It's not uncommon to hear people discussing the toxic nature of their organisational culture and pondering ways to improve it. Organisational culture evolves over extended periods, making it challenging to change overnight. Peter Drucker's famous quote, 'Culture eats strategy for breakfast,' resonates deeply with this sentiment. To clarify, Drucker didn't imply that strategy was insignificant; instead, he believed that a strong and empowering culture was a more certain path to organisational success. In fact, a strong organisational culture is an integral part of important corporate strategies.
In Module 4 of the Oxford Executive Diploma in Strategy and Innovation, 'Strategy in Action', we thought together about how change, especially aspects like digital transformation, is an inherent facet of business. However, resistance to such changes can be equally prevalent. Often, this resistance doesn't stem from genuine opposition to the change itself, but from ‘competing commitments’ deeply rooted within an organisation. Recognising these commitments is essential for cultivating an organisational culture that nurtures innovation and drives corporate success.
It's essential to note that organisational transformation is not a revolution; it doesn't happen overnight. Instead, it's an evolution, a steady progression towards better practices and systems, shaped by the organisation's culture. However, for this evolution to occur, understanding and addressing the competing commitments within the organisation becomes crucial.
Competing commitments and resistance to change
At its core, ‘competing commitment,’ as introduced by Robert Kegan and Lisa Laskow Lahey in a Harvard Business Review article titled ‘The Real Reason Why People Won’t Change’ (which we studied in Module 4), refers to a subconscious goal, either individual or collective, that contradicts the desired change. For instance, while an employee might express a desire for innovation, their deep-rooted fear of failure (a competing commitment) might deter them from taking risks, thus hampering innovation. It's this tug-of-war between overt intentions and concealed obstacles that renders change initiatives challenging.
Why organisational culture matters
One's competing commitments often arise from the organisation's prevailing culture. A company's culture, its set of shared beliefs, values and practices, plays a pivotal role in how employees react to change. Nokia's story is a good example.
Nokia, once a dominant player, found itself in a tough competition against Apple's iPhone. At a critical juncture, Nokia's mid-level managers faced immense pressure regarding the release of their Model 5800. The organisation's toxic top-down, authoritarian culture created an environment where these middle managers, fearing job loss, chose to misrepresent progress, causing a delay of 18 months in the release. This not only highlighted the competing commitments of the managers (upholding transparency vs. job security) but also emphasised how a rigid organisational culture can hinder adaptability and innovation.
Nokia's inability to pivot its culture swiftly led to its diminished standing in the smartphone market. While strategies and technologies are essential, it's often the softer elements, like culture, that determine an organisation's success in adapting to change.
How to address competing commitments
Addressing competing commitments necessitates a thorough examination of the organisation's cultural dynamics. Leaders should actively engage in dialogues with employees to diagnose underlying fears and motivations, ensuring an environment where trust prevails so employees can freely voice their concerns. Promoting a culture that values continuous learning and views failures as educational opportunities can help alleviate fear. Shifting from a top-down to a more inclusive bottom-up communication approach, as illustrated by Nokia's challenges, can foster the incubation of innovative solutions and candid feedback. It's no wonder Professor Amy Edmondson emphasised the importance of psychological safety in organisational culture.
The organisational culture - evolution, not revolution
As organisations strive for transformation, it's imperative to remember that it's a journey, not a sprint. Evolution suggests a gradual adaptation, driven by learning and growth. Instead of seeking radical shifts, organisations should aim for consistent, incremental progress. This not only makes change more manageable but also embeds it more deeply into the organisation's DNA.
Moreover, the role of culture cannot be overstated. A flexible, inclusive, and learning-oriented culture can act as a buffer against the pitfalls of competing commitments. As organisations look to the future, they must remember that while strategies and technologies will evolve, it's the people and culture that will determine how smoothly they navigate the tides of change.
The diverse paths to a thriving organisational culture
Based on what we've learned about the mechanisms of New Power Values and Models as well as Old Power Values and Models in Module 4, we understand that there is no one-size-fits-all answer to creating a financially sustainable and innovative organisational culture. A compelling illustration of this comes from a sushi restaurant franchise case study shared by our esteemed cohort colleague, Kei Yoshida, Chief of Media Innovation Centre at NHK (Japan Broadcasting Corporation). This traditional business, deeply entrenched in old power values, brilliantly leveraged new power models by embracing modern marketing strategies, customer engagement and innovative technologies. This transformative approach propelled it to grand success in the global market. Numerous companies exemplify various combinations, be it old power values with an old power model, new power values with an old power model, and so forth. Therefore, depending on the unique environment of each organisation, shaping their organisational culture while gradually recognising that the organisational culture itself is also a vital element of organisational strategies may be the key.
All the strategic aspects we learned from Module 1 to Module 4 are directly applicable to our daily business practices and are very practical. These strategies for business success and innovation are actionable.