g-f(2)12 Organizational culture and leadership are at the core of disruptive business models

Extra-condensed knowledge

While culture provides the foundation for organizational and industry stability, it is also the force that keeps leaders stuck in their old ways of conducting business. The takeaways from this story apply to every industry. 

• Leaders who are serious about creating the organizations of tomorrow have a simple choice: They can stay with the cultural norms that created their prior success, or they can do the hard work to change themselves to ensure success in the future. 
• Today’s leaders need to take a personal journey to avoid the fate that has befallen companies such as Blockbuster, Kodak, Sears, and so many others, and it starts with three steps: examining personal values in order to redefine them, communicating the new values widely, and measuring what matters — the performance of the new initiatives and investments that are necessary.

Genioux knowledge fact condensed as an image.

Condensed knowledge 

• While some leaders strive to create tomorrow’s cultural norms using advanced technologies, others resist cultural changes and stick to their knitting. The result is a growing chasm between winners and losers. 
• For example, today’s trillion-dollar behemoths are all technology-based organizations that take advantage of mobile technology, data, multiple revenue streams, and AI strategies. They are led by leaders who want to change the world, while the companies that held the top spots of growth and value just two decades ago — banks, oil companies, real estate companies, and manufacturers — are paying the price for holding on to their historical cultural beliefs.
• Three Steps Toward Change. If leaders are itching to change their corporate culture and direction, we recommend that they first follow three steps to challenge their own biases: 
• Step 1: Leaders need to examine their thoughts and values in order to redefine them. Attempts to change an organization’s strategy, products, services, measurements, or reporting will be in vain if leaders don’t realize that cultural change is an inside job. Leaders have to change first.
• Step 2: Leaders need to communicate their new identity. Clearly defining the values that management and the board hold should help an organization create today’s newest business model: AI-powered digital platforms with multisided revenue models. Doing this requires that they discourage existing employees from keeping their heads down and proceeding with business as usual.
• Step 3: Leaders need to measure the impact of new cultural norms on the company’s performance. To truly transform, leaders must identify new key performance indicators that link to their company’s emerging new identity and track and report them. If you don’t measure it, you won’t manage it, nor will you value it. 
• Change Your Leadership Culture — or Your Leaders. Organizational culture has a strong impact on the efforts of an organization trying to adopt big data, machine learning, and network-based business models to catch up with today’s leading companies. The reinforcing loop — culture — is the foundation of that race. If leaders truly want to derive meaningful business benefits from analytics and platform models, they must proactively address their own core identities before trying to introduce large-scale transformation initiatives.
• Sometimes the only way out is to replace leaders, including the board (and, potentially, investors, too).

Category 2: The Big Picture of The Digital Age

[genioux fact extracted from MIT SMR]

Authors of the genioux fact

Fernando Machuca

References

Changing Culture Is Central to Changing Business Models, Lanham Napier, Barry Libert, and K.D. de Vries, November 23, 2020, MIT Sloan Management Review.

ABOUT THE AUTHORS

Lanham Napier (@lnapier) was the CEO of Rackspace and is the CEO and cofounder of BuildGroup, a growth equity fund that invests in public and private SaaS-plus marketplace companies. Barry Libert (@barrylibert) is the CEO of AIMatters, a business model data science startup, and a strategic adviser to BuildGroup. K.D. de Vries (LinkedIn) is a marketing consultant at BuildGroup.