Can the GM recall crisis teach us about corporate cultural change?

GM is struggling to contain the damage to both it’s finances and reputation arising from faulty ignition switches, that it appears were known in the engineering organization as long as ten years ago. Mary Barra, the new CEO, has said that she and other top executives were unaware of the issue until last December, and she has vowed to get to the bottom of the problem, on three fronts:

  • recalling the cars with defective ignition switches as soon as they can be manufactured, and installing them,
  • determining who knew what when, and sharing that information in a transparent fashion, and
  • changing the culture at GM so that customer safety becomes the central principle of the firm.

We are going to be able to watch the story unfold over the weeks and months ahead. Only a few days ago, GM returned to bankruptcy court, seeking to have Judge Robert E. Gerber of the Federal Bankruptcy Court, who presided of the company’s Chapter 11 reorganization, enforce the provision of the bankruptcy that shields it from lawsuits for injuries that occurred prior to the bankruptcy date.

However, what I want to touch on is the third point: cultural change. Lou Gerstner said about his time at IBM’s CEO,

I came to see in my time at IBM that culture isn’t just one aspect of the game – it is the game. In the end an organization is nothing more than the collective capacity of its people to create value.

Cultures change slowly. In fact, culture resists change at a fundamental level, and directs members of the culture to continue to behave in established and accepted ways.

Stephen Billings once wrote,

If culture is a phenomenon that emerges from myriad interactions amongst organisational members, then it cannot be managed from outside as a whole. Instead, the top managers can only influence culture from within their own participation in interactions with others. Senior managers cannot design the culture that they want, nor can they engage other specialists to design the desired culture. They can only influence culture through their interactions with others.

And Jon Katzenbach wrote a piece for the Harvard Business Review called There’s No Such Thing as a Culture Turnaround, in which he makes that case that most efforts to quickly change culture fail. The companies either declare victory too soon, before deep cultural change has occurred, or they abandon the effort in frustration.

I’ve taken Katzenbach’s recommendations, and respun them into the context for GM:

  1. Find a theme — Mary Barra has had her theme forced upon her: putting customer safety first, and opening up the silos and dark places in the company so that all information related to safety is accessible. She has started to tell that story, although her congressional testimony didn’t go over well. She has fired the executive who was supposed to run interference there, Selim Bingol, G.M.’s senior vice president for global communications and public policy. Also gone is Melissa Howell, senior vice president for global human resources, who was allegedly slow to make HR policy more in line with Barra’s new goals. She’ll need coherence in her messaging, and a new team to tell that story.
  2. Don’t claim victory too soon — My bet is this turnaround could take five years or more, and might involve hundreds of departures of senior and mid-level executives at the company. She’ll have to leverage company pride, and other core beliefs that are still relevant, but work slowly to make whistle-blowing acceptable, so that anyone can say ‘we can’t do X because it will increase risk for the customer’.
  3. Enlist the help of informal leaders — Barra has to find the ‘positive deviants’ in the organization — those that are already displaying the behaviors that should be dominant in the company but aren’t yet — and she needs to enlist their help in turning the company around (see How ‘positive deviants’ help a culture change itself, and Cultural change is really complex contagion). One option is to try to leverage technology at all levels and locations, so that these people can a/ be found, and b/ connect to each other. Many reports from former GMers say that the company doesn’t communicate well internally.
  4. Remember that cultural forces don’t go away — Focusing on the behaviors that you want won’t eliminate the one you don’t. What you need to do is get people to adopt the new behaviors so that the new values are put into place, the right questions and being asked, and the right decisions get made.
  5. Start now — Barra cannot let other pressing issues take priority over her efforts to change the culture at GM. A series of lawsuits are going to be very costly and time-consuming: she should delegate the blocking and tackling there to a COO or SVP. But she can’t afford to delegate the cultural change that is needed for GM. And she seems to be doing that. Jeff Bennett reported in Amid Recall Crisis, GM’s Barra Quickens Pace:

Last month, she gave a pep talk at an internal meeting for about 1,000 GM employees at its Warren, Mich., technical center. To back up her message that GM must do a better job of serving its customers, Ms. Barra has sat with employees at the company’s call centers.

