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culture

The Walmart core–Simon interview in WSJ

by Sheila Margolis on March 21, 2011

Today, the WSJ published an interview with William Simon who heads Walmart’s US division. Simon says that to improve sales, Walmart is returning to its “Every Day Low Prices” formula.

According to the company website, it states this important core principle:

We’re known around the world as the company that helps our customers save money so they can live better.

Saving customers money is core to the culture of Walmart.

Additionally, since its founding, Walmart has had a customer service philosophy that is grounded in respect, service, and excellence.

As Sam Walton expressed in his autobiography,

… if you think about it from the point of view of the customer, you want everything: a wide assortment of quality merchandise; the lowest possible prices; guaranteed satisfaction; friendly, knowledgeable service; convenient hours; and a pleasant shopping experience.

So I was perplexed by Mr. Simon’s response to the interview question, “Can you just go back to what Wal-​​Mart did well?” Mr. Simon responded:

I try to avoid the word “back,” because back doesn’t exist; history is gone. You have to take what worked for Sam [Walton], what’s worked recently, and where you think the business is going and build it all together.

Well, history may be the past, but it definitely has a place in defining the character of a company that endures into the future. Saving the customer money and making shopping easier is part of the history of Walmart that defines the company. Therefore, to alter either of these principles, distracts Walmart from its character, its Purpose and Philosophy, its Core Culture, its identity. Maybe Mr. Simon gets that, but his words were a bit confusing.

Having low prices every day is core–you don’t discount some items and raise prices on others.

Making shopping easier is core–you don’t eliminate selections that the core customer base expects.

Yes, companies have Priorities–strategic values–that allow them to compete and thrive in a changing business environment. But those values must reinforce and align with the company’s core values. In the case of Walmart, any strategic Priorities must align with the core principles derived from Sam Walton.

So, can Walmart compete by having smaller stores in urban areas? And can Walmart compete with online retailers? Business is challenging, but if the company forgets its core principles, any strategies that are not aligned with the core may produce negative results.

 

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What are your company’s distinctive values that set it apart from your competitors?

by Sheila Margolis on February 28, 2011

If you asked employees–what are our company’s distinctive values–how would they respond? Would they share a similar view of what’s unique and distinctive about your organization? In successful companies, employees know and live by the distinctive values that are core to it. These values are guiding principles that connect employees and build a sense of family. The values are a source of pride, and the shared practice of these values produces a distinctive workplace and customer experience that sets your company apart from others.

Many companies have clearly defined guiding principles that most employees share. Typically, they have a leader who understands how to build a community of workers who are bound by a shared Philosophy.

Zappos is one example of such a company. The CEO of Zappos–Tony Hsieh–is known for sharing with everyone, employees and the public, the company’s core values. If you look on their website, the Zappos Family Core Values are listed with a video explaining what they are and why they’re important. These descriptions by real employees give a clear picture of what’s valued in this company. Employees describe the core values as the foundation of their culture. The values capture what employees feel make the culture special. Employees are selected because they understand the core values and want to embrace them and practice them. The company even has little pictures to capture each core value.

Zappos Core Value-​​Deliver WOW through Service

Frog images of each of their values are terrific ways to communicate what’s important at this company.

Additionally, Tony, the founder and CEO, also wrote the best-​​selling book Delivering Happiness to share his founding principles and values that are central to the culture.

Take your company values seriously. Hire for them, live by them, and be sure the world gets it, too. Be known for what makes your company special. Be clear on what makes your company distinctive. It all begins with having a shared Philosophy that all employees understand and want to live by. Define your core values and make them a part of every aspect of your company.

 

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Changing school culture at Harvard Business School

by Sheila Margolis on February 6, 2011

Harvard Business School is revamping its M.B.A. program. According to a Wall Street Journal article, they are putting a greater emphasis on ethics and teamwork in response to a concern that the program has supported a money-​​focused culture that contributed to the financial crisis. The curriculum is changing with new classes, an internship program, and more time spent working in small groups.

But will these changes alter the attitudes of its students who are attracted to Harvard because they consider it a culture of entitlement? To create leaders of competence who want to lead solutions in health care, energy, and sustainability, the entire Harvard experience from selection to completion, must incorporate this new tone of change. Changing a culture is an intricate process that must begin at the core and be infused in all organizational practices. The curriculum and how students are structured is a start, but selecting applicants who are a fit is essential, too. A mindset is not easy to change. Defining the new culture must be a collective process for faculty, administration, and students. And aligning all practices with the new culture must be a shared goal.

