In this era of massive disruption, a naïve approach to culture is something you can’t afford.
“No CEO will ever get fired for being ignorant about their own culture,” my friend and colleague Paul provocatively likes to say. CEOs do get fired for lots of things, but rarely is culture one of them. This is because, by the time they and their boards realize their strategies are failing on account of something to do with culture, it’s too late. That invisible hand will have already inhibited or sabotaged the desired change to such a degree that the company will have no chance of delivering on its ambitions.
And most executives and management consultants have little idea why.
What We Want; What We are Willing to Give
Other than reciting the famous quote, culture eats strategy for breakfast, most managers and consultants approach to culture and change through quick-fix, folksy myths, and simplistic advice that appeal to impatient executives. Although culture is among the most complex domains of organizational life, we have a low tolerance for any but its most basic understanding. What we want from culture (a lot) and what we are willing to give to get from it (not so much) are incompatible.
The problem is that much of how we think about and works with culture is based on outdated science, pseudo-science, and myth (‘Culture comes from the top’; ‘it worked at my last company’; ‘culture is how people feel’; etc.). This thinking comes directly from MBA programs and consulting firms in the business of reducing culture to bite-sized for their consumers. Unfortunately, the data suggest most of how we have been working with the culture over the last forty years hasn’t worked.
For too long, the culture industry (academics, consultants, HR) and its clients (executives) have trafficked in expediency at the expense of efficacy. Expediency comes in the form of thinking of culture as a dependent variable, something to be managed and controlled like inventory, machinery, or real estate; therefore reduceable to single concepts like beliefs, attitudes, values, norms, language, behaviors, personality traits, the CEO, etc. This way, it can appeal to managers who want straightforward, rational inputs to drive business outcomes.
But culture is anything but a rational and straightforward input.
Mind the Gap
In this era of massive global disruption, being naive — or worse, arrogant — about culture is something we can no longer afford. The pace and complexity of change are as never before. Transforming a 100-year-old industrial enterprise into a digital platform, or an e-commerce company into a logistics behemoth, or a tech start-up into a global player (and so on), takes a lot more than the CEO “setting the tone,” training on values, or a revamped HR strategy. It requires a far more sophisticated, nuanced, and complete understanding of how culture works, and why.
The good news is that the science of the cultural mind — the focus of cognitive anthropologists, sociologists, linguists, psychologists, AI researchers, and cultural neuroscientists for the past three decades — offers a better way. There’s a lot to this new science, but what follows is a quick overview, and why this matters for leaders intent on transforming their organizations.
Culture is a Reference System
Cognitive scientists think of culture as background knowledge — a reference system — for making sense
and operating in any community. Reference systems are mental operating systems, a resource we don’t know we are using until we become aware of or need to change it (more on that in a minute). Think of how you know not to stare at someone in an elevator, or how to behave on a subway platform, or whether your video camera should be on or off during a Zoom meeting. These are reference systems.
Corporate cultural reference systems evolve out of what a company does successfully over time, or the tacit knowledge that comes from the professionalization of its dominant groups. Think of any hard business, market, or technological problem an organization has solved core to its existence or navigated to survive (e.g. operating systems at Microsoft; search at Google; making air travel accessible to the “common man” at Southwest) and you will find mental residues of these experiences contained within their reference systems. These experiences shape the synaptic connections of the collective; what is meaningful is coded in the brain as shared mental models, or dominant logics that are applied to new situations to make sense of and function successfully within them. This is how culture works.
Like operating systems, reference systems have multiple layers: preconscious dominant logics as source code; a middleware of organizational practices — informal and formal routines, habits, and processes —where the logics can be seen as pervasive patterns; and a series of “apps” known as adaptations in the form of prevailing behavior and attitudes that are often reactions to the logics and practices.
Cultures Preserve the Status Quo…
Contained within your company’s cultural reference system is all the information you will ever need on whether what you desire for your future is possible, and if so, how. Reference systems are the repositories of your organization’s accumulated knowledge, the sum total of all of the cognitions, assumptions, beliefs, heuristics, standards, rules-of-thumb, folk wisdom, and other lore about what it has taken for your organization to get to where it is today. They are the product of successful environmental adaptations; if the adaptations weren’t successful your organization wouldn’t be here. And as this huge tacit repository of accumulated wisdom, they are optimized for the status quo, for maintaining equilibrium at all costs.
…Until We Try to Change
To understand why, imagine landing after a 12-hour flight in a completely foreign city where you don’t speak the language or read the signage, and then trying to hail a taxi. You become suddenly aware that everything you thought you knew about hailing a cab no longer applies. This is how to reference systems work in times of change: they keep you trying to make sense of your new surroundings with the knowledge that is no longer applicable.
You see this clearly in any industry or company undergoing radical transformation (i.e. most). For example, the world of sensors-on-everything, digital asset management, AI, predictive analytics, and so-called ubiquitous computing is fundamentally changing the industrial world. Most industrial executives have read all about digital transformation and know the best practice advice. What they may miss is that their aspired digital futures are being unwittingly sabotaged by their own reference systems, because what it takes to be a successful legacy industrial company and what it takes to be a digital player are culturally very diﬀerent.
Industrial reference systems were born as adaptive responses to industrial contingencies — managing for absolute certainty, mitigating all risks, standardized operating models, maximizing efficiencies, incrementally improving, closely managing costs, planning years ahead, having low tolerances for abstraction, managing through hierarchies of command, and on. These logics are like antibodies attacking a virus: they will stymie moves in the digital direction because digital logics are radically foreign. Constant innovation, moving fast, not having all the answers before engaging, using high levels of discretion in decision-making at the lowest levels of the organization, rapid experimentation, self-organizing, making sense through models and abstractions, measuring success in non-financial terms — all of these “digital” values and practices (and others) are undermined by industrial logics.
In other words, the very heuristics, rules of thumb, standards of success, and similar tacit logics that managers use to successfully run an industrial company preclude them from transformation — because digital logics and practices are inherently contradictory. Despite best intentions, these foreign reference systems unconsciously signal that it’s too risky, unpredictable, and uncertain to actually change.
What to Do?
This doesn’t mean organizations seeking fundamental transformation are forever locked into their own pasts. But it does mean that change requires a much more sophisticated understanding of what is culturally going on, and rejecting quick-fix, simplistic solutions. Understanding your own cultural reference system is one of the most important things a CEO and change leader can do, especially now. The key is to surface the dominant logic at its core and trace how they show up as patterns in organizational practices. Then focus on changing these logics by changing the practices that are most retarding the desired change.
Easier said than done, of course. But this is the first step to using the science of the cultural mind to full advantage. Until this more sophisticated approach is leveraged, however, your culture will be perfectly suited to keeping you right where you are today.
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