Updated: Dec 9, 2022
Despite good intentions and positive motivations, most culture initiatives fail.
That’s because an existing culture is largely invisible to those who operate inside it, and the forces that sustain it (again, often hidden) are usually more powerful than the motivation to change.
Lloyd's of London
This week the Financial Times has reported on opportunities for change at Lloyd’s of London, so let’s consider this as a case study in the public domain. Lloyd’s has embarked upon a transformational programme, the first reason for which is practical - as the FT article noted: “Lloyd’s has come under fire from insurers about the costs of the market”. The “Future at Lloyds” project recognises that a modern market place that doesn’t deploy the latest technology efficiently is likely to be at a disadvantage to its competitors.
The second reason is qualitative: the Lloyd's Market Association (LMA) has identified that some of the existing behavioural norms, including sexism and bullying, are not acceptable in an institution that is a part of modern society. But progress seems slow as has been called out by FCA in its sector views published in February.
Systems preserve themselves
One of the attributes of any stable system is that it seeks to preserve itself. For evidence, look at the punishment that is consistently meted out to whistle-blowers – even when whistle-blowing is ‘supposed’ to be encouraged by company policy. The only cultures that accept whistle-blowing are those where it is fully integrated into the system itself (like airline safety) rather than treated implicitly as an attack (most other systems including, sadly, the NHS).
And this incongruence between explicit policy and under-the-surface reality is at the heart of why most culture initiatives fail. You never see a company values statement that lists greed, pursuit of power, or envy – even though they tend to be incentivised in a capitalist economy and are the primary drivers in many organisations.
If a culture change has any chance of succeeding, it needs to embrace and challenge the drivers (particularly those hidden) that sustain the existing culture. But as we observed in a previous analogy with the golf-swing, it’s difficult to be fully aware of any system or culture that you are already part of. Tackling this requires a rigorous approach to openness and honesty that is rarely seen in business, so we shouldn’t be surprised that it doesn’t happen often. That’s why it usually takes an outsider like a new chair or chief executive to initiate change. Sometimes the external imposition of regulation makes an existing culture completely non-viable. But even then, there are numerous examples of firms persistently maintaining their existing culture in the face of regulation - even when death of the business is the inevitable outcome.
The apparent lack of progress at Lloyd’s suggests that some self-sustaining drivers may have been missed: what are they? There are some clues readily available to the external observer. Lloyd’s is one of our consistently most successful institutions, based on a creative and entrepreneurial approach to risk-taking that has been unrivalled globally. Its origins in a London coffee shop, its historic business processes and behaviours - right down to the use of leather binders of paper and dressing differently to others in the City - could easily be linked in the minds of Lloyd’s participants with that historical success. Along with other deep-seated and unacknowledged values, this cultural ‘permafrost’ may be rooted in the awareness that the same culture has seen it survive historic existential threats like the San Francisco Earthquake, Piper Alpha, long tail asbestosis claims, and AIDs: who is brave enough to challenge all that?
Balance of motivations
If a culture is to change at all, the balance of motivations needs to shift. The damaging consequences of staying exactly where we are need to be as clear as the benefits of the change. The drivers that are currently implicit need to be made explicit if they are to be managed. For example, in this GDPR age, what function does carrying large bundles of paper around in leather binders serve - when the same information could be stored more practically and securely on a tablet?
The apparent reluctance to embrace change at Lloyd’s suggests that it’s necessary to get much further under the surface in order to achieve meaningful results. We need to ask questions that are designed to dig into the key realities, including those that may be hidden. Here are some candidates:
What are the attitudes and behaviours within the current culture that constitute the greatest risk to the future at Lloyd’s?
How does the Lloyd’s market need to change to secure its future in the modern world?
What are the likely consequences for not making these changes, both for the institution and for the people who work within it?
Who (whether individuals, groups, or corporate bodies) has the power to influence the necessary changes?
Why should they want to exercise that influence, and what are the benefits to them of not doing so?
What are the unwritten rules for behaviour? Which of these are benign, and which threaten to undermine the changes required?
What incentives – whether explicit or implicit – maintain the unhelpful behaviours?
Once these and other, similar, questions have been answered fully, it’s possible to start identifying key blockers to change, and sufficient motivation to overcome or bypass them.
Soft-skill enablers also need to be in place for change to be implemented: leadership, openness and clarity of communication, coaching and a safe environment where feedback is expected, encouraged and acted upon. But none of these can deliver culture change by themselves.
Making the invisible visible
Culture change needs to start with where we are now: we need to make the invisible visible. Not an idealised version, but all of the truth including operating values that we might be ashamed of or embarrassed about. That’s tough, and even more difficult for those already in the system because they are genuinely blind to them.
It needs awareness and courage. If the realities are to be exposed and honestly dealt with, skilled external support can help enormously. If that doesn’t happen, the most likely result is the list of platitudes that is so often passed off as culture change in business today.