Philosophy of Culture Change

Introduction

Culture is often described as "the way we do things around here." In fact it is more complex. It is also feelings, underlying beliefs, values, history, and assumptions about an organization. Those are rooted in experiences, stories, and behaviour patterns sometimes decades or centuries old. The culture tells people what is and is not okay. Culture is enduring, difficult to develop or reshape.

The pursuit of management excellence has many labels - reform, renewal, modernization, transformation, re-alignment - but all are about changing the behaviours that characterize Public Service management culture. For purposes of illustration this guide focuses on Modern Comptrollership, but it is generic in nature and its approach can be applied to any effort to change management culture.

Change models
No single approach can fit all. Instead, every organization needs its own model of change corresponding to its needs and issues. When change efforts fail, it is common to blame organizational resistance but this is an inadequate explanation. Change goes wrong for systemic reasons: poor vision, inadequate communications, insufficient planning and resources, failure to make a compelling case, and inconsistent messages with leaders not following through.
Change models fall into three types: top-down; transformational leadership; and strategic approaches. Overall experience shows that with careful and appropriate application.

Top-down models emphasize leadership. The CEO can orchestrate relatively rapid change by developing a vision, communicating it and involving employees. The leaders set goals, clarify desired outcomes, provide feedback, give rewards for desired performance and take action when goals are not met. They do not ignore the human factor - they care about people and want to see them grow - but they focus on performance driving cultural change, not the reverse.
Transformational leadership: In his latest book, Managing Politically, McGill University Professor Henry Mintzberg looked at three federal departments. He has long argued that change bubbles upward. "You can't drive change down an organization," he says. "You facilitate the situation so that change can come up. Create a climate where people can individually and collectively think for themselves, take initiatives, and build interesting things. Change grows from the grass roots, where people know what needs to be done."
Transformational leadership works by influencing the values and priorities of followers, thereby motivating them to achieve more. Leaders inspire followers through the mission, optimism, enthusiasm and emotional appeal. They provide personal support and encouragement, show concern and offer coaching. They set a personal example, sacrifice for the group and show good ethics. They challenge people to view problems from new perspectives and to find new solutions, while making it safe for them to express negative emotions and business concerns. Followers then connect more to the mission, seek ways to improve their performance and thus enhance the organizational culture.
Of course, despite the cover stories in magazines, not all great leaders are larger than life. Many prefer responsible, behind-the-scenes actions. They lead by quiet example and by working through others.
Strategic approaches: Perhaps the best-known author on change is Professor John Kotter. He lays out an eight-step strategy:

1. Establish a sense of urgency.
2. Create the guiding coalition.
3. Develop a vision and strategy.
4. Communicate the change vision.
5. Empower employees for broad-based action.
6. Generate short-term wins.
7. Consolidate gains and produce more change.
8. Anchor new approaches in the culture.

Notably, his model does not start with vision. That only comes after an organization's leaders have established a sense of urgency for change and built a coalition to help them push for it. Skipping the first stages, warns Kotter, will lead to failure.
And although cultural change is critical to long-lasting change, Kotter puts it at the end rather than the start of the process. "Culture changes only after you have successfully altered people's actions," he says, "after the new behaviour produces some group benefit for a period of time, and people see the connection between the new actions and the performance improvement."

Find a change model to fit the situation
A top-down approach apparently can be effective, but only if the leader controls the levers of recruitment, promotion, incentives and dismissal - and at the same time pays attention to the people factor and is open to feedback. New behaviour will eventually be accepted and become the culture.
In another view, culture change comes through changing the way things are done in an organization so that, over time, people will change as well.
A third view holds that if you change how individuals feel and provide them with new experiences, they will eventually adopt the new behaviours, leading to the emergence of a new culture.
What matters is to find what works best in the specific situation, given your understanding of all the factors.

Stages of culture change
Common themes emerged from the interviews with executives and the review of management literature, advising that significant change in complex organizations requires:

1. strong leadership, a vision, and a change team or guiding coalition charged with implementation;
2. perseverance and commitment to follow through;
3. understanding of the current culture, where the resistance will come from; and
4. the courage to tackle resistance head-on.