Getting up close and personal with a wide and diverse group of GMers, and reaching out to informal leaders (‘positive deviants’) to join her new movement within the company should be Barra’s highest priority. She just announced an internal whistle blower program called Speak Up for Safety, writing on the GM Fastlane blog

Last week, I announced a new Speak Up for Safety program to recognize employees for submitting ideas aimed at making GM vehicles safer, and for speaking up when they see something that could impact customer safety. I am excited to take this step to push safety even further to the forefront of our employee culture.

We are, at heart, the sum of our employees – their creativity, their dedication, and their commitment to excellence. GM employees have always been encouraged to raise safety concerns, whether openly or anonymously, and are empowered to be persistent. With the creation of the Speak Up for Safety program, we will have the opportunity to publicly thank and recognize them for their courage and openness. And importantly, we also promise accountability from our senior leadership back to these employees that we will take action or close each issue in a timely fashion.

This program is an important step toward embedding the customer- and safety-centered culture in every aspect of our business. It underpins much of what all GM employees committed to in 2013 when we adopted our new vision and values. These core values – Our customers are our compass, Relationships matter, and Individual excellence is crucial – are more than just words on paper.

We are building an organization that lives these words, day in and day out – not only because it’s what our employees want, but because it’s what our customers deserve. We will learn from our recent experience, and it will make us better.

Mary

So, I’ll be watching GM’s efforts in the weeks and months ahead to see if they stay the course, and keep the momentum necessary for the long haul, because it’s going to take years. I will also try to swim upstream into the company to find what sorts of technologies they are using or acquiring to increase internal communications.

The trajectory of ‘cultural change’ matters, as Microsoft demonstrates

There are a number of reasons that I follow the goings on at Microsoft very closely. First of all, as an analyst tracking work technologies I am interested in the direction they are going and the technological advances the product teams achieve. Secondly, their strategic direction has a big impact on the markets they play in, like enterprise software, games, operating systems, and cloud computing. But lastly, the manner in which their organizational and management changes are taking place — and in such a public manner — also stands as a case study on a large, successful high tech business attempting to respond to a changing and highly competitive marketplace. So instead of zooming in on the specifics of Sharepoint integration with EMC Syncplicity (see here) or other technology-heavy news, I’m going to use Microsoft as an example in talking about ‘cultural change’ in business, and specifically the trajectory of cultural change.

What do I mean by trajectory of cultural change? It’s helpful to think of change in business as having a point of origin somewhere in the organization, and a means of transmission to other points. This is like the epicenter of an earthquake and its resulting groundwave, or the way an innovation idea spreads through a society. And in stratified cultures — like most companies today — there can be a up/down dimension to cultural change, so it is reasonable and useful to think about and talk about very different sorts of change, like top-down corporate cultural change, outside-in product change, and bottom-up work cultural change.

What sorts of cultural change are we seeing at Microsoft, and what can we learn from that?

Microsoft’s leaders are talking up cultural change at the present time. The term ‘cultural change’ is often used as a proxy for other, less appealing and less high-minded activities. Take for example this snippet from the new Chairman of Microsoft, John Thompson, who was until recently the head of the CEO search committee, who selected Satya Nadella (see Satya Nadella now Microsoft CEO, Gates steps down as Chairman). Adam Lashinsky asked Thompson, ‘Does Microsoft’s culture need to change?’, to which he replied in this way:

Adam Lashinsky, Microsoft culture must change, chairman says

I think that’s a better question for Satya. But I would argue that there are some attributes to Microsoft today that do look vaguely like IBM circa 1990. The Windows monopoly is in fact under attack, and therefore we’re going to have to change or think differently about the management systems and the associated culture of the company as time goes on.

Thompson characterizes the need for product change at Microsoft: specifically the outside-in trajectory of a shifting market of operating systems. If a company with a dominant position in a changing market fails to stay ahead of market needs, that is the indicator of a cultural problem (often mistakenly called a ‘strategy’ problem).

In the Microsoft case, Steve Ballmer‘s era was studiously bad at responding to market signals and dismissive of advances that have eroded its leadership. Ballmer’s laughter when asked about the newly released iPhone is iconic, saying the price was too high and it had no keyboard. It reminds me of the newly minted MBA at a VC form I was visiting years ago who had suggested to the managing partner that the firm shouldn’t invest in a restaurant chain he had researched because the prices were too high and the lines to get in were too long.

