HOW CEOs DRIVE LASTING CHANGE

5 Steps to Drive Change from the Inside Out

Locating the Heart of Your Company

As CEO, you own your company’s strategy. You are the captain of the ship, responsible for its direction; a course that should be captured and clarified in your strategic plan.

But when did you last develop your strategic plan? And where is it now?

Take it off the shelf, dust it off and let’s examine it. We suspect that your plan, like so many others, is lacking heart, lacking soul, and is not being driven by a deeper meaning or purpose. This is because your team used only their minds to develop it. They didn’t tap into the heart.

By the way, did you notice this year’s strategic plan is about 80% the same as last year’s? And do you acknowledge that you probably won’t accomplish 80% of what is new or different from last year’s plan? Why? Because too much focus was placed on completing the plan, and not enough on releasing the company’s spirit.

Let us talk about spirit for a moment…

How does one breathe life and spirit into their organization and, ultimately, the strategic plan?

We posit that most people live their lives failing to question old assumptions. In keeping with the provocative nature of this eBook we suggest that, as the leader of your organization, you should hold off on developing your next strategic plan until you have appropriately grounded the organization in a foundation of intentionality. Until you can ensure that your strategy takes root in the true heart of your company and its people.

This is the story of Change from the Inside Out.

Change from the Inside Out

Every company has a heart and soul

Ask yourself the following… Why does your company exist? What is your place in the world? Why does it matter? And why should your employees show up every day and give you their best?

Your ability to clearly articulate a meaningful response to these questions – this is the heart of your company. But can the average employee answer these questions? Or worse, can the average CEO?

The Model

Change from the inside out

We believe true change starts deep inside the organization with you – the CEO (and your senior leadership team). Leaders are responsible for crafting a shared narrative around the purpose of the company, where it’s going and the values you all share. That narrative helps to motivate and engage your employees, playing out as a strong and intentional culture. And that culture gets reflected in the external brand you present to the world.

“When you’re surrounded by people who share a passionate commitment around a common purpose, anything is possible.”
- Howard Schultz, Founder and CEO of Starbucks

Step 1 Intentional Leadership

The power of intentionality

Intentionality is the ability to step out of your body (metaphorically) and examine yourself, asking the question, “How would I like things to be?” Then returning to your body to make those things happen.

Most leaders, to the extent that they are competent, are unconscious competents. Their leadership is molded by the ride they have taken in life, both personally and professionally. And they have weaved together the experiences from that ride to form a story.

The same logic can be applied to most companies. The stories that exist, both inside and outside of any company, have formed and evolved, most often unintentionally, over time. Because of this, many companies exist as what they are, rather than what they could be.

Declaring your Leadership Agenda

Before you can build the company of your dreams, you must focus on yourself. You, and each member of your leadership team, must define what kind of leader you want to be. We advise all leaders to develop their leadership agenda, a short one-page statement that communicates your leadership style (both current and aspirational).

The leadership agenda is a declaration you share with those closest to you; those who can and will hold you accountable. And it should follow you everywhere you go – whether at home, at work, at church/synagogue or during times of recreation.

However, it says nothing about the company as a whole.

Aligning your leadership team

Before you can successfully drive change inside your company, you must ensure that your leadership team is engaged, excited and aligned around the broader process. If you fail to achieve buy-in, you will not succeed.

We like to say that it’s easier to get them on the take-off, than it is to get them on the landing. If you try to push change forward on your own – good luck. It won’t work. You need a senior leadership team that understands and supports the process of organizational change. For this to be successful, it will have to touch every part of the organization.

Step 2 Emotionalize Your Story

An engaging shared narrative will drive your culture

Let us point out a missing link in most companies. Your employees have four types of needs. Most companies meet three of those four, but they fail to acknowledge or satisfy the fourth.

Physical Needs

They want a competitive salary, reasonable benefits, a good working environment, etc. Most companies meet this need adequately.

Mental Needs

They want challenging work, growth in their job, new skills developed, etc. Most companies meet this need adequately.

Emotional Needs

They want to be recognized, get an occasional pat on the back, etc. Good companies meet this need adequately.

But your employees have a fourth need. Something most companies do not understand…

Spiritual Needs

By spiritual, we don’t mean religious. We mean feeding the spirit. Why do your employees come to work? What is the purpose of your company and how connected do they feel to this purpose?

“Money motivates neither the best people, nor the best in people. It can move the body and influence the mind, but it cannot touch the heart or move the spirit; that is reserved for belief, principle, and morality.”
- Dee Hock, Founder and Former CEO of VISA

We, as humans, make red blood cells all day long. If we don’t, we will die; but none of us refer to that as our purpose in life. Similarly, companies need to make money. If they don’t, they will perish. But it cannot be your purpose; it is an outworking of your purpose.

