Organization Development

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The Company had been operating for many years in a business model where decision-making power was decentralized, and each company business unit was functioning in silos. The Destination (or Horizon) The Company had clearly defined the strategic change it wanted to implement, as well as the desired outcomes and destination—to move from independent functions operating in silos to an interrelated and interdependent network of functions, where each function is fully aware of the roles and responsibilities of all other functions within the company. Furthermore, the strategic vision implied that each function would acknowledge how other functions are able to support and complement their own, leading to continuous and efficient inter-functional collaboration and com- munication. This transformation is illustrated in Exhibit 1. On the left side of the figure, the different functions within the company (f1 to f4) are operating in silos, with very little collaboration and communication between them, inevitably leading

For 20 years, our organization, AXDEV, has supported transformation across various business sectors, allowing us to observe barriers that can affect the desire of leaders to foster a collective organizational culture. To illustrate our experience, we present a case example of a major International Pharmaceutical Company (hereafter referred to as “the Company”) that we guided through a major business model transformation.

By Suzanne Murray, Patrice Lazure, and Sophie Péloquin

Understanding Culture and Subcultures for Efficient and Sustainable Transformation

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to duplication of work, inefficiencies, and misinterpretation of the core desired organizational culture. The desired strategic destination is illustrated on the right side of the figure, where the different arrows symbolize channels of communication and collaboration between functions. The desired strategic destination was a model of inter-functional collaboration, where duplication of information and inefficiencies would be reduced.

Understanding Barriers and the Impact of Subcultures After review of the current and desired situations, the next step was to better understand the behavioral and attitudinal barriers (and their underlying causalities) to the successful implementation of the change, the specific needs of each team, as well as specific personality traits and subculture profiles that had formed based on the collective experi- ence. Dialogue sessions and interviews, using open-ended exploratory questions, were conducted with key leaders and employees from each function, to better understand how the individuals understood the desired strategic change, the destination, and the new business model. Employees and leaders were also asked to describe what they perceived as the current barriers to change implementation, to discuss their competencies, and the facilitators assessed their atti- tude, confidence and personal barriers to engage towards the new destination.

They were also asked to describe how they perceived their respective functions, teams and the interactions between the individuals within each function. This allowed for the identifi- cation of gaps in the knowledge of other functions’ roles and responsibilities, in the communication processes, and in iden- tifying shared goals between functions. Nodes of resistance to

collaboration, specific duplication of work between functions, and attitudinal barriers were also identified, as well as different needs between functions. For example, the medical affairs team, who tend to be more analytical given the scientific nature of their work, required to see more evidence of a need for a business transformation.

The marketing team had a focus on the commercial and financial impact of the transformation and the sales force teams were concerned about the impact on clients. Finally the current leadership team was most concerned about how to engage in- dividuals with a more traditional change management process across the board (one-size-fits-all) and assumed the organiza- tion’s employees would follow the new direction in a similar fashion.

Monitoring Through Candid Dialogue The next step aimed at monitoring the pulse, or heartbeat of the organization, by letting people of all departments and all levels engage in candid dialogue, between functions, and with the leadership team. Challenges and concerns in relation to the potential impacts of the transformation on human re- sources, roles and responsibilities, processes, and requirements for new competencies were identified.

Regarding the latter, many organization members did not feel they had these new competencies required by the transfor- mation, and concerns were raised about the organization’s abil- ity to appropriately inform and train them in the different new functions, given how different the expected results and changes were for each position. During the dialogue sessions, in order to encourage candid dialogue, expert facilitators set the stage by encouraging each participant to be willing to be challenged and to challenge each other in their perspective of the various elements that were being assessed.

EXHIBIT 1

Example of a transforming organization, moving from functions (f1 to f4) operating in silos to a model centered on inter-functional collaboration and communiction.

CURRENT Business Model and Organizational Culture

NEW Business Model and Organizational Culture

Operational Change

Transitional Plan

Human Factor

w

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Again, how the destination had been defined played a key role in orienting the discussion towards elements of strategic importance. For example, members of different functions were provided opportunities to explain their roles and respon- sibilities to their colleagues from other functions, and expert facilitation was provided to allow for members of different functions to identify common goals that are aligned with the desired destination.

Activating the Transition During the next step, the human factors identified were used to inform and activate a transition plan that would consider the different subcultures and personality traits that were observed for each function. For example, the medical affairs team was considering the marketing team as being too sales-oriented and not sufficiently evidence-based, while the marketing team was considering medical affairs to be detached from the reality and working from their ivory tower. Any transition plan towards inter-functional collaboration which would not consider these negative perceptions would face resistance and a strong risk of failing. Thus, the transition plan was designed to first address these perceptions, eliminat- ing the human factors that were acting as barriers and enhanc- ing the factors acting as enablers. The final transition plan considered all identified human factors, for each subculture.