So Thompson’s ‘under attack’ line can be translated to ‘we fumbled the future because of willful blindness’.

The next part of the sentence is Thompson asserting that this willful blindness is the side effect of ‘management systems’. I parse this — because of recent steps by Satya Nadella to consolidate control of Microsoft’s marketing and engineering in the hands of a much smaller senior leadership team (SLT) — as a faster acceleration away from the siloed fiefdoms that existed for most of Ballmer’s time as CEO.

And the last bit — ‘the associated culture of the company’ — is Thompson making the trajectory of this change clear: Nadella and the SLT are going to make large changes and those farther down in the Microsoft hierarchy will need to sign up to the new program, or get out.

Nadella made this extremely clear in his recent memo in which he announced a realignment of functional roles and the departures of some senior people (see Satya Nadella consolidates roles and trims Microsoft leadership team).

One of my consistent themes has been a point I made in my original mail – we all need to do our best work, have broad impact and find real meaning in the work we do. Coming together as teams fuels this on a day-to-day basis. And having the Senior Leadership Team (SLT) set both pace and example means a lot to me.

I have discussed this point in various forms with the SLT and have asked for their “all in” commitment as we embark on the next chapter for the company. We need to drive clarity, alignment and intensity across all our work.

Nadella is pruning away senior people, to make a smaller and more aligned team at the top, one that is committed to a top-to-bottom realignment around some core principles: clarity, alignment, and intensity. As I said at the time, this is Nadella aspiring to the cultural milieu of a, entrepreneurial start-up: a small elite set a grand goal — like bringing a revolutionary new social tool to market — and they attract a team of committed followers who sign up for a marathon push, and all have to get on board with the plan. The desired mindset is like that of the Conquistador Cortés, who scuttled his boats in Mexico when some of his men tried to seize a boat and escape to Cuba.

Nadella is running Marissa Mayer‘s playbook. I wouldn’t be surprised if we hear about remote work no longer being in vogue at Microsoft.

The trajectory of this change is top-down. But ultimately actual change can only happen when the individuals in the organization change their own behavior, and in top-down change, when the directions laid out by the senior team come to inform decisions being made, and alter the products being built.

Contrast this with what might have happened if Microsoft had been open to outside-in change over the past decade or so? Instead of laughing at iPhone, ignoring mobile and web apps, product leads would have been experimenting, and keeping up with market innovations.

But the third trajectory — bottom-up — is the most infectious. Inside of Microsoft, developers are adopting the mindset of lean and agile development, for example. The acquisition of Yammer has led to a major impact of the development teams for Office 365, Sharepoint, and other projects. I interviewed Kris Gale in November, who oversees all product development engineering at Yammer, and he related some very innovative approaches they’ve taken (see The New Visionaries: Kris Gale). In a nutshell, Yammer’s approach to managing development work doesn’t involve managers assigning tasks. As he put it,

The breakthrough was realizing that we didn’t have to assign work through our reporting hierarchy. Instead of the head of engineering breaking a goal up into what the X team needs to do and what the Y team needs to do, then assigning those things to the managers of the teams to be further broken up into tasks, we said we’d just take an engineer from X team and one from Y team and dedicate them to solving the business problem however they best saw fit, then move on to something else. All of Yammer’s organizational methodology in engineering came from that: How do we build mechanisms to force all of our work to happen in small, temporary, fully-dedicated, autonomous, cross-functional teams? Or: How do we scale engineering so that all problems get solved the way we’d have solved them in the first year of the company?

And that brings us back to what Nadella wants to do: get people moving in the right direction, and operating with the intensity and clarity that successful start-ups have in their first year.

The question is, which way to get there? Will Nadella’s top-down push lead to getting the company to act like a start-up, or will it simply peter out in as a series of reorganizations and change initiatives? He has certainly pegged his future on making a serious turnaround in the business by cultural change. Alternatively, will he try to find the examples of start-up culture and replicate them in development, marketing, sales, and other functional groups across the company?

I’m betting he’ll go top-down, but bottom-up is the trajectory that would actually work.

