Lou Gerstner weighed in on the Wells Fargo scandal the other day in the Wall Street Journal. He wrote that CEOs who blame a flaw in their company’s culture misunderstand how culture is created and its role in determining corporate behavior.
"What is critical to understand here is that people do not do what you expect but what you inspect. Culture is not a prime mover. Rather it is a derivative. It forms as a result of signals employees get from the corporate processes that structure their work priorities."
His argument that culture is a result, not the cause of corporate processes is only partially correct. Culture isn’t static. As Edgar Schein has pointed out, the creation of organizational culture is a continuous circle: behaviors and recognition create culture, and culture leads to certain behaviors. And this is why it’s essential for any leadership team to model the lean behaviors they hope to instill in their organization. If the leadership team doesn’t live lean, they can’t lead lean.
It’s clear that at Wells Fargo, the stated value of “putting customers first” does not—cannot—coexist with a system that rewards employees for selling more products to those customers, irrespective of customer needs. It’s equally clear that in your organization, the stated need to embrace continuous improvement does not—cannot—coexist with a system that prioritizes cost savings over learning; that asks front-line employees to work differently, but not the C-suite execs; that requires mid-level managers to participate in lean activities, but not the vice-presidents.
Gerstner points out that it’s the cumulative effect of processes such as performance measurement, compensation, and recognition (among others) that shape corporate culture. They also shape the likelihood of success in your pursuit of lean. Does your company reward individuals or teams for learning? Does your company recognize and celebrate the acquisition and deepening of knowledge about lean, or only revenue, profits, and cost reduction? Can you really expect your employees to care—to truly care—about all this continuous improvement bloviation when you haven’t built the systems and processes that elevate it to the stated level of importance?
If lean really is important to your organization, then you have to build systems to support it. It’s a large part of what the Lean Enterprise Institute calls the “daily management system.” That means that everyone—everyone—gets involved in lean activities, that everyone gets recognized for their lean work, that everyone gets rewarded for adopting (even if they don’t yet fully embrace) the essential behaviors. That’s how you build a culture of continuous improvement.