Clear communications of the horizon towards which the organization was moving were specifically adapted to each subculture and included in the transition plan. The transition plan also included a process for more candid communication within and between functions as well as between employees and leaders, and between senior management and the various organizational functions. This process facilitated exploration of the real issues, bringing them more effectively to the forefront, and addressing them immediately and preventively, as opposed to reactively. For example, the communications to medical affairs were centered on the evidence demonstrating benefits of the transformation for the company; communications to the Marketing team had a focus on the commercial and financial impacts; those developed for the sales force teams were cen- tered on the positive impact it would have on clients.

The Company was guided in putting in place candid solu- tions and interventions to assist the individuals and the teams at all levels of the organization, effectively supporting implemen- tation of the transition plan. As an example, tailored inter- ventions to support leadership team members were designed to ensure they would develop the competencies to guide the different subcultures through the transition, moving from a traditional change management process of “one-size-fits-all” to a process that embraces complexity and considers the differ- ent subcultures inherent to the organization. The leadership interventions included enhancement of the leadership ability to translate (with appropriate knowledge) and to role model (with their attitude and behaviors) what the new core culture should be.

Nurturing the Engagement During the last step, employees were provided opportunities to continue to voice their perceptions and concerns, in a sus-

tained effort for re-assessment and adjustment. The aim here was to nurture the candid and open dialogue. This led to a gradual evolution towards solutions for challenges that were not fully solved after the previous step. As an example, the medical affairs and the marketing team were provided with regular opportunities to candidly discuss their perceptions of each other, and to evolve these perceptions, ensuring that the better understanding of the other function roles and respon- sibilities would be sustained through time. Gradually, each function learned to appreciate the perspective of the other, and understood that each function’s perspective is directly influenced by their role. The scientific nature of medical affairs’ role naturally pushes them to prioritize evidence over everything else, while the commercial and financial nature of the marketing team’s work influences their priorities in a dif- ferent ways. Despite these differences, each function evolved to realize how their respective roles could be complementary.

The roles of senior leaders within each function, as well as the Company’s senior management became a critical compo- nent of true engagement towards collaborative communication. Leaders were mentored and guided on how to candidly and transparently share, not only the strategic direction of the new business model, but also their own challenges and barriers. This provided employees with role models, making them feel more engaged, and less evaluated or threatened by sharing their per- spectives as well. Leaders who truly expressed and shared their concerns and challenges elevated the level of trust, lessened the barriers and supported employees to do the same.

The role of HR in many organizations, including the Com- pany from the case example, is viewed as a more transactional role, rather than the strategic role it can (and should) have. This makes it challenging for HR professionals to propose and impact major transformations. Where HR is perceived as a strategic function at the executive level, we have observed that their role is critical. In such settings, HR professionals can use their competencies in facilitating and developing change influ- ence and change management initiatives, ensuring, through the knowledge they possess of their own organization, that such initiatives are more targeted to the specific reality of the organi- zational culture and subcultures.

Business Model Transformation This case example supports the increasing evidence that have demonstrated that organizations’ culture can be a major bar- rier (or facilitator) to efficient and sustainable organizational transformation.1 Organizational culture is often defined as a set of behavioral and attitudinal norms that members of an organization share as they perform their work.2 Others have defined it as the sum of the assumptions, beliefs, and values that its members share and is expressed through “what is done, how it is done, and who is doing it.”3

The notion of organizational culture tends to be simplified. Culture is not homogenous within an organization, many subcultures coexists often by function or team, behaving like microsocieties.4 A subculture is defined as a subgroup within an organization that meets the following four conditions: 1. They share regular interactions. 2. They identify themselves as a group.

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3. They share a set of problems that are different from other subgroups.

4. They act based on a collective understanding that differs from other subgroups5.

The H.U.M.A.N. Approach to Organizational Transformation Understanding and addressing organizations’ subcultures and their complexities should be a priority to any organiza- tion’s transformation6. In the case example above, we em- ployed a five-step methodology that can easily be remembered by the acronym H.U.M.A.N. (Horizon, Understand, Monitor, Activate, Nurture), and which is detailed in Exhibit 2. The ap- plication of the approach, as detailed in the case example, can allow leaders to identify subcultures within the organization, assess their level of alignment with the current or planned overall culture, evaluate the impacts (both positive and negative) these subcultures may have on the organization and its desired culture transformation, and enable the leadership team to facilitate the transformation by leveraging this under- standing of the various cultures within their organization.