Cultural change is really complex contagion

I have been thinking a great deal about cultural stability and cultural change in business, recently. Partly that’s the outgrowth of a report I am working on, and partly it’s the result of the Yahoo ‘no remote work’ brouhaha, which boils down to Marissa Mayer trying to change the culture of Yahoo. So, I thought I would advance a science-grounded discussion about cultural change, and risk an overly long piece. (I haven’t gotten any ‘TL;DR’ messages here, yet.)

First of all, let me submit to you that the tangible result of culture change is behavioral change. For example, if a company went through some series of activities intended to improve meeting hygiene — shorter, more effective meetings, with agendas and action plans, etc. — the proof would be that meetings were measurably shorter, participants hated them less, they led to higher degrees of follow-through, and so on. Yes, leading up to those measurable behavioral changes, cultural change has to start in the minds of the individuals: they have to change their value systems, learn new skills, and reject old ways of doing things. But the proof is in the pudding.

I recently wrote about ‘social deviants’ playing a key role in cultural change (see How ‘positive deviants’ help a culture change itself). Social deviants are not perverts: they are members of a community that already display some set of desired characteristics when most of the other members do not. In that earlier post, I recounted the story of how MRSA — the drug resistant strain of staph infection that plagues many hospitals — was stamped out at a Pittsburgh hospital. The technique was to have the community identify those positive deviants that were already displaying behaviors likely to decrease the spread of MRSA, and then put those deviants into a role of disseminating their practices, so that others could try to adopt them personally. In the Pittsburgh hospital, the MRSA infection rate fell by more than half in less than six months.

The premise behind positive deviant-based innovation is that you can find insiders approximating the behaviors needed for a cultural change, and the community can work within itself to spread those behaviors, and find new ones, and to make the change collectively. It doesn’t require outsiders, except to bring and spread the idea of positive deviancy.

But what is the social network analysis behind this sort of cultural transformation? What sorts of companies are most likely to be able to make cultural changes?

Damon Centola and his colleague Michael Macy wrote a foundational article about this issue, called Complex Contagions and the Weakness of Long Ties. Their work builds on the work of Mark Granovetter, who developed the distinction between the ‘strong ties’ between close friends or kin, and the ‘weak ties’ that exist between more casual acquaintances. Weak and strong are not only relational — referring to the strength of the tie, and the frequency of the individuals’ interactions — but also indicate a structural dimension. Weak ties connect strongly linked clusters — cliques of friends or tightly-knit families — and act as a mechanism for novel information to move from one cluster to another, and once that information reaches a cluster, it spreads to all the members. As a result, Grannoveter called this the ‘strength of weak ties’, and he credits them with being the most important means of information transfer. And information also includes disease, like passing around the newest flu bug, and other social phenomena, like happiness.

So the scenario for contagion is fairly intuitive: on Monday no one in Betty’s office has a head cold. Monday night, Betty attends a meeting of communications professionals, none of which are close friends, but she has a cocktail with a few casual acquaintances, and the new morning has a slight sniffle. She goes to the office Tuesday, but leaves early with a head cold. By Friday, 70% of the office has it.

And it doesn’t require very many weak ties in a city for the head cold to reach everyone. It’s a small world, as Granovetter famously put it. But not all contagion is simple, like a head cold, and so the primacy of weak ties — in other situations — may diminish. Centola and Macy call this the ‘weakness of long ties’.

In simple contagion, only one exposure to the rhinovirus is necessary to get the disease. But other sorts of information transmittal — especially around information that is controversial, advocates risky behavior, or is counterintuitive — has a greater threshold for being passed along. As the authors say,

A contagion is complex if its transmission requires an individual to have contact with two or more sources of activation. Depending on how contagious the disease, infection may require multiple exposures to carriers, but it does not require exposure to multiple carriers. The distinction between multiple exposures and exposure to multiple sources is subtle and easily overlooked, but it turns out to be decisively important for understanding the weakness of long ties. It may take multiple exposures to pass on a contagion whose probability of transmission in a given contact is less than one.

[…]

By contrast, for complex contagions to spread, multiple sources of activation are required since contact with a single active neighbor is not enough to trigger adoption. There are abundant examples of behaviors for which individuals have thresholds greater than one. The credibility of a bizarre urban legend (Heath, Bell, and Sternberg 2001), the adoption of unproven new technologies (Coleman et al. 1966), the lure of educational attainment (Berg 1970), the willingness to participate in risky migrations (MacDonald and MacDonald 1974) or social movements (Marwell and Oliver 1993; Opp and Gern 1993; McAdam and Paulsen 1993), incentives to exit formal gatherings (Granovetter 1978; Schelling 1978), or the appeal of avant-garde fashion (Crane 1999; Grindereng 1967) all may depend on having contacts with multiple prior adopters.

