Faced with the challenges of developing a long-term strategy for profitable growth and engaging his organization to make the strategy happen, Mike Chesser, CEO of Great Plains Energy (GPE), and his COO, Bill Downey, began with a set of beliefs to guide the strategy development effort.
1. GPE’s Strategic Intent must succeed across a range of scenarios that take into account technology advances, environmental requirements, commodity price and supply changes, and even changes in the demographics of the workforce. Too often, energy companies, mistakenly predicting one scenario, invested heavily only to realize the potential for multiple scenarios over time.
2. A company’s culture is the only real long-term source of sustainable competitive advantage. Developing strategies and culture together can serve as powerful reinforcements for each other. Furthermore, organizational cultures can either accelerate or hinder the successful execution of any strategy.
3 The strategy development process could serve as a good way to kick-start and model the desired culture. For GPE this would mean broad employee inclusion rather than development by a select handful of managers.
4. Collaboration with a broad range of individuals inside and outside GPE would promote a real dialogue and open communication-key elements of the culture GPE defined as the “Winning Culture”-while yielding the most powerful Strategic Intent.
5. A culture of engagement and empowerment represents one side of the success equation. A commitment to individual and collective accountability for results represents the other.
Therefore, getting an entire organization engaged around the related tasks of developing the strategy and creating a supportive “Winning Culture” increases the likelihood that both will be successful.
How do you get an organization truly engaged in actually developing the strategy as well as executing it? First, employees need to be deeply involved in the traditional tasks associated with strategy development: collecting and analyzing data; identifying and exploring the implications of underlying market and industry trends; conducting competitive assessments; and developing and testing alternative scenarios.
Second, employees need to be exposed to the multiple stakeholders whose perspectives must be incorporated into the development of strategic options. In GPE’s case, this meant regulators, community leaders, customers and industry experts, all of whom were invited to participate in a series of strategy workshops, at which employees (often numbering in the hundreds) could weigh in with their own perspectives-“a new and powerful experience for most employees,” noted Chesser.
Finally, organizations get engaged in strategy development when development and implementation are treated as parallel rather than sequential activities. With employees at all levels and from across the organization serving on strategy development teams at GPE, new insights and ideas could be tested in real-time, rather than waiting for strategy roll-out months later.
The result was a comprehensive strategy that began with a collaborative approach to addressing regulatory issues and included innovative uses of distribution technologies, investments in both new sources of supply and environmental applications, customer programs to conserve energy, and initiatives to further build skills and culture. As Chesser and Downey observed, “We were implementing the strategic solution as we designed it. This ensured that ownership of the strategy began on Day 1.”
Building a “Winning Culture” at GPE was viewed as an integral part of the strategy development process. If strategies are about creating sustainable competitive advantage, then one ignores the underlying culture of the organization at one’s peril. “Since markets, industries and business environments change,” Chesser declared, “a winning culture is the only long-term sustainable competitive advantage.”
Corporate cultures are, of course, inherently hard to change, precisely because they are the products of decisions, statements, and actions by multitudes of managers over the years and are observed and internalized by many times that number of employees. For this reason, changing corporate cultures-like other major change initiatives-must be led from the top, while being embraced and driven by employees throughout the organization. This requires both executives and down-the-line employees to understand and then model the behaviors associated with a Winning Culture. For GPE, these behaviors are implicit in the more open and collaborative style of management that the executive team saw as keys to marketplace success: trust, mutual respect, open-mindedness and a dedication to “win-win” solutions.
Chesser, Downey and the executive team also created conditions up-front for successful development of the new strategy that simultaneously laid the foundation for development of a Winning Culture. First, they ensured that an initiative to build a Winning Culture was conducted in parallel with and integrated into the overall strategy development effort. Second, a well-respected manager was selected from an operational role to serve as the full time Winning Culture team leader. Third, the Winning Culture initiative team was carefully staffed with talented individuals from across the organization (both management and union). And finally, Chesser personally sponsored the Winning Culture initiative team. When the team was announced, the entire organization saw senior management’s commitment to employee-driven cultural change!
