hen organizations get into big trouble, fixing the culture is usually the prescription. That’s what most everyone said General Motors needed to do after its recall crisis in 2014—and ever since, CEO Mary Barra has been focusing on creating “the right environment” to promote accountability and head off future disasters. Pundits far and wide called for the same remedy when it came to light that the U.S. Department of Veterans Affairs, deemed a corrosive bureaucracy by federal investigators, kept veterans waiting months for critical health care. Cultural reform has likewise been proposed as the solution to excessive use of force by police departments, unethical behavior in banks, and just about any other major organizational problem you can think of. All eyes are on culture as the cause and the cure.
But the corporate leaders we have interviewed—current and former CEOs who have successfully led major transformations—say that culture isn’t something you “fix.” Rather, in their experience, cultural change is what you get after you’ve put new processes or structures in place to tackle tough business challenges like reworking an outdated strategy or business model. The culture evolves as you do that important work.
Though this runs counter to the going wisdom about how to turn things around at GM, the VA, and elsewhere, it makes intuitive sense to look at culture as an outcome—not a cause or a fix. Organizations are complex systems with many ripple effects. Reworking fundamental practices will inevitably lead to some new values and behaviors. Employees may start seeing their contributions to society in a whole new light. This is what happened at Ecolab when CEO Doug Baker pushed decisions down to the front lines to strengthen customer relationships. Or people might become less adversarial toward senior executives—as Northwest employees did after Delta CEO Richard Anderson acquired the airline and got workers on board by meeting their day-to-day needs.
The leaders we spoke with took different approaches for different ends. For example, Alan Mulally worked to break down barriers between units at Ford, whereas Dan Vasella did a fair amount of decentralizing to unleash creative energy at Novartis. But in every case, when the leaders used tools such as decision rights, performance measurement, and reward systems to address their particular business challenges, organizational culture evolved in interesting ways as a result, reinforcing the new direction.
Revisiting their stories provides a richer understanding of corporate transformation and culture’s role in it, so we share highlights from our conversations here. Most of these stories involve some aspect of merger integration, one of the most difficult transitions for companies to manage. And they all show, in a range of settings, that culture isn’t a final destination. It morphs right along with the company’s competitive environment and objectives. It’s really more of a temporary landing place—where the organization should be at that moment, if the right management levers have been pulled.