So, what is your purpose? Why should your employees be engaged at work? Why should they wake up in the morning, make their way into the office and give you their best?

What is it about your company that feeds their spirit?

Building your organizational narrative

The organizational narrative is a story about why your company exists and where it is going.

What vision do you see for the future? Where does your company fit into this vision? Why is it exciting? And how will the world be a better place when your vision is realized?

The organizational narrative consists of the following elements:

Purpose: A clear and thoughtful purpose brings energy to the corporate endeavor and is a central theme in the company story.

Vision: A simple, uplifting, challenging, but believable, picture of the future can stretch the imagination and energize your employees.

Mission: A strong statement that describes how the organization is going to make its vision real.

Values: Beliefs and principles that guide behaviors within the organization and support its mission.

What role does the CEO play in this process?

Your narrative will lack impact or meaning unless it is owned and communicated from the core of the organization – the CEO and its leadership team.

Step 3 Breathe Life into Your Culture

An intentional culture attracts and nurtures the right people

How employees think, act and feel inside the organization – that is your culture.

Culture exists whether you manage it or not. In most organizations, culture takes shape organically over time. Yet, when you look to the most successful organizations in the world – do you think their culture took shape organically? (Google, Starbucks, Ritz Carlton, etc.).

The question is: what can you, the CEO, do to influence culture in your organization? You must get intentional about building the kind of culture you want.

This may not be simple, but it is achievable.

An intentional corporate culture

It starts with intentional leaders who are aligned around a well-crafted and emotionally engaging narrative; one that motivates your employees.

However, you can’t expect your employees to be motivated if your narrative is neither bold nor unique. As an example, if your core values include generic buzz words such as honesty, integrity or excellence – you are yet to craft a strong organizational narrative. Just as your body must produce red blood cells to live, every organization demands honesty, integrity and excellence. These are table stakes, not unique values.

Your narrative must be unique and bold to be effective.

Once the narrative is defined you must implement an internal communications plan and Tools to make it real. Your narrative has to be more than words on the wall in the staff kitchen area.

Introduce practical cultural Tools

At Think Shift, we have built a catalogue of over 120 Tools that we share with our clients to help them implement the culture they want and nurture it over time. As a quick case study, we will share two of these Tools to help you imagine how this might work inside your organization.

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Tool:Video Tape Test
Case Study: Think Shift

We describe one of our core values, transparency, as follows: Transparency means elevating the truth without fear of offense or disagreement. We want to work alongside others who have the courage to operate at the highest bar of integrity. It’s about holding nothing back.

While we have several tools that elevate transparency, the video tape test Tool is both simple and easy to explain…

Imagine for a moment if every conversation you had at work was recorded on video tape. Then imagine if every one of those videos were available for any employee to watch, at any time.

How would this affect what you say?


This line of thinking elevates thoughtful and transparent communication. When any of our employees are having a discussion and one person starts saying something inappropriate or unfair to others (e.g. talking bad about a fellow employee who isn’t there to defend themselves), someone might say the words “video tape test” and everyone involved in the conversation will immediately know what they mean. This causes the speaker to pause, think through what they are saying and rethink what they are communicating.

This is transparency in action.

Tool:Level of Performance
Case Study: Think Shift

Do you consistently and transparently tell your employees how they are performing?

Let’s be honest, we all dread having to tell an employee that their performance is slipping. What tends to happen is that we wait until their performance has slipped to a point of being unacceptable before we finally tell them. And by that point, we may already be considering letting them go.

The Levels of Performance is a Tool about communication. When meeting with an employee for a regular 1-1, ask yourself the following question: “Knowing everything I know today, would I hire this person again?” The honest answer to that question is something you should be communicating in every 1-1 meeting. You should also be communicating whether that employee’s performance is selectable, incumbent or unacceptable.

 

 

SELECTABLE

On day one, an employee begins as being selectable. He or she was chosen as the best person for the job. By performing at the selectable level, the employee would be chosen again if the position were vacant. The employer would also still be considered a top choice for the employee.

INCUMBENT

Over time, an employee may become less challenged or interested. Or an employer may fail to remove blockers to the employee’s success. Both can degrade performance. Not so much that you’d part ways, but you may not choose this person again if the job was vacant. If performance has fallen into the incumbent zone, it’s time to prevent further decline. Here you should identify problems, reset expectations, and chart a course back to selectability.

UNACCEPTABLE

When performance dips into the unacceptable zone, you start seeing negative returns on your investment. As the employee fails to deliver what’s expected, professional equity erodes. It’s to the point where drastic measures become unavoidable. Sadly, the unacceptable level is where most management discussions happen. At this point, it will cost more time and money to fix the situation.

Levels of Performance is a framework for providing clear, objective and quantifiable feedback. When you focus on the problems early and hold people accountable, corrections are easier to make. With higher employee performance and satisfaction, you’ll have less turn over and greater stability for long term growth.