Stage 1: Before anything else, leaders must build an understanding of the organization's current culture by collecting information on the types of behaviours being practised. In other words, they have to understand their own leadership style, the organization's culture and where it is now.
Stage 2: Next is developing a vision of where the organization should be, and performing a gap analysis; this reveals where the organization falls short of the vision. To fill the gaps, design a strategic plan that articulates the vision, outlines priorities for improvement and establishes measurable targets with an eye to early successes. A team must be established, trained and mandated to implement the change. Ultimately, the whole organization must be involved, although specifics will vary according to the scope of the plan and the nature of the organization.
Stage 3: Next comes implementing the plan: The deputy/head and the guiding coalition must make the case for change, communicate again and again (and again), and build capacity.
Stage 4: At the same time, there is a critical transitional period in which people "let go" of one set of behaviours as they move to another. This is the stage where many change initiatives begin to lose momentum. It's important to celebrate wins and early successes, communicate widely and often, and find innovative ways of motivating people to adopt the new behaviours, processes and systems.
Stage 5: Finally, following up. It's important to keep measuring progress, seek feedback, and continue to adjust and improve. Over time, the leadership must build a deeper understanding, update the strategy and get better at implementation.

The following diagram illustrates both the components and the steps to apply a successful culture change management.

Why Six Sigma: Concept & Mastery Levels

For Motorola, the originator of Six Sigma, the answer to the question "Why Six Sigma?" was simple: survival. Motorola came to Six Sigma because it was being consistently beaten in the competitive marketplace by foreign firms that were able to produce higher quality products at a lower cost. When a Japanese firm took over a Motorola factory that manufactured Quasar television sets in the United States in the 1970s, they promptly set about making drastic changes in the way the factory operated. Under Japanese management, the factory was soon producing TV sets with 1/20th the number of defects they had produced under Motorola management. They did this using the same workforce, technology, and designs, making it clear that the problem was Motorola's management. Eventually, even Motorola's own executives had to admit "our quality stinks,".

Finally, in the mid 1980s, Motorola decided to take quality seriously. Motorola's CEO at the time, Bob Galvin, started the company on the quality path known as Six Sigma and became a business icon largely as a result of what he accomplished in quality at Motorola. Today, Motorola is known worldwide as a quality leader and a profit leader. After Motorola won the Malcolm Baldrige National Quality Award in 1988 the secret of their success became public knowledge and the Six Sigma revolution was on. Today it's hotter than ever.

It would be a mistake to think that Six Sigma is about quality in the traditional sense. Quality, defined traditionally as conformance to internal requirements, has little to do with Six Sigma. Six Sigma is about helping the organization make more money. To link this objective of Six Sigma with quality requires a new definition of quality. For Six Sigma purposes I define quality as the value added by a productive endeavor. Quality comes in two flavors: potential quality and actual quality. Potential quality is the known maximum possible value added per unit of input. Actual quality is the current value added per unit of input. The difference between potential and actual quality is waste. Six Sigma focuses on improving quality (i.e., reducing waste) by helping organizations produce products and services better, faster and cheaper. In more traditional terms, Six Sigma focuses on defect prevention, cycle time reduction, and cost savings. Unlike mindless cost-cutting programs which reduce value and quality, Six Sigma identifies and eliminates costs which provide no value to customers: waste costs.

For non-Six Sigma companies, these costs are often extremely high. Companies operating at three or four sigma typically spend between 25 and 40 percent of their revenues fixing problems. This is known as the cost of quality, or more accurately the cost of poor quality. Companies operating at Six Sigma typically spend less than 5 percent of their revenues fixing problems (Figure 1). The dollar cost of this gap can be huge. General Electric estimates that the gap between three or four sigma and Six Sigma was costing them between $8 billion and $12 billion per year.

