A Recipe for Effective Organizational Change

Even some of the most talented and revered CEOs in the world face daunting challenges when it comes to implementing large-scale organizational change. And more often than not, new leaders encounter problems because they either don’t appreciate the true interplay between culture and strategy, or they ignore it. Organizational change is certainly not an easy task. According to research by McKinsey, 70 percent of change efforts fall short of desired results. By Matthew Shay,19/04/2016

For decades we have heard the famous quote — often ascribed to Peter Drucker — that “culture eats strategy for breakfast.” And it often does. But it’s more complicated than that.

While culture is a much more powerful force than strategy, it is far less likely to overpower a strategic plan that
1) nurtures the positive culture that already exists and
2) invests in the new culture that will help the organization succeed.

When I was appointed CEO of the National Retail Federation in 2010, it was a natural point for us as an organization — our members, board and employees — to take stock of where we stood. What were we doing well? What did we need to improve on, and what direction did the organization as a whole need to take to better serve our members, and create more value for them and the retail industry? NRF had accumulated quite a few assets over its time and there was some concern that not all these parts were moving in the same direction. Innovation was stagnant and we didn’t adequately reflect the industry whose voice we carried in Washington.

But we had one powerful insight: The industry wasn’t balkanized and fragmented between online and bricks-and-mortar or department stores versus specialty stores or any other divisions, and NRF shouldn’t be either. We set out to bring our entire organization together with the common theme: “One NRF.”

It has taken several years and lot of hard work, but we’re seeing tangible results in the form of increased member value, growth in membership, heightened member engagement and a large increase in revenue.

And based on our experience, we identified three important insights on implementing large-scale organizational change that can help avoid some common and costly missteps:

Get buy-in from the board: Your board must understand and endorse the vision you have for the future of the organization. Too many CEOs rush this process, trying to live with the board support they can get and attempting to fix it later. At NRF, our executive team and board took the time to listen and learn about our current strengths and the challenges that lay ahead of us. This helped us achieve unanimous support at the end of the process and craft a plan to unify the organization under the principal of “One NRF” — our strategy to get all stakeholders, all NRF divisions and all of our programs and activities aligned and working together. This was critical to us as we moved from paper to the real world and needed to make adjustments.

Devise a strategic plan that can actually work: Before you challenge your organization to achieve new common goals, you need to create a plan that everyone in your organization can understand and follow as a “North Star.” Our plan of “One NRF” is clear, applicable across the organization and tangible for each staff member to refer to every step of the way. It aligns us all and helps our culture evolve in a healthy way by modifying behavior and generating results.

Develop a vision for the culture you want to create: We knew that without the proper investment, commitment and conviction, we couldn’t transform NRF into the modern organization required to support a modern, dynamic retail industry. To get the right people in place and create the right work environment for them to collaborate and innovate, we made strategic investments in three areas:

  1. We invested the time and money in shedding our old office space where employees were walled off and separated. “One NRF” required us all to work together. Literally. You can read the post about how moving to an open office space plan accelerated our success here.
  2. We invested in creating the culture we needed to succeed. We now have more all-staff meetings and “brown-bag” lunches where departments not only share ideas but also enlist the opinions and expertise of their colleagues in other departments to solve problems. We also invested in more team building and skill building through coaching and other education and development opportunities to keep us moving forward together.
  3. We empowered our divisions to achieve results in new ways and encouraged risk taking by making sure people knew it was ok to fail.

If we were failing, that meant we were trying new things. And we’ve had some clear successes, but also some misses — from both of which we learned a great deal.

Our strategy for “One NRF” continues to evolve — as does our culture, because the retail industry we represent doesn’t stand still either. Organizational change is an ongoing process. While we have achieved some great results over the last five years, we still have a lot to do to fully realize our goals.

Please share with us your lessons on organizational change and learnings on the interplay between strategy and culture. What have you learned? What does success look like for your organization?

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