What is cultural transformation?

Cultural transformation is about the accelerated changes made by companies that focus on growing their businesses from the inside out – empowering people and the way they work through a human-centered approach. It has become more relevant than ever as organizations build the resilience required to serve their stakeholders in the midst of world-altering shifts. Prophet’s 2020 global research report: “Catalysts in Action: Applying the Cultural Levers of Transformation” intends to help organizations determine how and where to focus their efforts to continue powering their transformations from the inside out and ultimately emerge even stronger.

This report builds on our 2019 research, in which we first identified the cultural levers of transformation. A strong slate of global leaders contributed to these findings via in-depth interviews and we’re fortunate that many of these individuals have once again participated in our 2020 research to share progress and lessons learned, in addition to the stories and examples gathered from other leaders to demonstrate the power of cultural transformation in action.

Why is cultural transformation important? 

The future is here. Companies no longer have discretion when it comes to transformation for the Digital Age; it is their only option. Deferred digital decisions – which previously may have shown up as small chinks in a company’s armor – have now exposed significant vulnerabilities in organizational cultures across industries and regions, shattering any reason to hold onto historical behaviors, skillsets, organizational designs and operating models.

Our research shows there is a need to address culture as a part of an effective transformation.

Though the context for companies’ transformations has dramatically changed, the core methods have not. Prophet’s Human-Centered Transformation Model acknowledges that just like the humans that comprise them, organizations have DNA and a Mind, Body and Soul and successful transformation depends on these elements working in sync to drive sustained cultural change.

“Focusing on levers that help create safe spaces and meaningful mechanisms for employees to adapt to the change are critical.”

The application of these cultural levers invites its own set of questions and challenges. We’ve observed that organizations are often unsure where to start or where to go next in terms of which levers to pull. Our research report identifies four pathways of cultural change that are intended to help organizations focus their efforts and make sustained progress toward cultural transformation. These pathways are not intended to be prescriptive but rather a helpful aid for how organizations might navigate transformation based on overcoming primary roadblocks. The report also provides best practices and stories of how other companies are moving forward in making progress against these cultural levers.

Four Pathways of Cultural Transformation

We’ve identified the following four pathways of cultural change. These pathways align to our Human-Centered Transformation Model and can be viewed as either entry points into the model or ways to move through the model, i.e., where to focus next:

Defining the Transformation

Consider this pathway to be the “control tower” for all other pathways. This is where a company solidifies its DNA: its business and brand strategy; purpose and values and employee value proposition. Once established, DNA serves to continually direct the ongoing change. In order to successfully define the transformation, organizations must set a powerful, actionable ambition and clarify the leaders who will lead the cultural transformation.

Directing the Transformation

Directing the cultural transformation requires focusing on cultural levers related to the Body of the organization. This focus ensures organizations are taking a holistic view of the governance, processes, roles, systems and tools needed to enable an operating model that makes transformation real. Many organizations have made progress on a clear roadmap and KPIs, though other key levers, such as pushing decision rights downward have proven more challenging. Our research provides examples from organizations that are successfully overcoming these hurdles. Furthermore, a powerful story emerged in the data where organizations with an empowered transformation management office (TMO) are experiencing more positive impact and transformation success.

Enabling the Transformation

Enabling the cultural transformation requires focusing on the Mind within our Human-Centered Transformation Model. The Mind is where organizations identify, source and build the capabilities required for employees to thrive and for organizations to succeed in the Digital Age. These organizations will benefit from a focus on levers related to upskilling their employee bases and upgrading the ways they identify, recruit and retain talent – resulting in a supercharged workforce that is prepared to take ownership of operating in new ways.