What is Six Sigma?
Six Sigma is a rigorous, focused and highly effective implementation of proven quality principles and techniques. Incorporating elements from the work of many quality pioneers, Six Sigma aims for virtually error free business performance. Sigma, ?, is a letter in the Greek alphabet used by statisticians to measure the variability in any process. A company's performance is measured by the sigma level of their business processes. Traditionally companies accepted three or four sigma performance levels as the norm, despite the fact that these processes created between 6,200 and 67,000 problems per million opportunities! The Six Sigma standard of 3.4 problems per million opportunities is a response to the increasing expectations of customers and the increased complexity of modern products and processes.

If you're looking for new techniques, don't bother. Six Sigma's magic isn't in statistical or high-tech razzle-dazzle. Six Sigma relies on tried and true methods that have been around for decades. In fact, Six Sigma discards a great deal of the complexity that characterized Total Quality Management (TQM). By one expert's count, there were over 400 TQM tools and techniques. Six Sigma takes a handful of proven methods and trains a small cadre of in-house technical leaders, known as Six Sigma Black Belts, to a high level of proficiency in the application of these techniques. To be sure, some of the methods used by Black Belts are highly advanced, including the use of up-to-date computer technology. But the tools are applied within a simple performance improvement model known as DMAIC, or Define-Measure-Analyze-Improve-Control. DMAIC can be described as follows:

Infrastructure
A very powerful feature of Six Sigma is the creation of an infrastructure to ensure that performance improvement activities have the necessary resources. In this author's opinion, failure to provide this infrastructure is the #1 reason why 80% of all TQM implementations failed in the past. Six Sigma makes improvement and change the full-time job of a small but critical percentage of the organization's personnel. These full time change agents are the catalyst that institutionalizes change. Figure 2 illustrates the required human resource commitment required by Six Sigma.
Leadership .

Six Sigma involves changing major business value streams that cut across organizational barriers. It is the means by which the organization's strategic goals are to be achieved. This effort cannot be led by anyone other than the CEO, who is responsible for the performance of the organization as a whole. Six Sigma must be implemented from the top-down.

Champions and Sponsors
Six Sigma champions are high-level individuals who understand Six Sigma and are committed to its success. In larger organizations Six Sigma will be led by a full time, high level champion, such as an Executive Vice-President. In all organizations, champions also include informal leaders who use Six Sigma in their day-to-day work and communicate the Six Sigma message at every opportunity. Sponsors are owners of processes and systems who help initiate and coordinate Six Sigma improvement activities in their areas of responsibilities.

Master Black Belt
This is the highest level of technical and organizational proficiency. Master Black Belts provide technical leadership of the Six Sigma program. Thus, they must know everything the Black Belts know, as well as understand the mathematical theory on which the statistical methods are based. Master Black Belts must be able to assist Black Belts in applying the methods correctly in unusual situations. Whenever possible, statistical training should be conducted only by Master Black Belts. Otherwise the familiar "propagation of error" phenomenon will occur, i.e., Black Belts pass on errors to green belts, who pass on greater errors to team members. If it becomes necessary for Black Belts and Green Belts to provide training, they should do only so under the guidance of Master Black Belts. For example, Black Belts may be asked to provide assistance to the Master during class discussions and exercises. Because of the nature of the Master's duties, communications and teaching skills are as important as technical competence.

Black Belt
Candidates for Black Belt status are technically oriented individuals held in high regard by their peers. They should be actively involved in the process of organizational change and development. Candidates may come from a wide range of disciplines and need not be formally trained statisticians or engineers. However, because they are expected to master a wide variety of technical tools in a relatively short period of time, Black Belt candidates will probably possess a background including college-level mathematics and the basic tool of quantitative analysis. Coursework in statistical methods may be considered a strong plus or even a prerequisite. As part of their training, Black Belts receive 160 hours of classroom instruction, plus one-on-one project coaching from Master Black Belts or consultants.

Successful candidates will be comfortable with computers. At a minimum, they should understand one or more operating systems, spreadsheets, database managers, presentation programs, and word processors. As part of their training they will be required to become proficient in the use of one or more advanced statistical analysis software packages. Six Sigma Black Belts work to extract actionable knowledge from an organization's information warehouse. To ensure access to the needed information, Six Sigma activities should be closely integrated with the information systems (IS) of the organization. Obviously, the skills and training of Six Sigma Black Belts must be enabled by an investment in software and hardware. It makes no sense to hamstring these experts by saving a few dollars on computers or software.

