cutlure leadership and change richard barrett (upload)

www.valuescentre.com 1www.valuescentre.comwww.valuescentre.com

Culture, Leadership and Change

Richard BarrettApril 2011

2

What is Culture?

3

What is Culture?

“The way things are done around here”

The culture of an organisation or any group of individuals is a reflection of the values, beliefs and behaviours of leaders of the group and the legacy of past leaders.

4

What are Values?

5

What are Values?

Values - A shorthand method of describing our individual and collective motivations and what is important to us.

Values can be positive or potentially limiting.

Positive Values: trust, creativity, passion, honesty, integrity, clarity

Potentially Limiting Values: power, blame, greed, status, being liked

6

Exercise: Values, Beliefs and Behaviours

This exercise takes about 15 minutes

1. Choose 3 values that are important to you and enter them in the left hand column of the worksheet

EXAMPLE: Clarity

2. Write down your beliefs that support this value in middle column

EXAMPLE: Clarity bring focus to decision making

3. Write down the behaviours you exhibit that support this value

EXAMPLE: Seek many opinions, synthesize multiple data points to understand the big picture

7

Hierarchy of Decision Making

Based on past: DNA encoded reaction. Action precedes thought.

Based on past: Learned ego reaction. Action precedes thought.

Based on past: Considered response. Pause between event and response.

Future orientation. Consciously creating the future.

Based on flow. Tap into the collective unconscious and what wants to emerge.

Intuition

Instincts

Sub Conscious Beliefs

Conscious Beliefs

Values

Based on inner voice. Direct influence of the soul on decision-making

Inspiration

8

The Leader and the Values

The excellent companies developed cultures that incorporated the values and practices of their great leaders, and those shared values can be seen to survive for decades.

Tom Peters, “In Search of Excellence: Lessons from America’s best run companies”, 1983

Leadership values and excellence

9

The Leader and the Values

Tom Peters, “In Search of Excellence: Lessons from America’s best run companies”, 1983

The real role of the leader is to manage the values of the corporation.

10

Culture and Strategy

11


Strong Culture Good Strategy

High Performance

12


Full Spectrum Leadership

Compelling VisionInspiring Mission

High Performance

Strong CulturePersonal Alignment

Group CohesionStructural Alignment

Good StrategyClear Goals

Measurable Objectives Key Performance

Indicators

13

Both Culture and Strategy are Important

In firms with strong corporate cultures, managers tend to march energetically in the same direction. The alignment, motivation, organisation, and control can help performance, but only if the

resulting actions fit an intelligent business strategy for the specific environment in which the firm operates.

John P. Kotter and James L. Heskett, “Corporate Culture and Performance”, 1992

14

Culture and Brand

15

Culture and Brand

Employee Perspective Customer Perspective

CULTURE BRAND

The Culture

Vision Mission Values Behaviours

Who you are on the inside, looks a lot like who you are on the outside

Do you consciously create your culture, or do you have a default,

unconscious culture?

16

Culture and Valuesin a Rapidly Changing World

17

Organisations as Complex Adaptive Systems

The modern economy resembles a complex adaptive system rather than a close equilibrium system. Thus, markets exhibit periods of relative calm and stability which are interrupted by stormy periods.

Such disequilibriums make it difficult for participants to survive for long periods as their strategies, skills or culture tend to get finely optimized for stable periods, and then suddenly become obsolete when the restructuring occurs. Companies have a hard time surviving upheavals, market shakeouts and technology shifts.

Therefore, strong cultures are only valuable if they exhibit the adaptive and learning qualities. Otherwise, they become a liability during the periods of accelerated change.

Beinhocker, E. (1997) “Strategy at the Edge of Chaos”, McKinsey Quarterly, Vol. 1, pp 25-39

Strong cultures exhibit adaptive and learning qualities

18

The Economic Meltdown

What we currently are experiencing is not a market shakeout or a technology shift.

It is the breakdown of an unsustainable economic paradigm that threatens the global sustainability of human society.

19

Global Sustainability Issues

Pandemics

Climate Change

Global Economy

GlobalTerrorism

Poverty Reduction

Food Resilience

Natural Disasters

Energy Resilience

Species Extinction

WaterShortages

The significant problems we face cannot be solved at the same level of thinking that created them.

Pollution

Waste Disposal

20

What Sustainability Issues is your company facing?

• Internal Issues• External Issues

21

What this Means for Business

Increased focus on Sustainability

Risk and uncertainty are increasing

Change is accelerating – social, economic, technological

Competition is increasing – China, India, South America

Complexity is increasing

Interdependency is increasing

Ethics and public opinion increasingly influence corporate decision-making as societal issues increasingly become political issues

22

Other Business Issues …

How to attract and keep talented people – War for Talent

How to increase profitability and shareholder value

How to increase staff engagement

How to increase innovation, creativity, agility, and customer satisfaction

How to ensure ethics permeate the corporate culture and the company is in alignment with public opinion

23

The Global Sustainability Challenge?

