Strategy, Team Culture, and Organizational Change

Readings

I often joke that I only read while on vacation, and then, only really business books; I’m slowly building my own MBA while on the beaches of Jamaica. From my years of doing this, I’ve picked out a few key readings that have shaped how I think about strategy, culture, and organizational change (SCOC) and divided them into two groups: core readings and supplemental readings. The core readings are the primary building blocks of knowledge, whereas the supplemental readings add additional insights that can strengthen how you think about the core readings and approach work in general.

Important terms and concepts

While both the core and supplemental readings, and the related works mentioned in them, are really worth reading, there’s a lot going on in them (I’ve got nearly 40 pages of personal notes between Good Strategy / Bad Strategy and Organizational Culture and Leadership alone). There are some terms and concepts, though, that really stick out for me, and form the basis of how I think and talk about SCOC. While many of the definitions are taken directly from their source, some are instead amalgamations from different sources based on my understanding of how things work together or how I’ve come to teach the concepts over time. While it may seem counter-intuitive, I generally start with the core concepts from the supplemental readings, as I feel they form a a set of building blocks to better understand the core readings.

Blameless errors

From The Field Guide to Understanding Human Error. The “old” way of thinking about error is, roughly, that someone did something wrong; they didn’t follow the rules or they intentionally or unintentionally missed something or skipped a step. It’s therefore their fault that something went wrong and they’re to blame. The “new” way to think about error is through context. Assume the actor is trying to do their best, and if they didn’t follow the rules or missed or skipped something, it’s because they were trying to route around problems that would have prevented them from completing their task in good faith (for instance, lots of false positives in tests could condition them to skip testing, which may let a bug through). Examine when things go wrong through the eyes of the actor, the context they’re in, and the context they had at the time, not from an omnipotent point of view after. Work should then be done to reduce problems in the systems and contexts in which those decisions were made, instead of, for instance, blaming the actor for not following procedure correctly. In software engineering, this is the core concept for “blameless retrospectives”.

Paradigm shift

From The Structure of Scientific Revolutions. A paradigm is the current way something exists. In the book, it’s the set of scientific principles currently considered mainstream, but it could be the current team culture, current software engineering practices, current organizational structure, etc…. A paradigm shift happens when a new paradigm arises and wins enough followers over to break from the previous paradigm, leaving it behind. New paradigms arise when practitioners (often those new to the paradigm, like young scientists entering the field) feel that the current paradigm no longer meets their needs (for instance, doesn’t fully explain the results of their experiments) and seek out a new way of understanding their work to resolve those issues. In Leading Change, this would be described as a “sense of urgency” (defined below). An old paradigm shifts to a new paradigm when enough members of the old paradigm agree that the problems the new paradigm aims to solve are worth solving and that the new paradigm also solves their problems, too. New paradigms will not take hold if they aren’t able to satisfy the needs of the majority of the practitioners from the previous paradigm.

Diffusion curve

From Diffusion of Innovations. While there are a number of different rearticulations of this theory, I use the terms from the original book. The theory discusses how new ideas (innovations) spread. The Wikipedia article is an excellent summary of the theory, but the key items I take with me when thinking about how to apply this to SCOC are the elements that go into the diffusion of an innovation, and the adoption curve.

The key elements of diffusion are:

• Innovation - The actual idea, practice, or object that is perceived as new and someone would like others to adopt. Can, for instance, be a new paradigm, a new piece of technology, or a new organization structure.
• Adopters - The people (individuals or groups) that the innovation is meant for
• Communication channels - How information is transferred between adopters and innovators.
• Time - Adoption almost never happens instantaneously.
• Social systems - Micro and macro cultural influences on adopters.

Because of the social systems adopters find themselves in and the communication channels they have (especially with how “close” to the progenitor of an innovation), adoption can be broken down into 5 cohorts: innovators, early adopters, early majority, late majority, and laggards