Green Belt
Green Belts are Six Sigma project leaders capable of forming and facilitating Six Sigma teams and managing Six Sigma projects from concept to completion. Green Belt training consists of five days of classroom training and is conducted in conjunction with Six Sigma projects. Training covers project management, quality management tools, quality control tools, problem solving, and descriptive data analysis. Six Sigma champions should attend Green Belt training. Usually, Six Sigma Black Belts help Green Belts define their projects prior to the training, attend training with their Green Belts, and assist them with their projects after the training.

Staffing Levels and Expected Returns
As stated earlier in this article, the number of full time personnel devoted to Six Sigma is not large. Mature Six Sigma programs, such as those of Motorola, General Electric, Johnson & Johnson, AlliedSignal, and others average about one-percent of their workforce as Black Belts. There is usually about one Master Black Belts for every ten Black Belts, or about 1 Master Black Belt per 1,000 employees. A Black Belt will typically complete 5 to 7 projects per year. Project teams are led by Green Belts, who, unlike Black Belts and Master Black Belts, are not employed full time in the Six Sigma program. Black Belts are highly prized employees and are often recruited for key management positions elsewhere in the company. After Six Sigma has been in place for three or more years, the number of former Black Belts tends to be about the same as the number of active Black Belts.
Estimated savings per project varies from organization to organization. Reported results average about US$150,000 to US$243,000. Note that these are not the huge mega-projects pursued by Re-engineering. Yet, by completing 5 to 7 projects per year per Black Belt, the company will add in excess of US$1 million per year per Black Belt to its bottom line. For a company with 1,000 employees the numbers would look something like this:
Master Black Belts: 1
Black Belts: 10
Projects: = 50 to 70 (5 to 7 per Black Belt)
Estimated saving: US$9 million to US$14.6 million (US$14,580 per employee)
Do the math for your organization and see what Six Sigma could do for you. Because Six Sigma savings impact only non-value added costs, they flow directly to your company's bottom line.

Implementation of Six Sigma
After over two decades of experience with quality improvement, there is now a solid body of scientific research regarding the experience of thousands of companies implementing major programs such as Six Sigma. Researchers have found that successful deployment of Six Sigma involves focusing on a small number of high-leverage items. The steps required to successfully implement Six Sigma are well-documented.

1. Successful performance improvement must begin with senior leadership. Start by providing senior leadership with training in the principles and tools they need to prepare their organization for success. Using their newly acquired knowledge, senior leaders direct the development of a management infrastructure to support Six Sigma. Simultaneously, steps are taken to "soft-wire" the organization and to cultivate an environment for innovation and creativity. This involves reducing levels of organizational hierarchy, removing procedural barriers to experimentation and change, and a variety of other changes designed to make it easier to try new things without fear of reprisal.

2. Systems are developed for establishing close communication with customers, employees, and suppliers. This includes developing rigorous methods of obtaining and evaluating customer, employee and supplier input. Base line studies are conducted to determine the starting point and to identify cultural, policy, and procedural obstacles to success.

3. Training needs are rigorously assessed. Remedial skills education is provided to assure that adequate levels of literacy and numeracy are possessed by all employees. Top-to-bottom training is conducted in systems improvement tools, techniques, and philosophies.

4. A framework for continuous process improvement is developed, along with a system of indicators for monitoring progress and success. Six Sigma metrics focus on the organization's strategic goals, drivers, and key business processes.

5. Business processes to be improved are chosen by management, and by people with intimate process knowledge at all levels of the organization. Six Sigma projects are conducted to improve business performance linked to measurable financial results. This requires knowledge of the organization's constraints.

6. Six Sigma projects are conducted by individual employees and teams led by Green Belts and assisted by Black Belts.

Although the approach is simple, it is by no means easy. But the results justify the effort expended. Research has shown that firms that successfully implement Six Sigma perform better in virtually every business category, including return on sales, return on investment, employment growth, and share price increase. When will you be ready to join the Six Sigma revolution?