Brand Clarity

Leading Corporate Culture Change, Part 1

March 10, 2008 12:00 AM

By Jonathan Bender

The Halo Group talked to consultant Chris Houston of The Change Alliance about how a CEO can lead an organization in a new direction.

How does the need for a change agent arise within an organization?

A leader always has two fundamental challenges. The first is to run the organization they have today; they have a responsibility to serve and deliver products to their current customers. The second is to change their model, so that tomorrow's performance is in some way different, better, or sustainable. And the difficulty is that both of these goals need to be achieved simultaneously. Often, the management process pays particular attention to one task or the other, usually today's performance - best reflected in the numbers that show the current economic strength of a corporation. But the results today are the outcome of previous decisions, so today's change agenda is intended to produce results for tomorrow.

The quarterly earnings cycle forces a transactional response. CEOs feel that they have to do something today - preferably Now! - which is why it is sometimes helpful to have an outside opinion and perspective, one not caught up in the issues of producing today's output. A change agent has an eye on the horizon as opposed to the immediate crisis. It's that ability to simply think beyond the immediate issues of today, but do so fully cognizant of the present realities.

When is it time to consider bringing in a change agent?

Change ultimately happens because of either pain or gain. The first question to ask when considering using an outsider is: "Does the potential for value exist?" Simply put, is it worth it? There is a rhythm or cycle in every business that lends itself to opportunity. A consolidation might offer the chance to steal market share from a competitor. A distribution channel is closing, a product is at the end of its life cycle, or competition moves into our space. Traditional markets seem less attractive or costs are moving in a way that you can't understand or control. Slowing revenue growth is always a good indicator. But these are slow-moving variables - the CEO must have a sense of urgency that others need to feel. Timing is crucial and the very best indicator is the gut instincts of the leader that "now is the time."

The CEO needs to sense that she/he should address a need, crisis, or opportunity. It's critical that you don't bring in outside resources unless the organization is ready to move with them; otherwise, you're just wasting money.

What's the biggest challenge for CEOs as their organizations mature?

I often see leaders struggle with change because what made them successful initially is often not what will make them successful in the next stage. For example, in professional service firms, competence is determined by your ability to bring a particular service to a client. That's a very different skill from managing a firm of people looking to deliver services effectively. If you come up through a functional organization, you'll likely only see one portion of the system. Whereas CEOs need to lead a complex organization, managing all arenas. Thus one of the biggest challenges for the leader is being able to see and sense the whole organization and then to act with the same kind of confidence that they have used in this broader and bigger frame. Two issues arise: hesitancy or overconfidence. Both are crippling. But to break through resistance to change, an uncomfortable boldness and unaccustomed humility are required. Both are sometimes in short supply and the change agent may sense which is required and deliver the appropriate "medicine."

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Leading Corporate Culture Change, Part 2

March 10, 2008 12:00 AM

By Jonathan Bender

In part two, we discuss how a CEO can work with a consultant to establish corporate culture change.

Can CEOs inadvertently be standing in the way of an organization's growth?

I sometimes find leaders choosing to stand above the organization and feel that they're going to change it without it somehow profoundly changing them in the process. Effective change can only happen when leaders grow personally. The CEO has to ask themselves: "Am I prepared for some kind of change in me?" Because change in their organization starts in their office.

I remember a client saying to me once, "Chris, I realize that every instinct I have for this business is no longer relevant, yet they are the only instincts I have."

They had got to a very critical place in their own learning, the place of "I don't know." But then he moved forward, and made some difficult and risky choices, which may well not have worked. Without this almost mystical combination of humility and courageous vision in a leader, change is very hard to foster. I have said, "As grows the leader, so goes the change process." It seems that this is most often the case.

All too often, leadership can be a point of resistance. Instead, leadership must advance ahead of the organization. People need to take personal risks with their career or credibility. I remember being 18 months into a change process with a CEO and discovering that he had literally gone fishing. In another case, it got too hard and too distasteful - "I just don't need this, Chris!" That process was never going to work because he had quit. A change agent is an instrument, I prefer the word "servant" of the leadership; it should never be the other way around. I can only help them take the organization in a direction where the CEO is ready to go.

How can the relationship between a change agent and CEO help define a new leadership position for the organization?

The role of the CEO is fairly lonely. If you muse out loud, you run the risk of people taking you at your word and doing exactly what you say. You don't always have the opportunity to dispel fear or uncertainty. The role of confidant or sounding board is one that I play quite often. Sometimes what they need most is an intelligent and empathetic person by their side.

