Chat with us, powered by LiveChat Importance of Cultural Change and Methodology Article Review | All Paper

Assignment Details:1. Reason for writing: What is the importance of this research? Why would a reader be interested in the larger work? 2. Problem: What problem does this work attempt to solve? What is the scope of the project? What is the main argument/thesis/claim? 3. Methodology: Describe the types of evidence used in the research. 4. Results: Discuss the findings in a general way.5. Implications: What changes should be implemented as a result of the findings of the work? How does this work add to the body of knowledge on the topic?Start your paper with the full citation of the article at the top in correct Turabian author-date format. The review needs to following Turabian formatting. The paper should be between 300 – 500 words and written in clear, grammatically correct language.Article is from Harvard Business Review and is attached.

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July–August 2012
reprinT R1207K
Cultural Change
That Sticks
Start with what’s already working
by Jon R. Katzenbach, Ilona Steffen,
and Caroline Kronley
With compliments of…
Start with What’s Already Working
2 Harvard Business Review July–August 2012
For article reprints call 800-988-0886 or 617-783-7500, or visit
by Jon R. Katzenbach, Ilona Steffen, and Caroline Kronley
merged with U.S. Healthcare, a lower-cost health
care provider, in 1996, a major culture clash ensued.
But instead of adapting to U.S. Healthcare’s moreaggressive ways, the conservative Aetna culture
only became more intransigent. Aetna’s leaders
could make little headway against it, and one CEO
was forced out after failing to change it.
What Aetna’s management didn’t recognize was
that you can’t trade your company’s culture in as if it
were a used car. For all its benefits and blemishes, it’s
a legacy that remains uniquely yours. Unfortunately,
it can feel like a millstone when a company is trying
to push through a significant change—a merger, for
instance, or a turnaround. Cultural inclinations are
well entrenched, for good or bad. But it’s possible to
draw on the positive aspects of culture, turning them
to your advantage, and offset some of the negative
aspects as you go. This approach makes change far
easier to implement.
In late 2000, John W. Rowe, MD, became Aetna’s
fourth CEO in five years. Employees skeptically prepared for yet another exhausting effort to transform
Illustration: serge bloch
n the early 2000s Aetna was struggling mightily on all fronts. While on the surface revenues
remained strong, its rapport with customers
and physicians was rapidly eroding, and its
reputation was being bludgeoned by lawsuits
and a national backlash against health maintenance
organizations and managed care (which Aetna had
championed). To boot, the company was losing
roughly $1 million a day, thanks to cumbersome processes and enormous overhead, as well as unwise
Many of the problems Aetna faced were attributed to its culture—especially its reverence for the
company’s 150-year history. Once openly known
among workers as “Mother Aetna,” the culture encouraged employees to be steadfast to the point that
they’d become risk-averse, tolerant of mediocrity,
and suspicious of outsiders. The prevailing executive mind-set was “We take care of our people for
life, as long as they show up every day and don’t
cause trouble.” Employees were naturally wary of
any potential threat to that bargain. When Aetna
Copyright © 2012 Harvard Business School Publishing Corporation. All rights reserved.
July–August 2012 Harvard Business Review 3
Cultural Change That Sticks
the company into an efficient growth engine. This
time, however, they were in for a surprise. Rowe
didn’t walk in with a new strategy and try to force
a cultural shift to achieve it. Instead, right from the
start, he, along with Ron Williams (who joined Aetna
in 2001 and became its president in 2002), took time
to visit the troops, understand their perspective, and
involve them in the planning. With other members
of the senior team, they sought out employees at all
levels—those who were well connected, sensitive to
the company culture, and widely respected—to get
their input on the strategy as well as their views on
both the design and execution of intended process
These conversations helped Rowe and his team
identify Aetna’s biggest problem: A strategy that
focused narrowly on managing medical expenses
to reduce the cost of claims while alienating the
patients and physicians that were key to Aetna’s
long-term success. At the same time, they surfaced
Aetna’s significant cultural strengths: a deep-seated
concern about patients, providers, and employers;
underlying pride in the history and purpose of the
company; widespread respect for peers; and a large
group of dedicated professionals.