The authors enumerate conditions of complex contagion:

  1. Strategic complementarity — Knowing about some new innovation is not enough to induce people to adopt it. We all evaluate the costs and benefits of an innovation, and wait until we feel it’s ‘worth it’.
  2. Credibility — When other people we know adopt innovations, we are more likely to do so too. Hearing the same story for different people makes it more believable, and we are them more likely to pass it along.
  3. Legitimacy — When we see others wearing a fauxhawk or jeggings, we are more inclined to do so ourselves. As the authors point out, ‘Innovators risk being shunned as deviants until there is a critical mass of early adopters’.
  4. Emotional contagion — Again, it has been shown that emotionality can be passed along in tight social groups, like cruelty and happiness.

Adopting innovative behaviors, like stand-up desks, or dropping older behaviors, like smoking, is more likely in settings where others are talking about or doing the same things. And since the greatest frequency of interaction takes place with close friends and family, people can be pushed over the threshold to adopt new behaviors in settings of higher social density.

Note that this doesn’t necessarily have to involve face-to-face interactions. Online friendships are as real as those IRL (in real life): the same brain chemicals surge when someone give you an ‘attaboy’ in the company chat, as when you are physically patted on the back.

But the big takeaway for me, with regard to cultural change in the business, is that new behaviors are hard to spread when the following conditions hold:

  1. Workers have few trusted and close company friends
  2. The new behaviors being advocated are unfamiliar, risky, or contrary to the current status quo
  3. Very few employees have adopted the new behaviors.

We can consider this the downside conditions for ‘complex cultural change’. The trick for turning it around is demonstrated in the research of the authors, as well. They demonstrated that new healthy behaviors are more likely to be adopted when clusters of people who are all friends or kin meet and discuss  on the progress or difficulties they are experiencing in adopting the new behaviors. This is also congruent with positive deviancy.

So,  when companies want cultural change, the first step is not to tell people how to change their behaviors. The first step in cultural change is to increase the density of social engagement, or, more simply, to try to help people make more friends at the company. The second step is to find positive deviants — people who are already demonstrating the behaviors that will define the new culture. Then, those deviants and the deviants’ closest contacts should work to share their efforts in amplifying the desired behaviors, and as those ideas become less controversial and more mainstream, others will begin to be more open to adoption as well. But for fast and lasting change, this must all grow from within. As Centola and Macy’s work shows, the weakness of long ties make it very difficult for Betty in the New York City office to be convinced to adopt new marketing approaches from people she doesn’t know and trust in the San Francisco office. She will have to hear about it many times, and with the words coming from trusted mouths.

And this suggests both a path for Mayer to take and why her challenge is so significant. She may think that barring remote work will lead to people making more close connections in the office, but she might have been better off framing her first step as increasing the social density of the distributed workforce across Yahoo, and then as a second act, finding the social deviants inside of Yahoo and let them figure out how to spread that cultural change, themselves. You have to leave cultural change up to the deviants, not to management.

In the Pittsburgh hospital, for example, the doctors — the most well-educated and highest paid on staff — were the worst offenders in spreading MRSA, and the single most effective positive deviant was a low-paid health care aide with only a high school diploma.

You can’t predict where the cultural change will start, but you can predict how it will spread: through strong ties.

How ‘positive deviants’ help a culture change itself

Adoption of social business tools and practices is a recurrent issue. Here’s one theme we hear a lot: a company wants to roll out a new set of social tools and get everyone on board, so they hire an outside consulting firm to help in the transition. Nonetheless, after six months only 37% (or some other discouragingly small percentage) of the company are using the tools on a daily basis.

What’s gone wrong? Well, the backlash to major initiatives to impose large-scale change in many organizations is something like an immune response. The organism attempts to remain as it was before the infections, and will attack the outside agents that are destabilizing the existing homeostasis.