The team then laid out the following steps to begin building a Winning Culture, regularly reviewing its work to ensure that its efforts were aligned with the emerging Strategic Intent:
Defining what was meant by the term “corporate culture” and creating a profile of what a Winning Culture would look like at this utility.
Candidly assessing the current “as is” cultural state, then asking “what in our culture do we want to preserve, what do we want to keep and strengthen, and what do we want to change?”
Drawing on “best practices” by speaking with representatives of highly-respected companies outside the utility arena (Dell, Starbucks, Procter & Gamble, UPS, etc.) on how best to build a Winning Culture that will be truly supportive of the enterprise strategy.
Developing and launching a set of targeted actions-each with its own project plan, budget, and resources-to challenge prevailing values, beliefs and ways of work. One critical action shifted accountability for creating the Winning Culture from the cross-organizational Winning Culture team to the line organization, where it could be institutionalized and routinely demonstrated. To this end, location-specific Winning Culture Partner Teams are currently being piloted in generating plants, distribution service centers and staff functional organizations.
As the elements of the Winning Culture became clearer, so did the linkage between organizational culture and strategy. As GPE’s final Strategic Intent statement declared, “Achieving our Strategic Intent-making it happen-will require a Winning Culture.”
Effective management of cultural transformation requires a set of concrete metrics. As COO Downey explained, “A key aspect of the performance-driven culture we are building at GPE is accountability for results. But to hold individuals accountable, you not only need clear plans and objectives, you also need to have measures that allow you to gauge progress.”
Fortunately, GPE had already begun to develop Balanced Scorecards as part of a performance management process that reflected and communicated the company’s long-term strategy. Measures associated with creating a Winning Culture (e.g., participation in new leadership development programs, improvement in employee survey responses, number of internal promotions) were entered on both line and staff functional scorecards.
With nearly two years under its belt, the management team at GPE is beginning to see the fruits of its labors to craft a winning strategy while building a Winning Culture. First, the seeds of a Winning Culture took root in the development of a precedent-setting regulatory agreement that successfully balanced the interests of multiple stakeholders. Second, customer satisfaction, plant availability, employee safety and other metrics continue to improve even as costs are contained. Finally, GPE has learned much – about itself, about the challenges of engaging the organization in crafting its new strategy, and about what works (and what doesn’t) in pursuing the creation of a Winning Culture. Chesser and Downey summarize some of the important organizational lessons:
Identify and stimulate the “activators” of cultural change. These are the near-term activities and decisions that can “jump start’ the change process. At GPE, these included setting up the strategy workshops and including the Bargaining Units in previously management-only forums and incentive compensation plans. Both Chesser and Downey acknowledge the support of bargaining unit leadership as critical in building momentum for the cultural change effort.
Carve out meaningful time to get everyone engaged in the effort. It takes time to get multiple stakeholders inside and outside the organization engaged. But, as Chesser and Downey noted, “While the process takes longer this way, it leads to stronger and quicker implementation.”
Hold every executive accountable for modeling the new behaviors. All employees look to senior management to determine if this time “it’s for real.” Early on, the active visible involvement of the CEO and COO signaled, in Chesser’s words, that “change cannot be delegated, but must be led from the top.” Other executives and managers recognized that their actions needed to reinforce those of the CEO to demonstrate that this was more than “just another initiative.”
Recognize that, once engaged, employees need to be kept engaged. This means many forums for ongoing communication, especially face-to-face, that demonstrate a commitment to keeping people informed as an important first step in securing their support for a major change initiative. Also, it is imperative to quickly translate strategic objectives into individual performance objectives that make manager’s expectations explicit.
Chesser offers two final points on this approach to simultaneously creating a winning strategy and a winning culture: “Remember, it’s a process, not an event; and recognize that this may be the single greatest contribution to the company that any CEO can make in his or her career.”
David Calfee is a partner and Steve Sheridan is the managing partner of Bridge Strategy Group, LLC, a management consulting firm based in Chicago. For more information, see www.bridgestrategy.com.