Building a High Performance Business Culture Daniel Denison International Institute for Management Development Lausanne, Switzerland Denison Consulting, LLC Ann Arbor, Michigan, USA

Published June 2012 “A milestone in the culture studies arena.” -Edgar H. Schein Denison & Hooijberg’s newest book illuminates the cultural dynamics firms need to manage in order to remain competitive, including: Supporting the front line Creating strategic alignment Creating one culture out of many Exporting culture change Building a global business in an emerging market Building a global business from an emerging market Dan Introduces the book Published June 2012

What Is It All About? Supporting the Front Line Domino’s Pizza Creating Strategic Alignment DeutscheTech & Swiss Re Creating One Culture Out of Many “Polar Bank” Exporting Culture Change Across National Boundaries GT Automotive Building a Global Business in an Emerging Market GE Healthcare China Building a Global Business from an Emerging Market Vale

Mindset is the Foundation Image by R.A. Clevenger Norms, Behaviors and artifacts. Visible, tangible. Personal Values and Attitudes. Less visible, but can be talked about. Cultural Values and Assumptions. Usually not visible at all, often held subconsciously, rarely (if ever) questioned in everyday life.

Culture Reflects the Lessons Learned Over Time Culture Reflects the Lessons Learned Over Time Visible Symbols Lessons Survival Culture Underlying Principles http://www.youtube.com/watch?v=6_WAmt3cMdk

Understanding Habits & Routines

Rituals, Habits, & Routines We must  make  automatic  and  habitual  ... as many useful actions as we can. The more of the details of our daily life we can hand over to the effortless custody of automation, the more our higher powers of mind will be set free for their proper work. William James

Hold Your Horses! Morrison’s essay opens with a story of a young time & motion expert trying to find a way to speed up artillery crews during WWI, just after the fall of France. He watched one of the five- man gun crews practicing in the field with their guns mounted on trailers, towed behind their trucks. Puzzled by certain aspects of their procedures, he took some slow-motion pictures of the soldiers performing the loading, aiming, and firing routines. When he ran these pictures over once or twice, he noticed something that appeared odd to him. A moment before the firing, two members of the gun crew ceased all activity and came to attention for a three-second interval extending throughout the discharge of the gun. Since this seemed like quite a waste of time, and the young time & motion expert really couldn’t  make any sense of it, he asked an old artillery colonel to look at the films to see if he could explain this strange behavior. The colonel, too, was puzzled. He asked to see the pictures again. "Ah," he said when the performance was over, "I have it. They are holding the horses." Elting Morrison, Gunfire at Sea

Changing Culture By Changing Rituals, Habits & Routines Preserve & Strengthen Invent Perfect Unlearn Leave Behind Rethink Try Again Good Bad Old New

Building a High Performance Business Culture

What Counts… Mission Direction..Purpose..Blueprint Adaptability Pattern..Trends..Market Translating the demands of the business environment into action “Are we listening to the marketplace?” Mission Direction..Purpose..Blueprint Defining a meaningful long-term direction for the organization “Do we know where we are going?” Consistency Systems…Structures… Processes Defining the values and systems that are the basis of a strong culture “Does our system create leverage?” Involvement Commitment..Ownership Responsibility Building human capability, ownership, and responsibility “Are our people aligned and engaged?“ http://www.youtube.com/watch?v=6_WAmt3cMdk

One Hundred Year Old Manufacturing Company 12 8 66 29 18 82 9 11 68 55 63

One Hundred Year Old Manufacturing Company 12 8 66 29 18 82 9 11 68 55 63 First in industry, but declining Trying to hold on to the past 1st time in 20 years failed to meet targets Targeted by competitors President operationally focused “We’re a team going down together

Creating Strategic Alignment

Global Purchasing: Executive Team

Global Purchasing: Middle Managers

Global Purchasing: Buyers

Post-Merger Integration

Parent Company Acquisition

Transformation: GE Healthcare China http://www.youtube.com/watch?v=yB47wx-b6sY

GE Health Care China: Entering an Emerging Market 2002: GE acquired Datex-Ohmeda and entered the anesthesia business. DO was focused on the medium and high-end of the market. 2006: GE acquired Zymed (CSW), a family-run business in Wuxi Zymed had “adopted” their technology from Datex-Ohmeda. “The organizational structure of Zymed was simple. It had dreams, but no long-term strategy. It had a culture of thrift. It also had good execution, which was based on a transparent rewards system. In its ten-year history employees benefited a lot financially.” 2007: GE hired Finn Matti Lehtonen as General Manager of LSS in China He replaced Singaporean P.S. Sim, the original GM “Sim was busily engaged in marketing and sales, He has no time for quality, operations, costs, or other issues.” 2007: Lehtonen, an engineer with over 25 years experience in China He built a team with long experience in GE Healthcare China A few key hires (engineering, sales) from the outside.

GE Health Care China: Entering an Emerging Market GE underestimated the quality problems that they had inherited and had to stop shipping CSW machines. DO machines were high quality, but assembled at another, separate site in Wuxi. Engineers were too busy fixing quality problems to do the necessary product design work to replace the existing CSW products with new one. “We have to put about 90% of our engineering resources on maintenance. If I could start from scratch and put 90% of the engineering resources on new product development, we could reduce quality issues by 80%.”

Survey Results: Late 2007 What to Do? Leadership Team Managerial & Supervisory R&D What to Do?

GE Health Care China: Entering an Emerging Market Lehtonen decided to lead with vision. The goal was to inject a strong sense of vision, mission, and strategy into the organization and reshape the mindset of all employees. He held monthly town hall meetings that involved all 180 employees on site to discuss the vision and the strategy map for the organization and for each function. The culture survey results showed that among the engineers, there were three major issues: lack of customer focus, limited sense of purpose, and little attention spent on capability development. They addressed this issue by sending each of their engineers into the operating room one day each year, to see their products in action. “When I was in the operating room, the idea occurred to me that if the machine didn’t work, we could harm people. On the other hand, when the operations are successful, I feel proud of my job because I help save people’s lives.”

Survey Results: Early 2009 Leadership Team Managerial & Supervisory R&D 2008 2009

GE Health Care China: Entering an Emerging Market Leading with process was much harder. The organization had at least three different processes: GE Process, DO Process, and CSW Process. They involved very different mindsets: “It seems no one realizes how much a good process means to engineers. My understanding is that a good process is like a signpost on the highway. With a good process, you’ll know clearly how to do things… Engineers are people who like to ask “why” and find the answer… But we have neither clear signposts nor people answering the question here… Sometimes you have to spend more than a day doing something that could be done in one hour with out the process.” “The new GE process is developed based on US FDA requirements. Its level is just too high for our low baseline.” “A lot of requirements come from EHS (environment, health and safety), HR Finance, and other functions. GE culture is very aggressive. You must close lots of things within a very short period of time.” “We can’t use the DO process as it doesn’t have a supporting system here. But the new process is not clear. When you get lost with the process and ask someone else, it seems no one knows the direction.”

Questions & Answers