Leading Culture Change in Global Organizations Part II Crossing Borders

1. Webcast Series:
Part II
Crossing
Borders
Daniel Denison
Denison Consulting
Ann Arbor, Michigan
IMD Business School
Lausanne, Switzerland

2. “A milestone in the culture studies arena.”
-Edgar H. Schein
Daniel Denison’s newest book illuminates
the cultural dynamics firms need to
manage in order to remain competitive,
including:
• Supporting the front line
• Creating strategic alignment
• Creating one culture out of many
• Exporting culture change
• Building a global business in an
emerging market
• Building a global business from an
emerging market
Available June 26, 2012!

3. Leading Culture Change in Global Organizations:
Special 3-Part Webinar Series
Part I: Getting Your Own House In Order
May 31, 2012 11:00 am – 12:00 pm EDT
This webcast will focus on Supporting the Front Line and Creating
Strategic Alignment by exploring successful change initiatives.
Part II: Crossing Borders
June 28, 2012 11:00 am - 12:00 pm EDT
This webcast explores the challenges companies face in ’Crossing
Borders’ to build effective cultures.
Part III: Emerging Markets
July 19, 2012 11:00 am - 12:00 pm EDT
Part III of this webinar series examines the challenges — and
unique opportunities — of implementing culture change in an
increasingly relevant context: Emerging Markets.

4. What Is It All About?
Supporting the Front Line
Domino’s Pizza
Creating Strategic Alignment
”DeutscheTech” & Swiss Re
Creating One Culture Out of Many
“Polar Bank”
Exporting Culture Change Across National Boundaries
”GT Automotive”
Building a Global Business in an Emerging Market
GE Healthcare China
Building a Global Business from an Emerging Market
Vale

5. Changing Culture
By Changing Rituals, Habits & Routines
Good
Preserve Invent
& &
Strengthen Perfect
Bad
Unlearn Rethink
& &
Leave Behind Try Again
Old New

6. Culture Reflects the Lessons
Learned Over Time
Visible Symbols
Lessons Culture Survival
Underlying Principles

8. The Rain Dance

9. The Cargo Cult

10. Sacred Cows Make the Best Burgers
Mark Twain

11. How Habits Work
Routine
Cue Reward
Charles Duhigg, The Power of Habit

12. Brain Activity in Rats
Charles Duhigg, The Power of Habit

13. Brain Activity in Rats: The Learning Phase
Cue Routine Reward
Charles Duhigg, The Power of Habit

14. Brain Activity in Rats: The Routine
Tacit Knowledge
Cue Routine Reward
Run straight, hang a left, eat the chocolate!
Charles Duhigg, The Power of Habit

15. Paul O’Neill at Alcoa:
Identifying Keystone Habits
 It got so bad they would bring dummies to the parking lots,
dress them like managers, and burn them in effigy. ―Alcoa
was not a happy family. It was like the Charles Manson
family, but with the addition of molten metal.‖
 O’Neill picked safety as one thing that unions and executives
could agree on. Zero injuries. Injuries must be reported to
the CEO within 24 hours.
 ―We killed this man. It’s my failure of leadership. I caused
his death. And it is the failure of all of you in the chain of
command‖
 Once you see everything as a bunch of habits, it’s like
someone gave you a flashlight and a crowbar and you can get
to work.

16. Polar Bank

17. Polar Bank
• Three entities: retail, project finance and private banking
• Three countries: Sweden, Norway and Denmark
• Industry that is consolidating
• You want to control your destiny
• One strong, synergistic culture will help you achieve that

18. 2004 Culture Survey Results

19. Taking Action
• You are the CEO of Polar Bank
• The 2004 results are your results.
• You want the retail, project finance and private
banking entities to act as one bank.
• What do you do?

20. Creating the Polar Bank Vision
 Created Strategy workshops
 Debated strategy
 Drilled down on issues
 Focused on what the units could accomplish together
 Involved retail managers in the debate on public project finance strategy
and vice versa.
 Created one board for each of the three units as well as the overall
company
 Communicated importance of strategy and vision
 Made many speeches and site visits
 Used metaphors and popular culture
 Made Strategy Consistent Acquisition
 Agreed on Polar Bank values
 Ambition; Passion; and Teamwork

21. Cascading the Vision & Strategy
 Leadership Development and Educational Initiatives
 Designed Leadership competencies model
 Customer Orientation; Vision; Innovation; People Management;
and Cross-boundary collaboration
 Developed Leadership Program for senior executives with IMD
 Worked on their leadership skills
 Reflected on how to embed the leadership vision into Polar Bank
 Rolled out 360-degree feedback program to support the leadership
vision
 Board received first feedback
 450 managers have since received feedback
 Innovation
 Set up clear innovation process and awarded first Innovation
Award in June 2006

22. Assessing the Impact
 Implemented a performance evaluation
system that supported the vision and strategy
 Included leadership development objectives
with links to bonuses for the Top 100
managers.