Motivating the Transformation

Organizations that are motivating cultural transformation must focus on the organization’s Soul. In our Human-Centered Transformation Model, the Soul is where leaders are equipped to both talk and “walk the talk” around the transformation journey to create trust among employees to adopt and evangelize new ways of working. Stories, rituals and symbols help build belief among employees and connect their day-to-day work to where the organization is heading. Focusing on levers that help create safe spaces and meaningful mechanisms for employees to adapt to the change are critical, as is recognizing progress being made along the way and sharing these stories of both successes and lessons learned.

It’s easy to know where you’re reading this blog: at home. In fact, you haven’t been to an office in many months now because the COVID-19 crisis launched the largest volume ever of workers into the world of remote work and virtual collaboration.

An Option Becomes a Necessity

The advent of remote working technologies 20 years ago didn’t have a widespread effect on how most people work. From Fortune 500 companies to digital natives, it has been common to find remote work happening in only one isolated part of the business or not at all. In fact, remember when Yahoo! famously banned remote work? Or IBM?  So, it was not a surprise at the outset of the COVID crisis to see waves of announcements about “testing the technology”.

That “test”, of course, is still ongoing. It is only now in this unprecedented moment that a deep and unavoidable business need and the existing technology have come together. Suddenly, what was once largely implemented as a lifestyle choice for most companies is a universal necessity. From companies extending work from home policies through the end of the year to Twitter’s recent announcement that it’s employees will be allowed to work from home forever, it’s looking likely that our working lives may never be the same again.

The Technical Foundation is in Place

Whether or not we’re individually skilled at remote work, collectively most corporations are dominated by those who have relatively little experience navigating the new world into which they have been unwillingly thrust. This is evidenced by the many articles about the perils of back-to-back video conferencing on Zoom.

“Suddenly, what was once largely implemented as a lifestyle choice for most companies is a universal necessity.”

As a result, every employer now realizes that their workforce needs both proper equipment and real skills to work effectively remotely and that they, as a culture, had better get good at remote collaboration or they will be outpaced by those companies that already can.

Core Skills for Remote Working

This moment offers the opportunity to take a hard look at how you might best equip your workforce for a future way of working that is arriving precipitously fast. How might you begin preparations now to be able to dominate your competition in this brave new world?

There are well-known needs for skills around goal setting and time management for each individual when working from home. However, as many people are now discovering, working remotely with distributed teams requires new application of existing skills; and also, some skills which might be entirely new. At Prophet, we’ve identified three core skills for remote teamwork that need support and reinforcement:

1. Clear Communication: Working in offices offers the opportunity for what architects and workspace designers call “unprogrammed interactions”, by which they mean casual run-ins in the kitchen, rest room or on an open plan floor. It’s not until you’re remote full-time that you realize how often you depend on bumping into someone in the office pantry and using it as an opportunity to quickly clarify your intentions, needs and objectives. Working remotely requires colleagues to communicate more clearly on the first go, often using new tools. Knowing when it’s best to use messaging (e.g., Text, Teams, Slack) versus video chat or email is important, as is being able to articulate your information and expectations clearly in that format.
2. Virtual Meeting Design and Facilitation: Working remotely, most of your meeting participants are going to be easily distracted, whether by virtue of the fact that their meeting attendance tool is also their tool for messaging and email; or because a partner, child, or dog demands their attention. We probably do not spend nearly enough time on meeting design in the normal course of events. Working virtually, however, makes ‘magic meetings’ with little or no design even more problematic. Knowing how to design virtual meetings, meaning how long a conversation or other activity should take, how to orchestrate different types of productive conversation and which specific tools will keep participants focused are all critical for making a virtual meeting successful. Equally important is knowing how to facilitate across the distance—which sometimes means separating the process role of facilitation from being in a participant role.
3. Remote Relationship Building: Anyone who has been on a great team knows that success is not just driven solely through processes and roles, but that team culture is part of the secret sauce that distinguishes exceptional output from the merely mediocre. With a pandemic that has separated us all physically, it’s more critical than before to be able to lean into soft skills and drive connection across the gap. Team leaders must be able to create a safe space where individuals can freely share ideas, get advice and balance workload in a way that respects their personal lives. This is how creative solutions to pressing challenges will be found and how teams will come through the crisis intact.