There are many approaches to recognizing and address- ing the issues and challenges of consolidating the different subcultures within an overarching organizational culture. The H.U.M.A.N. approach is only one of many and is based on our experience. However, the main objective is first to recognize subcultures exist, their importance and the need to engage into effective approaches that will facilitate the solutions for leaders in bringing the employees and leaders on a similar track and journey, that embraces those overarching beliefs and values they are trying to convey. There are many approaches to identifying organizational cultures and subcultures and we would encourage leaders to become familiar with several of these approaches and find which one is more suitable for their organization. Beyond recognizing the existence of organiza- tional cultures and subcultures, it’s essential to recognize that they can facilitate transformations. Also essential is willingness from leaders to really assess what those subcultures are and to consider addressing as many of the subcultures as possible.

Over the years, we have observed that how each core culture value is described and exhibited as behaviors within each subculture is not frequently taken into consideration by leaders, and that this constitutes a frequent barrier to the successful alignment of the subcultures with the overarching culture.

For example, let’s imagine that a specific belief, the need for trust and respect, is identified within a sales force that is going through a merger and acquisition. The words trust and respect may vary significantly in how they are exhibited as behaviors within each subculture as well as within each individual, and thus, within the overarching organization. Leaders will often advocate for behaviors of respect but will not necessarily clearly describe what that behavior would look like in various scenar- ios. The notions of respect and trust are therefore left for the individuals that are members of the various subcultures or functions to define, and they are likely to make several different assumptions about how it should be translated into behaviors.

Our observations have shown that in these cases where a belief or a value is not precisely defined, its actual expression

as behaviors is likely to depend on the individuals that are influential—not necessarily in power—within a subculture. These influencers can actually role-model and reinforce cer- tain behaviors based on their definition and interpretation of the belief or value, which is not necessarily aligned with the behaviors senior management leaders are expecting from the desired belief or value. As a concrete example, if you take a sales force, respect could be exhibited as a behavior such that an individual within the group being perceived as respectful if they comply with a specific directive by middle management or a senior management individual. On the other hand, it is very possible that when leadership commu- nicated respect to be a core value of the desired culture, the concrete behavior they expected was to respectfully bring forth innovative ideas, even if these ideas are against middle or senior management. The lack of a clear definition of the word respect has thus created an important gap in the inter- pretation and translation into behaviors within the subgroups or individuals.

The impact of those subcultures in an organization’s trans- formation, whether the transformation is due to a merger/ acquisition or to a change of strategic direction, is enormous and lack of understanding and consideration of those subcul- tures contribute to transformations not succeeding or not be- ing sustainable7. The main reason why, as we have observed, is that each group leader, subgroup and individual will translate the strategic leadership’s expectations into behaviors based on their interpretation of the expressed beliefs and values, leading to behaviors which might be contradictory to how the leadership had envisioned expression of the culture. In addi- tion, subgroup leaders, whether they lead by their position or naturally through their stronger or more influential personal- ities, will influence other members of the subgroup to behave in accordance to their interpretation of the culture, which again, might be contradictory to the desired culture.

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HORIZON STEP 1: Clearly define what the organization is aspiring to evolve toward.

DEFINE • Landscape in which the organization will be evolving • Position the organization wants to occupy in that landscape • Changes needed (i.e., the strategy) • Transformations initiated without clear destination in mind, or with unclear

communication of what the destination that may result in confusion, misunderstanding, and lack of engagement from the company’s work force

UNDERSTAND STEP 2: Obtain an in-depth and candid understanding of the organization’s subcultures.

IDENTIFY • Gap and barrier analysis to identify mismatches in the organization’s culture/subculture in

relation to the future business model • Team personality characteristics or traits within each function • External, independent group to help not personalize the issues and provide engaged

employees a safe environment where to describe these challenges, without fear of repercussions

MONITOR STEP 3: Assess readiness for change and foresee impact on transformation on the organization.

ENSURE • Safe environment for people to share their perceptions, concerns, and thoughts • In-depth understanding of the reality of the individuals within functions • Information being collected is by an independent group to ensure confidentiality and

anonymity • Aggregated information when presented to the leadership team • Assessment of the skills and willingness to change of the leadership team • In-depth understanding to facilitate or even induce the evolution toward the desired

organizational culture

ACTIVATE STEP 4: Develop and deploy a transition plan with candid solutions that fully considers the subcultures.

DESIGN, DEVELOP, AND DEPLOY • Transition plan aligned with the identified real issues • Processes, communications, engagement, and interventions, in respect to the sub-

cultures • Descriptions of what each function needs to start, stop, and continue doing • Interventions to support individuals and teams to evolve toward the organization’s new

culture. This step offers candid solutions and interventions to support individuals, teams and, subsystems at all levels of the organization during the transition

NURTURE STEP 5: Engage in continuous reassessment and adjustment.

