The Secret to Business Culture
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Speaker 2
because of the culture changes they engage in, their organizations are able to continue to keep the people employed. They keep the customers get their products. They get competitors, owners, shareholders make more money. I mean, everyone is better off
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Speaker 2
to you want to have a direction, that cultural change, but you also want to engage the rest of your employees and helping realize that direction.
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Speaker 1
this is a really rich business masterclass that we've just been through here.
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Unknown
Welcome to start with a win where we unpack franchising, leadership and business growth. Let's go.
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Speaker 1
And coming to you from area 15 ventures.
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Speaker 1
And start with the wind headquarters. It's Adam Contos with start with a win we have back on for this two part series. Part two of two. We have Jay Barney, a business school professor and author, has done a ton of study on how stories change the culture within organizations. Go back and listen to part one. We get a lot of foundation for this, and we get the first two, attributes of this great way to change your culture, those being authenticity and star in your own story.
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Speaker 1
You're going to want to go listen to that and dig deep in those. But Jay, we've got four more to go here, so let's get right on it. What is what is the fourth? I'm sorry, the third attribute of creating this culture change through storytelling.
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Speaker 2
with these stories that you're building is you're taking, you're taking all stories that support an old culture. Are you replacing them with new stories? And those new stories have to demonstrate to your employees that there really is something new, new culture is going to be developed here.
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Speaker 2
again, the book is about the stories. So let me just, share with you an example this of this break with the past, with the past, the future. So, one of our, CEOs is, is, recently hired at Gillette Corporation, to, and he's in charge of the, developing world business, basically India and China.
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Speaker 2
Okay. And, at the time that he's given that responsibility, he focuses first on India. They're basically not selling any razors in India. Not I mean, like, like 2000, I mean, like none. Okay. Wow. And, and and people are just mystified in the company because, see, at Gillette, they had done the R&D and they had developed this new tech and great technology they thought was going to be great.
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Speaker 2
They had tested this technology, on Indians, men and, you know, the UK and then, the Cambridge area where they had their research labs and the, the Indian man who liked it said, but liked it a lot. So they thought, this is a total win. and so, but but the they weren't selling it.
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Speaker 2
So, the, the culture of R&D and product development at the time at Gillette was, the, the labs develop the technology. They ship it to us and then we, then we sell it. And, and so, and so, the CEO said, you know, sorry. I'm going to India. And his supporters say, you do.
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Speaker 2
You know what? That's not what we do here. You're going to go talk to consumers. It's going to work now. I'm going to India. It got real big pushback on that. And finally, six or so people agreed to go with him. And so they have a great boss over in India, and they visit potential customers. and it turns out that, the way that, most Indian men shave, is inconsistent with the product they were selling.
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Speaker 2
I give you an example. many, men in India don't have a separate bathroom. They can shave and they have a they live in apartments that share bathroom. So you don't shave in the bathroom. You find a little room someplace in your house, and you shave with a beer in the in that little room. What that means is, instead of running water to clear off your razor, you basically have a little cup of water.
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Speaker 2
You like this? Okay, well, very easy for the razors to get clogged. and so, and so Gillette's razor was really good, but it was also just easily clogged. Then they also don't have a place to store their razor separately. So what they do is we have a club I covered in my bathroom where I put my razor blades.
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Speaker 2
So instead what they do is they they had no razor on a nail on the wall up above. where the shave? Oh, Gillette's razor didn't have a nail, didn't have a hole on the handle. And that's. We're talking pretty basic stuff, right? So, so they learned so much from this experience. They bring it back and, and they, and on the, on the airplane back, they actually get together on the airplane and design a new razor for the Indian market.
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Speaker 2
And they go from zero market share to 20% market share in two years, because they really came up with just phenomenal. And yeah, that's a huge growth. Unbelievable. but remember when the the culture changing idea came up there was resistance, which is I'm going to India. I'm of course you're going to India. This is not rocket science.
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Speaker 2
Of course you're going to go. And so and so, and so it has to be a break with the past. This has to be completely we're going to do a different way of doing R&D. It's not that the labs are bad. There's nothing wrong with that. It's just that we have to do something else for the developing markets, markets in developing countries, economies.
