The needs of the many

at the peak of its success in 1997, consumer electronics retail giant Best Buy Co. Inc., Richfield, Minn., USA, began to melt down. Share prices plummeted as shareholders learned the company was making $7.7 billion a year in sales but less than $2 million in profit.

Paul LeBlanc had to deliver some bad news when he took over as president of Southern New Hampshire University in Manchester, N.H., USA, in July.

His mission was to stabilize a turnaround that had been managed by Richard A. Gustafson, LeBlanc's predecessor of 14 years. Gustafson had expanded degree programs, improved the school's physical plant and presided over a 40 percent increase in applications in the past two years. When LeBlanc arrived, his memorandum to the faculty and staff was direct.

“In some ways, I said publicly what everybody knew—when a new president comes in, all the vice presidents are on the bubble for awhile,” LeBlanc says. Telling executives their job might be on the line created some tension, but dispelled some, too, as LeBlanc offered unprecedented access and input to students, staff and faculty. “We've been as open and transparent as we could be with the changes we've already had to make,” he says.

While open communication can be a valuable tool in implementing culture change, Alexander Stendal, managing consultant for Thales IS GmbH Germany in Berlin, says, “The best chance to spoil it all is to ignore local habits during your first contact at the location. Even if the goal you have in mind is to standardize processes or business behaviors—which is true of most global projects—it proved to be more efficient to involve the locals' way of communication and working than implementing solutions by central order.”

Cultural differences and changes will be accepted fastest on a personal level, Stendal says. This applies whether it's a corporate culture or a multinational team working across a single corporate culture. “What proves to be very efficient is putting together mixed teams to solve a certain task.”

Once interpersonal communication is established, relationships can be reinforced by phone and e-mail, and productive teamwork at a distance is possible. “The best way to avoid fatal misunderstandings caused by improper language skills is a practical demonstration of whatever your focus is,” Stendal says.

That's when Best Buy executives brought in Elizabeth Gibson as part of a team from KnoWorks, a division of RHR International Inc., a 50-year-old consulting firm in Wood Dale, Ill., USA. Gibson found Best Buy to be a “go-for-broke, brawling, entrepreneurial maverick.” The company opened 212 stores from 1991 to 1995, and by 1997, it had more than 33,000 employees in 270 locations. Stores operated independently. Experienced management teams hopped from one grand opening to the next. Customers came for the low prices but too often stayed away when the shopping experience became erratic.

Best Buy already had tried one culture change to govern all store procedures and operations, a project called the Standard Operating Platform (SOP), which was developed by another consulting firm. SOP standardized practices across the company's business operations, everything from unloading trucks to loss prevention. But it didn't change the company's maverick, chaotic culture. Gibson recalled confronting an impatient Best Buy executive who didn't understand that culture change is as much about why something is done differently as the results. “People often go too quickly to measuring execution—before they have the tools to [measure] it properly,” she says.

Extending the SOP project, Gibson and her team developed a “change scorecard,” so Best Buy managers, employees and her consultants could objectively measure their culture change implementation. “Changing behavior also depends on changing how you think about something and how you feel about something,” she says. “The big lesson is that when people set out to change culture, it's too slippery a thing to grasp. It's like nailing Jell-O to the wall.”

MINI CASE STUDY

The scorecard gradually inculcated Best Buy executives, managers and employees not only with the processes being changed but also with the rationale for the change. By 2001, the company's stock price posted a high of $59.28 a share for the year, compared with a high of $4.38 in 1997. The key to Best Buy's successful culture change project, Gibson says, was time and commitment. “Initiating a culture change means the people in the company have to take over the change,” she says. “A consultant can't do it for you.”

Perpetual Change

Culture change isn't a finite project. Pricewater-houseCoopers LLP's Genesis Park project aims to train the future leaders of the organization by instilling a culture of continuous improvement in promising young members of its teams.

Bethann Brault is executive director and cofounder of the Genesis Park project in Washington, D.C., USA. She helped launch the project in 2001 after attending meetings where she realized the perspective of younger employees was lacking. “We are big believers in developing a strong, sustainable company for the long-term,” she says, “and for that you need continuous improvement. And for that you need young, new leadership.”

