Tag: Culture

Culture Eats Strategy for Breakfast: Good Luck, Microsoft


Culture Eats Strategy for Breakfast: Good Luck, Microsoft

A few days ago, Microsoft announced its new CEO, Satya Nadella. The changes don’t just stop there, though. Bill Gates will be stepping down as chairman of the board and taking on a new role as “technology adviser”.

 
In the past, there has been no shortage of criticism of Microsoft’s outgoing CEO, Steve Ballmer. He famously dismissed the Internet, thought smart phones were a passing fad launched mobile devices that no one seemed to buy.

 
But these are all symptoms of a greater issue, and they are faced by many companies large and small.

 

When a company has been so successful for so long, it is hard to respond to external change.

 
This is the real underlying issue that Microsoft faces, and Nadella’s job isn’t so much to establish a whiz bang strategy, but to rally the troops around a few core cultural changes necessary for the company to return to growth.

 
The lessons learned by Microsoft are applicable to many businesses, and so are the challenges that its new CEO must now face; these include changing a culture built around the following:
 

  • Change is scary, and when in fear, people return to what they know
  • By its definition, change makes yesterday’s knowledge less helpful in addressing tomorrow’s issues
  • With a new normal and in need of new skills, people often worry about their job prospects
  • When people worry, they avoid risks and try to keep their heads down
  • This is exactly the opposite of what needs to happen for innovation to take place
  • Innovation—across people, products, business processes and culture—is exactly what is necessary to succeed

 
No matter how complex the details are, most agree that Nadella is going to pursue a strategy oriented around software, hardware and services. Historically, software has been the cash cow, and sales people and product engineers haven’t been rewarded for working on things that might take revenue away from those income streams.
 

Nadella’s task at hand is easier to outline than it is to implement. He needs to establish a market for competition and innovation inside the walls of Microsoft. He needs to change the culture so that Microsoft employees compete with one another before an external company does.

 

At the same time, Nadella needs to create a set of processes where people feel safe for competing with one another and are rewarded for doing so—all while maintaining a unified sends of community, lest Microsoft turn into the wild west where everyone is out for him or herself.
 

In the coming weeks and months, there is no doubt that Nadella will be making announcements on this product or that service, referring to a longer-term strategy in which those moves make sense. For those interested in the future of this tech giant—or how lessons learned might be applicable to their own businesses—it might be more interesting to look behind the scenes and try to discern how those announcements will be supported by the cultural, organizational and motivational systems necessary to make them successful.
 

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Could your culture be stifling innovation?


Could your culture be stifling innovation?

Each firm has its own unique culture. Often times, this culture evolves from the original founders of the company and continues to thrive even long after those founders have left the organization. At other times, firms receive a kick in the pants from new leadership and culture is changed in step-form. HP is an example of the former, while GE under Jack Welch is an example of the latter.
 

Without getting into an academic debate, culture is the set of norms that govern positive and acceptable behavior in an organization. It is more than simply determining what is right and wrong; it is what determines what is “all right”. For example, supporting one’s superior no matter the outcome might be part of the culture at one organization, whereas open and honest debate, regardless of role in the hierarchy might be part of the culture at a different organization.
 

Ultimately, the culture of most firms can be categorized into those that are rules-based and those that are normative.

 

Rules-based organizations

Firms in this category tend to be very hierarchical, with written rules governing daily activity. For most of their history, auto manufacturers were prime examples of rules-based organizations. One major American auto manufacturer used to have very tightly written rules about what sort of furniture and fixture was appropriate for each level of executive leadership. This same firm is said to have gone so far as to pay for the expense of removing carpeting and wood paneling if an office was reallocated to an executive of a lower standing. That’s a pretty severe set of written rules.
 

Normative organizations

Firms in this category are often very flat meritocracies. Written edicts are few and far between; rules still exist, but they are embodied in the collective mind of the organization, rather than on a written piece of paper. One firm we had the pleasure of working with illustrates this beautifully. The company had one written rule as regards to vacation: There is no limit on vacation time available, and all vacation time is paid. The founder of the firm felt that vacation time was an opportunity to recharge one’s batteries and clear one’s mind. The policy turned out to be a powerful tool to attract and retain colleagues, and on average, individuals at this firm take no more than a few weeks of vacation time per year. The comfort (and support) that more is available “just in case” is what drives value.
 

So what does this all mean?

Well, to a firm interested in growth and innovation, it means quite a bit. There will always be a place for rules in any organization. We’re not suggesting they should be thrown out all together. But no individual (and no set of individuals) can envision every future possibility. Rules that govern every possible outcome are a thing of the past. Instead, modern firms that want to thrive should set guidelines that describe model behavior and then allow culture to reward that behavior.
 

This approach might be novel for a company with unlimited paid vacation time, but it is essential for a firm that is looking to foster and support innovation.
 

Interested in learning more about how to foster innovation within your organization? Drop us a line. We’d love to hear from you.
 

About the Kabardian Group: We help clients achieve profitable growth. Short, simple and to the point. Our clients include companies large and small and at every stage of their development, including start-ups. www.kabardian.com