Culture Eats Strategy for Breakfast”

"Culture eats Strategy for Breakfast”

Strategies for Change based on Culture

Quote attributed to management guru Peter Drucker

Culture is a very strong driver of behavior of individuals within your organization and having the wrong culture may conﬂict with your strategic goals. Key is to have the appropriate culture which is aligned with your companies strategic goal and objectives.

Manage Culture

shift the Actions balance

Beliefs

coaching is an ongoing Lead long term investment Experiences

The “Results Pyramid” is copyright of Partners in Leadership LLC agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2018. agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2018. Key ﬁndings - Important but neglected

• Culture is ranked 3rd in terms of importance, behind strategy and financial performance • Only 20% or 1 in 5 of the 450 responding C-Level directors reported spending time to manage and improve it • Some 62% felt that they were primarily responsible for setting culture from the top • However, 63% did not consider culture as part of their risk assessment

Board Leadership in Corporate Culture: European Report 2017 - Research Report by Board Agenda & Mazars in association with INSEAD

• When they do discuss culture, the Nr. 1 focus is on understanding the actual culture and 2nd the link between culture and strategy • Half say there are either significant gaps between strategy and culture or they have not spent time considering alignment of the two. • A third are not confident they have the right information and are unclear on alignment between the desired culture and that which actually exists in the business

Board Leadership in Corporate Culture: European Report 2017 - Research Report by Board Agenda & Mazars in association with INSEAD

• Only 1/4 of the boards said that they undertake an audit of the their culture • The remaining 3/4 rely upon sources such as employee surveys, risk events such as rule breaches, HR issues and the monitoring of compliance • Employees are seen as major targets for cultural change programs: enhance employee motivation and productivity was cited as the Nr. 1 reason for a change program.

Board Leadership in Corporate Culture: European Report 2017 - Research Report by Board Agenda & Mazars in association with INSEAD

“Overall, the findings indicate that, although awareness of the importance of corporate culture to business success is recognised, boards have yet to find a way to discuss corporate culture in a meaningful way.”

Board Leadership in Corporate Culture: European Report 2017 - Research Report by Board Agenda & Mazars in association with INSEAD

Every organization has a culture, regardless of whether you want it or not.

Culture is the set of behaviors that have been established and accepted within an organization agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2017. agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2018. Make culture explicit

Organizational culture exists and manifests itself in the form of behaviors and activities. Make it explicit to allow for better alignment and context creation — it's difﬁcult to change what cannot be seen.

Flexibility & Discretion

Culture Type: Clan Culture Type: Adhocracy Orientation: Collaborative Orientation: Creative Leader Type: Facilitator, Mentor, Team Leader Type: Innovator, Entrepreneur, Builder Visionary Value Drivers: Commitment, Value Drivers: Innovative outputs, Communication, Development Transformation, Agility Theory of Effectiveness: Human Theory of Effectiveness: Innovativeness, development and participation produce vision, and new resources produce effectiveness effectiveness

Culture Type: Hierarchy Culture Type: Market Orientation: Controlling Orientation: Competing Leader Type: Coordinator, Monitor, Leader Type: Hard driver, Competitor, Organizer Producer

Internal focus & Integration Value Drivers: Efficiency, Timeless, Value Drivers: Market share, Goal

Consistency and Uniformity achievement, Profitability External focus & Differentiation Theory of Effectiveness: Control and Theory of Effectiveness: Aggressively efficiency with capable processes produce competing, customer focus produce effectiveness effectiveness

60 strong Hierarchy oriented proﬁle Clan 50

50 40

Agile Values & Ad-hocracy They struggle to introduce a more agile

40 30 Principles and lean approach to work, because the hierarchical culture is not supportive of 30 20 agile values and principles

20 10

10 20

20 30

30 40

40 Market 50

Hierarchy 50 60

60 strong Hierarchy oriented proﬁle Clan 50

50 40

Ad-hocracy They struggle to introduce a more agile

40 30 and lean approach to work, because the hierarchical culture is not supportive of 30 20 agile values and principles

20 10

10 To create the right context to move toward a more agile and lean culture, we 10 need to transition toward Clan or Ad-

10 Hocracy 20

20 30

30 40

40 Market 50

Hierarchy 50 60

What types of behaviors associated with the speciﬁc culture do we want more of and which do we want less of in order to move closer to our desired culture?

