How do you successfully change your company culture?
By Roger Martin | Published: 2025-10-21 14:48:00 | Source: Fast Company – leadership-2
Culture change is a big topic – and a big consulting business. When I Googled “culture change consulting business,” three of the top five (unsupported) answers were Bain, BCG, and McKinsey (in that order). Since culture change is a salient issue for executives—and often a very frustrating one—I decided to address it in this article, Playing to Win/Practitioner Insights (PTW/PI). Culture change strategy: Three rules for creating change. As always, you can find all previous PTW/PI’s here.
Changing the culture of consulting venues
It was interesting to take a quick look at the culture change offerings of Bain, BCG and McKinsey.
Payne It was ambitious: “Culture is behavior on a large scale.” Companies that create a winning culture are Five times more likely to be high performers . . . If you do it right, not only will you be able to boost total shareholder return and EBIT growth by up to 500%, and revenue by a factor of 10, you will create an advantage that is difficult for competitors to imitate.
BCG It was interesting. I provided three success stories, in both examples the only success measure was cost reduction/cost savings ($500 million and $283 million, respectively) – clearly BCG’s focus is changing the culture to reduce costs. (The third case was strange, as it celebrated a “147% jump in cost earnings per share.”) You would think that a $10 billion professional services firm would at least spell-check the boldface tags on a landing page. But perhaps there is a new, non-GAAP metric called “cost earnings per share.”
However, her take on “desired culture” is: “We help create a high-performance culture…” . . By articulating the unique set of cultural attributes that support business strategy, operationalizing them through leaders’ and organization-wide practices, and embedding culture and change into organizational structures, processes, and policies.
Mackenzie In fact, culture and change propaganda says very little about culture. Of the four elements of our “approach,” culture is only mentioned: “Capabilities-based: We build your employees’ skills and the capabilities and culture of your organization to improve safety and organizational performance.”
Wholesale vs retail
There’s a lot of stuff there, and I’m sure there are valuable nuggets in the approach. But there is too much emphasis on structures, policies and processes. These are all in a category I call wholesale“Things that can be done remotely, centrally. It’s not an unusual motive. Governments like wholesale. For example, some time ago, the federal government became concerned about the economic struggles of single women with young children, and came up with the Assistance to Families with Dependent Children (AFDC), a federal assistance program that provides cash benefits to single mothers with children. That’s wholesale.”
Giving money to local groups to provide assistance tailored to each individual family is a good thing retail. Governments don’t like retail because they have to find a lot of local groups, vet them, monitor them, etc. That’s a lot of work.
The companies are similar. They want to change the culture by reorganizing to push responsibility down – to create a culture of initiative. Or changing the stage-gate process for R&D projects – to create a culture of innovation. Or change compensation rules to create a culture of achievement.
Guidance mechanisms
Wholesale solutions certainly sound cooler and imply a commitment to changing the culture. But the secret to cultural change is retail. To clarify, I’ll dig deeper Guidance mechanismsa term I coined (at least in relation to business organizations) on my first visit Harvard Business Review Article back in 1993, called Change the company’s mindset. Decades later, I write about it again in Chapter 6 of my 2022 book A new way of thinking.
Both articles discussed the platforms that make companies work the way they do – and not otherwise. This is no different than the (literal) steering mechanism in newer model cars that will not allow you to switch lanes without the first indication. You may want to change lanes, but the steering mechanism says: No!
My work on mentoring mechanisms has adopted and adapted the work of Diana Smith – with whom I worked for several years in the mid-1990s. She is one of a group of prominent students/followers of the late Chris Argyris, along with Amy Edmondson, Peter Senge, David Cooperder and myself. I was drawn to her work because of my interest in the concept of steering mechanisms, as described below.
The three elements operate as a system of three interacting mechanisms. At one end she is Formal mechanisms. This is it Structures, systems and processes designed to achieve goals– Like the ones I talked about above.
Cultural mechanisms she Mental evidence that drives collective interpretations/actions. That is, cultural evidence tells you how to interpret the world around you and what actions are appropriate in this world. For example, if Kevin insults one of his subordinates in an offensive and insulting way in a meeting, and the interpretation, based on repeated incidents of this type of behavior, is that because Kevin is a star performer, he can mistreat any subordinate with impunity, the rationale will be: “Abusive behavior is okay if you are a star.” If you work for one; Expect it. And if you can be a star, you can do it too
In a strong culture (not a good culture, but a strong culture), everyone who witnesses such an interaction has the same interpretation. In a weak culture, explanations are spread all over the map, meaning there is no instruction manual.
The key is to realize that culture is derived from an intermediary field, Mechanisms for dealing with othersAnd she is Patterns that form when members identify and solve problems together Formal mechanisms do not directly influence cultural mechanisms.