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Will training improve Delta Air Lines customer service?

by Sheila Margolis on February 6, 2011

Delta Air Lines has not been doing so well in customer service. If you go to FightStats​.com, you will see that for December 1, 2010 to January 31, 2011, the on-​​time performance rating for the 20 most active routes, showed the following results (the higher the number, the better; 5.0 is the highest rating possible):

  • Delta Airlines had an on-​​time performance rating of 3.005.
  • AirTran Airways had an on-​​time performance rating of 3.68.

According to a Wall Street Journal article, customer complaints at Delta were high in 2010 and with high baggage handling problems and canceled flights, the airline knew it had to work on things. Training can be a valuable component of any improvement process.

But if Delta is serious about improving customer service, the airline and its employees must see service as a valued aspect of their culture–more than just an add-​​on. To integrate customer service throughout the company, the mindset of everyone at Delta must be altered. That process begins with everyone in the company taking time to reflect on what has historically been the distinctive values of Delta and what few additional values will enable the organization to compete and thrive. By stopping and asking all employees a few key questions, everyone can participate in identifying those values and then integrating them in all aspects of work. Customer service must be something important to each employee, and then the training can be used to hone employees’ customer service skills.

A day of training can be beneficial, but for the culture to change, it must start at the core. Not only should this culture assessment process decide if customer service is a value, the process should include defining the principles that make Delta customer service distinctive. There is a Delta tradition that those of us in Atlanta knew in the past. Maybe that unique Delta Southern Style or whatever employees want to call it, can be brought back, honed, and allowed to flourish again. Defining the core culture of Delta should be the first step. Then, Internal Practices like training, hiring, performance management, internal communication, work design, and systems for doing work must be aligned, as well as External Practices and Projections.

Delta can build a culture of distinction, but it must start from the core so that the values are defined and shared. Culture begins at the core.

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Why do companies like BP choose a culture of growth with cost-​​cutting rather than a culture of safety?

by Sheila Margolis on February 1, 2011

Bob Dudley–the new chief executive of BP– stated he will move BP to having a greater safety culture.

In his September 2010 press release, he describes safety and risk management as BP’s most urgent priority. Dudley instituted a structural change–a new Safety & Operational Risk division headed by Mark Bly– to strengthen the safety focus.

In a press release dated Feb. 1, 2011, BP states:

BP’s immediate priority is to complete the process of embedding world-​​class safety and operational risk management at the heart of the group’s approach to all its activities and throughout all its operations.

Of course, if you are truly embedding safety into all aspects of your culture, the process never ends–it’s an ongoing focus where everyone continually thinks of new and better ways to improve the safety focus.

A Wall Street Journal article says that BP critics point to BP’s historical focus on deal-​​making and growth rather than on safety and operational excellence. The article sites major challenges that BP faces to changing the culture, including fixing aging infrastructure and changing staffing to reduce worker fatigue.

But the causes are more complex, according to a U.S. presidential commission report by the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling.

The causes are described as systemic issues. Examples include:

  • Flaws in BP’s management and design procedures
  • Failures to appreciate risks
  • Poor communication between BP and Halliburton
  • Lack of communication and training about lessons learned from prior problems
  • Government regulators lacking the authority, necessary resources and technical expertise
  • Using time-​​saving and cost-​​saving measures

Why is it that so many problems are due to a focus on profits over safety? Repeatedly, a focus on growth at the expense of safety or quality leads companies on a dangerous path that affects human lives. It’s not just BP that has taken this path. Look at the recent problems with Toyota. Companies like Toyota have been known in the past for having a quality and safety culture, yet they have moved in the wrong direction. When major quality or safety issues are exposed to the public, by either a disaster or a recall, the changes in the culture are often systemic–it’s not an isolated error but a change in values.

If a company like BP wants a safety culture, it must implement massive changes– throughout every aspect of the organization–that are guided by that safety focus. It must do more than just re-​​structuring or changing incentives and rewards.

The changes must start at the heart of the culture–at its core–where employees stop for a moment to reflect on the values that are important and together create a shared view. If safety is what’s valued over profits, then employees should not be over-​​worked, and faulty equipment and poor maintenance should not be allowed.

Leaders must be the #1 advocate for safety–in the case of BP, does Dudley talk about safety every day?

