To emphasize how important culture was to the IBM turnaround, it is important to share that this book only has two main sections: Strategy and Culture.

This week, we read about the changes to the IBM culture that were required in order to realize and achieve the IBM Strategy.

I can’t guarantee that I won’t get onto my soapbox in this post. In fact, I can promise you that I will. Before I subject you to that, I will tell you about IBM’s culture.

The Before Times

When a company first starts, it embodies the ethos of its founder. For IBM, that was Thomas Watson, Sr. Over time, Watson decided to deliberately and systematically institutionalize these values. He termed them the Basic Beliefs and they were as follows:

• Excellence in everything we do.
• Superior customer service.
• Respect for the individual.

If you read those and went hey, my company espouses the same values! then you’ll likely appreciate my soapbox rant later.
But not yet…

Values Corrupted

As time went on, these high level values came to empower some dysfunctional behavior. Perhaps you’ve experienced the same. Here’s a summary quoted from the book:

• The pursuit of excellence over time became an obsession with perfection.
• Customer service came to mean, essentially, “servicing our machines on the customers’ premises,” instead of paying real attention to their changing business. Customer service became largely administrative - like going through the motions in a marriage that has long since lost its passion.
• Respect for the individual spawned a culture of entitlement, where “the individual” didn’t have to do anything to earn respect. It also came to mean that an IBMer could do pretty much anything he or she wanted to with little or no accountability.

Fixing a Dysfunctional Culture is Tricky

Imagine having such fundamentally correct values result in such abuse and negligence in a company as large as IBM.

Now, imagine trying to fix it.

You certainly can’t contradict the values. Even asserting new values would indirectly negate the current ones. What’s a CEO to do?

What Gerstner did is kinda amazing and I’m going to summarize it here. It’ll be quick though because I’m anxious to get on my soapbox!

The conditions that Gerstner created included:

• Bringing the Outside In - he shifted the focus from internal politics to the customer needs.
• Disbanding IBM’s culture of no - he removed processes and policies such as that which allowed any employee to outright reject a decision and refuse to act on it. If your brain needs time to process that one, please take it.
• Insisting on clear communication - in addition to other things, he eliminated made up phrases and acronyms that had developed into a unique language at IBM. My favorite was the phrase Management-Initiated Separation (MIS) which meant that someone was getting fired. It was even used as a verb: “I’ve been MISed.” This could totally be a spinoff of the Office.
• Requiring his leaders to….well, lead.

To enforce these conditions, Gerstner created and communicated 8 guiding principles to break down bureaucracy but provide a North Star for decision making. He mandated required behavioral changes which included holding people accountable and moving forward with urgency. He developed the IBM Leadership Competencies that were the basis for promotion and salary increase. Finally, he cast an inspiring long-term vision around e-business.

Well, of course they were. Here was someone who knew the culture they wanted to create, owned it himself because it was that important, held others accountable for living the culture and did it consistently for YEARS.

*climbing on my soapbox*

And now for the rant

Recently, I shared with a small group that I’m passionate about leadership because I want to work for and with the best and, in my opinion, you can only attract and retain the best if you have good leadership. I feel the same about culture. I’m really passionate about culture.

But I am honestly SICK of hearing company leaders talk about culture. It’s honestly because so many people say the right things but do NOT back them up with their actions.

Objectively, I don’t think most people are actively trying to destroy the culture or undermine efforts to build it. Most people just don’t realize how fragile culture is. Trust and culture are cousins.

I made that up - I have no idea how what their familial relationship is.

We have to recognize that very small things make up our culture. Let me give you some examples of what I’ve seen.

Team lead asks everyone to plan their work for the next few weeks and come prepared to present/discuss during the team meeting. One person routinely comes unprepared and the team lead works with them during the meeting to determine what tasks they will need to accomplish. While everyone else sits there and waits.

Let’s assume our company’s values have some version of respect for the individual. Well, certainly we have violated that on at least two fronts:

1. NOT holding the team member accountable for meeting expectations.
2. Wasting everyone else’s damn time - yeah I said it!

Ambitious person is selected for a leadership position based on his claims of wanting to take care of the people and make mission happen. The person makes no effort to get to know the people he’s newly responsible for or the missions that they support. He’s regularly observed hobnobbing with the executives in situations where the new team is present.

What does this communicate to everyone else about what the executive team values or what is required to get you promoted? If people first were your value, would that really mean anyone who sucks up to the executives?

Action Steps

Ok so there’s no point in continuing that rant. If you’ve experienced a dysfunctional culture, surely you’ve read enough to be triggered and for that, I’m sorry. Instead, let’s end this post with some action steps.

First, if you are in charge of creating incentives, take extreme caution in doing so. Involve others in the process and take some time to specifically examine how those incentives may undermine the culture you want to create. At IBM, Gerstner did away with incentives that were tied to a subcomponent of the business and made them tied to the overall performance of the whole company.

Next, audit your culture on a regular basis. No, I don’t mean hiring an external company the way other audits are done. I mean finding ways to confirm that the culture is what you think it is or one that matches your slogan.

A previous company tried to create a company around the slogan People First.

LOL who am I kidding? Every company does!

Anyway, the point is that at this particular company, the people didn’t feel like they were being put first. There were a lot of reasons for that including the mismanagement of benefits and the lack of growth opportunities. If anyone had bothered to take a deeper look, they would have learned that the slogan was actually an inside-joke. That’s definitely NOT what they were going for.

So, find ways to confirm that what you think you are building is what you are building. It’ll be worth it. The best part is that by conducting the audit, you are simultaneously communicating to your workforce just how much you care about your values.

If this topic interests you, I highly recommend Pat Lencioni’s At the Table podcast episode on The Invisible Threat.

Moving On

This essentially concludes our study of IBM. The rest of the book are Gerstner’s Lessons Learned. I may share those next week. However, this also concludes our case study mode and we will switch back to study mode to learn some more techniques.

Given that we are focused on leading effective change management, I felt it was time to focus on how we might learn when an organization needs changing. So, our next book will be Seeing What’s Next: Using the Theories of Innovation to Predict Industry Change by Clayton Christensen. I’ve read this book before but I suspect I will get a LOT of new things from reading it with the new lens of all we’ve learned.

Thanks for reading!