I recently spoke with the CEO of a company that was acquired by a larger company. He was asked to join the acquirer’s executive team. The smaller company was fast moving with a culture that did not require a lot of approvals and permissions. They celebrated successes and did not fixate on mistakes or failures. The larger acquirer is slower moving and highly bureaucratic. Every decision requires layers of approvals and the culture overall is risk averse. The former CEO was struggling to chart a course in the new environment.
When you have been the CEO, it is hard to become ‘just’ a member of an executive team. You are used to defining the culture and setting the pace, but once you are acquired and join an existing company, the CEO of the acquirer established the culture, and it can be challenging to find your footing. In this particular situation, the acquirer CEO was aware of the situation with his company, and asked his new executive team member to help introduce change.
There is a lot of inertia in company cultures. In a hierarchical, bureaucratic organization, there are people in roles that see their job as requiring them to be part of approval processes, or as protectors of the business from rash decisions. Their whole world is built around slowing things down or enforcing rules and standards. Eliminating review steps or sign-offs is tantamount to eliminating a portion of their job, so there is natural built-in resistance to change.
A hierarchical environment, where decisions or approvals only occur at the top of the hierarchy creates a culture that diminishes the roles for individuals lower in the hierarchy. They are relieved from making decisions or taking ownership and accountability for the decisions. It creates an environment where people wait to be given permission to act, and adopt a ‘tell me what to do’ mentality. Often they are held accountable for results, but not permitted input into how to achieve them, so they are trapped in a losing proposition of accountability without authority.
None of this engenders a hard-charging, fast-paced culture, and it all contributes to the sluggishness the former CEO was encountering. The question is how can he be a change agent without stepping on the CEO’s toes, or those of other execs who are part of the hierarchy? We agreed that being a jerk about it will not do anyone any good, so it is important to adopt tools that will bend the culture in the right direction, but not break the company.
The starting place is to have a heart-to-heart discussion with the CEO to establish the parameters of change they can mutually agree upon. Introducing change will inevitably create some pushback that the CEO will have to deal with, so it is vitally important that the CEO is supportive of the changes, but it is equally important to establish a non-confrontational mechanism for the CEO to provide feedback if/when he perceives that the changes have crossed a line. I am an advocate of adopting tools and a language to create a safe space for the two to openly discuss what is going on.
The next step is for the CEO to communicate the initiative to the rest of the executive team and the company at large. Everyone needs to recognize the objectives, be aligned with the goals, and acknowledge that the company has a problem that needs fixing. In this instance, the more junior members of the team are eager for change, while the more senior members are not so sure.
This company has a culture of lots of meetings to discuss ideas, but nothing is decided until or unless it goes up the chain for approval. Meetings are informational, and idea generating, but light on decision making or defining action items and commitments. There is a whole language of commitments, but the most important element is to ask the question “by when?” If there is no commitment to action by a date, there is no commitment to get the task done. Improving meeting hygiene can go a long way to accelerating actions.
One of my favorite authors is David Marquet, a retired submarine captain. He describes an Intent Based Leadership model that moves decision making down the corporate hierarchy. The premise is that the people on the front-line know what is actually happening and what to do about it. The objective is to move decision making to knowledge, instead of trying to move knowledge up the hierarchy to decision makers. Each step up the hierarchy takes time and dilutes the knowledge. Like whisper down the lane, the information morphs as it is transmitted. The engineer tells their supervisor that they can complete a task in two days. The supervisor, to be safe, tells the manager it will take three days. The manager cautiously tells the director it will take a week, and the director tells the executive it could take up to a month. The executive looks at a month and decides it is not worth doing, and cancels the project. It happens in engineering and sales and marketing and all across the board. If instead, the engineer and their supervisor had authority to make the decision, the task would be completed and the business would move forward.
This type of change does not happen overnight. You cannot just flip a switch and let everybody do whatever they want. The people in more senior positions are there for a reason, and they too have knowledge and experience and they probably see a bigger picture. Before they can or will relinquish decision making authority, they have to establish trust that the front line has competence to make decisions, and they have to establish clear guardrails about what authority rests in the hands of the people lower on the hierarchy. But conceptually, moving decision making closer to knowledge is the goal if the objective is to accelerate action. Marquet defines a step by step process that starts simply with “tell me what you see, and I will tell you what to do,” and progresses to “tell me what you think we should do” so the manager can gauge the junior persons understanding of the circumstance before any action takes place. Ultimately, it moves to “tell me what you intend to do,” and finally “tell me what you did and how it went.” The idea is to build the decision making muscle and trust throughout the organization.
Coupling the concepts of shifting an informational meeting culture to action and commitment driven meetings, while at the same time introducing the progression of driving decision making lower in the organization will bend the cultural dynamic. The guidance for the former CEO to become the change agent is to first gain alignment at the top about the changes that need to happen, and then drive authority closer to the individuals with first-hand knowledge.
In a post by Steve Schloss, of Edison Partners, he described a similar situation. In his example it was a new CEO who found that his drive to increase the pace of the company actually created a cultural relief valve. The team had been waiting for someone to identify the complacency, and they experienced the changes as something they'd been missing. Company cultures sometimes become calcified and change can be a welcome accelerant instead of a painful transition.