A trained eye observing a successful virtual team will see all three of these skills in action. Individuals will interact with clarity and purpose. Meetings will have a clear structure and focused, engaged participants. And teams will bond in the ways great teams do – each person connected to one another’s passions, talents and needs – enabling effective working harmony.

The world is upside down (for you and all your employees) and it’s difficult to know which way to go. Here, we outline those companies whose values have successfully helped them to navigate this crisis, and how they are informing their approach to long-term decision making and working to galvanize the workforce.  

Values under pressure 

The COVID-19 pandemic has had a profound impact on the world and how it operates. First and foremost, it is a human and social crisis, affecting millions of people and upending lives. It has also had a significant and ever-growing impact on businesses and the global economy.

We have seen businesses respond to the crisis in several ways – which can have lasting implications for their company. For example, CVS Health provided bonuses to employees who were required to be at CVS facilities to assist patients and customers, as well as helping employees with child and elder care needs. They also plan to hire an additional 50,000 full-time, part-time and temporary employees, filling many of the roles with existing CVS Health clients who have had to furlough workers, including Hilton and Marriott. Recognizing their employees’ commitment, as well as proactively supporting their needs, helped employees to feel acknowledged and respected during these uncertain times.

Amazon, on the other hand, has squelched efforts by employees to seek rights and benefits that protect them and their customers and has been secretive about existing cases – diminishing trust and creating dissonance with employees and customers.

Why the difference? It comes down to how leadership translates their values into action. It’s often in times of crisis – when companies are forced to make difficult decisions – that their true priorities are shown. COVID-19 has provided an intense microscope into organizations’ values and how they guide their actions. Some have struggled, keeping their values as words on a page and leaving their people in the dark. While others have thrived – bringing their values to life as they manage the short-term needs of their employees with the long-term commitments of various stakeholders. This balance requires bringing stakeholders into the decision-making, being transparent in how decisions are made, and proving commitment through new skills, processes and rituals. Organizations are a macrocosm of people, and to truly lead with values across the organization, we must align how employees are equipped, governed, and engaged.

Translating your values for a crisis

Values should guide leaders through decisions, particularly difficult ones, that can determine the future of the organization. Getting them right can galvanize the workforce around what is really important (e.g., working together, being human, adapting), and can be pivotal in a company’s survival and growth over the long term.

Times of turbulence provide a unique opportunity for leaders to evaluate how their values actually show up. Understanding what the values need to do versus what they actually do can help leadership translate them into more meaningful guides for employees. What do themes like ‘transparency’ mean during a period of extreme change? How do themes like ‘caring’ show up when thousands of workers may need to be furloughed or endure extreme work conditions?

“It’s often in times of crisis – when companies are forced to make difficult decisions – that their true priorities are shown.”

We’ve seen companies use their values to guide positive actions. With a significant impact on the food and beverage industry due to the coronavirus, Starbuck’s CEO Kevin Johnson led with their values, “creating a culture of warmth and belonging” and “acting with courage” in an open letter to US employees. First, the company committed to pay all employees for 30 days, whether they chose to come to work or not. Second, the company recognized that re-opening stores would look different across the country, and empowered local leaders to make the decision of when to reopen, with the support of tools and resources.

Ensuring employees are equipped with skills and behaviors to live the values

In times of crisis, situations can change daily, if not hourly. Employees need to feel they are equipped with the right skills and behaviors to deliver on the values as circumstances change, and where new skills might be needed. For example, if an organization prioritizes innovation, are new skills needed to collaborate virtually? For companies that prioritize community and impact, are new skills needed to deliver that impact during the crisis? For behaviors, companies should be as specific as possible about how values should translate in different settings and situations to make sure they’re clear what’s allowed in times of crisis and what’s expected of them to provide better service.

