11 dec 2018
Why changing corporate culture is the key to mastering disruption
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Driving cultural change is the biggest single leadership challenge today, but how are today’s MNC leaders in APAC shaping up as they bring change to life?
It’s certainly not news that the concept of ‘culture’ is a critical component of success for business. But the way leaders are talking about it today is changing rapidly.
That change is not because there is just a shift in expectation from talent, as we heard discussed in an earlier chapter or even new best practice. There is a pragmatic economic need, where financial results will be compromised in a fast-changing environment unless the cultural status quo is broken.
From our interviews, it was clear that the new attitude from leaders is that the ‘responsibility’ for cultural change cannot be delegated. Unless the CEO leads and lives the culture they want to create, nothing changes. “It’s the mindset and culture that is the key to success.”
Bringing values to life
Many of the leaders we interviewed know where they want to go culturally, but their language speaks about the future rather than today. “Experience is important, but the ability to change is more so now. Our leaders need to develop a vibrant young culture.”
“We talk about our great culture and values, but I need to bring this to life. I want to feel it.”
Earlier in this series, we heard an example of how flattening a corporate structure supported impressive growth, but it is evident that this kind of cultural work is never-ending. “The mood and environment ‘we want to create’, is that disruption is an opportunity.”
DNA is a popular comparison. “Like sustainability, disruption needs to be part of your DNA. The challenge is the culture. How do we get this to be part of our DNA?” and “Align the DNA of the firm to be future-ready.”
But if changing ‘themselves’ is hard enough for leaders, then changing others is a huge challenge. What’s more, this is a dynamic process, rather than just moving to a new endpoint, so the leadership challenge is clearly massive.
“The DNA of our firm has always been entrepreneurial. I see myself as the catalyst to release this potential.”
Increasingly, the discussion about culture is largely about the tone and the example that leaders set. As one executive puts it clearly, “I am trying to role model a pace for us that meets the market.”
Missionaries, not mercenaries
Some companies have become really quite prescriptive in the language they use around culture. “I want missionaries, not mercenaries. People who work for the mission, not the money.” This quote and the following two came from fast-paced tech companies.
“We have a concept called “speed of light” and everything is done at this speed. Agile, nimble and grow like crazy. As we grow, we split out businesses and appoint a leader.”
“We don’t report to the organisation, we report to the mission.”
This next comment links back to the innovation chapter, where risk-taking only happens when people feel safe. Several leaders spoke about how they are encouraging people to challenge the organisation and take risks without fear of punishment. “Challenge is part of our culture. People are expected to experiment and take risks.” And “our culture has had to change and encourage fast failures.”
Changing the culture to allow failure is not just about the CEO though. Unless all of the management team understand and truly embrace this attitude, the ‘safe’ environment will not exist.
“The hardest thing to manage through change is people. The number one challenge for me is to hire people willing to accept change. If you have any internal resistance to change, you will fail.”
APAC’s cultural complexity
Beyond the ideal company culture, is the role of national cultures, which is highly diverse in APAC. In some countries, this actually creates an advantage.
“I feel privileged to be in APAC. People are more open. In Germany, it is hard to get change.”
“There is a lot more entrepreneurial spirit in India and China. There is always a ‘better way’ attitude there.” But this is not the same everywhere. “Japan is slow to embrace new things.” And then commenting on the region as a whole, “Cultural differences are even greater than generational differences.”
As the percentage of global revenue coming from APAC for MNCs continues to increase, “the cross-cultural challenge is still big. In the past, it was one way – can westerners adapt? – today it goes both ways.”
Many companies have taken to pro-actively working to equalise cultural understanding and this is the most common example we heard.
“We are exporting a lot of talent to the US and this influences thinking about Asia.”
The cultural leadership challenge for regional heads is summed up here with humility by this global CEO. “After 30 years in Asia, I still can’t say I understand other cultures. I still make mistakes. Now add to this, ‘digital’ makes cross-cultural shock instant.”
Changing from the outside
For most companies, there is a combination of bringing people in from the outside and changing the mindset of existing employees. It seems obvious but adds complexity.