• Innovators - Individuals who are willing and able to take risks on adopting a new innovation, usually thanks to high social status, financial stability, and/or close contact with the source of an innovation and other innovators. They have a high tolerance for failure and can absorb the cost of failure with their existing resources. They usually make up the first roughly 2.5% of adopters. When looking to apply this to SCOC work, these are the individuals or groups who are eager to try something new, knowing that their work isn’t likely to be negatively affected if the change doesn’t succeed, are willing to work through learning pains, are happy to help shape the direction of the work, and can see a large positive future if it works out.
• Early adopters - Looked to as thought leaders within all adopter categories. They have similar resources to innovators, but are more picky in what they choose to adopt, less willing to take risks if something ultimately fails. Because of this, they hold a key communication position across the adopter board. They usually make up the next roughly 13.5% of adopters. In SCOC work, find the individuals or groups that others look to for guidance, are far enough from the innovation progenitor that their opinions are viewed as genuine endorsements, and are willing to put in work to help spread the innovation.
• Early majority - Usually individuals or groups with average resources who aren’t considered thought leaders. They’re one of the largest cohorts, at roughly 34% of all adopters, and usually only start adopting after some time has passed. The point at which the early majority starts adopting an innovation is the tipping point where an innovation moves from niche appeal to mass and self-sustaining adoption. This is sometimes called “the marketing chasm” or when an innovation reaches “critical mass”. In SCOC work, look for individuals or groups who are willing to adopt after having been convinced by innovators and early adopters that the innovation will be a net positive for them.
• Late majority - The late majority starts after around 50% of an innovation’s potential audience has adopted. They approach innovation with a high degree of skepticism and will only adopt after they’ve seen it be successfully adopted elsewhere. They tend to have a smaller amount of resources than average and make up the next roughly 34% of adoption. In SCOC work, this is a group that’ll need to be convinced that the innovation won’t have a negative impact on them, as opposed to a net positive effect.
• Laggards - The final group, making up the last roughly 16% of adoption, laggards typically will only adopt a new innovation when they have no other choice but to do so. They’re typically highly skeptical of change and have the lowest amount of resources to expend on change. In SCOC work, this cohort will only likely change at the end of a transition period and after new norms have been rooted in the culture or organization. Members of this cohort are also most likely to be detractors in a change process (negative change agents). While these individuals are typically characterized as having a low amount of resources to expend, don’t confuse this for not having high status in a culture or organization; laggards can be executives that are opposed to change and, while they may have lots of resources, have little to none to spend on change because of their opposition.

Strategy

From Good Strategy/Bad Strategy. Strategy is the alignment of goals (overall values and desires) into actions and objectives (specific operational targets). A good strategy has one, or only a few, key objectives that will lead to favorable outcomes and create cascading benefits. It defines critical challenges and tie those challenges to actions. It is constrained and has a good chance of success. Bad strategy is a list of things to do, or a restatement of the desired state of affairs or the challenge ahead. It contains fluff, doesn’t face the challenge head-on, is a statement of desire rather than plans for overcoming obstacles, and either fails to address critical issues or is impractical. Ultimately, a good strategy is a coherent set of actions backed by an argument (the Strategic Kernel). Strategy is also distinct from vision, mission, or values statements:

• Vision statement - An aspirational view of the future
  Provide access to the world’s information in one click
• Mission statement - The purpose of your work
  Organize the world’s information and make it universally accessible and useful.
• Values statement - Core cultural beliefs
  Don’t be evil

Strategy is often formed within the bounds of these goals, but strategy’s purpose is overcoming a challenge; these items may set what challenges are to be faced and how you may prefer to think about them, but they themselves won’t help you solve problems. Strategy does.

Strategic Kernel

From Good Strategy/Bad Strategy. While there are many things that may make up a strategy, all strategy shares at least three things in common: a diagnosis, a guiding policy, and coherent actions.

• Diagnosis - Explains the challenge, simplifying and identifying critical things the strategy is meant to overcome. A diagnosis should define a domain of action and should favor leverage over outcomes (problems, not solutions). It doesn’t need to explain everything, but the problems being tackled need to be addressable and they need to be addressable in a given timespan.
• Guiding policy - The overall approach chosen to overcome the problems identified in the diagnosis. I often refer to these as the strategy’s “guard rails” as they’re meant to channel actions in a certain direction without defining what should be done. Guiding policies should not be goals or visions of end states. Great guiding policies should draw upon sources of advantage, or create advantage by anticipating the actions and reactions of others.
• Coherent actions - The coordinated steps designed to carry out the guiding policy. It doesn’t need to include all actions, but needs to include enough to bring high-level concepts down to earth. The actions should coordinate and build upon each other. They’re made coherent by being consistent, with coordinated deployment of resources, imposed by policy and design. Incoherent actions are in conflict with the guiding policy or in pursuit of unrelated challenges. Agile Epics, or IBM Design Thinking Hills, are good first sets of actions to be drawn up here.

Culture

From Organizational Culture and Leadership. Culture is:

The accumulated shared learning of a group as it solves its problems of external adaptation [(the environment they exist in)] and internal integration [(the human problems that arise in collective life)]

More succinctly, culture is how groups have learned to solve problems and organize in response to internal and external pressures; it is a learned phenomenon. Culture is pervasive, dealing with all aspects of how a group functions and how it is taught to new members. For a group to have a culture, it needs a level of stability. As such, not all groups have cultures, only ones that need to learn to do things together and have more or less constant membership will. Culture is made up of three items: artifacts, espoused beliefs and values, and basic underlying assumptions.