PricewaterhouseCoopers employs nearly 125,000 people in about 140 countries. Local offices nominate potential candidates; from those, eight to 10 promising individuals with less than 10 years' experience are taken off billable hours for five months to undergo a leadership training program. Tested for leadership qualities, critical reasoning, persuasive and interpersonal skills, Genesis Park participants are given a lot of time with company partners. “They come back with some credibility,” Brault says, noting that while average executives are in their 40s and 50s, the average Genesis Park graduate is 27. “We really do think of them as missionaries in the field.”

Genesis Park LEADERSHIP TRAINING

Teambuilding with creative exercises helps to build high-performing teams, which facilitate peer learning. This early teambuilding exercise helps teams understand how they work together with diversity.

Alexander Spek graduated from the program in December 2002 and was named a partner in the firm's Netherlands office in July 2003. He's now at work implementing International Financial Reporting Standards (IFRS) mandated for companies across Europe by 2005. Price-waterhouseCoopers' European clients are undergoing substantial transformation that could reach beyond their accounting functions, he says. “The mindset of people needs to change in that [under IFRS], first you look at the rules and then apply them, rather than coming up with your interpretation,” Spek says. “In some instances, accounting may start driving the business rather than the other way around.” Some executives resist. “You have to explain, train and make them understand why things are happening,” he says.

As a new project, Genesis Park's results are a work in progress, Brault says, though participants already are breaking new ground. The program has been tailored to get its juniorlevel participants more involved in external accounting assignments in Asian countries where senior accountants traditionally relegate younger staff to background research.

“A big part of our business is judgment,” Brault says. “The way you teach judgment is an apprenticeship model with a lot of interaction.” Several offices also are trying out Genesis Park participants in business development, a role usually reserved for partners. Resistance to that proposal was strong, Brault notes, from managers who assumed junior staff were too busy with other jobs or too inexperienced to recruit new clients. Brault is confident Genesis Park's future leaders are equal to the task.

Disney's RFPs

Patrick Kittell was vice president, technology at Disney Worldwide Services/ Information Services in Burbank, Calif., USA, when the entertainment conglomerate assigned him the project of transforming the company's request for proposal (RFP) processes.

Until the early 1990s, Kittell remembered, Disney's RFP process had been fairly straightforward. Managers launching projects or considering outsourcing had longstanding relationships with favored vendors and often issued letters and awaited responses. “We were comfortable with the [relationships] we had and not motivated to go get more,” Kittell says. “The change in culture that we really needed to make was to create some structure.”

Kittell recognized that Disney's RFP process was driven from the top down and imposed on lower-level supervisors and employees without their input. As a result, neither had enthusiasm for new services or products, and new ideas and feedback generated from below often were missed. Kittell implemented a five-step process to engage these workers:

• Perform a business needs assessment to identify a perceived “must-have” and establish a flowchart for various alternatives to filling the need.
• Complete a cost justification with income and expense projections of the various alternatives compared to their anticipated efficiency enhancements. By the end of the second step, Kittell observed, many projects that would have gone straight to RFP instead had been justified out of existence.
• Revisit the development of the RFP. Kittell notes Disney RFPs tend to be detailed, 100- to 150-question proposals for vendors to fill out. Now, he says, the specific questions are formulated by managers, supervisors and employees who actually would work with the new product or service. Vendors no longer send marketing materials in response.
• Invite employees to vendor presentations in which all participate in a Q&A with Disney supervisors. “For some [supervisors], it was the first time they'd been asked to do something like that,” Kittell says.
• Score vendor data and presentations. “People understood how the data translated into a recommendation,” Kittell says. “In many cases [the new process] acted as a deterrent to spending money foolishly.”

Throughout these changes, Kittell says he always involved the lead person in the affected department to avoid friction and alienation. Vendors went along because they wanted to be associated with the Disney brand. Senior executives advocated the change, he says, while supervisors and employees appreciated being asked for their input. Communication kept everyone engaged, Kittell says, and their engagement validated the change.

Unanticipated events such as the 11 September 2001 terrorist attacks in the United States always will require flexibility in project management for culture change, Kittell notes. “Sometimes you have to fast-track it,” he says. But top-down commitment—and bottom-up involvement—make the difference between a culture change project ready to adapt to such shocking developments and one potentially paralyzed by them. “The culture change that was happening meant everyone was ready to go because everyone was involved and enthused, as opposed to having something just dropped on them,” Kittell says. PM

William Hoffman, based in Denton, Texas, USA, has been writing on business and government issues for more than 15 years.