These insights led Rowe to rethink his approach
to the company’s turnaround. He declared that instead of just cutting costs, the organization would
pursue a strategy he called “the New Aetna.” It
would build a winning position in health insurance
and a strong brand by attracting and serving both
patients and health care providers well. That was an
appealing proposition but would require significant
restructuring; no one’s job was guaranteed. In other
4 Harvard Business Review July–August 2012
words, it was the kind of change that Mother Aetna
traditionally resisted with every passive-aggressive
move she could muster.
But this time, without ever describing their efforts as “cultural change,” top management began
with a few interventions. These interventions led
to small but significant behavioral changes that, in
turn, revitalized Aetna’s culture while preserving
and championing its strengths. For instance, the
New Aetna was specifically designed to reinforce
employees’ commitment to customers—reflected in
the firm’s history of responding quickly to natural disasters. Rowe also made a point of reinforcing a longtime strength that had eroded—employees’ pride in
the company. When, in an off-the-cuff response to a
question at a town hall meeting, he highlighted pride
as a reason employees should get behind change, he
received a spontaneous standing ovation.
So while the plan for change challenged longheld assumptions (among other things, it would require the elimination of 5,000 jobs, with more cuts
likely to come), it was embraced by employees. They
had been heard and appreciated, and they came to
accept the New Aetna.
Indeed, during the next few years it became clear,
from surveys, conversations, and observation, that
a majority of Aetna’s employees felt reinvigorated,
enthusiastic, and genuinely proud of the company.
And Aetna’s financial performance reflected that. By
the mid-2000s, the company was earning close to
$5 million a day. Its operating income recovered from
a $300 million loss to a $1.7 billion gain. From May
2001 to January 2006, its stock price rose steadily,
from $5.84 (split adjusted) to $48.40 a share.
Aetna’s story (which we have drawn from a
draft of an unpublished book by Jon Katzenbach and Roger Bolton, a retired Aetna senior executive) isn’t unique. We’ve known
for a long time that it takes years to alter
how people think, feel, and behave, and even
then, the differences may not be meaningful.
When that’s the case, an organization with an
old, powerful culture can devolve into disaster.
This has happened at organizations like Washington Mutual, Home Depot (before its recent
turnaround), and the U.S. Marine Corps during the Korean and Vietnam wars.
Happily, it’s also possible for a culture to
move in the right direction, as we saw at Aetna.
After all, cultures do evolve over time—sometimes slipping backward, sometimes progress-
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Idea in Brief
Many leaders blame
their company’s culture
for thwarting significant
change initiatives, such as
mergers or turnarounds.
But when they try to solve
the problem by changing the
culture, their efforts tend to
fizzle, fail, or backfire. The
consequences can be severe.
What those leaders don’t
see is that culture is highly
ingrained in the ways people
work—and that any company culture has assets. The
secret is to make the most
of its positive elements—to
ing—and the best you can do is work with and within
them, rather than fight them. In our research we’ve
found that almost every enterprise that has attained
peak performance—including the Four Seasons,
Apple, Microsoft, and Southwest Airlines—got there
by applying five principles. Such companies see culture as a competitive advantage—an accelerator of
change, not an impediment.
In this article, we’ll walk through the five principles, using examples from our research and client experience. Following them can help an organization
achieve higher performance, better customer focus,
and a more coherent and ethical stance.
Match Strategy
And Culture
Too often a company’s strategy, imposed from above,
is at odds with the ingrained practices and attitudes
of its culture. Executives may underestimate how
much a strategy’s effectiveness depends on cultural
alignment. Culture trumps strategy every time.
Some corporate leaders struggle with cultural intransigence for years, without ever fully focusing on
the question: Why do we want to change our culture?
They don’t clearly connect their desired culture with
their strategy and business objectives. Many times
A strategy that
is at odds with a
company’s culture
is doomed. Culture
trumps strategy
every time.
work with and within the
culture, rather than fighting
against it.
Leaders should take
care to honor their culture’s strengths, focusing
on changing just a few
critical behaviors rather
than attempting a wholesale
transformation. Once they
take this view, some leaders
even find that their culture
has become their primary
competitive advantage.