And all actions must be aligned with the safety philosophy. Employees should be applauded for reporting problems so they can be fixed and prevented throughout the company. Open communication–bottom/up as well as top/​down– can be a great contributor to building a safety focus. Contractors must be held to the same high standards, and if they don’t meet the standards, they must be changed. Cuts in staffing and training can have significant impact on safety so those areas must be monitored so safety standards are not compromised. Employees should be hired not only for competency but also because they personally value safety. It should be the role of each employee to enhance the safety culture.

Changing a culture is a process. It takes time, but it must be more than just add-​​ons. It must be part of the company’s core–its DNA. Making safety #1 should be a decision that everyone participates in and owns. And if safety is the company’s prime principle, then it must come first before anything else–including profits and growth.

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Air France has wide safety deficiencies. Does the airline you fly value safety?

by Sheila Margolis on January 27, 2011

If you read the Wall Street Journal article, “Air France Panel Cites Wide Safety Deficiencies,” you probably won’t rush to fly on an Air France plane. As the article states:

An independent study of Air France-​​KLM SA’s operations found a lack of “strong safety leadership at all levels of management” that has resulted in lax cockpit discipline, ineffective pilot training and “an unhealthy relationship” with unions.

The article says that management gives the message that safety is a priority. But the value of safety is obviously not woven into the fabric of their culture. For that matter, if you go to their website, it’s hard to find  any reference to safety. Buried in the massive content under sustainable development, you can finally see the word “safety.”

So what airlines do you fly? And what do they value? Take the time to see what they say matters to the company and its employees and of course, see if the experience matches their claims.

For example, Southwest Airlines is very clear about their values. It’s easy to find that service and value are their focus. Start by looking on their website: there’s a link on each page for “The Southwest Difference.” Just listen to a video and you’ll hear a customer service story that will make you cry. You can also read about their Mission and customer service commitment as well as their safety commitment. It’s so easy to find the values that matter to this company and its employees.

Next time you plan on flying or buying any products or services, take a moment to check out the values important to the company you are planning to use. If it’s not obvious what is valued, then there’s a good chance employees will not have a shared set of principles to guide what they do. Maybe it’s time to rethink where you take your business. Maybe it’s time to do business with companies that share your values.

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Are cost-​​cutting measures damaging Toyota’s culture of quality?

by Sheila Margolis on January 26, 2011

Another recall for Toyota. Now over 1.7 million vehicles world-​​wide including some Lexus models are being recalled for defective fuel devices or other faulty parts. What is happening to quality at Toyota?

It all goes back to knowing what’s core to your culture and never compromising on it. Every organization must define what values must be shared by everyone in the organization. These are the values that are never compromised. These are the values that each employee takes pride in and wants to live more effectively each and every day. You don’t want a lot of values–that important– so that there’s no excuses. These few values must be clearly understood. So, for example with Toyota, the focus should always be about quality. Quality should be the blood that runs through the veins of all who work for the company. Nothing moves quality second to anything.

So why do companies mess this up? It’s often a problem of not integrating the value throughout every aspect of the company. It’s about aligning all practices with the core principle. In the case of Toyota, as reported in the Wall Street Journal,

“Toyota has been using more common parts in its vehicles” in order to cut costs, said Koji Endo, an auto analyst at Tokyo-​​based independent auto industry boutique Advanced Research Japan.

Toyota should know better. The suppliers they use and the materials they buy must meet their high standards for quality. Anything less should not be qualified to be in a Toyota product–from the car to the key chain.

The article says Toyota has been taking actions to prevent recalls, such better reporting of safety issues, assigning engineers to focus on quality issues, and spot-​​checking vehicles for potential problems before launch. But maybe that’s just not comprehensive enough.

Every aspect of the company’s internal practices from how the organization is structured, how work is designed, systems for doing one’s work, hiring practices, orientation, training, performance management, internal communications and technology must reinforce the focus on quality.

And every aspect of the company’s external practices including its suppliers, vendors and partners must be screened to set quality as the number one requirement.

Also, the image the company projects should always be about quality. When I look at the Toyota website, I don’t see a dominant focus on quality. There seems to be a greater focus on selling more cars. Maybe the focus on growth has become more important.

If quality is the core value that captures the core essence of what Toyota is all about, then they must make it core to all they do. Costs or any other value cannot be a higher value than quality.

