Keys to Transformation
As president and chief operating officer, Peter Volanakis steered Corning Inc. (NYSE: GLW) past a brush with bankruptcy when the telecommunications industry imploded some 10 years ago.
Part of Corning’s resurgence came as a result of Volanakis’ leadership of the company’s entry into the now-burgeoning liquid crystal display market. Corning’s Gorilla® Glass — a pliable and impact-resistant glass — is found on more than 100 million mobile devices.
In both cases, Corning was in the heart of sweeping change — one a struggle back from the edge of financial collapse, the other a significant refocus of the company’s developmental efforts. And, in both instances, culture transformation was the philosophic and operational flywheel that helped Corning chart a successful course.
“After the collapse of the telecommunications industry, we had to reenergize our values and culture. Our revenue had dropped from $7 billion to $3 billion in just 18 months,” says Volanakis, who spent nearly 30 years in various positions with Corning. “When we started the bendable glass project, there were no customers and only a few notions of potential applications. Corning lost money for 14 years in LCD glass before turning a profit. I think that tells you something about a culture that encourages very large technology bets and sticking with them even in the face of daunting losses.”
Culture’s critical to transformation
Although it may have a simplistic bumper sticker ring to it, the phrase “Culture eats strategy for lunch” underscores the critical value of a company’s culture in transformative environments. And, as Volanakis notes, transformation doesn’t have to be characterized by sweeping, dramatic types of change.
“Transformation is taking place constantly,” he says. “Increasing your customer base is a form of transformation.”
Looked at one way, culture transformation can be a question of scale. For certain forms of change, such as introducing a new product or service, an accompanying change in corporate culture need not occur at the same time. But major corporate overhauls rarely take place without concomitant culture change.
“If you have a solid culture in place, you have an easier time of enacting simple changes,” says Lily Sarafan, president and chief operating officer of Home Care Assistance, a provider of in-home care services. “Major transformations absolutely require a shift in corporate culture because it requires buy-in from everyone from every rank in the company.”
Defining culture
One of the challenges of understanding the importance of a company’s culture is that the term itself is highly subjective, resisting any sort of consistent definition. For Volanakis, culture derives from clearly defined values that are as actionable as they are understandable.
“It starts with values. You need to know who you are — what’s your DNA?” he says. “Values provide a context for a broader culture. And those can’t just be words on paper or a kind of poster art. They need to be exemplified every day by the leaders of a company.”
Volanakis points to the value of the individual as a core tenet of Corning’s overall culture. And, consistent with the importance of values that are a matter of practice and not just theory, Volanakis cites the extensive education and training of new Corning employees in China — part of a strategy of increasing globalization underwritten by the value of investing in company personnel. Revenues from activities in China are fast approaching $1 billion.
A solid culture can also help organizations adapt to circumstances outside of their control. As Sarafan notes, the healthcare industry is poised to undergo a sweeping introduction of regulatory changes. She’s confident that Home Care Assistance’s clearly defined culture will allow the company to absorb those changes with a minimum of disruption.
“My belief that we’ll make a smooth transition has very much to do with our infrastructure and corporate culture,” she says. “That’s because we have buy-in, not just within the office team but our caregivers as well. We’ve included them in the process of developing a culture all along.”
Negative culture
Although corporate culture is a powerful vehicle for stewarding change of all sorts, it isn’t necessarily positive by definition. For example, a corporate culture that emphasizes outstanding customer service might seem like an inarguably positive value. But, if that emphasis compromises the company’s commitment to employee quality of life, it can be difficult to determine whether the organization’s overall culture is truly beneficial or not.
“It’s important to remember that culture can also evolve in a negative fashion,” says Charles H. Matthews, executive director of the University of Cincinnati’s Center for Entrepreneurship Education and Research. “And, leadership often doesn’t know whether their culture is a good thing or a bad thing. That’s a question that can get lost in the conversation.”
Still, other landmines are those instances where the “conversation” never takes place at all. Since culture is a highly singular component — what works for one corporation may be utterly inappropriate for another — it’s simply not a matter of replicating another organization’s culture. Another potential problem is the perceived nature of culture. For some executives, taking the time to define and identify a suitable culture may seem unproductively abstract. As Sarafan notes: “You can’t put corporate culture in a cost-benefit analysis.”
Culture as a failsafe
But the benefits are undeniable. Since a solidly defined culture implicitly mandates both the understanding and embrace of everyone in an organization, that sort of affinity can prove a failsafe for possible change that simply doesn’t fit.
“Everybody’s a volunteer. People generally don’t come to work every day just for a paycheck. They need meaning and identification with a company,” says Volanakis. “If you’re trying to achieve something and something happens that’s out of the ordinary with regard to the culture, people should stand up and say ‘That doesn’t feel right.’ ”
But even a situation that absolutely mandates a significant adjustment in culture doesn’t always allow for immediate action. Sometimes, notes Gregg Fairbrothers, adjunct professor of business administration at the Tuck School of Business at Dartmouth College, crises such as severe cash flow issues or an impending lawsuit take priority. That doesn’t water down the importance of examining culture — rather, first things first.
“Occasionally, the question of culture change needs to be addressed later,” he says. “But, once you’re out of rough waters, without the right company culture, you’re just going around in circles.”
Culture evolution
Just as a major operational or infrastructure change can’t happen overnight, nor can significant culture evolution quickly win the support of everyone within an organization. In fact, it’s probably better that it doesn’t.
“It doesn’t have to be immediate buy-in,” says Safran. “Buy-in is a process, it’s an explanation — it’s a very challenging process. If you have discussion and feedback from others, you end up with more nuanced and finalized ideas.”
For some, culture may, indeed, “eat strategy for lunch.” For others, they occupy the same plate on a complementary and supportive menu.
“You can have the finest strategy in the world, but it has to be executed by people and it has to happen in a cultural context,” says Volanakis. “Culture is the context in which that strategy sits. This is how we treat each other, how we deal with customers, how we grow. Culture is the context in which everything happens.”
Volanakis’ Three Keys to Transformation
Ready to transform your company’s culture? Do these three things first.
1. Know who you are.
Identify your core values, beliefs, and priorities. Without those as your base, any decision you make may be ill-directed.
2. Live your beliefs.
Instead of just saying, “We value people,” show it through development programs, a commitment to promoting from within, and competitive compensation.
3. Encourage buy-in.
You, as a leader, believe in your core tenets, but if those around you don’t, your company won’t be able to effectively withstand change or challenge.