Kering Group, a multinational luxury group, translated their skills in production from runway looks to face masks, while ensuring strict measures to protect staffs’ health. Shifting their capabilities to provide supplies needed by healthcare workers to combat the growing number of coronavirus cases demonstrated Kering’s value around caring more than a poster ever could.

Of course, these skills and resources need to be balanced with the reality of your business, but when runway looks aren’t needed and there is employee capacity, turning to values can have an important impact on many.

Creating processes that reflect your values

To ensure employees can deliver on values without fear or friction, the proper processes and governance need to be in place. Consistency is key here as processes should be applied consistently and at all levels. Where there are inconsistencies, it’s important to be transparent about why those choices are being made.

During times of crisis, existing processes may need to be adapted. Employee evaluations and competencies may need to be rethought to align with how the nature of an organization’s work has changed. Some organizations may find they need to inject new processes, such as implementing new customer support guidelines, to empower employees to make decisions aligned with their values. Others may find that some processes might need to be paused to help remove the red tape or bureaucratic procedures that typically slow organizations down and prevent employees from making values-led decisions quickly. Making changes like eliminating unnecessary layers of approval can actually turn times of crisis into catalysts for change.

For example, the biopharmaceutical company Gilead, has put its values of integrity and accountability first. They have worked with regulatory authorities, adapting processes to establish additional expanded access programs for remdesivir, their investigational medicine for COVID-19. Gilead adapted their approach to ensure they could help accelerate the process of providing remdesivir to severely ill patients, who could potentially benefit from the treatment. By leading with their values, Gilead has been able to balance the need for urgent action to save lives with the responsibility to do so safely.

Helping employees feel the values through rituals

During times of crisis, employees often feel confused and overwhelmed so it should be a priority of the leadership to communicate just how valued they truly are. This can be brought to life in meaningful and human ways by reinforcing values through stories, new rituals, or shifts in incentives. Even small changes like reminding employees to stretch, take lunch breaks, or meditate can help employees feel the values with themes like teamwork, selflessness, and respect.

It is important to maintain existing rituals, where possible, to show continuity. New rituals may also be needed to deliver on values in new ways. At Prophet, we have transitioned our office happy hours, pulse checks, and even office-wide events to virtual platforms. Continuing these rituals and providing a platform for employees to share personal stories has brought Prophet’s values of “Fearlessly Human, Unexpectedly Irreverent” and “Enjoying the Ride” to life – demonstrating humanity and empowering employees to bring their whole selves to the table. Positive behaviors and rituals such as these are productive changes that can be good to maintain, even after normalcy returns.

In just a few weeks, businesses and societies have been upended by COVID-19.  This is a defining moment for leaders to steward their organizations, themselves and their families through a crisis of this magnitude and come out stronger on the other side. For nearly a decade, we’ve had the pleasure of working with Mark Miller, Vice President of High-Performance Leadership at Chick-fil-A – working on projects like NEXT (their annual company event), Leadership Development and Customer Experience projects. Mark is a best-selling author of books including Chess not Checkers, Win the Heart, and The Secret. I recently caught up with Mark (virtually) and he shared some timely advice for leaders.

How is Chick-fil-A’s business doing, and in particular, the Operators and team members in the restaurants?

I’ll speak to what will probably become a theme throughout this piece: We have a lot to be thankful for. Obviously, it is a very challenging time for our Operators and their team members with closed dining rooms and mall restaurants; but overall, we are thankful we can continue to serve our customers.

You have about 2,500 restaurants around the country.  What are the leadership demands being placed on the Operators of those restaurants right now?

The demands are multi-faceted. We want to do everything we can to protect our team members who continue to serve customers. We don’t want to do anything to spread the virus. As it relates to Operators, they are trying to serve our customers under these challenging circumstances.

What are the pitfalls facing leaders right now in the middle of this crisis?  What should they avoid?