23. 2006 Culture Survey Results

24. 2004-2006
Culture Survey Results

25. Lessons Learned: Polar Bank
 Intervene at the level of the governance structure. When you have
major business units (BU) with strong and unique cultures, temporarily making their identical facilitates the
transmission of consistent messages about the new strategy and culture.
 Engage the different units actively in each other’s strategy
development process. When striving to achieve one overall company culture, it is necessary that
the different business units understand each others’ strategies
 Institute a job rotation process. Spreading best practices and building connections
across the BUs is facilitated by job rotation.
 Make HR decisions on those managers who do not align
with the new strategy relatively quickly. On the one hand it is important to give
people a voice. On the other hand, if they are not on board with the change in a reasonable amount of time and they
remain critical, it is time for them to part ways with the company.
 Allocate resources in line with the new overall strategy Budget
allocation is an important tool to align operational decisions with the strategy.
 Align performance evaluation system to reflect new
strategy. The performance evaluation system should be designed so that the behaviors that are aligned with
the new, desired culture are rewarded.

26. GT Automotive

27. GT Automotive
• Over $2.9 Billion sales and 16,000 employees in 27 countries
• Three major automotive businesses
 Brake & Fuel Fluid Carrying Systems
 Fuel Systems
 HVAC Fluid Carrying Systems (smallest and focus of this case)
• HVAC (Heating, Ventilation & Air Conditioning): 3000 employees
 $200 million sales
 Over 95% sales in NA and EU
 Small presence in SA and new presence in Asia
 Case A: Transforming a Corporate Culture (North America)
 Case B: Building a Global Team (Europe)

28. Initial North America Culture Issues
• S&H Fabrication (HVAC) was acquired by GT in 1998
• Culture change initiated in 2003
• New VP & General Mgr. (ninth leader in 5 yrs.)
• Feedback from long service (over 15 yr.) employees
 Innovative and entrepreneurial culture of S&H replaced by
slow, bureaucratic structure of TI Automotive
 Management not interested in HVAC
 Frustrated with implementing TI procedures and TI personnel
would not listen to their concerns and recommendations
 “We are the red-headed step child of TI”
 Concerned about the future due to limited progress diversifying
the customer base (95% GM) and recent personnel reduction.

29. 2003 Survey Results

30. From From Analysis to Action
Priority Structure
1. Involvement Involvement Meetings
identify issues
2. Teamwork Business Teams
take action

31. Involvement Meetings: Initial Implementation
• Involved most salaried employees in North America
• First Meeting
• Reviewed Survey Results: Identified top 3 improvements and
specific actions to support
• TOP 3: Vision, Strategy, Change
• Defined initial HVAC Vision
• Second Meeting
• Status report on Denison improvement progress
• Reviewed HVAC Strategy and defined revisions
• Defined HVAC objectives for following year

32. Business Teams
• Cross-functional teams defined and empowered to support our HVAC
Vision.
• Two types of teams exist:
• Customer teams: regional and/or global (Ford, GM, Chrysler,…)
• Non-customer / support teams: regional and/or global (Purchasing, Technology)
• Business teams drive final definition and implementation of HVAC
strategies, priorities and supporting objectives
• Teams openly share information within their team and, where
appropriate, across the regional / global organization
• Business teams possess complete responsibility and authority to
constructively complete their objectives
• Business teams clearly identify when management support is necessary

33. 2003-2004 Survey Results
HVAC North America
2003 2004

34. Building A Global Team

35. 2004 European Survey Results

36. European Survey Results
2004-2005

37. Common Themes For Culture Change
North America & Europe
• Initiation of team structures (business teams)
• Alignment of vision, strategy, objectives & rewards
• Implementation of Denison survey & formal action planning
• Involvement meetings & business team meetings
• Establishment of extensive capability development system
• Extensive reward and recognition systems
• Regular communication and team activities

38. www.LeadingCultureChange.com

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Culture Change in Global Organizations can receive
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40. Leading Culture Change in Global
Organizations:
Special 3-Part Webinar Series
Part I: Getting Your Own House In Order
May 31, 2012 11:00 am – 12:00 pm EDT
This webcast will focus on Supporting the Front Line and Creating
Strategic Alignment by exploring successful change initiatives.
Part II: Crossing Borders
June 28, 2012 11:00 am - 12:00 pm EDT
This webcast explores the challenges companies face in ’Crossing
Borders’ to build effective cultures.
Part III: Emerging Markets
July 19, 2012 11:00 am - 12:00 pm EDT
Part III of this webinar series examines the challenges — and
unique opportunities — of implementing culture change in an
increasingly relevant context: Emerging Markets.