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Published: January 19, 2011
 / Spring 2011 / Issue 62

 
 

Stop Blaming Your Culture

Turning Around Mother Aetna

One executive leader who worked expertly with his existing culture was John W. (Jack) Rowe, CEO of Aetna Inc. from 2000 through 2006, chairman from 2001 through 2006, and currently on the faculty of Columbia University’s Mailman School of Public Health. A former gerontologist at Harvard Medical School, Rowe — along with Aetna’s then president, Ronald Williams, who became CEO upon Rowe’s retirement and is now the company’s chairman — led one of the most successful turnarounds in U.S. corporate history. In five years, Aetna went from losing $1 million per day to earning $5 million per day.

The Rowe/Williams effort was the fourth attempt to transform Aetna’s strategic performance in 15 years. The previous three efforts were derailed by the culture, which was known within the company as “Mother Aetna.” This mind-set pitted the 40,000 employees of Aetna against everyone else the company had to deal with, for example, doctors, patients, medical providers (such as hospitals), and the employers who bought insurance. This “us-against-them” attitude had given Aetna a reputation as the most suspicious, recalcitrant, and bureaucratic health insurance company in the United States. All three previous top-down change interventions tried to increase the staff’s empathy for customer organizations, sensitivity to doctors, and responsiveness to patients. Two efforts basically ignored the culture, and the third tried to smash it apart. All failed.

Rowe often describes himself as the least likely person for the Aetna board of directors to pick as CEO. “I never ran a business,” he says. “I had never been to business school, or had any commercial management experience. The only thing I’d ever done was take care of patients and try to make hospitals do better.” That willingness to admit he didn’t know everything served him well. He started by identifying about 100 people throughout Aetna as “nonhierarchical influencers.” He sought them out informally, asking them to help him understand how employees felt — about customers and patients, about their own work, and about the goals of the company. These people acted as what anthropologists call key informants: cultural guides who could help him get to know the company more intimately than he ever would through purely formal channels. He stayed in touch with them continually, through e-mail, one-on-one visits, and group discussions. They gradually became the core of a group of people who shaped and supported Aetna’s new strategic direction.

Second, he set out to reconsider the company’s shared values. Aetna had been in business since 1819 (in its current form, since 1853), and its company statements about such values as honesty, caring, truthfulness, and teamwork were long established. But they weren’t congruent; he uncovered at least a dozen different formal values statements that various leaders had put forth over the past decades. So Rowe set up dialogues in Aetna offices around the U.S., on the subject “Why aren’t our shared values practiced in interactions with our customers?” People discussed this question in groups of about 30, defining specific ways in which they (and others) might act differently.

After 20 or more such events, Rowe worked with several of his colleagues to write up a new statement of values and behaviors. He also set up what came to be called purpose-driven councils — cross-functional groups designed to find ways to make critical changes happen. Rowe and his team designed these councils with three distinctive characteristics. First, they assigned each an explicit purpose, such as organizational effectiveness (developing a plan for restructuring the company) or strategic direction (developing a plan for prioritizing customer opportunities). Second, they enlisted members who were well respected by their colleagues and who had many informal connections. Third, they gave the councils decision authority over the areas they were investigating. The strategy council’s efforts eventually led Aetna to spin off its financial-services businesses and discontinue some unprofitable offerings, such as health insurance in certain countries.

 
 
 
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Resources

  1. Joel Cooper, Cognitive Dissonance: Fifty Years of a Classic Theory (Sage, 2007): Solid introduction to Leon Festinger’s grand idea and its relevance to today’s conflicts.
  2. Jon Katzenbach and Zia Khan, Leading Outside the Lines: How to Mobilize the (In)Formal Organization, Energize Your Team, and Get Better Results (Jossey-Bass, 2010): Integrating formal and informal measures (with more on the Aetna story).
  3. Jon Katzenbach and Zia Khan, “Leading Outside the Lines,” s+b, Summer 2010: How StockPot, a division of Campbell’s Soup, used metrics to shift cultural behavior.
  4. Richard Pascale, Jerry Sternin, and Monique Sternin, The Power of Positive Deviance: How Unlikely Innovators Solve the World’s Toughest Problems (Harvard Business Press, 2010): Changing behavior by championing people who get better results.
  5. Edgar H. Schein, The Corporate Culture Survival Guide (rev. ed., Jossey-Bass, 2009): Realistic, masterful handbook for diagnosing your culture and raising its tacit assumptions to the surface.
  6. The Katzenbach Center website: Ongoing source of research and insight on culture change theories and methods.
  7. For more thought leadership on this topic, visit s+b’s website at: www.strategy-business.com/organizations_and_people