“I recently appointed a marketing Director who I would not have appointed 2 years ago, but the needs of the market have changed.”
These kinds of outside appointments bring a risk of failure as this executive explained. “I hired an entrepreneurial executive, who was great, but left because I tried to get him to operate within our framework. It was my fault.”
“We bring people in from outside and some can’t function in this culture and environment.” Even though this company invests heavily in bringing new people into the ‘culture’. “To bring people into our culture, we have lots of programs to participate in, events, celebrations, etc.”
“Culture of new teams is the biggest thing keeping me awake”.
M&A integration has always been difficult to get right, but integrating a new acquisition while a company is working through cultural change is an additional leadership load. “We have made several acquisitions and merged these into our main business. This has created a huge change. We can teach skills, but they need to fit our culture.”
Sometimes it’s very clear that outsiders need to adapt and fit, or leave quickly. “Our people thrive on change. When they join us, they are overwhelmed at first. If they leave, it’s in the first 6 months.”
Changing from the inside
There will always be resistance to any form of change. Some people are unable to operate in a new way. They have their own clock speed. “Some of the talents had no notion of what was needed. I had to create a sense of urgency, and not all of my people could take this on, so I needed to change many of the management team.”
Another leader tried a new idea that has worked well. “We look for advocates from the long-term team to sell change. They are the role models that people relate to and this makes the biggest impact.” These were not senior management, but influencers below the middle layer.
People are influenced by their environment more than many assume. “We changed the working environment, which changes behaviours, which changes the culture.”
And the way companies provide and support learning to move their existing teams forward is gaining a big focus. “We have changed the way we learn. Learning on the go through condensed courses – micro-programs, through our digital platform.”
But ultimately, the culture is led by the CEO. Nothing changes without their ownership. “Our CEO has created a culture that encourages growth. Even though we are 12,000 people, it feels like a small company.”
Diversity of thinking
Every company today has a diversity agenda and there is a great deal of discussion about what this means. For several of our interviewees, diversity of thinking is the primary cultural shift they need to influence.
“Diversity of thinking is a big topic for us.”
This is beyond diversity quotas. It’s about creating a different intelligence in the company. This is difficult to achieve on many levels. “The diversity of thought topic is a big issue for us, but the people we need, don’t want to come to the office.”
Creating a culture that is loved by a diverse group is much more difficult than one that is for a group of corporate clones.
Culture is disrupting leadership because suddenly, leaders have a much greater and unending demand on them to be at the forefront of the necessary cultural change. “Managing the change takes a lot of my time.”
Leading by example and adopting a different style of operation means that the nature of leadership has changed too. “As a leader today, there is a need to gain influence through collaboration.” A very different outlook for some.
And changing the way things are done needs universal support. “Stripping back on complexity and corporate process to empower people” is a necessary reversal of the bureaucracy that most large companies have built to support a successful past. Letting go of this has become the heart of cultural change. This bit really requires leadership courage and fortitude.
Finally, as we’ve learned, “Change comes from leadership”, but how are the APAC leaders we interviewed communicating that change? The next chapter of ‘Leadership, Disrupted’ will answer that question in some detail.
Leadership Disrupted book
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To read further chapters of the ‘Leadership, Disrupted' Report, click below:
- Chapter 1: Introduction: 70 APAC leaders of multi-nationals respond to disruption
- Chapter 2: How the digital customer is dictating business change
- Chapter 3: What happens when the competition can do everything you can, only faster?
- Chapter 4: Why MNCs are trapped by their past successes
- Chapter 5: How MNCs are changing their business models to overcome previously-successful business models
- Chapter 6: How MNCs are redefining innovation across APAC
- Chapter 7: Looking East for innovation
- Chapter 8: Understanding the expectations of millennial talent
- Chapter 9: The proven ways to attract and hire top talent
- Chapter 10: Learning how to engage talent for the long-term
- Chapter 11: Why leaders are learning to be humble
- Chapter 13: The way good leaders communicate is changing
- Chapter 14: Is mindset fast becoming more important than skill-set?
- Chapter 15: Understanding how to seize the mindset opportunity