Competent change agents live in what always feels like a "twilight zone." They are close enough to be familiar with the organization, but far enough away to be considered a third party. By moving in and out of those zones, they can avoid irrelevance or getting trapped with the political system of an organization. They are known by an organization, but are not of it.

From this place, relationships are built over time across many different parts of the organization. Often the organization structure, designed for efficiency on one dimension, creates barriers in another. The change agent whose next paycheck does not depend on the success of one division over another is a useful bridge-builder and can "connect the dots." At a recent leadership conference I led, several years of relationship building across the company provided a web of relationships that could be drawn upon to help fashion an outcome that was of great value to the CEO, but that no one person inside the organization could have delivered. That is when the outsider is capable of adding the greatest value - doing what they alone can do because they are outside yet critically relevant to the organization.

What strategy can a CEO employ to effectively overcome resistance to change within a corporation?

Organizations that have a long history of success find change more difficult. Big organizations are big because at one point they were wildly successful. But in the seeds of that success lies the weakness that will undo them. As the stakes get higher, the constant process of readapting to changing market conditions can be challenging for a corporation. It's extremely difficult to let go of something when it is working.

Since every organization with success has a history, the key is to work within that history and find things to leverage. One of the great mistakes I've seen a CEO make was to ignore the grand history of an organization, destroying the goodwill that had been built in the process. It's important to remember that change isn't the beginning of the story. By understanding and respecting that story, you can anchor a new concept in something familiar. Almost inevitably there are individuals throughout the organization who are longing for the very change that the CEO is considering. Some may, at great personal risk, be already experimenting and pushing the boundaries but have little encouragement. They need to be uncovered and let loose. I have often felt that the single most important asset I ever possess as a change agent is the raw gut instincts of my client. My job is to help uncover them and give them life. The same applies for the leader - the best asset for change is the people inside the organization who are already on your side. They may be few in number and they may be well hidden, but they are there if you go and look for them.

Momentum already exists. I subscribe to the "Train" theory of change. You find something that is moving in the right direction, enable it, and then get out of the way. Frequently within a company, there are already people working within their own sphere of influence to create change. By channeling that frustration and bringing those people together, you can unleash the pent-up desire for change that exists in every organization.

At some point in the change process, crucial moments arise. They are easier to detect in hindsight, especially when "the moment was missed," but they arise as symbols of whether the leader means what he/she says, or if this is all about words. How the leader acts in that moment, in each of those moments, will define if resistance will prevent the change or if enough momentum is built to move on. They are defining moments - the change agent may recognize them, but only the leader can choose to act. The resistance to change is first overcome within the leader and then the organization will follow.

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Be True to Your Core

November 9, 2007 12:00 AM

By Linda Passante

Customers today are armed with the technology to look beneath a brand's attractive wrapping. They want to know about the company that made the product, and whether it shares the same core beliefs and values. And that's where a lot of brands get into trouble.

Companies spend so much time focusing on the brand concept that they forget to step back and consider its purpose. You want to make money for your business, employees, and shareholders. But how can you translate fiscal health into a purposeful brand that connects with customers? Start at your core. And then build your company around it. A natural place to begin is a founder's vision. Adam Lowry and Eric Ryan started with a Humanifesto when launching Method in 2001. They believed they could bring their own sense of style and eco-conscious lifestyle to the stodgy world of household cleaners. Cleaning products were going to be delivered in clean, innovative packaging and be made from eco-friendly ingredients. The founders knew that using natural ingredients and non-traditional product design would be more expensive, so they built a premium brand that offered higher margins to cover those costs. Today, Method's hand soap is a "home accessory," and the company has $40 million in annual sales.

A strong corporate vision can launch a brand, but great companies constantly reinforce and engage employees. They find ways to turn employees into believers and jobs into a mission.

Why do Ritz-Carlton and Nordstrom rank consistently at the top of their respective industries in customer satisfaction? They immediately foster a culture of service in employees of all levels to create a luxury brand. Their formula is simple. Hire quality people, train them relentlessly, and then systematically reward them for customer-centric behavior.

Ritz Carlton has its famous Gold Standards, offered by founders Caesar Ritz and August Escoffier. Every employee always carries a gold notecard inscribed with the values of responding to customer problems and constantly seeking self-improvement. Each shift begins with a 15-minute discussion of principles in a mini-training session. The average employee receives 232 hours of training per year. Enough said.