1. Story telling and role-modeling (e.g: empathy and tradition, walk the talk, common jargon)

3. Ritualization (e.g: Scrum events, Ritual Dissent, Open Space)

agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2018. Leader Type Quality Strategies Clan Ad-hocracy Clan Ad-hocracy OrgScan • Diﬀerent dimensions contributing to cultural development can be compared • It is possible to clearly see the overlapping areas and understand how far is the overall culture from Hierarchy Market Hierarchy Market being coherent Theory of Effectiveness Value Drivers • It is easier to find “adjacent possibles” Clan Ad-hocracy Clan Ad-hocracy toward which to shif the culture to facilitate coherence, before embracing a transition towards a new profile • It is possible to compare diﬀerent areas of an organization including currently running experiments

Leader Type Quality Strategies Company A Clan Ad-hocracy Clan Ad-hocracy

•Every dot represents a decision, self- submitted and self-signiﬁed by an employee Hierarchy Market Hierarchy Market

•Leaders are Clannish but the Quality Theory of Effectiveness Value Drivers

Strategies or Orientation are Market- Clan Ad-hocracy Clan Ad-hocracy driven

Hierarchy Market Hierarchy Market

18 agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2017. agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2018. What contributed to stories being negative or positive? Empowered decision making Speed of decision making was quite fast Rapid decisions had a higher likelihood of being reported negatively: while 31,5% of the reports were of decisions 31% of decisions were taken right away, and a further 40% within a day. Only 2 decisions weretaken reported right as away, taking forever.47% of This the might negative be stories were taken right away. Decisions taken within a day made up 29% of Only 18% of decisions were made by the Leader or Manager; 40% were made by the team or “everyone”, and 28% by because the respondents were all team members or team leaders, i.e. the organizational structurethe negative involved in stories, the decisions while was being quite flat.only The 19% overall of the stories. the individual respondents themselves. Of the decisions made by Managers/Leaders, the majority (61%) was speed seems to have contributed to the (small number) of negative stories (see slide 8). Operational/Tactical, but two thirds of these were in the “Rare and problematic” or “Familiar but difficult” categories. Where 60% of respondents were with the company for less than 6 months, 70% of the negative stories came from The approach taken to decision making was quite evenly balanced between Rational analysis,this Decisive group. action While and Collaborative14,5% of the consensus respondents were there for longer than 24 months, 23,5% of the negative stories This is consistent with a concentration in the Clan quadrant of the culture profile wrt Leader type, and with Agile building. No strong patterns were found that Rational analysis is preferred in any particular circumstance.came from Collaborativethem; therefore consensus a higher building likelihood is of negative stories from recent employees or “old hands” more likely to be important when decisions are strongly influenced by Peers, and in Operational rather than Strategic decisions (see next slide) principles Flat org structure The more problematic the situation was, the more likely the stories were to be negative Decision was made ... Decision was made by ... Decision made me feel ... Leader Type → Rapid decisions Not sure I don’t know T5: Decision needed ... Factors influencing Emotion Clan Ad-hocracy Not sure TimeTaken Everyone Emotion Tenure Rational analysis Negative

Took forever Role 100 Manager/Leader Neutral MadeBy Positive MadeBy

Problematic The Team Not sure Everyone 20 What contributed to stories being negative or positive? Within the month StrategicOps 80 Frequency Me Rapid decisions had a higher likelihood of being reported negatively: while 31,5% of the reports were of decisions StrategicOps 40 Familiar Not sure 60 0 10 20 30 40 50 taken right away, 47% of the negative stories were taken right away. Decisions taken within a day made up 29% of theoryEffectivenessY Manager/Leader Within the week count Operational the negative stories, while being only 19% overall of the stories. RationalAnalysis MadeBy 60