24

The Sustainability Challenge

The problems of existence have become global but the decision-making structures

we have for dealing with them are national.

We cannot move forward without a high degree of global cooperation.

25

A New Leadership Paradigm

Private Sector

Social Sector

Public Sector

The paradigm that divides the world into the social sector, the private sector, and the

governmental sector is not working.

It creates artificial barriers. We are each a constituent of the problem, so we have to

combine our forces, our efforts, and our competencies.

Tex Gunning, Unilever, Best Foods Asia

26


Private Sector

Social Sector

Public Sector

Average leaders take care of themselves and their families.

Good leaders take care of themselves, their families, and some of the community.

Great leaders—and great companies—not only take care of all stakeholders but also want to change the world.

They want to leave the world better than they found it.

Tex Gunning, Unilever, Best Foods Asia

27


A shift in focus from “I” to “we”

A shift from self-interest to the common good

A shift from being the best in the world to the best for the world.

28

We will only get beyond this stage of our collective evolution if we can put aside our

narrow self-interest, focus on the whole system, and build a values-driven

framework of policies that support the common good.

A Crisis of Leadership

Richard Barrett, The New Leadership Paradigm

29

What Evolution can teach us about the New Leadership Paradigm

• Three Universal Principles• Five Characteristics/Strategies• Building a High-Performance

Organisation to Withstand Turbulent Times

30

The Universal Stages of Evolution

From the Big Bang … to the Present Day

Stage 1Entities learn how to become viable and independent in their frameworks of existence.

Stage 2 As life conditions become more complex, viable independent entities bond with each other to create a group structures.

Stage 3 Viable independent group structures then cooperate with each other to form a higher order entity.

Energy Atoms Molecules Cells Organisms Creatures Homo sapiens

31

Evolution and Complexity

At each stage of evolution – from atoms, to cells, to creatures – there was not only an expansion in awareness, but also an expansion in the range of possible reactions or responses that an entity could make to changes in its internal or external environment.

Evolution: The continually unfolding ability to respond to increasingly complex life conditions.

An increase in external complexity demanded an increase in

internal complexity

32

Stage 1:

Entities learn how to become viable and independent in their frameworks of existence.

Stage 2:

As life conditions become more complex, viable independent entities bond with each other to create a group structures.

Stage 3:

Viable independent group structures then cooperate with each other to form a higher order entity.

Particles/waves of information existing in a quantum energy field.

Carbon atom Molecules Cells

Eukaryotic cell Organisms Creatures

Homo sapiens Nations Humanity

The Universal Stages of EvolutionLevels

of

Bein

g

Evolution

33

PERSONAL MASTERYEncourage individuals to become viable independent (be

accountable and responsible for their work)

INTERNAL COHESIONEncourage those individuals to bond together to form teams and

business units with common values and a sense of shared mission and vision

EXTERNAL COHESIONEncourage those teams and business units to collaborate together

to form a higher order entity known as the organization

What this Means for Organisations

Three Stage Leadership Development Process

34

Priorities for Leadership Development

Stage 1: Personal Mastery

Overcoming the fears of the Ego to become viable and independent in your framework of existence

Stage 2: Internal Cohesion

Aligning the motivations of the Ego with the Soul (bonding) to become an authentic individual

Stage 3: External Cohesion

Cooperating with other individuals who share the same values and mission to leverage impact

Evolu

tion

Stage 1: Team Mastery

Overcoming the fears of individual Team membersTo minimize cultural entropy

Stage 2:Internal Cohesion

Aligning the motivations of Team members with the mission of the Team for team alignment

Stage 3:External Cohesion

Cooperating with other Teams who share the same values and vision

Stage 1: Personal Mastery

Overcoming the fears of individual Staff members to minimize cultural entropy

Stage 2:Internal Cohesion

Aligning the motivations of Staff members with the vision and values of the Organization

Stage 3:External Cohesion

Cooperating with other Organizations who share the same values and vision

Leading Self Leading Others Leading an

Organisation

35

Selection Priorities for Talent Management

Adaptability

- Speed- Resilience

Continuous Learning

- Memory - Logic

Ability to Bond

- Compatibility - Trust

Ability to Handle Complexity

- Internal - External

Ability to Cooperate

- Alignment- Empathy

Characteristics of highly successful evolutionary entities

ABILITY TO LEAD SELF AND TO LEAD OTHERSAGE & EXPER-IENCE

36

From Leader’s Values to Shareholder Value

Corporate Sector

Leader’s Values/ Behaviours

Corporate Culture

CompetitiveAdvantage &Resilience

Performance & Shareholder

Value

37

Corporate Sector

From Leader’s Values to Shareholder Value

LeadershipDevelopment

EmployeeFulfillment

CustomerSatisfaction

Performance & Shareholder

Value

38

From Leadership to Customer Satisfaction

Public Sector

Leader’s values/ behaviours

OrganisationalCulture

Mission Assurance

CustomerSatisfaction

39

From Leadership to Customer Satisfaction

LeadershipDevelopment

EmployeeFulfillment

MissionAssurance

Customer Satisfaction

Public Sector

40

Building a High-Performance Organisation

• Focus on the Employee Experience

41

How do you Build a High-Performance Organisation?