Nordstrom excels at identifying customer service "heroes." Sales staff are rewarded with spontaneous cash awards and preferred working schedules. Those same employees are recognized over the company's intercom system before the doors open every day. In addition to positive reinforcement, Nordstrom also fosters healthy sales competition by making sales figures public. Every employee can access sales figures from all departments and stores within the chain-so they constantly know where they stand.

And it's a system that is improving the bottom line. Ritz-Carlton has grown sales at a rate of 12.7 percent over the past five years (the rest of the luxury hotel industry is at 1.8 percent). Nordstrom's has grown U.S. sales at 8.3 percent, all other nondiscount department stores have declined 1.6 percent.

Historically, others like Kodak have to evolve their mission to meet a changing marketplace without losing their core values. Kodak was once a cutting-edge corporation until it failed to recognize the impact of digital photography. Seemingly overnight, it had a stagnant business model and its main revenue source, film, was seen as a tired product by the marketplace. It was then that Kodak CEO Antonio Perez realized that it wasn't enough to change the product mix at Kodak-there needed to be a cultural shift as well.

Perez determined to make Kodak the "Apple" of the film world, re-envisioned the mission to help people manage their pictures online and develop personal libraries of digital photos. To engender internal buy-in, Perez was forced to clean house. Only three of the 21 executives in 2003 remain with most of the new hires coming from a digital background. Perez also capitalized on natural skeptics in his organization, grouping them together as "rebels," and asking them for suggestions about how the company could take a different direction and improve services. He reached out to other corporations to find ways of collaborating on new products or services. Suddenly, Kodak is an innovator again. Kodak, a likely candidate for a corporate takeover in 2000, has engineered a successful turnaround. In the first nine months of 2007, Kodak earned $461 million compared to a loss of $617 million for the previous year.

Even as your brand succeeds, the price of success is eternal vigilance. Your company needs to move quickly in the wake of missteps or customer dissatisfaction. It seems you are only as good as your sincerest apology. Apple CEO Steve Jobs issued his iPology in the wake of the rapid price drop on iPhones just 60 days after the launch. Consumers were irate that early adopters had been seemingly punished by $200. Jobs quickly responded with a $100 store credit and an apology for the timing of the price cut. He knew that the cool cache of his brand was in jeopardy and immediately stepped forward to admit the move was a mistake. It didn't completely mollify customers, but it shortened the news cycle of the story and turned some of the negative attention into a postive. It also strengthened the perception that Apple understands its customers, even when it makes mistakes.

Good brands have bad days. But brands that stay true to their core will receive forgiveness. And that is how you can weather the good and bad times.

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Selling brand truth: Inside and Out

November 6, 2007 12:00 AM

By Linda Passante

In today's Twittering, YouTube, blogging, mobile messaging, media-obsessed world, consumers can get to the core of every business instantly. And they do. To them, saying what you do is not nearly as important as doing what you say.

So you're selling more than a service or a product - you are selling your culture, your beliefs and your brand's purpose, formerly known as your mission. Consistency and transparency throughout every layer of your company influence buying decisions. So, your brand must be clearly understood and embraced by your entire organization.

To create a well-developed brand, follow these steps:

Strengthen Your Core
Every company has a mission but your business will only grow if your core purpose connects with customers. Sometimes, that requires talking about your brand in a new way. Recast your mission. When your brand no longer fits, step back and think about change. British Petroleum became BP, Beyond Petroleum, recasting its corporate image so consumers would think "environmentally conscious energy" company and not "big bad oil." Change the business model. ING's identification of a business model with low overhead and an easy-to-deliver, on-line platform turned the banking industry on its head. In a culture that encourages consumption, ING positioned itself as a champion of savings. Consumers immediately responded to its high-yield, direct savings product. Let your mission guide development. Apple has focused on selling consumers exclusive access to a digital lifestyle - they've branded cool. By allowing the company to produce an endless number of entertaining iproducts, they drove the core hardware and software business. Its stock has more than doubled in the past year and is at an all-time high.

There's Only One Department -- The Customer Department
Stop and look at your company from the perspective of your customers, because they don't see separate units or profit centers. She's not an online banking customer; she banks with Citi. Whether she clicks on your website, gets an email offer, requests technical support or shows up on your doorstep, she doesn't distinguish between departments. Identify how each function -- finance, operations, human resources, sales, IT, marketing and administration -- creates value for your customer. Then work with your senior team to determine how your business impacts the life of your customer.