During interpersonal interactions, collective interpretations are formed—like the one that happened with Kevin. The first time you see this type of abusive behavior in your company, you may not know what to do about it, although you may get some help from someone who will take you aside and say: Don’t get into this situation with Kevin or this will happen to you!
In this way, the area of personal relationships is the primary focus. Formal can affect personal relationships. For example, if a company has completely separate marketing and sales organizations, this may lead to enhanced tensions between the two functions and lots of exciting meetings between marketing and sales staff. Repeating bad meetings will likely cause marketing people to warn new sales people to be careful with marketing, as they always come with unsellable marketing ideas. When this becomes the common interpretation, the next meeting will get worse, which only reinforces the interpretation, and so on. Ultimately, a formal reform will often be attempted to “transform the culture,” for example to place marketing and sales under a single executive vice president of marketing and sales. But this will not change the culture because the source of the problem was still in the area of personal relationships and manuals in the minds of marketing and sales people.
Implications of culture change
There are two common ways to change culture. The first is to try to deal with the matter directly by declaring that the culture must change to the new desired state. This approach does not work, has never worked – or will never work. The second is to change formal mechanisms – reorganization, streamlining processes, changing incentives, and so on. This also will not work. But failure doesn’t stop people from trying.
Note that these methods are entirely wholesale – streaming a video, restructuring, etc. Wholesaling is not the solution. Cultural change is happening at the retail level – which means working at the interpersonal level. Changing the way people in a company interact with each other in interpersonal relationships is what changes culture. When it comes to changing culture, you have to do it Be the change you want to see (A quote incorrectly attributed to Gandhi).
Leaders of large companies often ask me, How can I achieve this in my large company? Won’t it take forever? I tell them that Kremlin surveillance doesn’t just happen in Moscow. In companies, managers monitor leadership behavior like hawks all the time. As a leader, if you behave in interpersonal interactions the way you want managers throughout the organization to behave, the reversal will happen faster than you think.
You’ve seen it in giant companies like P&G. AG Lafley wanted to make the culture more consumer-focused, so in every meeting with a member of his executive team in which they asked for his approval on a project or initiative, he would always ask: What consumer opinions is this recommendation based on? The AG was spending a lot of his time making home visits with consumers to better understand their needs. Naturally, managers throughout the organization followed suit because of his behavior. In the strategy development process, he always provided guidance on what he was looking for his direct reports to produce, but he also offered to assist them in any way they found useful. This created a culture of collaboration in strategy
I did this myself at a much smaller organization, the Rotman School of Management. The culture was very professor-centric. The tenure-track professors were the proverbial Brahmin caste. But the student experience was dependent on everyone providing services, and I wanted our culture to reflect that. So, I would always stop to talk to the receptionist at the front desk on my way to my office, with the cleaning staff when they came to clean my office (because I was there working late when they made their evening rounds), with the IT staff, with my lecturers, etc. The professors were watching me and most (but not all!) of them turned their behavior in a positive direction.
It has helped make this happen at companies in between, as with the $10 billion luxury apparel company that sells mainly through clothing retailers. The incoming CEO was extremely disappointed with the in-store brand execution and the organization’s lack of interest in it. For him, it was a culture of fire, oblivion and hope. I convinced him that instead of trying to forcefully change that culture, he should make a series of impromptu retailer visits during which he would problem-solve with store employees to come up with ways his company and the retailer could work together to create a great in-store shopper experience with his brands. She convinced him to invite senior members of his team to attend – not to ask them; Invite them.
Some joined him on the first trip, during which he modeled the culture of problem-solving and partnership he wanted to foster. He did not reprimand retail employees. And talk to them constructively about the partnership. Word spread and more executives joined him on future trips until the company plane was filled with passengers. Retail execution has improved dramatically as the culture changes from “fire and forget” to partnering for success.
Practitioner insights
Changing culture is difficult. The formal, personal, and cultural guidance mechanisms that build up over time are there to keep you moving in the exact same direction. There are three rules for successful culture change.
The first is to think retail, not wholesale. There are no master strokes from far up in the company that magically create cultural change.
The second is to focus on the personal sphere. It is the mediating sphere and the only sphere that can directly influence and change culture.
The third is to change the culture, you need to change your leadership behavior. There is no alternative. Do as I say, not as I do “It works just as well in companies as it works with kids – that is, not at all! Every personal interaction of a leader is a double-edged sword. If you do it poorly, your leadership behavior reinforces the culture you want to change. But if you do it well, it begins to shape new interpretations that are consistent with the culture you want to see – and that is gold!”
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(tags for translation) Business
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