• Artifacts - Physical manifestations of culture (language, processes, etc…). You cannot understand a culture by its artifacts alone, you need to talk to an individual to understand the importance of them (for instance, pyramids as temples versus graves).
• Espoused beliefs and values - What the culture says is important to it. An individual’s beliefs become group values only after they’ve been tested and and have been proven to be able to consistently solve a problem. Some beliefs cannot be effectively tested so are socially validated instead; because of this, it’s harder to see the direct connection to the group’s success. For these, how comfortable and anxiety-free members are when they abide by those beliefs is the only measure of success (religion, for instance). It’s important to distinguish between the those beliefs that are aspirational versus actually being practiced (an organization may strive for teamwork but reward based on individual success, for instance)
• Basic underlying assumptions - When a solution to a problem repeatedly works, a group gradually comes to believe that’s how nature works. That belief is an underlying assumption. These are the implicit assumptions that actually guide behavior and tell members how to perceive, think about, and feel about things. Underlying assumptions are very difficult to change, as change to them temporarily destabilizes how members of the culture think about the world, leading to anxiety and members trying to rationalize away the change instead of embracing it.

Cultures aren’t islands; they nest. Macro cultures are very stable top-level cultures; they’ve been around a long time and are the cultures in which other cultures live. For instance, the US has a culture, in that the California tech sector has a culture, in that, there’s Google’s culture, and in that, ChromeOS’s culture. Subcultures are a sub-division of a macro culture, so a team on ChromeOS may have its own subculture, much like ChromeOS is a subculture of Google. Generally speaking, subcultures inherit the macro culture they reside in, tweaking as needed for the problems they wind up solving.

In organizations, subcultures tend to form when a subunit’s needs necessitate it having its own leader. There are five main subunit structures that typically create their own subcultures: occupational units (engineering, finance, PM), geographic units, product/market/technology units, and operating divisions. Organizational hierarchies also wind up having their own subcultures, which can generally be broken down into operators, engineering and design, and executives:

• Operators - The individuals who produce or sell the org’s products. They view themselves as the ones who “run the place”. Operators evolve organically per organization, and therefore are highly sensitive to the degree to which all functions are independent. They often route around rules and hierarchy that “get in the way” in unpredictable conditions, and will often teach new operators the “on-the-ground reality” to get a job done (see: blameless errors).
• Engineering and Design - The individuals who design new products, structures, and processes to make the organizations more effective. They bring with them their occupational subculture, with engineers especially looking to remove as much possibility of human error as possible in the systems they design. A software engineer may be both part of this group and the operators group at the same time.
• Executives - Primarily the CEO and their executive team, but extends to middle management as well. Mainly concerned with the survival and financial health of the organization. Generally need to manage at a distance so think in terms of control systems and routines and become increasingly impersonal. Middle management tend to have similar needs, but without the power or autonomy to make sweeping change unilaterally, so live in an ambiguous authority environment.

Many problems attributed to bureaucracy, environment factors, or personality conflicts among managers are actually lack of alignment between these subcultures as the individuals of these subcultures often wind up working across purposes with each other.

External adaptation and internal integration

External adaptation and internal integration are the cornerstones of how culture is formed. They are the problems that groups find solutions to that become the underlying assumptions of a culture, which beliefs and values and, eventually, artifacts come from.

External adaptation stems from a group’s mission. It’s their shared understanding of their primary tasks and manifest (consequences that people see, observe, or expect and is explicitly stated and understood) and latent (consequences neither recognized or intended; identified by observers because they don’t expect those tasks to be performed) functions. Groups develop goals derived from this mission, build a consensus on how to obtain those goals (things like rewards structure and authority systems), how to measure how well the group is fulfilling those goals, and how to correct if goals are not being met. Being aligned on core mission and identity isn’t enough to ensure success or common goals, though; strategy is a key part of external adaptation, and is needed to ensure subcultures are aligned to fulfill the mission.

Internal integration stems from a group’s need to comfortably work together. It encompasses language and related conceptual categories, identity and boundary criteria for how lateral (one task to another), vertical (one rank to another), and inclusion (outsider to insider) work is defined, authority as distribution of power and status and how manage face (self-image of who we are and our self-esteem), trust and openness of relationships, and especially the building and maintenance of psychological safety, rewards and punishments for when expectations are or are not met, and how to explain the unexplainable, given that culture is based on decisions of the past and therefore can’t account for everything coming.

Culture is multifaceted, fulfilling the function of providing stability, meaning, and predictability in the present, but is the result of functionally effective decisions in the group’s past

Embedding and transmitting culture

Because every culture is nested in another culture, leaders need to consider how new beliefs and values will fit into the larger culture they sit in, or they won’t be adopted. There are primary ways that culture can be embedded and transmitted to new members, and secondary ways, which can be used to reinforce the primary means.

