How Do Business Leaders Create Culture Through Goal Setting?

Steve Rice: Any company that is twenty million dollars  has a culture – whether it’s the one they wanted to have when they were at four, six or fifteen million or not is another story. Or if it’s even the one they want now.

At some point, every company is gonna have departments, and it’s gonna have unintentional silos between departments and maybe even within departments. And, if there isn’t a culture already in place that’s trying to increase communication between those departments – because it’s required, I think, to have communication between those departments in order to have a well functioning business and have happy employees. My experience is that when we come into a company that does have silos, and they’re not communicating well, and they’re withholding, that you have a bunch of unhappy people and the business isn’t doing as well as it should.

So what process can we go through or what tools can we use to help a leadership team and a leader and the upper management at least identify that they do have a problem? And what tools can we give them to help them mitigate those problems and start working the solutions from the top down through the rest of the company into the employees, so that everybody benefits, including the customers? 

John Lamy: Sometimes companies wonder, “How can I bridge between the silos that have grown up? We have parts of the company that wall themselves off that are interested in turf wars, that protect, that don’t communicate very well. How can we do something about that, and by the way, take better care of the customer? Because some of that turf war and siloing is hurting the customers.” 

There are several different good answers to that question, but the one that I like and that I’ve worked with in the last little while is to develop a ‘Big Hairy Audacious Goal’ – in the words of Jim Collins, the management writer –  a ‘Big Hairy Audacious Goal’. So the stages in this process go like this:

You get the management team together, the C-Suite, and you basically look at your strategy. You look at the big issues you’ve got. You look at your value structure. And out of that you extract and create a big goal. Something big. How big? How challenging? That’s where the real artistry comes in. It can’t be too, too hard. But it wants to be a stretch, and it wants to bridge across as much of the company as possible. 

An example from my own personal life: twenty-five years ago, or something, at Hewlett Packard, Hewlett and Packard looked at our instruments that we made. We made fantastic electronic instruments, the best in the world. But they broke a lot. They would fail in the field. And Bill and Dave said, “Bad! We want to see a 10x improvement in the failure rate. Ten-x, not five percent or something like that. We want to see a ten times improvement in the failure rate over the next five years.” A huge goal, but it spanned pretty much the whole company – for sure the R and D group where I worked for sure, manufacturing for sure, the quality department for sure marketing – all these areas were touched. So that’s the kind of thing I’m talking about. 

And then what? So how does this tie to silos? Well, you set out that goal and then you have to break it down. Just like project management, create a work breakdown structure. Somebody has to do better design. Somebody has to do better acquisition of components. Somebody has to do a better job putting them together and so on. So you break it all down. But then there needs to be communication. I worked in R and D, and I had to work very closely with the manufacturing folks to make sure that the instrument was properly built. So all of a sudden that silo starts to get torn down. 

It was amazing. And you know what? Despite skepticism on the part of people like me, the R and D guys and gals, we did it. We actually accomplished a 10x improvement in a parameter failure rate. So it’s possible. It built a very strong company. And I think to this day it still echoes around back there that this is possible.There’s a lot to that. There’s a lot of work that goes into it, and then the execution of it takes a while. 

But you can build up a process by which you achieve goals, big goals, and one of the key immediate byproducts are breaking down silos. So I’ll just leave it at that as one possible answer to the question, “How do you affect a culture in a positive way that helps both the customer and the people working on the projects?”

Stephen Sendar: So in tying this together, I’m feeling we’ve veered from the initial question and appropriately, but I want a name that we have. The initial question is, “Can you build self-awareness into the culture of a company?” And the answer is, “Yes.”

Now we’re talking about something that can be seen as one of the ways, in certain kinds of companies, it can be. But I want to extract out what you said –  this notion of ‘goals and how they’re set’ being the framework that can support the growth and the teamwork is elemental in all the great companies. And I love that you guys achieved this at Hewlett Packard. I’ve always revered Hewlett and Packard being more committed to guests and customers in a way. (Steve) Jobs was more delighted that he knew his guests and he could get groupies. Hewlett and Packard wanted to make guests’ lives better – customers’ lives better. I always had that sense that how their foundations worked Included that.  

But this is sort of a substrate. Because one of my other idols in this way is Paul ONeill, with his non-arguable goals, which may be impossible to achieve, but you get to ask the question. Like the Finnish head of their environmental compliance department, who says, “We start with what we want to achieve, and then we find out what’s possible. We don’t start with the question of what is possible. We start with the goal!” 

And I think self-awareness is maintained by doing that, and it can be an instrument in helping people along. But the question of self-awareness, and creating the energy of self-awareness, is something other than that. Meaning this is how the business operates. But you also need the culture of self-awareness to make this more effective and to continue people growing. I really am struck that without effective goals, cultures with self-awareness will not thrive. They will dissipate. Or, I should say, people with self-awareness look for those audacious goals which are focused on accomplishing something as nebulous as ‘guest satisfaction’, ‘not breaking things’ – not ‘So we’re gonna sell $4 billion worth of something.’ That is a less effective goal for people who have self-awareness. It is not nourishing in a certain way. And so that was the long, long way around the barn to say: Goal setting as a part of a culture that creates self-awareness has to be stuff that continues the internal growth and freeing of self. And that’s what makes Paul O’Neil special. And that’s what made this goal special for Hewlett Packard to put on the table. It said, “Okay, I’m counting on your individual capacities and your team capacities to do this. I know you can solve this problem, and I’m gonna give you all the money and all the freedom to do it, and I’m going to step out of your way.”