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Speaker 2
And, and then and then and then, with a future about how this look going forward. And he began pitching this to that throughout the organization. and, and it had a big impact on Gillette's, Gillette R&D strategy. So, right, with a path with a path to the future. But one thing that's important to note here is that this path to the future, that the business leader doesn't have to.
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Speaker 2
In fact, we think it's not a good idea for the business leader to, to rigorously define what that future culture is going to be. It's going to be customer oriented. But that doesn't mean we're going to do the following 17 things. It's not that level of detail because you want to you want to have a direction of that cultural change, but you also want to engage the rest of your employees in helping realize that direction.
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Speaker 2
And and so if you give too much guidance about the future, you actually foreclose. Learning from your employees. So frankly, the path path was a path to the future rather than a detailed outline of your the seven steps we're going to take to change our culture and that kind of thing.
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Speaker 1
So that's that's really important for those people listening. I mean, it's, you know, you can't force no that direction to the future as the leader. And a lot of people look to the leader, especially in a tell.
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Speaker 2
Me what to do.
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Speaker 1
Top down organization. Exactly. Or even a founder led organization. They're going to hammer on that path. So, you know, leaders, you.
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Speaker 2
Know, I think I think you have a suddenly there that that is not in the book, but it's certainly something we've seen, which is that, Many business leaders know that they don't want to over control that change process, but employees want that control. They want to be told what to do. Sometimes. And you have to turn around and say, listen, here's the principle.
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Speaker 2
This is the direction we want to go. we want to move in towards a more customer oriented. We want to move in a different direction. Whatever. how does how does that, how will that affect your job? You have to figure that out, because, you know, what you need to do is this is the last thing which is, building the story cascade.
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Speaker 2
You need to build your own story inside the organization. And, and I can't tell you what the story is, because if I did, it wouldn't be authentic to you. Wouldn't it be so you have to build your own story and and and that means a path to the future, but not controlling too well.
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Speaker 1
That's good. All right. Let's move on to number four. I really like this.
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Speaker 2
Head in the heart.
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Speaker 1
Yes, this is really, really good. Especially this day and age because people want to know that you care.
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Speaker 2
So take care of the thing. First of all, there has to be a business reason for doing culture change. That's the hard part. If there's not a business reason, then this is what you're saying. This is it's like the biggest ego trip imaginable. I know there's not a business reason for doing this culture change, but I've always wanted an organization to have the same values that I have as a person.
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Speaker 2
Give me a break right? It's like, just give me a break, okay? I mean, I hear that and I just sort of just shake my head. so there has to be a business reason. And the business reason we found most of the time is we want to gain competitive advantage for our strategies. We want to prosper and survive.
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Speaker 2
We have to change our strategies. But our strategy is we have to change our culture. And so there's this. But you start with we've got to have a good, solid business reason that appeals to your employees hits. But this is culture. This is about identity and sense of belonging and purpose. So it's also got a, got a, got a yeah, I address the heart.
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Speaker 2
It's got to take that at the, at the emotional and and personal side as well. The story that the one story that we tell that I one of my favorite stories of all is, a woman who, Mellon who is she became was the first woman vice president, first general manager of, Procter and Gamble, feminine care division.
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Speaker 2
Now we can talk offline. Why? It took 15 years for a woman to become in charge of the fem care division, but that's right time. And so. But now she's in charge, and she. She begins to conceptualize, the care, business model. So the business model looks like it's not broken. It's very, very stable growth of best low growth.
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Speaker 2
It's organic growth as a function of, the demographic changes. and, Peggy has 50%. The market is very profitable. Okay. And in that model, the dominant mindset, the culture in fem care has been a more, manufacturing model, which is what we like to do is we want our products to work. Obviously, we want to we want to manufacture them at the lowest cost possible because this is, not a growing market.
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Speaker 2
So the only way we increase our profits is keeping our cost low as possible, which increases our margins in a way. And so it's a very much a manufacturing mindset. And, and she comes into this saying, wait a second. We're talking about when young women start using our products. This is an this is an important that is biological but emotional social change in their life.