By creating an adaptable, vision-guided, values-driven culture that focuses on all stake holder needs and in particular

the employee and customer experience.

42

3 Years 5 Years 10 Years0%

200%

400%

600%

800%

1000%

1200%

S&P 500 Good to Great

Firms of Endearment

Firms of Endearment*

Investor returns over 3, 5 and 10 years comparing S&P 500, Good to Great and Firms of Endearment.

“... the distinguishing feature of “firms of endearment” is that they treat all stakeholders—employees, customers, investors, partners, and society—equally. In addition, they fully recognize that they are a part of an economic ecosystem with many interdependent participants. They are committed to exemplary citizenship, and they embrace the concept of servant leadership.

* Rajendra S. Sisodia, David B. Wolfe, and Jagdish N. Seth, Firms of Endearment: The Pursuit of Purpose and Profit (Upper Saddle River, N.J.: Wharton School of Publishing, 2007).

43

Firms of Endearment

“FoEs share four primary elements in their corporate visions.

• A broader purpose than wealth generation• Dedication to servant leadership • Emotionally intelligent leadership• Commitment to exemplary citizenship• Recognition that they are part of an economic ecosystem with many interdependent participants”

Firms of Endearment: How World-Class Companies Profit from Passion and Purpose, David Wolfe, 2006

44

Better returns

A portfolio of the top twenty publicly listed best companies to work for in the USA in 2008 would have returned an average annualized return of 16.74% over the past ten years – compared to 2.83% for the S&P 500.

Fortune’s Best Companies to Work For

S&P 500

45

Best Employers have Lowest Entropy

Staff Engagement Cultural Entropy

Tier 1 (Best) 89% 5%

Tier 2 76% 8%

Tier 3 55% 15%

Tier 4 (Worst) 40% 21%

Cultural Entropy The degree of dysfunction in the culture – bureaucracy, internal competition, etc.

This research of 163 organisations in Australia was carried out by Hewitt Associates and the Barrett Values Centre in 2008

46

Low Entropy Leads to High Financial Returns

Entropy Level 3 Year Revenue Growth %

<10% 32.87%

10% – 19% 24.90%

20% – 29% 11.39%

>29% 11.07%

This research of 163 organisations in Australia was carried out by Hewitt Associates and the Barrett Values Centre in 2008

Cultural Entropy

The degree of dysfunction in the culture – bureaucracy, internal competition, etc.

47

The distinguishing feature of the best employers was their focus on employee needs and the employees’ experience.

The values that were present in the top ten current culture values of the best companies, that were not present in the worst companies.

Best employers focus on …

Employee needs and employee experience

Employee recognition

Coaching/mentoring

TeamworkBalance (home/work)

48

The Three Mantras of Culture Change

49


50


Cultural Capital is the new frontier of competitive advantage.

Organisational transformation begins with the personal transformation of the leaders.

Measurement matters. If you can measure it you can manage it.

51

Cultural Evolution Begins with Personal Evolution

The culture ofan organisationis a reflectionof the leadership consciousness.

power (L) 11 Level 3

blame (L) 10 Level 2

demanding (L) 10 Level 2

manipulative (L) 10 Level 2

experience 9 Level 3

controlling (L) 8 Level 1

arrogant (L) 7 Level 3

authoritarian (L) 6 Level 1

exploitative (L) 6 Level 1

ruthless (L) 6 Level 1

1. short-term focus (L) 13 Level 1

2. blame (L) 11 Level 2

3. manipulation (L) 10 Level 2

4. caution (L) 7 Level 1

5. cynicism (L) 7 Level 3

6. bureaucracy (L) 6 Level 3

7. control (L) 6 Level 1

8. cost reduction 5 Level 1

9. empire building (L) 5 Level 2

10. image (L) 5 Level 3

11. long hours (L) 5 Level 3

LV A Feedback 14 Assessors

PL = 1-9 | IRO (P) = 1-0-0 | IRO (L) = 1-8-0

CVA Current Culture

PL= 1-10 | IROS (P)= 0-0-1-0 | IROS (L)= 2-4-4-0

Cultural Entropy 38% Personal Entropy 64%

Culture Values Leader’s Values

52

The culture ofan organisationis a reflectionof the leadership consciousness.