Self-care or the lack thereof is a big concern at any time, but especially now. Rest is important; so is exercise. Connection with others is also vital – even if virtual. Call a friend, text a colleague, schedule a Zoom call. Stay rested, connected and fit to lead. Regarding what to avoid, my encouragement is to avoid dwelling on what is out of your control. Don’t deny it – just don’t dwell on it. I would suggest leaders focus their time, energy and best thinking on things you can control (or at least influence). There’s too much to do to waste effort on things that are out of your control.

How do you think about the difference between an “effective leader” and a “typical leader”?  What are the defining traits?   

Thanks to the hard work of the Prophet team, we are now forming a point of view on this topic. It has proven to be a fascinating and complex question! Most people would agree on the things leaders do: Communicate vision, build teams, drive innovation, build strong relationships, produce results, walk the talk, etc. We are trying to crack the code on what the most effective leaders do differently. The work is still underway, but I feel confident that our final conclusions will include a couple of important things. One, the best leaders appear to value and create margin more than “typical” leaders. These women and men understand it is in this space where they clarify their thinking, sort out everchanging priorities, evaluate current strategies, assess the effectiveness of current plans and re-center themselves around what matters. Without sufficient margin, we have found many leaders “stuck in action.”

You mention “creating margin.” How is that more important during a  crisis and how can leaders make time for that? 

The more complex the challenges, the more demanding the circumstances; the greater the consequences, the more margin matters. Leaders attempting to navigate in crisis need every possible resource at their disposal – beginning with the time, energy and space to think. Margin enables leaders to do their best work when it matters most.

What’s the other key trait that distinguishes “effective leaders” from “typical leaders”?

Another characteristic we’ve discovered in the most effective leaders is they believe they can! This is not an unbridled optimism, but it is a boundless belief in their personal ability to affect positive change. Our psychologist friends would call this an internal locus of control.

How might an effective leader demonstrate care to their teams during the crisis?

In my book Win the Heart, I outline four elements required for a person to feel cared for. All apply in pre- and post-COVID-19.

Connection – Stay connected. Yes, it is harder today, but never more important. I have made this part of my “shelter in place” daily routine. Who can you connect with today?

Affirmation – People want and need to feel seen and valued. Look for ways to affirm them and their value as a person. Again, you may find this difficult under our current circumstances, but this is vital. Many people are anxious about the future – their health, their loved ones, their finances, their job. Who can you affirm and encourage today?

Responsibility – Sharing real responsibility has always been a great way to demonstrate trust, but is often overlooked as a way to raise someone’s level of care for their work. What work, or better yet, what decision, can you delegate to someone today?

Environment – This is a broad category reflecting everything from physical and psychological safety to the proper tools and training required for the task at hand. In today’s world, many of our organizations are cutting expenses, as we should. However, are there any tools or resources you can provide for remote work that might prove helpful? When leaders enhance the work environment, it communicates care.

Bottom line: When leaders and organizations provide the elements of CARE, people care more.

What should leaders be doing right now to stay focused on what matters most / in the future?

A: My advice is to do what the best leaders always do: stay grounded in the things that will not change — your brand’s purpose, vision, values— and hold the rest loosely. As my friend Jim Collins popularized years ago: protect the core and stimulate progress.

What resources can leaders tap into right now?    

Please don’t overlook your own team members. We are seeing unprecedented levels of creativity and innovation within our own team. If you have a coach, use them. If you don’t and now doesn’t feel like the time to hire one, consider creating a peer learning group. I am part of a group that’s been meeting twice a month for over twenty years. Our topic for two decades? Leadership. We’ve conducted our last two meetings via Zoom. The only thing required is a few folks willing to get together with the explicit intent to help each other grow. It’s been a game-changer for me.

Read all the books you can. If reading is not your thing, use Audible. Pick an area you want to know more about and dig in.

“This is a defining moment for leaders to steward their organizations, themselves and their families through a crisis of this magnitude and come out stronger on the other side.”