Roll Out, Inside First
Success begins within your organization and an internal marketing communications plan provides a blueprint for that success. Utilize an interactive forum or executive-level brand day to provide senior management with specific goals. Give them the ability to use financial incentives, educational opportunities, and performance recognition to motivate their team. Watch as your senior administration become internal ambassadors instilled with a sense of pride and the motivational tools to effect change in your business.

Don't Just Measure, Celebrate Success
Your employees are your first customers and there's no better way to motivate them than to celebrate their success. Of course, traditional sales goals and performance benchmarks will set the tone early. But accountability can manifest itself in many ways.

Moving the heart and soul of your company requires acknowledging everybody. NPD, an international market research firm, celebrated milestone accomplishments of every function across the company with invitations to their corporate Caribbean cruise. At Cranium, performance metrics are communicated daily in board game fashion and Bank of Smithtown's CEO personally presents "Lucky Duck" employee awards with his duck whistle and a check for $100. These kinds of acknowledgements from senior management creates a sense of corporate community, pride of work and continued focus on driving brand value.

In a consumer surveillance culture, your public image is more than outer wrapping. It's built on the consistency of your thoughts, actions and experiences regardless of where or how often a customer comes in contact with your brand. It takes an entire organization.

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Rollout Inside First

November 1, 2007 12:00 AM

By Linda Passante

Bells and whistles don't work unless there is someone behind them. It's exciting to launch an external campaign encompassing advertising, public relations, and promotions. But before you get caught up in great ideas and make any promises, you better be sure your employees are ready to keep them.

In order to reconnect your team and customers as part of a new initiative, you have to begin within your organization. Whether the repositioning of your brand stems from a merger or a desire to recapture lost market share, employees want to understand their role. So, tell them about the changes, why and what will change, and how it will affect them personally. That's how they can feel pride in what they do.

Here is how to make sure your brand is ready to deliver from the inside out.

Urgency Starts at the Top
Your CEO, the Chief Engagement Officer, must articulate the vision and rally the troops. It's critical that a company's leadership demonstrate commitment to new thinking to summon company-wide support for change. She or he has to understand the possible resistance points from senior managers before they arise because effective cultural change begins and ends with the head of your organization. The CEO can be a visionary or a torchbearer, but her or his will and enthusiasm for a new initiative is what will drive adaptation among senior management.

Engage Senior Leadership
These are your executives, they are used to receiving answers. They are also used to doing business a certain way. And their concerns will range from legitimate to defensive. Regardless, it has to be clearly demonstrated that you have a viable and realistic approach for success. And that means, showing the wizard behind the curtain.

The CEO of one of our clients recently brought all of his senior executives to a neutral location--Canada. Everybody loves Canada, right? In your company, these are going to be the 100 or 1,000 people who determine the strategy of your organization on a daily basis. As the CEO explained the urgency behind a new brand position, he led a series of programs over several days to inform, inspire, and energize his leadership. He connected with team members from every cross section because he solicited opinions and critiques--engaging the minds of his staff.

Set Goals and Responsibilities
After the CEO had collaborated with senior leaders on the new vision for his corporation, he asked them to create specific goals and decide what resources needed to be committed in order for them to have success in the areas that they managed. You can increase the accountability of your senior leadership by having them formalize and follow up on those commitments in regional or departmental plans.

Empower Change
Change is difficult for many employees. You can't force them programmatically. You need to ground change in the context of their roles and potential benefits. Always offer help. Consider financial incentives for those that promote innovation and who are quick to adapt to a new brand methodology.

With established strategic initiatives, seal the deal with a commitment--consider the example of Fidelity. When the financial services provider launched its "Smart Move" campaign, all 41,000 employees got a voice mail from Paul McCartney announcing the kickoff. It created a personalized connection for all of Fidelity's employees and inspired them to participate. Symbolic gestures can be important.

Employee Engagement = Customer Engagement = Financial Performance
Every interaction an employee has with a customer is an opportunity to build on the customer's emotional connection with your brand - or diminish it. And that brief few minutes can impact your bottom line in a hurry. A recent Gallup poll, featured in the Harvard Business Review, indicated that fully engaged employees deliver a 23% premium over the average customer in terms of share of wallet, profitability revenue, and relationship growth. Business units featuring engaged employees outperformed other units 2:1 on key performance metrics like sales, growth, and profit.

Brands don't grow businesses, people do. Giving your customers a fresh look at your brand has to start with your employees, because you've got a lot of fancy new bells to ring.

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