NB: I explore this topic in greater detail in my chapter of The Future of Change Management.
Today’s episode is brought to you by the letter “S”.
We’ve all been there, haven’t we?
Sitting in an increasingly stuffy meeting room as the brainstorming vibe perceptibly switches from “creative” to “desperate”, the communal chocolates depleted until only the weird ones are left, and the ideas are becoming steadily worse.
For four McKinsey consultants called Bob, Tony, Tom, and Dick, the situation was particularly acute. They’d been stuck in this “seance” in a San Francisco office for nearly 2 days. They’d produced the outline of an organisational model they wanted to call the “7S”, but they were struggling to find that all-important seventh alliterative S-word.
As Tom remembers it, the missing concept not only had to begin with the magic letter “S”, it needed to be the glue that held the rest of the S-shaped model together: Strategy, Structure, Systems, Style, Staff, Skills… what could it be?
Bingo! Tony came up with the answer: “Superordinate Goals”.
If you’re thinking, “wow, that’s clunky”, you’re not alone. After initially publishing the model, Tony’s “Superordinate Goals” morphed into something much more familiar: “Shared Values”.
And that, believe it or not, is where the concept of Shared Values originated: a McKinsey slide that needed another S-word back in 1978.
As Tom (Peters) tells the story, he, Tony (Athos, of Harvard Business School), and their McKinsey colleagues were desperate to find something “soft” to complement the array of “hard” structural factors they’d included in their soon-to-be-famous 7S Model.
They succeeded beyond their wildest dreams. The “Shared Values” concept made various magazine appearances before starring in 1982’s In Search of Excellence, one of the best-selling business books ever published. In the four decades since, the concept has colonised organisations worldwide.
Adding value?
Since that McKinsey slide it’s become accepted wisdom in boardrooms and Executive offices across the globe that “organisational culture”, that crucial but often misunderstood concept that’s scuppered many a leader’s best laid plans, is most effectively thought of as “Shared Values”.
The approach is straightforward enough. Select three to five corporate buzzwords from a shortlist, print some posters, stickers, mouse mats, t-shirts and other “merch”, and declare to employees, shareholders, and anyone else who’s interested that these “values” will now guide your organisation’s every move. Job done.
But does it work?
You might be expecting me to say something equivocal here, like “the evidence is mixed”. But you’d be wrong. The evidence is absolutely crystal clear.
Here’s MIT’s Sloan School of Business:
“The analysis reveals that there is no correlation between the cultural values a company emphasises in its published statements and how well the company lives up to those values in the eyes of employees”
A paper for America’s National Bureau of Economic Research came to a similar conclusion:
“We find that proclaimed values appear irrelevant“
In the usually conservative world of academia, where research findings tend to be heavily caveated and written with careful phrasing, these are staggeringly explicit conclusions.
Both papers (and many others) go on to make the wholly unsurprising claim that stated values are far less important than observed values, or as every schoolkid knows: “actions speak louder than words”. It turns out there’s more evidence for this old folk wisdom than meets the eye.
Decisions, decisions
The conventional explanation for why shared values should work was perhaps best articulated by Volkswagen.
“Our values provide the basis for our motivation and our decisions. It’s exactly the same with Volkswagen’s values… Once they are firmly established in our heads and our hearts, they will influence our behaviour and decisions in addition to our personal values.“
This mechanism was presumably misfiring when Volkswagen engaged in a vast high-level multi-year conspiracy to mislead mandatory emissions tests, despite their explicit commitment that “sustainable, collaborative, and responsible thinking underlies everything that we do”.
The point here isn’t the cheap shot juxtaposing the company values with the scandal. (I’ll leave you to perform the same fun exercise in your own time for Enron, Arthur Andersen, Lehman Brothers, Boeing, or whichever other newsworthy corporate malfeasance springs to mind first.) No, the point is the assumed transmission mechanism, or as Descartes might have put it, “I value therefore I do”.
The problem is, there’s a vast array of evidence suggesting that’s simply not how humans work. Many of the decisions we make every day happen automatically, with little or no conscious awareness.
