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(originally published by Booz & Company)


Navigating the First Year: Advice from 18 Chief Executives

S+B: Can you discuss how you approached the issue of culture in your first year as CEO?

Romain Bausch: When I became CEO, SES was run operationally by the technical department. But it’s not enough to have a strong technical culture and to be a leader in the technical field. You also have to build up the commercial and business development functions in order to grow the business and not to become too much of a technology-focused company. We needed to make sure that the engineers accepted that other functions were also important and that it was not all about operating satellites.

André-Michel Ballester: At Sorin Group, we had to work to make the employees proud of their company again — so they would be happy to work for the company, have a sense of purpose and confidence in the future. I wanted them to be able to speak their minds and disagree when they disagree, but to talk about issues, whether or not the issues were resolved immediately. My goal was to achieve some significant changes in the culture of the company in a year. I’m not saying that I was able to change the culture completely, and even after four years I would say it’s still a work in progress. But that is partly because you want your culture to evolve with your business goals. Now we are trying to build growth. It’s not the same culture that you want when you want to turn around the company.

Ahmad Abdulkarim Julfar: You cannot have two different cultures in an organization. It has to be one culture, from the top of the hierarchy all the way down. You can’t have one culture at the board and a different culture in management, because the management needs to be tightly linked to the board, and the board needs to be an extension of management. That is why we are working hard to integrate the culture of our management and the board.

Gonzalo Vargas Otte: When I took over my current position at INACAP, Chile’s largest education system, the organization was undergoing a significant shift in terms of culture and strategy, associated with an ambitious development plan that doubled the organization’s size in a six-year period. In this process, INACAP was moving from a command-and-control culture toward a more integrated, horizontal model — one that encouraged executives to be accountable and make more decisions on their own. Being able to grow exponentially, while at the same time improving quality at all levels, required a strong emphasis on formalizing policies, procedures, and standards — thus enabling a decentralized decision-making model, guaranteeing organizational strategy alignment, and facilitating quality improvement and homogenization throughout the country. These and other changes were necessary if our culture was to become coherent with our new strategy.

Ian Livingston: In my view, culture takes a very long time to change. I actually believe the only way to change culture is to change behavior, by changing the attitudes and the objectives of the employees and leadership. What I definitely wanted to do is set some very clear objectives for the company and the behaviors we needed. One was honesty; the other was agility. The reason I said honesty is that in the past, pretty much every time something went wrong in the business, it was the result of people not facing facts. And then agility is about pace — whatever you do, do it quickly.

Kunio Noji: External shocks force us to rethink how we do business and make ourselves stronger. Without shocks, we become complacent and stick to the old way of doing things. Transformations should always be in the “drawers” of management, ready to be applied in times of external shocks and crisis. Trying to figure out transformations after a crisis hits is too late. Readying the organization to execute transformations is also important. In normal times, the organization must continuously train and stand ready to execute.

Transformations take time. For example, fundamentally transforming our manufacturing flexibility took nearly five years. But pushing and convincing the organization to tackle this change paid off. The capability allowed us to reconfigure our manufacturing and recover very quickly from the shock that followed the Lehman Brothers failure. Whereas it used to take us one year to move a product between plants, we can do it now in three months. We purposely move products around to keep plants on their toes. We can do this because the basics of the organization are unchanged. That’s what top management ensures.

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