change management


As anyone who has ever driven a car knows, blind spots are potentially lethal. This holds true in leading business organizations as well on the road, so it’s time we worked to eliminate them from one of the most critical business tasks of our age: culture change.

The danger of blind spots helps explain the continued popularity of Kaplan and Norton’s book The Balanced Scorecard: Translating Strategy into Action.That influential book, after all, addressed the value of having multiple measures or perspectives. Incomplete scorecards resulted in ignored aspects or blind spots.

Now, culture change initiatives must adopt this practice. To date, culture change initiatives generally concentrate on values, mission, personal interaction, and morale. All of these are important, but together they represent an incomplete picture. These blind spots help explain the poor rate of success – in the 11-30% range – among such initiatives.

To address those blind spots, I propose that the culture change scorecard needs to incorporate three additional factors:

Power Distance

Efforts to empower employees typically fail because words and actions send different messages. Power remains a valued commodity when seen from a narrow perspective connected to monarchs and monopolists. While the concept of power is emerging, power symbols remain in the workplace, from the offices to organizational charts. Extreme compensation gaps, for example, convey a power-related message that is louder than any tag line or mission statement ever could be. Such signals – and there are many – help reinforce cultures that tend to be more hierarchical and less flexible, even amid well-meaning culture-change programs striving for flatter organizations.

Risk Orientation

An organization’s risk orientation is also a critical culture change factor. The definition of an “acceptable” level of risk varies not only across industries, but across organizations. Managers may give lip service to innovation, but this will not resonate if there are high penalties for failure. What gets rewarded will get done and what gets punished or discounted will be avoided. This is not to suggest that a higher risk orientation is always desirable. However, there does need to be an alignment between management’s call for greater innovation – which often requires taking intelligent risks – and the culture that must reinforce management’s message.

Time Horizon

Culture change requires a combination of short-term and long-term thinking, but some organizations focus on one direction at the expense of the other, making change management effort difficult or even futile. In firms that focus on the short-term, quarterly goals may be chased at the expense of making investments in the future, and this can harm the ability to the react effectively to future developments. R&D, for example, can be cut back in the short-term but over the long-term, this can be disastrous for the company that needs to keep ahead of the competition. Likewise, too much focus on a desired future state can lead to cash flow issues that jeopardize the whole organization.

By incorporating these three factors into a change management model and adding new benchmarks to measure power distance, risk orientation and time horizon, we will have the peripheral sight as well as the hindsight and foresight needed to help drive culture change.