Jul 18, 2024
During a recent interview with a growth-stage CEO, I asked the highly credentialed and experienced candidate about his approach to leading this prospective organization through necessary changes after the organization had been unable to achieve agreed-to growth targets over the past year. Among several tactics and action items on his radar, he shared the need to find the right balance between respecting the strengths of the existing culture, introducing new aspects and rituals to build a resonant culture, and helping people unlearn the unhealthy elements of what was in place culturally at present.
As I listened to him, I smiled.
The need to strike a healthy cultural balance as a modern-day CEO is strongly reinforced by results from a recent Russell Reynolds Leadership Confidence Index, which pulls together global insights from board members, CEOs, C-suite leaders, and next-generation leaders. According to the Index, there are three critical constructs that CEOs and executive leaders must address in response to societal, political, and technological change:
- Capability
Does the ELT have the right capability to lead the organization successfully, with a strong grasp of competitive dynamics in their industry, and access to the right information to support decision-making? Does the ELT receive good advice and input from the board?
- Behavior
Does the ELT work together effectively as a team, effectively embrace change; and role model the right culture and behaviors?
- Issue management
Does the ELT effectively embrace the opportunities of digital, cultural, and workplace transformation and have a successful strategy for C-level leadership succession?
Unfortunately, the Index also revealed a steady decline in leadership confidence among staff to address this ever-increasing complexity. From where I sit, as a coach to clients, these dynamics ring resoundingly true, especially among growth-stage companies.
Take a recent conversation I had with a client about her company’s new CEO. A well-respected member of her organization, my client was promoted to the C-suite by the Founder/CEO who was also highly respected, influential, and consensus-driven. The board recruited the new CEO who is well-known in their industry. He brings a very different and stark leadership style.
While the organization was known prior for its nimble, open, and respectful culture where ideas flowed freely and employees felt empowered, the new CEO had a clear change mandate. He spoke the right words. But his actions said something different. He was control-driven and aggressively top-down.
As I listened to her, I reflected on my personal experience, having seen this “movie” all too often. The new CEO comes in with grand visions of transformation and a clear sense of what is needed to improve performance, but what lies neglected, or is often overlooked, is the critical value of cultural foundation and what has been embedded within the culture over time.
Respecting Past and Present
Culture is fragile in growth-stage companies when subjected to rapid change as business and financial conditions shift. While some growth-stage cultures may be flawed and Founder-influenced, requiring wholesale reinvention, intervention and/or acute change from the top, most require a more intentional and nuanced touch. There may be aspects of culture that hinder performance, are undervalued, or are misaligned to the needs of the business. Or the strength of the existing culture might operate on autopilot despite the leadership at the helm. Regardless, disregarding the existing cultural foundation may turn important leaders and followers into leavers as they quickly become alienated, demoralized, or disoriented.
For many newly hired CEOs, the cultural legacy they inherit may come with ill-conceived assumptions that past and present culture are “anchors”. While the future is not necessarily an extension of the past or present, one can use the past and present as critical reference points, and as a balanced catalyst for signaling both respect and reverence, along with the possibility of a better future.
So, how can new growth-stage CEOs who often replace Founders be more culturally intentional as they seek to make a lasting impact, starting with their first 100 days?
- Understand Before Acting. Patience must take precedence. Take the time to thoroughly understand the current culture. Engage with employees at all levels, listen to their stories, and learn about what they value in the organization. Learn to separate the noise of what you hear from the signals you pick up.
- Identify Core Values: Every organization has core values of some type that define behavior, ritual, and identity. Identify the values people aspire to or see as disconnected from the task or opportunity at hand. Make sure your proposed changes align with them. Balance cultural evolution while also preserving its essence.
- Honor the Past, Embrace the Future: Acknowledge the contributions of your predecessor and the positive aspects of the existing culture. Show appreciation for the past while also presenting a compelling vision for the future. This will help foster a sense of continuity and stability.
- Implement Change… Gradually: Radical change can be disruptive and counterproductive. Allow time for employees to adapt. Small, incremental adjustments can lead to significant improvements without causing cultural shock.
- Be Inclusive (where it makes sense): As you assess capability at the executive table and at the layer below, find ways to engage leaders in your thought and framing process. Create opportunities for change ownership and accountability. Listen and observe. This enriches the change process and ensures broader acceptance and integration.
Balancing Continuity and Change: A Few Suggested Actions
Seeking to make a positive impact without undermining the existing culture, you might consider these approaches:
- Cultural Assessment: Conduct a thorough cultural assessment through focus groups and one-on-one interviews. Understand the strengths and weaknesses of the current culture and identify areas that need enhancement.
- Vision Alignment Workshops: Organize workshops that bring together employees from different levels and departments. Use these sessions to align your vision with the organization's core values and gather feedback on potential changes.
- Cultural Ambassadors: Identify and empower cultural ambassadors within the organization. These are employees who embody the best aspects of the existing culture and can help facilitate the transition by bridging the gap between old and new.
- Pilot Programs: Before rolling out major changes company-wide, implement pilot programs in select departments or teams. Monitor the impact, gather feedback, and make necessary adjustments before broader widescale implementation.
- Continuous Feedback Loops: Establish mechanisms for continuous feedback and open dialogue. Regular town hall meetings, suggestion boxes, and anonymous surveys can provide valuable insights and help address issues promptly.
- Recognition and Celebration: Recognize and celebrate both past achievements and progress towards new goals. This reinforces a positive culture and maintains morale during periods of change.
The role of a new CEO following a Founder is challenging but is also a highly influential place replete with the power to reshape or re-frame the future of an organization. This power and influence must be wielded with great care and respect for the existing cultural foundation. By understanding and valuing the current culture, communicating transparently, and implementing gradual and inclusive changes, new CEOs can achieve a harmonious balance between continuity and innovation. As an executive coach, I have seen that the most successful leaders are those who thoughtfully honor the past, while deliberately guiding their organizations toward a better future.
