminded everyone of the agency’s shortcomings, new administrative leadership promised to refocus the organization by resetting priorities and measures, realigning programs and processes, and restructuring.

I don’t think it’s such a big secret why culture is the favorite culprit blamed for a lack of creativity and innovation. It pulls together all the most visible company dynamics: management styles, budget policies, political practices, office environment, interpersonal relationships, and decision speed.

Big Company Syndrome

But there’s a deeper root cause related to the system and structure from which the culture springs: It’s what my friend and former Toyota Group Vice President Bob Bennett once explained to me as “Big Company Syndrome.”

It’s prevalent in large corporations with weak or loosely defined systems and structures, can be deadly if gone untreated, and goes something like this:

Constant, companywide innovation is not something requested, managed, or measured at the organizational level. Therefore the desire for personal reward and recognition drives an informal system intended to produce a promotion or bonus, which results in a strong program-oriented mentality. Meaning, sell a program and request more capacity and resources in the form of bodies and budget, regardless of whether it adds value. Approval is granted because it produces a favor owed and supports the boss’ own career ambitions. Objectives now become focused on meeting budget projections. Company expenses then rise faster than sales, and add further complexity. That limits organizational effectiveness, requiring even more work to execute the program, leading to yet further requests for more resources. When costs swell, senior management puts the squeeze on to stem the tide. Speedbumps get erected, often in the form of additional project approvals and heavy-handed governance. Valuable ideas get iced along with circumspect programs. Eventually, the ability to flex, react, and innovate is lost.

Now, compare that to a design studio or entrepreneurial outfit, both of which organize themselves around customer-focused goals, projects, and processes, not functions. Projects have a clear start and stop, so resources are mobilized to match the need.

But over a certain size, the entrepreneurial structure grows up and gives ground to the Big Company Syndrome… if you let it.

Can the Big Company Syndrome be turned around? Is there a way to recreate the creative shop experience and entrepreneurial spirit to ensure constant innovation even when the Big Company Syndrome has a stranglehold on the organization?

Yes, through strong systems and solid structures focused on creating the right social context. You do not attack “culture” directly, for the simple reason that people will hold on even tighter to the culture you’re trying to change.

Stay tuned for a future post. For now, the message is this: to change a culture, focus on the system.

About The Author

Matthew E. May

Matthew E. May counsels executives and teams through custom designed facilitation, coaching, and training using four basic ingredients: strategy, ideation, experimentation, and lean. He’s been counseling for 30 years, a third of it as a full-time advisor to Toyota. He is the author of four books, the latest The Laws of Subtraction (McGraw-Hill, 2013), and is working on his fifth book. His work has been appeared in The New York Times, The Wall Street Journal, Harvard Business Review, and many other publications. May holds an MBA from The Wharton School and a bachelor’s degree from Johns Hopkins University.