continuous learning 11 Level 4

generosity 11 Level 5

commitment 10 Level 5

positive attitude 10 Level 5

vision 10 Level 7

ambitious 9 Level 3

making a difference 8 Level 6

results orientation 8 Level 3

honesty 7 Level 5

integrity 7 Level 5

intuition 7 Level 6

leadership developer 7 Level 6

1. customer satisfaction 16 Level 2

2. commitment 11 Level 5

3. continuous learning 11 Level 4

4. making a difference 11 Level 6

5. global perspective 9 Level 3

6. mentoring 9 Level 6

7. enthusiasm 8 Level 5

8. leadership development 8 Level 6

9. integrity 7 Level 5

10. open communication 7 Level 2

11. optimism 7 Level 5

12. shared values 7 Level 5

CVA Current Culture

PL= 12-0 | IROS (P)= 4-2-5-1 | IROS (L)= 0-0-0-0

LV A Feedback 27 Assessors

PL = 12-0 | IRO (P) = 9-1-2 | IRO (L) = 0-0-0

Cultural Evolution Begins with Personal Evolution

Cultural Entropy 7% Personal Entropy 9%

Culture Values Leader’s Values

53

Measuring Culture by Mapping Values

54

The Model and Cultural Transformation Tools

Pages: 55-101 Pages: 19-67

55

Growth Needs and Deficiency Needs

Growth NeedsWhen these needs are fulfilled they do not go away, they engender deeper levels of motivation and commitment.

Deficiency NeedsAn individual gains no sense of lasting satisfaction from being able to meet these needs, but feels a sense of anxiety if these needs are not met. Physiological

Safety

Love & Belonging

Self-esteem

Know and Understand

Abraham Maslow

Self Actualization

56

Maslow’s Needs to Barrett’s Consciousness

Know and Understand

Physiological

Safety

Love & Belonging

Self-esteemAbraham Maslow

Know and Understand

N e e d s C o n s c i o u s n e s s

Self-Actualization

Richard Barrett

57

Maslow’s Needs to Barrett’s Consciousness

Know and Understand

Physiological

Safety

Love & Belonging

Self-esteem

Know and Understand

N e e d s C o n s c i o u s n e s s

1. Expansion of self-actualization into multiple levels.

2. Substitute ‘states of consciousness’ for hierarchy of needs.

3. Each state of consciousness is defined by specific values and behaviours.

58

Stages in the Development of Personal Consciousness

Positive Focus / Excessive Focus

Service

Making a difference

Internal Cohesion

Transformation

Self-esteem

Relationship

SurvivalFinancial Security & SafetyCreating a safe secure environment for self and significant others. Control, greed

BelongingFeeling a personal sense of belonging, feeling loved by self and others. Being liked, blame

Self-worth Feeling a positive sense of pride in self and ability to manage your life. Power, status

Personal GrowthUnderstanding your deepest motivations, experiencing responsible freedom by letting go of your fears

Finding Personal MeaningUncovering your sense of purpose and creating a vision for the future you want to create

Collaborating with PartnersWorking with others to make a positive difference by actively implementing your purpose and vision

Service to Humanity and the PlanetDevoting your life in self-less service to your purpose and vision

59

Positive Focus / Excessive Focus

Financial StabilityShareholder value, organisational growth, employee health, safety. Control, corruption, greed

BelongingLoyalty, open communication, customer satisfaction, friendship. Manipulation, blame

High PerformanceSystems, processes, quality, best practices, pride in performance. Bureaucracy, complacency

Continuous Renewal and LearningAccountability, adaptability, empowerment, teamwork, goals orientation, personal growth

Building Corporate CommunityShared values, vision, commitment, integrity, trust, passion, creativity, openness, transparency

Strategic Alliances and PartnershipsEnvironmental awareness, community involvement, employee fulfillment, coaching/mentoring

Service To Humanity And The PlanetSocial responsibility, future generations, long-term perspective, ethics, compassion, humility

Stages in the Development of Organisational Consciousness

Service

Making a difference

Internal Cohesion

Transformation

Self-esteem

Relationship

Survival

60

Placement of Values by Level

Current Culture 100 Employees

Top Ten Values

1. tradition (L) (59)

2. diversity (54)

3. control (L) (53)

4. goals orientation (46)

5. knowledge (43)

6. creativity (42)

7. productivity (37)

8. image (L) (36)

9. profit (36)

10. open communication (31)

10

42 5

7

9

6

8

3

110

Service

Making a difference

Internal Cohesion

Transformation

Self-esteem

Relationship

Survival

61

Cultural Entropy

Distribution of Values by Level

Current Culture 100 Employees

11%

1

2

3

4

5

6

7Service

Making a difference

Internal Cohesion

Transformation

Self-esteem

Relationship

Survival

62

Engineering and Projects Company (339)

