Companies achieve market dominance by introducing innovative products or adopting a unique way of doing business that their customers perceive as adding value. A timely innovation often changes the rules of the game and creates a barrier to entry for the competition. But success associated with a major innovation is not achieved because of market impact alone. If the innovation is sufficiently powerful, congruent patterns of behavior form around the breakthrough and the innovator evolves a supportive corporate culture*. As the innovative company adapts to capitalize on its advantage, the cultural alignment creates focus and clarity of purpose. Profit is realized because alignment fosters operating efficiency. Compatible ideas, products, and decisions are embraced, while the "out of the box" suggestions of nonconforming challengers are rejected.

Unfortunately, a caveat is attached to innovation based success. Military history is riddled with evidence that the majority of victors do not live happily ever after. That's because winning generals are prone to reuse technology, strategies, and tactics that helped them win previous battles. Sticking with yesterday's advantage when the situation has changed is a recipe for disaster. Germany conquered Europe with a new strategy called blitzkrieg (lightning war—a sudden swift military attack). Fixed embattlements such as the Maginot line, once thought to be impenetrable, did nothing to impede the rapidly moving invader. When a culture becomes centered on a specific advantage, there is great risk that ideology will take over—and ideology is anathema to change. During WWII, while Poland was in the process of being invaded, a defending cavalry officer wrote, "the idea of huge armored vehicles rolling down roads at a fast pace is a dream."

Success can be a precursor to failure in the business world as well. American Express suffered a near fatal blow when they did not respond to challenges from the banking industry. Amex had evolved a perfectly adapted "collective set of habits" to exploit a credit card market of their own creation. But the advantage came with a blind spot. Executives failed to recognize that bank cards were changing the rules of the game. In spite of radically shrinking market share, Amex resisted lowering the rate charged to retailers and would not reduce what business owners viewed as an inordinately long compensation interval. The oversight was not corrected until a new CEO killed what had become an ideology driven culture. The company had originally become a dominant force because of service innovation—but slipped from dominance when second generation executives allowed the core value of service to mutate into a change resistant ideology. Senior management saw themselves as care-takers of a great legacy (ideology) rather than values driven leaders charged with helping employees respond to evolving consumer needs. Once Amex re-clarified their core-values, the arrogance associated with ideological mutation was replaced by responsiveness and a once powerful culture was restored.

During values clarification workshops, I use a personal experience to help executives discern values driven leadership from management by ideology. My family and I had just moved to northern Canada. Prior to relocating, we had a standing rule with our two girls to, "come home when the streetlights come on." Unfortunately, in Edmonton Alberta during the month of June, the streetlights don't come on until well after 2AM. My girls thought they'd hit a bonanza and needed to be reminded that it was a value of safety that prompted creation of our original rule. I had to explain that adherence to the safety value, necessitated changing a previously desirable pattern of behavior. A rule that was established to promote safety was no longer safe. Understandably, my teen-aged daughters fought long and hard to preserve their streetlight ideology.

Changing a corporate culture is more difficult than altering personal habits—and most of us have suffered through at least one or two failed New Year's resolutions. Tough, non-compromising management is an essential part of making change stick. Management is about planning, staffing, directing, and controlling—in short, getting results. Everybody in the organization has a management position defined by their job description. From CEO to receptionist, positions depend on each other to perform assigned responsibilities. An organization's hierarchy of authority should be under the influence of senior management at all times but direct control is mandatory during culture change. Divisions, departments, and work teams must be held in check until altered behavior patterns stabilize in a new orbit—free from the gravitational pull of the status quo. Senior management intervention is required for a minimum of eighteen months. Having a plan based on core values and monitoring the leadership activity of executives is the cornerstone of effective culture shaping.

Understanding the difference between management and leadership is essential during a culture change initiative. Management is about orchestrating positions to produce a profit—within the boundaries of existing rules, process, and constraints. Authority is granted to positions as an entitlement. Leadership however, focuses on the people living behind organizational roles. It redirects energy towards the support of change—energy that would typically be spent resisting. In a values driven culture, senior management encourages everybody to engage in leadership activity—but they also maintain position authority and process discipline. Managers engaged in leadership activity, understand that it's people—not positions, who will either embrace or resist change.

A primary responsibility of senior officers is to ensure that positions remain aligned behind a winning strategy. But success, without the values driven leadership of people behind their positions, will predispose even great organizations to the primary pitfall of management by ideology—resistance to change. Executives can avoid the "success breeding failure" syndrome by ensuring that their corporate culture remains centered on core-values. Management by ideology seeks to maintain the status quo and forces people to live with one foot in yesterday. Values driven leadership by contrast, fosters forward thinking. People see (or fail to see) possibilities because of what they believe. If a critical mass of employees believe that "nothing will—or should—ever change around here" that's the future. The largest determinant of how we behave is the conscious or below conscious expectation of what the future holds in store. Because people are always moving towards what they believe, the organization's best protection against management by ideology is the presence of values driven leadership.

• Established customers are asking for things you could profitably carry but have chosen not to.
• Competitors are succeeding with a course of action that you rejected.
• Rules and policies that no longer make sense remain in place.
• Innovative ideas are not taken seriously if they violate traditional methods of doing business.
• Shareholders and business analysts are concerned about lost market share.

L=f (V1+V2)SS X ALR
                       C

Leadership (L) increases energy as a function of values (V1-what you believe) plus vision (V2-where you are headed), multiplied by the ability to send signals (SS-by word and deed)) in a consistent and meaningful way. When people react to challenge (C) with an appropriate* leader response (ALR) energy that would have been expended as resistance, is transferred to task.

© Art McNeil 1987

From the #1 best-seller The "I" of the Hurricane: Creating Corporate Energy.

*Culture - "a collective set of habits used by a group of people to get things done."

*Appropriate - "get the job done but in a way that further reinforces what we believe in and where we are going"