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Speaker 2
We want our products to be empowering to women. This is yeah, we need to be fashionable, low cost. I got that, but we got we got to go beyond that. We have to have we have to have products that treat our our customers as individuals. And, you know, for for boys, when they begin shaving, it's kind of seen as a rite of passage into manhood or something like that.
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Speaker 2
We want that same thing to be true when women start menstruating and and our products to help them do that. Now, the story she built. So she's just stands up in front of a bunch of these male engineers and say, we want this product to be an enabling and, and, empowering to young women. it's for sure we get a lot of blank stares.
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Speaker 2
So she went through a process describing the book of Building stories, where she had consumers, would, invite them into, like a focus group. And then they divided products into various categories and, and emerged out of that process, was the fact that, ingenious care products were, effective, but not they didn't delight the customer and they didn't empower the customer.
00:12:09:22 - 00:12:39:19
Speaker 2
and, out of that, by the way, comes an entire new, product line, which is this based on, the, the Pearl. Pearl is smooth and it's elegant and it's her style. And so they introduced a brand of Tampax. It's called, the Pearl. And if you go to the grocery store, you'll see that's half, half that store that the shelf base is now this pearl, design.
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Speaker 2
And, the for the first thing they did, for example, is they replaced a cardboard applicator with a smooth plastic pearl color applicator, I mean, all sorts of stuff. And, remember, this is a very, very mature market. And, and, and in a relatively short period of time, market share goes up dramatically. This introduces a new product. You now have a right high market share, higher prices, higher margins, lower costs, total win.
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Speaker 2
Strategy wise. And by the way, there's the business model there. So it's head but it's yes. Join me in empowering your daughters right. That's that's a no cost. Yeah. And so that's the hard part I mean it's just a phenomenal story. She's she's she's an amazing woman.
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Speaker 1
That's an incredible example. Yeah. Tying the head to the heart. Yeah. And and we've seen that a couple times with some of these different you know like dove.
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Speaker 2
yeah.
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Speaker 1
Has done that. There's, there's been a few of them out there that I would encourage everybody to look into. But I mean, I agree talk about a winning culture change strategy for sure.
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Speaker 2
Huge. And and and and and you know, you you're not saying that the old manufacturing culture was wrong, right. That's it's not about making someone wrong here. It's about saying we can do more. We can do the head, and we can do the heart, and we can make a big difference here. So yeah.
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Speaker 1
Absolutely. All right. Take us out to number five.
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Speaker 2
Number five is this is the biggest surprise to me, was how theatrical? many of these story building things are. I mean, we got CEOs dressing up in costumes. We have them doing stuff that is so non CEO like. And part of it's what theatricality does is it helps people remember the stories because they're just amazing.
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Speaker 2
And and and also it's it because you're, because the CEO is doing this stuff that is so theatrical. It's it's a strong commitment, very hard to back off of those kinds of things. And so it makes people give you an example. This is, a friend of mine who was, CEO of, of a software company.
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Speaker 2
I think that they had been doing pretty well, but then they had a bad year. It was a very bad year, and there wasn't a lot of money. they figured out they actually didn't have a strategy. They hired a consulting firm. They worked together, developed a new strategy. But the new strategy meant that they're going to have to layoff 20% of their employees.
00:15:06:11 - 00:15:23:19
Speaker 2
That's a lot. So that's going to be a big layoff. Yeah, the first in the history of the company. And so, they had they had scheduled they were going to have had scheduled already a celebration dinner for the year that supposedly was going to be really good. And to us as well, we can't have a celebration dinner.
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Speaker 2
And this is my neighbor going to lay all these people off. And the woman who is in charge of organizing that said, well, we've already paid for the venue. And they said, a very fancy hotel. So some of get out of this, we can't get out. So this is why I can't change the meeting. We have to go to this fancy hotel.
00:15:42:03 - 00:15:59:13
Speaker 2
But I'm the change and I'm going to change the content of the meeting. I'm going to build a story to help us get ready for the next. And so people arrived and the play an hour and they go into the dining room and then this, you know, just very, very high end hotel China and, and, fancy Davos online.