Strategic TimeTaken Time 40 How problematic the situation was Where 60% of respondents were with the company for less than 6 months, 70% of the negative stories came from Variable Resources Within the day this group. While 14,5% of the respondents were there for longer than 24 months, 23,5% of the negative stories Politics The Team 80 60 came from them; therefore a higher likelihood of negative stories from recent employees or “old hands” intPrinciples 20

DecisiveAction Within the hour The more problematic the situation was, the more likely the stories were to be negative 100 SlowtheoryEffectivenessX decisions and long 40

Decisive Collaborative 20 40Rare 60 80 Decision made me feel ... action 100 consensus building Consistency between LeaderMe Problematic qualityStrategiesX 20 Factors influencing Emotion Not sure Compromises Right away tenure had negative impact Hierarchy type & DecisionMarket maker leaderTypeX Critical TimeTaken Emotion Everyone Observations0 10 20 wrt compromises30 40 50 made were balanced across the whole triad. Note that T6 had 38 NA’s (25%), which might 0 Tenure 0 10 20 30 40 50 0 5 10 15 Negativecount Negative Neutral Positive Not sure be meaningful. count Importance of variable toward Emotional tone Role Manager/Leader Neutral Emotion MadeBy Positive MadeBy Relatively few patterns were found in this triad. Quite reasonably, decisions that were made right way tended to Problematic Not sure The Team compromise on Time more than either Resources or Politics. Team Leaders tended to compromise more on Politics10 than 8 StrategicOps 14 Team Members did, and Rare decisions involved more compromises on Politics than more frequent ones (graph not shown) Frequency Me

Familiar 0 10 20 30 40 50 theoryEffectivenessY count RationalAnalysis T6: Compromises were made on ... Compromise on Politics Time How problematic the situation was

Variable 100 Resources Problematic Politics 60 Resources 75 intPrinciples 100 DecisiveAction decisions turned Managers 50 theoryEffectivenessX 40 Politics Rare out negative20

Problematic 80 25 qualityStrategiesX handle politics 20 leaderTypeX

Critical 0 40 0 Team leader Team member 0 5 10 15 60 Importance of variable toward Emotional tone Negative Neutral Positive Not sure Role Emotion Compromises: Decisions right away ...

60 8 40 Resources 100

20 80 80 20 40 60

80 20 Politics 20 40 60 80 Time 100 100

Politics 20 40 60 80 Time 100

12 Company B

•Negative decisions strongly linked to Hierarchy and Market cultures

•Positive decisions strongly linked to Clan culture (and Ad-hocracy)

agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2017. Quality Strategies Flexibility & discretion T1: Decision was influenced by ... Decision was made by ... Clan Ad-hocracy T1: Decision was influenced by ... Collaborative Creative External Advisors

Not sure 100

External Advisors

20 Majority of decisions 100 80 A group

40 20 60 made by managers... 80 Innovative

60 Advisor/Expert 40 40 company? 60 Internallyfocussed Externallyfocussed

80 20 MadeBy 60 More Ad-hocracy Manager/Leader 40

100

Peers 20 40 60 80 Market 100

80 20 The Team Hierarchy Market

100 Controlling Stability & control Competing

Peers 20 40 60 80 Market Me 100

0 20 40 60 80 count

... but inﬂuenced by colleagues

Complicated (Good Practices)

Complex Complex (Emergent) (Emergent Practices) Obvious (Best Practices)

Chaotic

(Novel Practices) Chasm

Early Late t Early Adopters Laggards Majority Majority Culture

Rapid Scrum/ Scrum/ Kanban Prototyping/XP XP Kanban Methods

Once explicit, start guiding the culture towards a more appropriate state. It should support the values and behaviors that are important for your strategic goals and for the people within the organization. Because change is difﬁcult and confronting, validate changes with small safe-to-fail experiments executed at regular intervals. Gradually incorporate validated learnings. This reduces resistance and minimizes the waste of two coexisting systems.

