Gadgets are smart these days. You can buy a refrigerator that tells you you're out of milk. Your car knows when its tires are low. You can even ask your mobile phone for parenting advice. We owe the increasing power of our toys and tools to the fact that all of them now sport robust operating systems. Similar to our gadgets, organizations have operating systems. Think of them as cultural operating systems (COS).
Organizational problems boil down to how good and well-performing the cultural operating system has. Our four programs form the building blocks of an organization's high-performing cultural operating system. Hence, a Cultural operating system engages a set of rules that guide the behavior of employees when they enter a high-stakes meeting, react to abrupt organizational changes, or contemplate what to do with discretionary time.
Today many organizations are struck as they deal with outdated COS. An organization has a set of written and unwritten rules, whereby unwritten rules always trump the written ones. Studies show that COS can account for 1/3rd to 1/2 of its growth and profitability. One extensive study showed that a well-designed COS correlated with 400-500% increases in revenue, income, and share price growth over organizations with less effective written and unwritten rules.
The measure of a good COS is the degree to which it enables an organization: -
1. To execute superbly
2. To innovate consistently
Just as all electronic devices need essential functions like input, output, data management, and so on, some basic skills are required to enable the effective functioning of any human system.
When these crucial skills are present, things run smoothly and improve regularly. The system bogs down and mired mediocrity when these crucial skills are present. Each skill addresses a critical competency for individual, interpersonal, team, or organizational effectiveness.
PERSONAL >> Individual/self-directed change
INTERPERSONAL >> Open Dialogue
TEAM >> 360-degree Accountability
ORGANIZATIONAL >> Influential Leadership
- Self-directed Change – Fewer than 10% of employees can change their habits. By teaching employees self-directed change, you can change your most significant flaw into strength. An influential cultural operating system's most fundamental building block is the capacity to engage in independent action effectively. The organization's payoff comes from employees' confidence that their initiative will be rewarded and supported instead of punished and undermined. Think of the bottom-line results organizations achieve when all of their employees are continually engaged in self-directed change. Employees know they are trusted in this culture, so oversight is minimal. Individuals become skilled at self-direction, which enables their organizations to overcome barriers that impede their competition. And, with every employee able to think and act independently, the organization's capacity to pivot and adapt is profoundly enhanced. The result is unbeatable levels of execution and innovation.
- Open Dialogue – Reluctance and the inability to speak up are the primary causes of poor decisions, half-hearted execution, employee disengagement, and stifled innovation. Vigorous disagreement is the crucible of innovation, yet human beings are nurtured from childhood to defer to those in authority. If leaders do not intentionally break down a culture of silence, they will, by default, have a COS that undermines continuous improvement and innovation. For example, during one blistering summer, the air conditioner failed at Eleven Madison Park, Danny Meyer's high-end French restaurant. By the time the first hundred lunch guests arrived, the temperature in the restaurant was already at 80 degrees and rising—not to mention the oppressive humidity. Rather than bury the problem or defensively cancel lunch to avoid embarrassment, the Eleven Madison Park team immediately acknowledged the problem and candidly discussed ways of ensuring guests' comfort. Because the team wasted no time finger-pointing, they were ready when the guests arrived—offering each the option of a personal fan (purchased by creative team members at a local hardware store) or a rescheduled reservation. Most guests weathered the heat in good humor and admired the caring response of the staff. When leaders take action to develop a COS of candid dialogue, mistakes are caught more quickly, decisions are implemented more effectively, and innovation flows more routinely.
- 360-degree Accountability - One wise healthcare executive discovered that rampant hospital-acquired infections (infections patients contract from healthcare workers!) were not a fact of life in a complex healthcare system. Instead, they were largely a consequence of silence. Many of her employees knew how to avoid spreading infections but were afraid to hold others accountable for following those best practices—even simple practices like washing hands or wearing masks and gowns. Suppose team members can't hold each other accountable, an organization's capacity to carry out unified action on complex interdependent tasks drops. And nearly all significant results, whether related to innovation or execution, require cooperative effort across multiple teams and functions. Many resources and morale are wasted through an unwritten rule that "accountability is someone else's job." In most organizations, a culture of collusion prevails—one where individuals see problems but say nothing, assuming someone "up there" will deal with them. When it comes time to debrief the disaster, the focus is more on blame than learning since there is no widely shared sense of accountability. The core value in this COS is not power but results. When a norm develops that allows people to raise concerns with those above and below on the chart, problems are solved regularly and quickly. A pervasive sense of empowerment and responsibility for results prevails. Even when issues happen, the importance of personal responsibility that accompanies a culture where anyone can hold anyone else accountable drives a focus on learning rather than blame. This focus accelerates collective competence development, dramatically improving execution and facilitating innovation.
- Influential Leadership - The most common cultural characteristic we encounter is deep cynicism about leaders' ability to execute change. One change initiative fails—not because the strategic ideas were inadequate, but because leaders could not influence change in the behavior required to implement the new ideas. Organizations with weak COS stay that way because their leaders cannot execute behavior change. Leaders' unwillingness or inability to think systematically about influencing rapid, profound, and sustainable behavior change is so damaging that it directly leads to cultures of silence, collusion, and resistance to change. Leaders who think profoundly and skilfully about the myriad forces that shape behavior and who creatively engage all of these forces to create positive change create cultures of confidence. In these organizations, employees hold leaders in higher regard and feel optimistic that even profound changes will lead to improved future performance. Our client's results over the past decade confirm that organizational results like increased efficiency and higher employee satisfaction are the by-products of Crucial Conversations.
The question is not whether you have a cultural operating system—every organization has one.
The question is whether your COS advances or impedes continuous improvement in execution and innovation. Leaders who lead the way in creating a COS characterized by self-directed change, open dialogue, 360° accountability, and influential leadership harness the full potential of their human resources.