These companies align their
business priorities with the
culture and use it to sharpen
their strategic focus, all the
while helping the culture
evolve so that it becomes an
accelerator of change, not
an impediment.
we’ve walked into organizations that presented
us with an entire laundry list of hoped-for cultural
traits: collaborative, innovative, a meritocracy, risk
taking, focused on quality, and more. The list is too
vague and too long to tackle. It sounds great but provides nothing in the way of differentiation.
Contrast such nebulous aspirations with those in
an organization in which a few cultural traits truly do
match and support the strategy, like the Mayo Clinic.
World renowned for its ability to bring together specialists across a range of medical fields to diagnose
and effectively treat the most complex diseases, the
clinic promotes unusually high levels of collaboration and teamwork, reinforcing those traits through
formal and informal mechanisms.
 ocus on a Few Critical
Shifts in Behavior
Studies show that only 10% of people who have had
heart bypass surgery or an angioplasty make major
modifications to their diets and lifestyles afterward.
We don’t alter our behavior even in the face of overwhelming evidence that we should. Change is hard.
So you need to choose your battles.
Where do you start? First observe the behavior
prevalent in your organization now, and imagine
how people would act if your company were at its
best, especially if their behavior supported your
business objectives. Ask the people in your leadership groups, “If we had the kind of culture we aspire
to, in pursuit of the strategy we have chosen, what
kinds of new behaviors would be common? And
what ingrained behaviors would be gone?”
Say your organization is a former utility or government agency interested in becoming a better
service business. If it excelled at service, how would
people treat customers differently? What kinds of
interactions would be visible in any new offices you
opened? How would employees propose new ideas
July–August 2012 Harvard Business Review 5
Cultural Change That Sticks
The Cultural Slide at Arthur Andersen
One of the best-known, and
yet most misunderstood,
examples of cultural
backsliding took place
at the Arthur Andersen
accounting firm.
With practices in more than 30 countries, it
was once the envy of professional service
firms. Then in 2002 indictments during the
Enron investigation forced Andersen into
bankruptcy. At the time, many believed that
a single client relationship had brought the
firm down for largely legal or regulatory reasons. In fact, its fall stemmed from a creeping cultural erosion that had begun decades
before the Enron debacle.
At least that was the conclusion of analyst
and journalist Charles Ellis, who studied the
or evaluate one another? How would they raise difficult issues or bring potential problems to others’ attention? And how would employees react when they
actually saw colleagues doing things differently?
When choosing priorities, it often helps to
conduct a series of “safe space” discussions with
thoughtful people at different levels throughout
your company to learn what behaviors are most affected by the current culture—both positively and
negatively. This is what Aetna did. It was also the
approach taken by a national retailer that was looking to build a culture with a strong customer focus.
The retailer’s leaders enlisted the help of internal
“exemplars”—people who were known for motivating their teams effectively. A group of senior executives interviewed them and isolated a set of crucial
motivating behaviors, such as role-modeling good
customer service. Store managers received training
in the behaviors, which were also translated into
specific tactics, such as ways to greet customers entering the store. The stores that have introduced the
new behaviors are already beginning to see results,
including improved same-store sales in key product
areas and fewer customer complaints.
The behaviors you focus on can be small, as long
as they are widely recognized and likely to be emulated. Consider the response one company had to the
discovery that a major source of employee frustration was its performance-review process. The company used a 360-degree evaluation mechanism, but
If they look hard enough, most
firms will find they already have
pockets of people who practice
the behaviors they desire.
6 Harvard Business Review July–August 2012
Andersen failure in depth and described it in
an unpublished manuscript, What It Takes.
“Arthur Andersen, once the world’s most
admired auditing and professional services
firm, descended through level after level of
self-destructive decline to its ultimate death,”
he says. Ellis traces the firm’s decline to the
1950s, when its leaders shifted their focus
from quality and integrity to beating other
firms’ revenue numbers and market position.
As Andersen expanded around the world,
it abandoned practices geared toward pro-
employees were often unpleasantly surprised by the
results. So management introduced a simple behavior: asking people who were providing input whether
they had ever given the feedback to the person being reviewed. As a result of this straightforward
question, colleagues began to share constructive
criticisms with one another more often, resulting in
fewer demotivating surprises and a better dialogue
about performance.
