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The Decline of the Once Strong
An example is the Tata Group's (India's large conglomerate) February
2007 acquisition of the Corus Group, the descendant of British Steel.
This is the largest acquisition ever by an Indian firm. This is a role
reversal, where an organization of a former British colony has flexed
its financial muscle to those who once were the rulers.
As another example, the U.S. automotive industry gives us a good
laboratory experiment to test. I lived in Detroit in the 1990s. The
decline of household auto manufacturer names, such as General Motors
and Ford, can be mapped back to the oil crisis of the 1970s. That
crisis allowed Japanese car manufacturers, such as Honda, to leverage
their skills in manufacturing lawn mower and powerless 90cc motorcycles
into producing fuel-efficient and defect-free automobiles.
The Big Three U.S. automakers are currently building a case with
Washington politicians that their substantial health care costs
resulting from an older (and more pensioned) labor force has made an
unfair and uneven competitive playing field with younger foreign
manufacturers like Toyota, which is about to eclipse General Motors as
the global leader. With a new Democratic-controlled U.S. Congress and
health care reforms like Gov. Schwarzenegger's in California, help for
pension-burdened companies may be on the way.
But is this the solution or is the remedy much deeper? For example,
the problem with the Detroit-based auto manufacturers may not even be
about the lackluster products that they are accused of offering. The
problem may be that large and/or or old companies have deep-seated
cultures that may be fine for nostalgia but are too slow to change and
adopt new values to achieve higher performance.
What Makes the Difference: Executive Talent and Moxie or the Organization's Culture?
We accept the practices of organizational change management to
modify employee behavior. People typically resist change. Most people
like the status quo - it is human nature. However, I have always
questioned if a strong change management process can induce a change in
an organization's culture. Culture runs deep in organizations.
I recently witnessed evidence that applying strategy maps and the
associated balanced scorecard, two of the major components of the
performance management framework, can change a culture. At the annual
summit hosted by the Balanced Scorecard Collaborative, William V.
Catucci, now the retired CEO of AT&T Canada's Long Distance
Services, told a gripping story of how he turned a despondent and
sinking company into a winner. In the late 1990s, Catucci's company had
been losing market share and become extremely unprofitable. Worse yet,
an employee morale survey reported a most dejected workforce. Had the
company sunk too far to avoid bankruptcy?
Catucci had read an article about strategy maps and balanced
scorecard. He rolled up his sleeves and began implementing in a
disciplined way. Like a sailing ship's captain, he first set a new
direction. That is a CEO's job. The big challenge is always determining
how to get there. Very importantly, he communicated his direction to
the managers and employees by defining the various strategic objectives
to spark innovation, redesign business processes and become much more
customer focused. Managers and employees were asked if they wanted to
stay or leave the ship. Their commitment was crucial. Many resigned.
The rest of the story is a success story. Within two years, the
organization had doubled the customer base when the industry was
growing at four percent. The company was now profitable, and
revenue had increased from $273,000 to $370,000 per employee. Most
importantly, employee morale measured an all-time high. In 1998, Catucci was a finalist for the Canada CEO of the Year award.
Everyone in the audience was riveted by Catucci's testimonial, and
the applause at his conclusion was deafening. He described AT&T
Canada's transformation as a culture change, and he attributed it to
applying performance management methodologies.
Nurture or nature? When good leadership is equipped with the sound
and proven methodologies that constitute performance management, an
organization's culture can be changed for the better.
Column published in DMReview.com
March 2, 2007
One person has commented on this article. (1) Business Excellence, Inc.
2007-12-11 13:46:22 This article is very well done. Since 2004, I have made presentations on "Balanced Scorecard: Success through Leadership Enablers".
The story on William Catucci from AT&T Canada LDS is quite inspiring. I plan to use that as an example of role of the leader to change the culture using Balanced Scorecrad performance measurement system.
Manu K. Vora, Ph.D., MBA
Chairman and President
Business Excellence, Inc.
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