Culture as a competitive advantage

For those organizations who manage to define, implement and nurture an intentional corporate culture that works; a competitive advantage can be created.

This may not be something most companies consider a competitive advantage. Yet, in today’s increasingly transparent world, your internal culture is a major factor in your external brand. Companies can enhance their brand value and customer loyalty through the development of a strong and engaging culture.

Beyond adding value to the brand, a strong culture motivates your employees. And when your employees are motivated, this translates into discretionary effort. Not only will your employees go the extra mile to serve the organization and its purpose, they will do it passionately and with a smile on their face. And as CEO, you didn’t get to where you are today without understanding the power of a highly engaged workforce.

Step 4 Building an Authentic Brand

An authentic and well-positioned brand can impact your bottom line

How culture drives brand

Brand is the outsiders view of your company. It is the perception of your company held by your customers. Culture is the insiders view of your company. It is the perception of your company held by your employees.

What your employees say about you around the water cooler – that is your culture. What your customers say about you to their friends and family – that is your brand. The key is in getting these two groups telling the same authentic story.

The importance of authenticity

With the rapid adoption of social media and other technologies, companies today live and operate in glass buildings. What happens inside the organization is available for all to see. Pair this with a drive to greater transparency across all industries and we find ourselves in a world where authenticity has become a table stake.

Brands today can no longer hide the inside of their organization from the outside world. Today’s transparent world has exposed what every intentional leader intuitively knows – that brand and culture are two sides of the same coin.”
- David Baker, CEO at Think Shift

Today’s customer demands authenticity (whether B2B or B2C). This has created an imperative to ensure that the (brand) stories you tell externally match the (cultural) reality inside your organization.

How brand creates value

What is a brand? Most people equate brand with a logo or visual identity. A fluffy concept dreamed up in the marketing department of any company.

Leaders know this is not the case. Your brand has the potential to create tremendous value that drives strategic growth and directly impacts your gross margin.

Quality of revenue

What is the value of a great story? Or a great experience?

Graph comparing 2016 gross margin for Starbucks (58%) vs. McDonalds (39%)

Consider Starbucks and McDonalds. Give or take a few pennies, the cost of the coffee, the cups, the lids and the labor required to serve it up hot and ready – is about the same.

Yet, Starbucks (in 2016 specifically) was able to achieve a significantly higher margin based (almost) purely on brand positioning and customer experience.

Starbucks knows exactly what neighborhoods they want to be in; what people they are trying to attract; and what experience they want to provide for those people. For their customers, walking into a work meeting or a gathering with friends holding a Starbucks cup is a part of their personal brand. It is a statement about the kind of person they are.

For those who buy McDonalds coffee, the cup in their hand is not a statement about who they are. It is not intended to contribute to their personal brand. They just want a cup of coffee that is affordable and quick and see no reason to pay a premium for this product and service.

It is the brand that separates Starbucks from McDonalds. It is the brand that enables the difference in both price and margin.

Heart Before the Mind

Consider what we’ve accomplished so far. We now have a group of intentional leaders, a powerful story, a thriving culture and an authentic brand. All of these are long-lasting and deeply embedded. Together they form the heart of your company. Those things that won’t change year over year. They lay a foundation of intentionality upon which your strategy can be built.

The heart is where you find the magic to inspire and motivate.

The mind is where you find the logic to develop a measurable strategic plan.

Step 5 Develop Your Strategy

An effective strategy must be anchored in the heart of your company

A strategy with heart and soul

Your strategy is a declaration of what you want to achieve in the future and how you intend to do it. This clarity can be a powerful mechanism to rally the troops. We know passionate employees are far more inclined to go the extra mile when they have a clear and credible vision of their destination.

What does an effective strategy look like?

Effective strategic planning should be custom to each organization – there is no “one-size-fits-all.”

We recommend a three-year rolling strategy that forces you to consider your financial and operational goals three years from today. Once these are understood, you can focus on a more detailed strategy for year one. Any annual strategic planning session should begin with a presentation of your narrative, culture and brand. A discussion of these elements will reaffirm your leadership team’s connection to the heart of the company and ensure it’s influence over future strategic decisions.

An Intentional Heart

Let’s return to the foundation of our philosophy – intentionality.

Most people consider themselves intentional if asked. But are they really? More importantly, are you?

Intentionality is the ability to step back, assess your situation and understand how you want things to be. Then to step forward and make it happen.

The Intentional CEO

To achieve intentional change from the inside out, below we have summarized the five steps presented in this eBook:

  1. Become an intentional leader
  2. Develop and share your organizational narrative
  3. Build and nurture an intentional culture
  4. Communicate an authentic brand
  5. Craft a strategy that is rooted in the heart of the organization

 

 

 

THIS IS
CHANGE FROM THE INSIDE OUT