00:15:59:15 - 00:16:21:10
Speaker 2
and it time people said that it dinner outcomes the first course which is bread and people get water and then comes the second force and it's also bread and water. At which point the CEO stands up and says, we suck. Our business has been terrible. We're losing money. We're bad for our owners were bad for our employees.
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Speaker 2
We're going to have to do this big layoff. We don't deserve a celebration. We don't deserve anything tonight except bread and water. And so we're going to have a seven course meal tonight. And it's all going to be bread and water. because that's what we deserve as a company. but we're going to use tonight as the beginning of the turnaround.
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Speaker 2
So that next year we're come back to the same exact hotel, in the same boat, in the same dining room, and we're going to have a thoughtful, celebratory dinner and. How long do you think it took for that bread and water dinner to get it started, be spread throughout the company.
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Speaker 1
Instantly.
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Speaker 2
Instantly. And I always joke about it because the sky is that she has a good friend of mine. I joke, I said there were 25 people at that bread and water dinner, and there are 75 people who claimed to be at that bread. The water rushes. We only deserve bread and water and that's how we're going to happen.
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Speaker 2
Now, I will say this, the hotel was in San Francisco, and San Francisco has good bread. So my grandfather. But, but that's theater. And that's just that's just one example, of I've mean several examples of this of, you know, making a tunnel a memorable event, that that makes the story so easy to spread throughout the organization.
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Speaker 2
Wow. All right. Now.
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Speaker 1
That was number five. Number five is the theater. Take us home. Number six.
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Speaker 2
Number six, cast building the story of Cascades. So our research shows that, the story building starts at the CEO level or just general manager, whatever. The business center responsibilities starts at that level. but if it stays at that level then or not and or not, really going to change the culture. So ultimately what has to happen is, different people inside the organization, different levels in the organization, have to start building their own stories.
00:18:13:02 - 00:18:29:06
Speaker 2
and, and, and so the, the story building is Cascade. Now, there are some practical things you can do. For example, you can actually go to a business and if you're the CEO, you can go to one of your vice presidents who and says, you know, you got to build a stock. Would you build a story?
00:18:29:08 - 00:18:50:06
Speaker 2
it has these six attributes. What's in the LSA? What do you want to build? And the answer is, I can't tell you what story to build because it has to be authentic to you, but it has to be consistent with these cultural values. So you can see story building. the thing you also want to do is you want to get employees of every level of organization engaged in activities are consistent with the new culture.
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Speaker 2
But then but then and then let me know about those stories. So the one of the examples in the book is, so, company, Traeger Grills is a big, big operation here in the States, well known. I'm a customer. anyway, they, the CEO, gets long story short, buys the company, closes its operations in Oregon and moves me here to salt to Utah.
00:19:21:08 - 00:19:40:15
Speaker 2
the culture in in Oregon was toxic. Toxic? So he had to build a new culture. So if you actually move the organization to create the opportunity is a very strong move. and one of the one of the values he is trying to get into this new culture is just, unlimited commitment of customers. It's not highly differentiated products.
00:19:40:16 - 00:20:10:13
Speaker 2
It's not cheap. You want to try to get a high price. We want these customers to be satisfied. And so, and so he's preaching that he's trying to do stuff. And so what happens is some, some lower level guy, the following occurs. It starts on a Friday. You get some phone call from a, from a customer who is, a, a manager at, one of their big customers, Costco in Seattle and, and in the guys this, my tracker's not working.
00:20:10:13 - 00:20:34:21
Speaker 2
This is all. Tell me what's wrong. And he diagnoses the problem over the phone. He says, okay, no problem. He he diagnosis goes to the the to the office, picks up the part that he needs to fix the problem. Gets on an airplane, flies in Seattle with the part, fixes the guy's trigger. helps him, marinade his, his the beef.
00:20:34:23 - 00:20:54:01
Speaker 2
Hahahahahahaha. And then gets back on the airplane and flies back. Wow. And then I'm. And that's unresolved. Nothing. Nothing. Just to up this because this is this is the value. Right? Right. And then and then on Monday, the VP of sales and Traeger comes into the CEO's office. You do you know about it on the weekends? This is not what it is.