Level 7

Level 6

Level 5

Level 4

Level 3

Level 2

Level 1

Personal Values Current Culture Values Desired Culture Values

IRS (P)= 6-4-0 | IRS (L)= 0-0-0 IROS (P)= 0-2-5-0 | IROS (L)= 1-1-1-0 IROS (P)= 1-3-6-0 | IROS (L)= 0-0-0-0

Matches

PV - CC 1CC - DC 4PV - DC 2

Health Index (PL)

PV: 10-0CC: 7-3

DC: 10-0

1. honesty 169 5(I)

2. accountability 165 4(R)

3. commitment 150 5(I)

4. continuous learning 92 4(I)

5. balance (home/work) 91 4(I)

6. family 91 2(R)

7. self-discipline 91 1(I)

8. responsibility 89 4(I)

9. respect 81 2(R)

10. open communication 76 2(R)

Black Underline = PV & CC Orange = CC & DC P = Positive L = Potentially Limiting I = Individual O = Organizational

Orange = PV, CC & DC Blue = PV & DC (white circle) R = Relationship S = Societal

1. continuous improvement

111 4(O)

2. customer satisfaction

111 2(O)

3. safety conscious 102 1(O)

4. cost reduction 88 1(O)

5. job insecurity (L) 77 1(O)

6. inconsistent (L) 75 3(I)

7. teamwork 74 4(R)


9. blame (L) 71 2(R)

10. corporate image 64 3(O)


2. customer satisfaction

147 2(O)

3. continuous improvement

143 4(O)

4. employee development 111 4(O)

5. employee recognition 96 2(R)


7. inspirational leadership 95 6(O)

8. employee fulfilment 94 6(O)

9. teamwork 90 4(R)

10. professionalism 80 3(O)

Values Plot Copyright 2011 Barrett Values Centre February 2011

The values that are important to

employees in their personal

lives.

How employees experience the company - What is working well? What is undermining the sustainability

of the company.

What employees believe is necessary

for the company to achieve

its full potential

1%

1%

1%

9%

12%

17%

24%

8%

6%

21%

0% 20% 40%

1

2

3

4

5

6

7

6%

5%

12%

10%

8%

14%

11%

9%

5%

20%

0% 20% 40%

1

2

3

4

5

6

7

1%

1%

0%

6%

12%

16%

19%

13%

5%

27%

0% 20% 40%

1

2

3

4

5

6

7

Engineering and Projects Company (339)

C

T

S

Values Distribution Copyright 2011 Barrett Values Centre February 2011

C = Common GoodT = TransformationS = Self-Interest

Positive ValuesPotentially Limiting Values

CTS = 38-21-41Entropy = 3%

CTS = 25-20-55Entropy = 23%

CTS = 37-27-36Entropy = 2%

Personal Values

Current Culture Values

Desired Culture Values

Total number of votes for all

values at each level

Cultural Entropy % of Votes for Limiting Values

Common Good

Transformation

Self Interest

6464

ValueCurrent

Culture VotesDesired

Culture VotesValue Jump

accountability 71 180 109

inspirational leadership 15 95 80

employee fulfilment 23 94 71

employee recognition 28 96 68

employee development 57 111 54

professionalism 36 80 44

efficiency 30 74 44

commitment 55 95 40

honesty 33 70 37

balance (home/work) 29 66 37

Value JumpsValue JumpsVotes for Values in

Current CultureVotes for Values in

Desired Culture

6565

ESPOUSED VALUE

CC VOTES DC VOTES Difference*

Customer satisfaction

111 147 +10%

Accountability 71 180 +32%

Honesty 33 70 +11%

Employee fulfilment

23 94 +21%

Espoused Values AnalysisEspoused Values Analysis

Votes for Values in Current Culture

Votes for Values in Desired Culture

66

Nedbank, South Africa: An Example of Cultural Evolution

68

Entropy 13%Entropy 25% Entropy 19% Entropy 17% Entropy 14%

Nedbank: Current Culture Evolution

1. cost-consciousness2. profit 3. accountability 4. community involvement 5. client-driven 6. process-driven7. bureaucracy (L)8. results orientation 9. client satisfaction10. silo mentality (L)

2005

1. cost-consciousness2. accountability 3. client-driven 4. client satisfaction 5. results orientation 6. performance driven7. profit8. bureaucracy (L)9. teamwork 10. community involvement

2006

1. client-driven 2. accountability 3. client satisfaction 4. cost-consciousness5. community involvement6. performance driven 7. profit8. achievement9. being the best 10. results orientation

2007 2008

1. accountability2. client-driven 3. client satisfaction 4. community involvement 5. achievement6. cost-consciousness7. teamwork8. performance driven9. being the best 10. delivery

2009

1. accountability2. client-driven 3. client satisfaction 4. cost-consciousness5. community involvement 6. achievement7. teamwork 8. employee recognition 9. being the best10. performance driven

5 matches4 matches4 matches3 matches 6 matches

69

25%

19%17%

14%13%

0%

5%

10%

15%

20%

25%

2005 2006 2007 2008 2009

Nedbank: Cultural Evolution

Entropy reduction leads to improved performance—increased revenues, profits and share price. Working toward entropy of <10% will result in healthy functioning of the organisation and improvement of staff morale.