Culture is primarily transmitted by what leaders pay attention to, measure, and control regularly. It’s how they react to critical incidents and crises, allocate resources, rewards, and status, and how they recruit, select, promote, and excommunicate members. It’s also done through deliberate role modeling and coaching.

Those methods can be supported by secondary embedding mechanisms, like organizational design, structure, systems, procedures, rites, and rituals, along with formal statements of an organization’s philosophy, creeds, or even by creating charters. They can also take on less direct means, like the design of physical and digital spaces and by the stories that are told about important events or people. These mechanisms only work if they are consistent with the primary mechanisms, otherwise they’ll be ignored or create an internal source of conflict.

Relationship levels

From Organizational and Cultural Leadership. A group’s relationship levels, or power distance, represent the psychological distance between members; it’s how they to relate to each other to make the group feel safe, comfortable, and productive, and is a key aspect of face. While the specific rules for a given culture change to reflect its current state, there are four levels that a relationship can fall into:

• -1, Exploitation - Usually only experienced by prisoners, POWs, slaves, or occasionally members of a different culture who are considered underdeveloped. This level is defined by a lack of trust and openness, and while one can choose to build relationships with members of this group, there is no expectation that anyone is owed anything.
• 1, Acknowledgement and civility - These relationships are transactional; people on the street, service members, professional helpers, etc…. Interactions are governed by defined roles and are usually task-based. The parties may not know each other personally, but they treat each other respectfully. There’s trust to a certain degree to not harm each other, and there are polite levels of openness and conversation. In corporate settings, think of cross-functional team members who you ask for help on a task but do not work closely with. These are professional, formal transactions.
• 2, Recognition as a unique person - These are casual friends, members of working teams, clients and subordinates who have personal, but not intimate, relationships. These relations have a deeper level of trust; they make and honor commitments and promises to each other, agree not to harm or undermine each other, and agree not to lie or withhold information to each other relevant to their tasks. In corporate settings, think of “work friends”. These are friendly, personable transactions.
• 3, Strong emotions - These are close friends, loved ones, and those you’re intimate with. You’re generally more open with these individuals, and it’s assumed that you’ll actively support one another when possible or needed, going beyond level 2 relationships. In corporate settings, think of “real” friends, partners, or spouses. These are intimate relationships

Tuckman’s Stages of Group Development

Referenced from Organizational and Cultural Leadership (Wiki). Tuckman proposes that there are four stages all groups go through as they mature: forming, storming, norming, and performing. The stages describe how team members interact with each other, and are a reflection of the culture and leadership of the team.

• Forming - Finding one’s identity and role. Here, the team agrees on goals and begins to tackle tasks. Team members tend to behave quite independently here, and team members are usually on their best behavior. Discussions center on defining the scope of tasks, how to approach tasks, and the like.
• Storming - Resolving who has authority and influence. At the start of this stage, there is usually a positive and polite atmosphere. Time and competition pressures will reveal some members become more active and others shut down, revealing a status system where some are seen as contributing more than others. Disagreements and personality clashes may be aired, but must be resolved before a team can move out of this stage, so some teams never leave, or some may re-enter when new challenges arise. This is the stage where psychological safety, dependability, and structure and clarity (see Google re:Work) are cemented.
• Norming - Team resolves at what relationship level they want to operate at by making explicit that which was implicit. They may choose to stay task-focused (level 1) or get to know each other and become friendly (level 2). People least conflicted about the issue of closeness will see or name issues as they happen. The leader must point out that everyone is different with different needs, and the strength of the group is in its variety instead of its homogeneousness. The illusion of “we all like each other” is replaced with “we can all understand, accept, and appreciate each other”. There is a danger here that members become so focused on keeping the peace that they become reluctant to share controversial ideas.
• Performing - Team can focus on task accomplishment and use its resources to work effectively. They are motivated and knowledgeable, with autonomous decision making and acceptance of dissent, as long as it is channeled through means acceptable to the team.

Many teams get stuck in forming as members try to vie for influence and power, or in storming believing they’re all great and they like each other. In both cases, members are thinking primarily about themselves and their role in the group and therefore aren’t able to give full attention to the group’s tasks. Teams may also revert to previous stages under changing circumstances; for instance, a change in leadership may cause a team to revert to storming.

Organizational Change

Ok, now for my super theory of super everything. With those terms in your head and (maybe) the readings complete, let’s bring in the 8 steps for leading change from Leading Change. In my personal journey here, from all the readings I mentioned above, I read The Field Guide to Understanding Human Error first, then Leading Change, so this framework for understanding how change happens has been in the back of my mind since the beginning. But, it wasn’t until I read the other books did the pieces really start to make sense, kind of like Neo finally seeing the world as code at the end of The Matrix. Here, interspersed with Kotter’s 8 steps is how I see how all the pieces fit together.