Design

Documentation

Rollout

Fix Issues

> 9-10 months… t

…focused on standardization, before stabilization…

Design Coach Design Coach Rollout Rollout Doc Doc Rollout Rollout Doc Doc Rollout Doc

≤ 12 weeks t

…focused on stabilization with emergent standardization…

Necessary Condition (NC): what is needed in order to fulﬁll the Success Factor

NC Deﬁne the Goal PSF Goal we want to achieve Possible Success Factor (PSF) represents a hypothesis about a key factor that would enable us to achieve the Goal

The Goal for 2015 has been established The Transition Team identiﬁed at least 7 PSFs that would provide a powerful leverage to achieve the ﬁnal Goal

agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2017. Strategy Map June 2014 Break out groups worked on detailing the various PSFs into actionable experiments to validate the hypothesis for organizational improvement

Safe-To-Fail Experiments agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2017. agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2018. Strategy Map from Mai 2016 -> strategic alignment within project with multiple agile teams

Tactical board to the Strategy Map -> created for alignment on tactical actions related to each Success Factor

agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2017. agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2018. agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2018. agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2018. Organisation culture dimensions Example-Company

Leader Type Quality Strategies Dynamic data Clan Ad-hocracy Clan Ad-hocracy

•Take a baseline

•Run the scan continuously Hierarchy Market Hierarchy Market •Track your pilot/experiment teams Theory of Effectiveness Value Drivers • Monitor what happens Clan Ad-hocracy Clan Ad-hocracy

•Are we moving in the right direction?

•Compared to rest of the company?

•What can we now amplify or rollout?

Hierarchy Market Hierarchy Market

Agile Coach & Trainer [email protected]

@gregorykeegan @agile42/coaches

• Started in 2007 as an international group of passionate people • Focussed since then in making every workplace more liveable and engaging • Completely self-managed, no department, no fixed roles, no HR, no Controlling… • Very high qualified people (highest amount of CECs, CTCs, CSTs and CAL Educators in a single company worldwide)

We recognize that your organization and culture are unique, which implies a unique implementation of any new methods like Scrum or Kanban.

Our eﬀective combination of leadership coaching, knowledge transfer, team training, coaching on the job and practical tools is the basis for your success, as it has been for many other international customers.

agile42 has helped enterprises such as Nokia, Sony, ABB Group, Ericsson, Avea and Siemens successfully and sustainably transition to agile.

agile42 also helped startups to grow faster and healthier, good examples are: Fyber, Babbel and Sipgate.

agile42 | the agile coaching company www.agile42.com | All rights reserved. Copyright © 2007 - 2017. Organizational resilience: is the capability of an organization to react to unknown challenges and volatility by co- evolving with the change into a new and improved stable state.

Growing autonomy: means investing in growing people to enable them to act more autonomously and consciously within and for the organization. Good as well as fast decisions need to be made constantly and autonomously within the organization to allow fast feedback and reaction time.

Nurturing an inter-dependent culture: requires enabling communication between diﬀerent groups and people within the organization. Increasing transparency and encouraging development of interpersonal relationship outside of team and group boundaries to accelerate reaction times. Cultural coherence deepens and within it the understanding about how to act in everyone’s interest.

All material produced in this presentation is protected by the Creative Common License 4.0 (by-nc-sa).

The brands and logos of agile42, Enterprise Transition Framework ETF (http://agile42.com/etf/), Team Coaching Framework TCF (http://tcf.agile42.com/) and Agile Strategy Map (http://www.agile42.com/en/agile-transition/agile-strategy-map/) are Copy Rights and Trademarks of agile42, and agile42 International and can’t be reused without written authorization. The OrgScan has been jointly developed by Cognitive Edge and agile42 International, SenseMaker® is a registered trademark of Cognitive Edge.