Entropy Scores

Entropy risk bands

<10% Healthy functioning10-19% Some problems requiring careful monitoring20-29% Significant problems requiring attention30-39% Crisis situation requiring immediate change40%> Impending risk of implosion, bankruptcy or failure

70

Cultural entropy represents the degree of dysfunction in a culture

Cultural Entropy

Entropy Impact

<10% Prime: Healthy Functioning

11-19% Minor Issues: Requiring cultural and/or structural adjustment

20-29% Significant Issues: Requiring cultural and structural transformation, and leadership coaching

30-39% Serious Issues: Requiring cultural and structural transformation, leadership mentoring/coaching, and leadership development

40-49% Critical Issues: Requiring cultural and structural transformation, selective changes in leadership, leadership mentoring/coachingand leadership development

71

Nedbank: Response Rate to Values Survey

1827

6083

10155

14091

18206

0

4000

8000

12000

16000

20000

2005 2006 2007 2008 2009

63.0%

50.4%

28.0%

35.5%

20.2%

28,898 employees in 2009

Response rate

nu

mb

er

of

pa

rtic

ipa

nts

72

Nedbank: Cultural Evolution

Nedbank Staff Survey Scores

59.6% 66.3%71.5% 75.1% 78.8%

0.0%20.0%40.0%60.0%80.0%

100.0%

2005 2006 2007 2008 2009

73

Revenue grew on average 16.9% (CAGR) per year from 2004 to 2007

Share Price grewon average 20.4% (CAGR) per year from 2004 to 2007

Nedbank: Financial Impact of Cultural Evolution

78

100

134 136

96

0

20

40

60

80

100

120

140

160

2004 2005 2006 2007 2008

Closing share price (Rand)

1402715809

18948

22428 22077

0

5000

10000

15000

20000

25000

2004 2005 2006 2007 2008

Revenue Rm (operating income)

CAGR : Compound Annual Growth Rate

74

Entropy Costs (Alienation & Money)

• Value Proposition• Cost of Limiting Values

75

Employee Value Proposition

Company BEspoused Valuesclient collaborationteamworkdeliverymeritocracyintegrity

Company A Espoused Valuesintegritycompassionaccountabilityrespectexcellence

1. long hours (L)2. being the best3. cost reduction (L)4. poor communication (L)5. client collaboration6. bureaucracy (L)7. confusion (L)8. arrogance (L)9. hierarchy (L)10. silo mentality (L)

Cultural Entropy 37%

1. accountability2. customer satisfaction 3. being the best 4. commitment 5. compassion 6. continuous improvement 7. integrity8. teamwork 9. cost effectiveness10. respect

Cultural Entropy 9%

77

Cost of Limiting Values

• Short-term Focus£3,489,818

• Confusion£3,178,636

• Bureaucracy (unnecessary)£1,799,618

• Empire Building£1,764,682

• Information Hoarding£1,634,045

• Sickness and Leavers £834,225

• Hierarchical £624,327

• Long Hours £187,909

• Total Entropy Cost (potential business value) £13,504,261

Based on staff’s perception of lost productivity and opportunity. Annual income £33,000,000 and loss of £500,000 in 2000.

78

Cost of Limiting Values

1. over-engineering (L)

2. bureaucracy (L)

3. complacency (L)

4. job security (L)

5. inefficiency (L)

6. inflexibility (L)

7. risk-averse (L)

8. hierarchical (L)

9. tradition (L)

10. control (L)

11. cynicism (L)

12. short-term orientation (L)

13. turfism (L)

Exec Team Estimate of Costs of Limiting Values

€5.4bn per year

(€7bn income - €235,000 profit)

European Corp Current Culture250,000 employees

Rule of Thumb: Each limiting value in top ten represents a loss of 6% to

7% of potential revenue.