Successful organizations understand that they must define their core culture–the principles that are central to who they are that are never compromised. And employees must practice those few principles in everything that they do.  That consistency is what makes organizations great.

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Mergers and acquisitions increasing in 2011–Are you considering the human factor?

by Sheila Margolis on January 5, 2011

According to a Forbes article published December 28, 2010, merger activity will increase in 2011:

A recent study from Thomson Reuters and Freeman Consulting Services concludes that the global market for M&A will surge 36% in 2011 to over $3 trillion.

Sadly, most mergers do not achieve their objectives. Failed mergers that otherwise have a sound strategic and financial fit are typically the result of the loss of intangible, hard-​​to-​​measure, human factors on which the company’s tangible assets ultimately rest. M&As have the power to shake up an organization and ignite feelings of loss and uncertainty that can be devastating to a company and the people in it. Employees with years of knowledge and a depth of commitment to a company don’t just turn off the switch and feel dedication to something new. These transactions are fraught with challenges:

  • People who previously may have been competitors are thrown together.
  • Employees fear being earmarked redundant.
  • Competitors capitalize on the uncertainty.
  • Existing cultures change.

So what is the remedy? How can you manage in this climate of continuous change? How can you learn how to not only survive but also thrive in a constantly changing work environment? The solution begins with understanding culture.

  • Analyze the culture of both organizations prior to the deal and decide the culture of the organization that emerges after the deal.
  • Share with everyone the Purpose of the new organization, its distinctive Philosophy that directs employee actions, and the strategic Priorities that must guide workers so they are strategic in their work activities.
  • Access the fit of employees with this new culture and give employees the opportunity to evaluate their fit or lack of fit with the new culture. A merger or acquisition represents a new opportunity to create a compelling, ambitious vision to capture value not present prior to the transaction. Individuals must determine if they buy in and want to be a part of that vision and strategy. Is the future of the company a future you want to share?
  • Communicate–actually over-​​communicate. There is a lot of uncertainty and any and all communication will be appreciated by employees. Know that individuals want to know how the change will affect them so be sure to address the organization-​​wide changes and the changes that will impact each individual. Questions employees will have include: Do I have a job? Who will be my boss? What type of company will I be working for?

And a few months after things have settled, give employees an opportunity to voice their feelings and perspectives through a survey that is anonymous. Take the time to share survey results and any changes that will be made.

As companies choose to use mergers and acquisitions to grow and expand their reach and their offerings, they should take the time to clarify the cultural issues and focus on the people issues so that the deal is a financial, strategic and human success.

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The Groupon corporate culture–what’s it like?

by Sheila Margolis on December 23, 2010

There have been lots of articles in the news about Groupon, so I thought I’d try to uncover  what’s “in print” about the Groupon organizational culture. Keep in mind that corporate culture is typically derived from the organization’s founder, or from the principles and ideals that drove the organization’s creation. Groupon’s founder and CEO is Andrew Mason.

First, this is how the Groupon website describes Mason:

Andrew Mason is the founder of Groupon as well as The Point, the collective action platform from which Groupon was born. Andrew’s mostly unremarkable existence began in Pittsburgh, PA; he moved to Chicago in 1999 to attend Northwestern University, where he lives today with his girlfriend and over 20 cats. Andrew graduated with a degree in music, the uselessness of which served as a chief inspiration to not be useless. Out of college, Andrew became a software developer by no ambition of his own, but via a series of acquaintances offering to give him money to do incrementally harder stuff on computers. Excited by the power of technology to change the world, Andrew developed Policy Tree, a policy debate visualization tool, and won a scholarship to attend the University of Chicago Harris School of Public Policy in 2006. In school for only 3 months, the flighty Andrew dropped out after receiving an unexpected offer to fund the idea that would become The Point. The Point, a ground-​​breaking approach to online collective action and fundraising, launched in November 2007. One year later, Andrew founded Groupon, leveraging the collective buying technology of The Point to make it easier (and cheaper) to experience all the great stuff in Chicago. At various points in his life, Andrew has also started businesses to deliver bagels as if they were newspapers, and sell muffins with cranberries that he found in his backyard to people living on his street. When he isn’t working, Andrew spends most of his time writing his life coach training book, Unleash the Power Within the Power Within: Self Help For Self Helpers.

Just for clarification, in a CNBC interview, an anchor asked if it is true that he has 20 cats. Mason responded, “No. Most CEOs will make stuff up about themselves to sound way smarter and cooler and people are disappointed to find out otherwise. I decided to set the bar very low and make up lies about myself that make me sound lame.”

