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Editor’s note: This article is part of a new MIT SMR series about how leadership is evolving in a digital world.
Most leaders today are trying to do the same things: help their organizations become more agile, more innovative, more digitally savvy, and more customer-centric.
Sooner or later, though, they come up against entrenched values and behaviors, and progress stalls. That’s particularly true with digital transformation. Experts concur that traditional mindsets and “ways of doing things around here” — the lay definition of culture — are the primary culprits hindering the fundamental transformation that emerging technologies are meant to enable.1
But organizational culture is hard to change. It’s intangible; there are no direct levers for controlling it. As MIT’s Ed Schein has noted,2 what an organization’s leaders pay close attention to and shower with time — not what they say — will provide the best clues about its culture. Think about it as the difference between a formal value statement and what employees say about the company on Glassdoor. There is typically a large gulf between stated aspiration and experienced reality.
When they confront that gulf, leaders often fall into one of two traps: overrelying on formal, structural changes (new lines of reporting, new jobs and work units) in an effort to eventually shift people’s mindsets, or simply leaving the job of culture change to HR, hoping that with time, training, and repetition, the new slogans will become reality. Of course, neither approach works.
In my ongoing research on how established organizations transform for the digital age, I have observed a third way that yields better results — identifying and then eliminating (or modifying dramatically) iconic practices: practices that are emblematic of historical cultural values but whose continued existence sends mixed messages about the organization’s desire to change.
Iconic practices originate to help an organization achieve its most mission-crucial tasks. Over time they also serve symbolic or ceremonial functions, such as showing that one is a good insider, a person who understands and can be trusted as a keeper of the culture.
A good way to identify iconic practices is to note which customs, seen from the outside, seem to involve an inordinate investment of people or time.
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1. See, for instance, G. Westerman, D.L. Soule, and A. Eswaran, “Building Digital-Ready Culture in Traditional Organizations,” MIT Sloan Management Review 60, no. 4 (summer 2019): 59-68.
2. E.H. Schein, “Organizational Culture and Leadership,” 5th ed. (Hoboken, New Jersey: John Wiley & Sons, 2016).
3. J. Bezos, “2017 Amazon Annual Report,” Amazon, accessed Sept. 10, 2019, https://ir.aboutamazon.com.
4. H. Ibarra and A. Jones, “Jean-Philippe Courtois at Microsoft Global Sales, Marketing, and Operations: Empowering Digital Success,” Harvard Business Review case no. LBS218 (Boston: Harvard Business School Publishing, May 1, 2019).
5. T. Koulopoulos, “Performance Reviews Are Dead. Here’s What You Should Do Instead,” Inc., Feb. 25, 2018, www.inc.com.
6. H. Ibarra, A. Rattan, and A. Johnston, “Satya Nadella at Microsoft: Instilling a Growth Mindset,” Harvard Business Review case no. LBS128 (Boston: Harvard Business School Publishing, June 1, 2018).
7. P. Cappelli and A. Tavis, “HR Goes Agile,” Harvard Business Review 96, no. 2 (March-April 2018).
8. “Allen & Overy Annual Report and Financial Statements: For the Year Ended 30 April 2018,” Allen & Overy, accessed Sept. 10, 2019, www.allenovery.com.
9. “Our History,” Allen & Overy, accessed Sept. 10, 2019, www.allenovery.com.