79

Mergers & Acquisitions

80

Merger of Equals – Health Insurance (USA)

Personal Values

IRS (P)= 5-5-0 | IRS (L)= 0-0-0


2. honesty 4573 5(I)

3. family 3962 2(R)

4. reliability 3713 3(R)



7. caring 3280 2(R)

8. integrity 2958 5(I)

9. adaptability 2888 4(I)

10. respect 2842 2(R)

Personal Values

IRS (P)= 5-5-0 | IRS (L)= 0-0-0



3. honesty 2185 5(I)



6. family 1642 2(R)

7. caring 1546 2(R)


9. respect 1471 2(R)


Company A Company B

10 Matching Personal Values

81


Company A – Entropy 14% Company B – Entropy 17%

8 Matching Current Culture Values


IROS (P)= 2-3-4-1 | IROS (L)= 0-0-0-0

1. customer satisfaction 4617 2(O)

2. community involvement 3887 6(S)


4. diversity 3099 4(R)

5. teamwork 2816 4(R)


7. continuous improvement 2596 4(O)

8. organizational growth 2466 1(O)

9. employee health 2364 1(O)



IROS (P)= 1-3-5-1 | IROS (L)= 0-0-0-0






6. organizational growth 1356 1(O)



9. diversity 1194 4(R)

10. productivity 1177 3(O)

82


Company A Company B

7 Matching Desired Culture Values


IROS (P)= 3-3-4-0 | IROS (L)= 0-0-0-0






6. balance (home/work) 2967 4(O)




10. information sharing 2287 4(O)


IROS (P)= 1-3-5-1 | IROS (L)= 0-0-0-0






6. information sharing 1395 4(O)


8. continuous learning 1228 4(O)


10. leadership development 1170 6(O)

83


Company A Company B


Finance Finance

Fitness

Evolution Culture

Societal Contribution


Client Relations

84

Merger of Un-Equals – IT (Europe)

Company A Company B

5 Matching Personal Values

Personal Values

IRS (P)= 8-2-0 | IRS (L)= 0-0-0

1. enthusiasm 58 5(I)

2. humour/fun 49 5(I)

3. creativity 37 5(I)


5. honesty 32 5(I)





10. optimism 27 5(I)

Personal Values

IRS (P)= 8-2-1 | IRS (L)= 0-0-0

1. humour/fun 15 5(I)




5. making a difference 12 6(S)


7. being the best 11 3(I)

8. independence 11 4(I)


10. achievement 10 3(I)

11. performance 10 3(I)

85


Company A – Entropy 39% Company B – Entropy 7%

1 Matching Current Culture Values


IROS (P)= 1-1-4-0 | IROS (L)= 0-1-4-0

1. short-term focus (L) 67 1(O)


3. bureaucracy (L) 55 3(O)

4. control (L) 52 1(R)

5. results orientation 51 3(O)


7. workload (L) 38 3(O)

8. politics (L) 34 3(O)

9. profit 33 1(O)


11. success 29 3(O)


IROS (P)= 3-1-6-0 | IROS (L)= 0-0-0-0

1. humour/fun 19 5(O)

2. being the best 18 3(O)


4. success 15 3(O)

5. teamwork 13 4(R)


7. passion 11 5(I)



10. entrepreneurship 10 4(O)

86


Company A Company B

7 Matching Desired Culture Values


IROS (P)= 3-3-5-0 | IROS (L)= 0-0-0-0




4. teamwork 37 4(R)

5. long-term perspective 34 7(O)




9. innovation 28 4(I)

10. continuous learning 26 4(O)



IROS (P)= 4-1-7-0 | IROS (L)= 0-0-0-0


2. being the best 14 3(O)


4. humour/fun 13 5(O)



7. innovation 11 4(I)

8. success 10 3(O)



11. excellence 9 3(I)


87


Company A Company B


Finance Finance

Fitness

Evolution Culture



Client Relations

88

Questions

In each of the two case studies discuss and decide:

1. How aligned the people are2. How aligned the companies are 3. What can Company A teach Company B4. What can Company B teach Company A5. What are the chances of a successful outcome with reasons

89

Whole System Change

90

The Concept of Whole System Change

Pages: 119-157 Pages: 370-379

91

Four Conditions for Whole System Change

Interior Exterior

Individual

Collective

Personality: Values and Beliefs of an Individual

Culture: Values and Beliefs of a Group

Social Structures:

Actions and Behaviours

of a Group

Character: Actions and

Behavioursof an

Individual

Based on the Four Quadrants of Ken Wilber

The Four Quadrants

92

Four Conditions for Whole System Change

Interior Exterior

Individual

Collective

Personality: Values and Beliefs of an Individual

Culture: Values and Beliefs of a Group

Social Structures:

Actions and Behaviours

of a Group

Character: Actions and

Behavioursof an

IndividualMis

sio

n A

lign

men

tValu

es A

lig

nm

en

t

Structural Alignment

Personal Alignment

The Four Conditions for Whole System Change

93

4. Define core values & behaviours of the organisation

3. Revisit the Vision and Mission of the Organisation

1. Commitment from leadership team to personal transformation

2. Baseline measurement of the culture and key performance indicators. Create scorecard.

How do we build a high-performance culture

How do we become and remain agile and adaptable?