As Bob Dylan put it in his 11 minute epic dirge, Brownsville Girl:
People don’t do what they believe in, they just do what’s most convenient, then they repent
Staying with the Volkswagen theme, think about learning to drive. For most people, sitting behind the wheel of a car for the first time is a disorienting experience as you try to fathom how exactly you’re supposed to steer, accelerate, brake, and (in a manual) change gear, all while checking mirrors, using indicators, and avoiding all manner of moving and stationary objects.
Fast forward a few months and most of us have mastered the skills sufficiently that at some point we have the different, though equally disconcerting, experience of drifting off into a daydream and suddenly realising we’ve been driving along without really paying attention. Luckily for most of us, we wake from the daydream to find we haven’t left a trail of destruction on the freeway behind us, we’ve just been operating on a kind of autopilot.
This autopilot is, believe it or not, how most of us spend much of our lives. Sure, we all consciously deliberate over big, important decisions: getting married or divorced, leaving or starting a job, moving house. Sometimes we agonise over trivial decisions too. But much of the time, most of our decisions just happen, without us really realising it.
We make many of those decisions using heuristics: rules-of-thumb or mental shortcuts that help us decide quickly. Often, rather than solving a difficult problem like “what should I do?”, without knowing it we’ll solve an easier problem instead: “what do I normally do?”, “what’s everyone else doing?, or “what’s the easiest thing to do?”.
Much of the time this neat cognitive trick works well; if it didn’t it’s unlikely to have survived millions of years of evolution. But it does have an interesting side effect. Our natural reliance on automatic thinking makes our decisions and our behaviour very prone to environmental influence. That’s crucial for understanding and shaping organisational culture.
The Behaviour Factory
In his global bestseller Thinking Fast and Slow, pioneering psychologist and Nobel Prize winner Daniel Kahneman made an observation about organisations which is both blindingly obvious and profoundly insightful:
“Whatever else it produces, an organization is a factory that manufactures judgments and decisions.”
Every organisation’s culture shapes the decisions – and the behaviours – of the people in it. Those behaviours are, to a large extent, shaped by the environment of the organisation: the processes, policies, systems, metrics, KPIs, incentives, remuneration, job titles, role descriptions, org structures, physical spaces, and locations. They’re shaped by the stories people tell, the rumours they spread, and the way people see others, particularly leaders, behaving.
All these aspects, and many more besides, are the levers that subtly influence the behavioural production line in every organisation. Consciously shaping the behaviours, and therefore the culture, of an organisation means very carefully shifting those levers, sometimes forcefully, sometimes subtly. It also means recognising that some of the levers are interdependent; sometimes pulling one lever in one direction necessarily moves another lever in the opposite direction.
Above all, thinking of an organisation as a behaviour factory means understanding that every organisation is a complex and dynamic system. Neuroscience claims the human brain is the most complex object in the known universe. However, as influential anthropologist and evolutionary psychologist Robin Dunbar points out, any human relationship involves the interaction of more than one of these astonishingly complex objects. In Dunbar’s view, human social relationships are therefore the most complex thing in the world. It’s worth remembering that every organisation involves many, many such relationships.
With this in mind, it’s hugely naive to imagine that simply posting a few buzzwords on the wall or on a screensaver is really going to change behaviour at scale. I think McKinsey’s idealistic young consultants in that meeting room in San Francisco understood that well enough back in 1978.
The whole point of the 7S Model, clunky and simplified though it might be, is to show the complex web of factors that shape organisational culture. They put “Shared Values” at the centre, suggesting the other factors ought to align with and reinforce those values.
Of course, truly aligning Structure, Strategy, Skills, Systems etc with Shared Values is much harder than merely announcing a few buzzwords. All too many organisations seem to end up believing that just proclaiming values is a silver bullet for culture.
So complex is human behaviour that even in the vanishingly rare cases where the levers of the Behaviour Factory do point in the same direction as the stated values, events often have a way of intervening. Individual human behaviour is fiendishly complex and organisations are themselves vast systems of emergent complexity. Far from a mechanised production line managed by a human foreman, the Behaviour Factory more closely resembles a vast autonomous self-regulating system.
To think that a sprinkling of business buzzwords on a poster can change that is laughably, absurdly naive.