When a few key behaviors are emphasized
heavily, employees will often develop additional
ways to reinforce them. As GM was emerging from
bankruptcy, the company decided to spur innovation by placing a renewed emphasis on risk taking
and the open exchange of ideas. After one colleague
complimented another on his performance in a
meeting, their team lightheartedly began a practice
of handing out “gold star” stickers to recognize colleagues exhibiting strong character and candor. The
practice soon began to spread. While the stickers
probably would have been received skeptically as
a top-down initiative, as an organic peer-to-peer
custom they helped reinforce GM’s larger cultural
Honor the Strengths of Your
Existing Culture
It’s tempting to dwell on the negative traits of your
culture, but any corporate culture is a product of
good intentions that evolved in unexpected ways
and will have many strengths. They might include
a deep commitment to customer service (which
could manifest itself as a reluctance to cut costs) or
a predisposition toward innovation (which sometimes leads to “not invented here” syndrome). If
you can find ways to demonstrate the relevance of
the original values and share stories that illustrate
why people believe in them, they can still serve
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fessional excellence, such as a rule that
all accountants had to spend two years
in auditing and the use of a global profit
pool that ensured that all partners had a
stake in one another’s success. Each new
measure, while defensible, made it a little
easier to compromise the firm’s values. The
cultural deterioration also made it easier
to ignore many warning signs, including the 1973 bankruptcy of Four Seasons
Nursing Centers of America, in which the
founder pleaded guilty to securities fraud
and Andersen, as the auditor, was indicted.
By the time Enron became a key client in
the late 1990s and insisted on using only
individual accountants and auditors who
accepted its questionable practices, the
accounting firm’s professional culture
had already declined past the point
of no return. A few modest interventions might have preserved the
firm’s commitment to integrity and
avoided a very public and embarrassing demise.
your company well. Acknowledging the existing
culture’s assets will also make major change feel less
like a top-down imposition and more like a shared
The same surveys of employee behavior, indepth interviews, and observation that you use to diagnose your culture’s weaknesses can also clarify its
strengths. Executives at one financial services firm,
for example, conducted a survey to test employees’
readiness to follow a strategy that involved going
head-to-head with a new, aggressive set of competitors. The survey revealed a number of serious
cultural challenges, including passive-aggressive
behavior, inconclusive decision making, and pervasive organizational silos. But it also showed that staff
members were unusually willing to commit time
and effort toward the strategy; they really wanted to
help. This enormous strength had been largely untapped. That realization helped executives rethink
how they communicated the strategy, and more
important, how they interacted with employees to
support the new behaviors.
Another way to harness the cultural elements you
want to support is by acknowledging them. At Aetna
a major turning point came during one questionand-answer session, when a longtime employee said,
“Dr. Rowe, I really appreciate your taking the time to
explain your new strategy. Can you tell me what it
means for someone like me?”
Not an easy question. After a thoughtful pause,
Rowe replied, “Well, I guess it is all about restoring the Aetna pride.” As we noted earlier, he got a
spontaneous standing ovation from the hundreds of
attendees. Why had that concept hit such a nerve?
Aetna had always had a strong record of responding to natural disasters (including the Great Chicago
Fire of 1871 and the 1906 San Francisco earthquake).
Its employees were also proud of the many famous
people—movie stars, astronauts, sports heroes, and
other public figures—that the
company insured. It was only
as a result of a strong managed-care
movement that emerged in the 1980s and 1990s
that Aetna had gained a reputation as a stingy, recalcitrant company. Employees stopped feeling good
about their association with it. “At cocktail parties,”
said one longtime Aetna staffer, “I really dreaded the
question, Who do you work for?” When Rowe and
Williams made “restoring the pride” the core of their
message, they touched the hearts of many employees and helped them believe Aetna could regain its
former glory.
Another strength companies can leverage is the
employees who are already aligned with their strategy and desired culture. Most companies, if they
look hard enough, will find that they have pockets of
activity where people are already exhibiting the new,
desired behaviors every day—just as the “exemplar”
store managers did at the retailer.
Integrate Formal and
Informal Interventions
As you promote critical new behaviors, making
people aware of how they affect the company’s
strategic performance, be sure to integrate formal
approaches—like new rules, metrics, and incentives …
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