Below are how the founder and the culture have been described in the news:

  • This is how a Wall Street Journal article described the culture: Andrew Mason is described as the boyish entrepreneur. His desk is no different from the others–located in the middle of rows of white desks with a live feed to the Palo Alto satellite office. Perky, good looking and young employees look like they’ve stepped out of a J. Crew ad. The focus is on their army of savvy sales representatives. And they offer The Groupon Promise if customers are not satisfied plus they have a 24 hour hot line. Many customer care professionals are from Chicago’s improv-​​comedy scene. Irreverence is core to the culture–their offices had a monkey dressed in a Santa suit and a male actor strutting through the office in a tutu for a week–totally mute. There is no dress code or vacation policy. Because “surprise” is also core to the business–a surprise deal of the day–this desire to surprise is core to  how people do their work. CEO Mason realizes that a company’s purpose may not initially feel altruistic, but companies in business to make money are really equally in business to make a contribution that does good for others.
  • At Deals & More, they compare the cultures of Google and Groupon: “While Google likes to think of itself as quirky and nerdy, it’s got nothing on the off-​​kilter atmosphere created by Groupon CEO and founder Andrew Mason, who’s said he pulls pranks on his staff like hiring a man to walk around the office in a ballerina’s tutu. Google’s idea of a creative environment are lava lamps, exercise balls, and cartoon logos.”
  • In an interview with Chicagomag​.com, Mason is described this way:  “With an untucked sartorial style and a tendency to stare at the table rather than make eye contact, the tall, wholesome 29-​​year-​​old seems more like the boy next door than the next Steve Jobs or Jeff Bezos—tech superstars to whom Mason is being compared in the business press. ‘I’m just not used to talking that much about myself,’ he says. ‘It feels strange.’ He doesn’t have the CEO patter down, either. That is part of his charm.”
  • In an AOL Small Business interview, Mason said: “Part of the fun of this business is sending a deal that is for something you normally don’t do, like getting a deal to go to an indoor rock-​​climbing facility or experience a sensory-​​deprivation tank, and suddenly that person is saying, ‘Well, if I’m ever going to do this now, this is the time,’ and then maybe that person becomes an avid rock climber as a result.” Mason further states, “We’re a very humble group, and we don’t take anything for granted.”
  • In TechCrunch, from a Charlie Rose interview, Mason talks about the surprise element of the culture: “I think part of what makes Groupon really fun for consumers is this element of discovery, finding new things, being surprised every morning what the deal is. And we try to remain surprising and we try to do things, whether it’s the deal you’re getting or whether it’s the way we’re writing about the deal or whether it’s the brand and the culture of he company, that’s constantly surprising people, because that’s kind of the spice of life.” Mason explains, “I think the discount is this great trick that we’re playing on people, because we’re tricking them to get out of the house and live their lives, because it’s there for one day.” Mason cares about the local community stating, “For consumers, we want to reverse this trend of spending more and more time on the computer and help people rediscover their cities.”
  • In Fast Company, Mason says: “The accident of my success comes from injecting creativity into normal, sterile situations.”
  • In an interview in This Week In, Mason explains: “We hire great people, give them freedom to be awesome and they are a very humble group, they are all equal.”
  • In a Chicago Tribune article, Mason is described as CEO and jester. The article states, “As a youngster, Andrew Mason was the creative one with an offbeat sense of humor, organizing projects for his sister and friends that included forts made out of afghans, costumes and stages for plays, and building a bike path in the woods near his Pittsburgh area home.”
  • In an interview posted in Mixergy, Mason talks about failure: “When we started Groupon from the beginning, I had this paranoia. Since then I’ve kept a list that I look at every week of what are the biggest problems for the business. What are the ways it could fail? It sounds almost fatalistic but it really frames my way of thinking. I’ve found it to be useful and it’s helped us focus on the right things and anticipate problems instead of getting to have them. Knowing that no matter how great you are, you, too, can fail.”
  • In an MSNBC article, it describes Mason this way: “His only dress code: no sunglasses inside — because Mason hates how rock star Bono constantly wears sunglasses. Mason has been in a few rock bands, too, often stopping his shows to hand out family photos or to lead audiences in group exercises.” He has been described as eccentric, an inspiring genus, quirky, smart, driven – but with a very weird sense of humor.

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