REASSESS • Human factors that contributed to the subcultures • Opportunities for people to voice their perceptions, concerns, and thoughts as the new

organizational culture is in place • The pulse of the organization, the teams, and individuals to favor continuous evolution • Continuous reassessment strategy ensuring that the subcultures do not grow further

apart and/or become detrimental to the core culture

EXHIBIT 2

H.U.M.A.N.™: A step-by-step approach to addressing subcultures in organizational transformation

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Factoring in the Human Factor Different people engage in organization transformations differently. Each individual will approach it with their own concerns, mistrusts, fears, attitudes, values and beliefs, which translate in various types of behaviors, engagement or disengagement, each having the potential of becoming powerful barriers or enablers to optimal transformation. Leadership often focuses on the overarching culture and neglect to investigate subcultures within the functions or groups.

Optimal transformation occurs when leaders recognize that they need to be more explicit in describing what has been the way of working within the subcultures, what is the desired destination of the transformation, and more impor- tantly, how the transition plan will support the individuals in moving from how they have been functioning or thinking to the new desired functioning or thinking. Our observa- tions have been that a transitional plan for all operations, structures and processes is frequently addressed but not a transition plan to facilitate cultural needs. As an example, we have seen organizations require a more innovative way of thinking, working and sharing. However, within the subcul- tures, innovation is not necessarily present or well described or has not been exhibited or fostered before. Therefore, diagnosing and describing how innovation will support the transformation is essential. It can be achieved by being more candid and speaking more openly and freely, so employees can bring forward innovative ideas and thoughts without being judged or evaluated. Integrating these cultural aspects within a transition plan is something that is frequently ne- glected, and should be considered.

Sustainable transformation is achieved when the orga- nization provides its people with an opportunity to raise their concerns and speak freely and candidly in a protected environment. Addressing human factors that are specific to each subculture, with targeted interventions, mitigates the risks of negative impacts more efficiently than a “one-size- fits-all” intervention which does not consider the internal diversity of organizations, and should prevent misalignment between subcultures from resurfacing. For example, in a merger between Company A and Company B, if the overar- ching culture or belief of Company A is to be more candid in their dialogue within teams but in Company B, being candid is viewed as more rebellious or disrespectful, there needs to be an intervention to proactively address this clash of values. Such an intervention would articulate how the two groups can and should behave in a positive and constructive manner and would take into account the need to understand why each organization behaves in a certain way, what are the benefits of leading them on a different journey, what would be the expected positive outcomes, and in all transparency, what would be the potential challenges in changing the way that they have shared or experienced within their function to date.

Understanding and addressing organizations’ subcultures and their complexities should be a priority for any organiza- tion’s transformation and should be presented in a step-by- step approach. The H.U.M.A.N. approach gives an organiza-

tion a framework that provides people with an opportunity to speak freely and candidly. It supports understanding of the different subcultures and the impact that these sub- cultures can have on an organizational transformation. It embraces the complexity of change and the complexity of human factors to facilitate a more sustainable transforma- tion, one that is otherwise unlikely to be achieved with a simplified “one-size-fits-all” intervention.

Suzanne Murray is the founder and CEO of AXDEV Group, Global (USA) and Europe GmbH. Her career spans more than 25 years in organizational development, management, health care research, education, and performance improvement. She has presented and published in over 100 international peer-reviewed conferences and journals specializing in human and organizational performance and education. She can be reached at [email protected].

Patrice Lazure has an extensive background in applied research, especially in the healthcare field. His area of interest is focused towards the evidence-based identification of the issues that under- mine the performance of individuals, teams and organizations. As director of research, Patrice oversees AXDEV’s Performance Im- provement Research division, providing evidence-based recommen- dations to inform AXDEV clients’ decisions. She can be reached at [email protected].

Sophie Péloquin is director of performance strategy at AXDEV Group. Sophie is committed to developing and deploying inno- vative and credible performance improvement solutions for her clients, to impact the ability of individuals, team and organizations to reach higher level of professional fulfillment, efficiency and quality. She can be reached at [email protected].

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3Farmer, D.W. (1990). Strategies for change. In D.W. Steeples (Ed.), Managing change in higher education. New Directions for Higher Education, Vol. 71, pp. 7–18. San Francisco: Jossey-Bass Publish- ers.

4Schwarz, R. ( July 2016). Getting Teams with different subcultures to collaborate. Harvard Business Review.

5Khatib, T.M. Organizational culture, subcultures and organiza- tional commitment. (1996). Iowa State University. Retrospective Theses and Dissertations Paper 11540.

6Boisnier A., Chatman J.A. (2002). The Role of Subcultures in Agile Organizations. Haas School of Business, University of California, Berkeley.

7Roberts, G. ( July 2011). The soft things that make mergers hard. Harvard Business Review.

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