It turns out that this sort of rejection of outside influence is a widespread cultural phenomenon. However, some techniques have been developed that can counter this cultural rejection to behavioral change. One in particular, positive deviance, has been shown to work in many contexts.

The name suggests something sinister or unsavory, but it simply means looking for examples in a population that have already demonstrated adoption of the desired behavior, and having others learn from those ‘deviants’. In this approach, outsiders do not attempt to train members of the population in the new behaviors, or even stipulate exactly what the new behaviors are. It is outcome focused, rather than proscriptive.

In a recent article, Tina Rosenberg characterized the positive deviance approach:

Here’s how the positive deviance approach is different:

* Outsiders don’t bring in ideas to change a community’s culture. Instead, they ask the community to look for its own members who are having success. Those local ideas, by definition, are affordable and locally acceptable — at least to some people in the community. Since they spring from a community’s DNA, the community is less likely to feel threatened by these ideas and more likely to adopt them.

* The focus is not a community’s problems, but its strengths.

* Outsiders don’t design a communication or training strategy to teach the idea. Outsiders can bring people in the community into one room, but local people design a way to spread the new behaviors.

* Local leaders are not the ones who come up with solutions. That is the job of everyone on the front line dealing with the problem. The leaders’ job is to facilitate the process of finding and spreading these solutions.

* Outsiders don’t monitor success. They show people in the community how to do that.

Here’s an example: the Pittsburgh V.A. Hospital wanted to cut the rate of MRSA — the drug-resistant staph infection —  and older management techniques to do so, specifically, the Toyota Production System, had failed. John Lloyd, a Pittsburgh surgeon had read about positive deviance, and that led to a trial at the hospital, where those staff members who were positive deviants — people recognized by others as demonstrating behaviors that would decrease MRSA’s spread — were asked to brief others on what they did differently. This led to the unusual scene, in an extremely hierarchical culture, of a deviant housekeeper briefing doctors on anti-infection ideas.

Again, from Rosenberg’s article:

Six months later, the infection rate had fallen by more than half, and the gains did not go away. (Since this was not a randomized control trial, there’s no way to know how much of the gains came from the use of positive deviance.) The V.A. then adopted these changes in virtually all its hospitals, recommending that hospitals use the positive deviance approach and offering training in it. From October 2007 to June 2010, MRSA infections in intensive care units at the 153 V.A. hospitals in the program dropped by 65 percent; in nonintensive care units they dropped by 45 percent. (Again, we don’t know if the intervention can take credit, although it is significant that there had been no change in MRSA infection rates during the two years before the intervention.)

Pittsburgh’s experience, ultimately successful, also shows why positive deviance can fail. “It’s particularly difficult for donors who want to have a clear sense of what outcomes will be,” said Roger Swartz, the executive director of the Positive Deviance Initiative. Donors have solutions they like, and they will finance programs that use those solutions. But with positive deviance, you don’t know what the solution will be; it has to emerge as part of the process.

The approach can also be threatening to people at the top. They are used to being the experts, but with positive deviance, it’s the people in the field who are the experts. In hierarchical institutions like hospitals, housekeeping staff members do not usually brief physicians. But where managers can accept revolutionary new ways of doing business, positive deviance can succeed. “I don’t know how this is going to work,” the Pittsburgh V.A. chief Rajiv Jain told his workers when they began the program. “But I have total confidence that you as the front line staff will know.”

Incredibly valuable lesson here: a distant analogy applicable in all fields, not just hospitals or health care. The first point of failure is that people don’t want to change their own behavior. Doctors — those theoretically most well-trained — were the worse offenders. And the attempt to impose a new order from outside failed. What worked was finding those inside the culture that already were positive deviants, and having their methods shared and adopted.

The role of consultants and leaders is to channel this, to find the outliers with positive deviance, not to dictate behaviors. And the pushback to this approach is from management that wants a deterministic approach with predictable results, even if that leads to high rates of failure.

As Eric Bonabeau once said, management will continue to use techniques that don’t work, instead of adopting techniques that they don’t understand. But the evidence from the V.A. Hospital system and dozens of other examples is irrefutable.

So, in your social business adoption project, don’t tell people how to be more social specifically. Find the people who are naturally becoming more social, have them share what they are doing with others. Spread the lessons of the positive deviants, and the culture will change itself.