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Speaker 2
And tell us the story. And and it turns out that manager at Costco told the the general manager at Costco, who then called the corporate, VP of sales at Costco, who then talked to Costco merchandizing corporate, who then contacted the VP of sales. And that's how they found out about this guy. So all that's, you know, credible, positive vibe from that customer.
00:21:23:09 - 00:21:40:14
Speaker 2
and it was Bob Dylan. He's come in on work and he's just working on some spreadsheets. Does he know he's not a big deal? Wow. so what do they do? Well, they. There's a and when when the CEO hears this, you guys, it's working. It's culture change. And and.
00:21:40:16 - 00:21:41:16
Speaker 1
So you.
00:21:41:18 - 00:22:08:16
Speaker 2
Go and so you celebrate. Bob. So. Absolutely. So you, the customer service award is now named Bob Smith, whatever his name is. Award. And and, you know, they give out they give out cash and bonuses for outstanding customer service. On and on. It's And so they reinforce that that culture change when, when but but when when, you know, you've got culture change when someone that that organizations became to engage in those and building their own stories that are consistent with those values.
00:22:08:17 - 00:22:10:11
Speaker 1
Incredible. This is I mean.
00:22:10:13 - 00:22:13:07
Speaker 2
These stories are amazing trade.
00:22:13:07 - 00:22:33:17
Speaker 1
I mean, this is a really rich business masterclass that we've just been through here. On how so many of these businesses have impacted themselves through building stories and building their culture with those stories, I can't encourage people to to check out this book enough. I got mine on Amazon. I'm sure you can get it wherever books are sold.
00:22:33:22 - 00:23:00:23
Speaker 1
The secret of culture change how to build authentic stories that transform your organization. Jay Barney, you've got a couple of coauthors that worked on this with you. just a fantastic book to lean into to build a great organization. take us home, J. Anything that has really been a massive in developing this book.
00:23:01:01 - 00:23:28:07
Speaker 2
I have actually, I have come to respect, and the, the business leaders who figure out what they do to change their culture and then do what's necessary to make it happen. I know we're we don't have an algorithm for culture change. It's not some simple process. But the CEOs we've talked to, they're 80% more senior.
00:23:28:09 - 00:23:51:00
Speaker 2
just forget it. And they do. They do the I the heroic because because of the culture changes they engage in, their organizations are able to continue to keep the people employed. They keep the customers get their products, they get competitive change owners, shareholders make more money. I mean, everyone, is this better off because of this culture change?
00:23:51:00 - 00:24:05:11
Speaker 2
These these people go through. They they takes they take some hits of the process and yet they remain focused. I'm I'm just really impressed with them. That's awesome. That was that was my big surprise is how much I came to respect these people.
00:24:05:13 - 00:24:20:21
Speaker 1
Awesome J Barney, a great leader, a great business school professor. You're you're educating. I'm culture here. This is fantastic. I have one question. I ask all the great leaders on sir, with a win J how do you start your day with a win?
00:24:20:23 - 00:24:44:12
Speaker 2
That's a great question. as a professor, I have a lot of flexibility defining. I mean, I always say, I have a flexible schedule. Unless it's not flexible. When I have to teach, I have to change up. but I literally start every morning by saying, okay, I as I set my agenda for the day and for the week, I ask the question.
00:24:44:12 - 00:25:04:01
Speaker 2
I don't ask the question. What do I have to do? I ask the question, what I what do I really want to do? What's what's going to give me the most joy over the next 24 hours, 48 hours, whatever it is, and it's a lot of stuff you got to do, but you just keep coming back to the thing that gives you the most joy.
00:25:04:03 - 00:25:15:18
Speaker 2
And, and, for me, it's turns out it's doing this kind of work. it's just, it just just gives an enormous satisfaction. And so that's what I do.
00:25:15:20 - 00:25:38:14
Speaker 1
Awesome. Yeah, I love that. What do I really want to do? What's going to give me joy? J. Barney business school professor, author, and a great friend who knows how to change culture or the formula behind it. I mean, it's up to us to to make that happen. Folks. So, check out Jay's book, Look Up Jay online and at the University of Utah.
00:25:38:15 - 00:25:46:11
Speaker 1
There's business school there. you know, your your good friend Jay, thanks for bringing all of this to us. And thanks for starting with a aware.