How can we position ourselves for the future?

How can we build our long-term resilience?

5. Develop compelling

reasons for change

Whole System Change: Nine Step Process

94

Why?

Whole System Change: Implementation Phase

6. Personal Alignment

Begin with the leadership team and then expand to the larger leadership group including managers and supervisors (Leading Self and Leading a Team)

7. Structural Alignment

Set up incentives to make the espoused values and behaviours pervasive

• New employee/ Executive selection

• New employee/ Executive orientation

• Employee/executive performance evaluation

• Employee/executive promotion criteria

• Talent selection and development programme

• Management development programme

• Leadership development

programme

8. Values Alignment

Inculcate espoused values and behaviours into the executive and employee population. Explore personal values.

9. Mission Alignment

Integrate the vision and mission of the organisation into the executive and employee population. Explore personal motivations.

Whole System Change: Nine Step Process

95

Begin with the Leadership Team

• Personal Alignment of Leaders • Internal Cohesion in the Leadership Team

96

Personal Alignment of the Leaders

1

3

2

4

Wilber’s Four Quadrants

Organisational transformation begins with the personal transformation of the leaders. Organisations don’t transform. People do.

When leaders change their beliefs and values (1), their behaviours change (2).

This influences the culture of the group (3), which in turn changes the behaviours of the group (4).

97

The Leadership Values Assessment is a feedback instrument that compares a leader’s perception of the values he or she believes best describe his or her management/operational style with their colleagues’ perception of their management/operational style.

The instrument also compares leader’s perception of their own strengths, and the behaviours that they believe they need to improve or stop, with the assessors’ perceptions and measures personal entropy.

Leadership Values Assessment

Level 7

Level 6

Level 5

Level 4

Level 3

Level 2

Level 1

Jeff's Values Assessors' Top 11 Values

Matches 5

Jeff Vader

balance (home/work) Level 4

balance (physical/emotional/mental/spiritual)

Level 6

empathy Level 6

fairness Level 5

internal community builder

Level 5

nurturing Level 6

personal relationships Level 2

positive attitude Level 5

trustworthy Level 5

wisdom Level 7

Orange = Values match P = Positive I = IndividualL = Potentially Limiting R = Relationship

(white circle) O = organisational

Leadership Values Plot Copyright 2008 Barrett Values Centre August 2008


Level 6

compassion Level 7

empathy Level 6

employee development Level 4

forgiveness Level 7

humor/fun Level 5

listener Level 2

mentoring Level 6

nurturing Level 6



PL = 10-0 | IRO (P) = 4-5-1 | IRO (L) = 0-0-0 PL = 11-0 | IRO (P) = 3-7-1 | IRO (L) = 0-0-0

How Jeff sees

himself

How Others see Jeff

Matching Values

0%

0%

0%

0%

10%

0%

40%

30%

10%

10%

0% 20% 40% 60%

1

2

3

4

5

6

7

0%

0%

0%

0%

18%

0%

18%

36%

18%

9%

0% 20% 40% 60%

1

2

3

4

5

6

7

Jeff Vader

C

T

S



CTS = 80-10-10Entropy = 0%

CTS = 72-9-19Entropy = 0%

Jeff's Values

Assessors' Values

Leadership Distribution Copyright 2008 Barrett Values Centre August 2008

Level of Personal Entropy

Level 7

Level 6

Level 5

Level 4

Level 3

Level 2

Level 1

Jim's Values Assessors' Top 11 Values

Matches 3

Jim Vader


Level 6

goals orientation Level 4

listener Level 2

mission focus Level 4

organisational growth Level 1

perseverance Level 4

respect Level 2

results orientation Level 3

team player Level 4

trustworthy Level 5





Level 6

compassion Level 7

employee fulfillment Level 6

humor/fun Level 5

listener Level 2

mentoring Level 6



strategic alliances Level 6

team player Level 4

vision Level 7


How Jim sees

himself

How Others see Jim

Matching Values

0%

0%

0%

10%

20%

10%

10%

10%

0%

40%

0% 20% 40% 60%

1

2

3

4

5

6

7

0%

0%

0%

0%

18%

0%

18%

36%

18%

9%

0% 20% 40% 60%

1

2

3

4

5

6

7

Jim Vader

C

T

S



CTS = 20-40-40Entropy = 0%

CTS = 72-9-19Entropy = 0%

Jim's Values

Assessors' Values



Level 7

Level 6

Level 5

Level 4

Level 3

Level 2

Level 1

Darth's Values Assessors' Top 11 Values

Matches 2

Darth Vader

ambitious Level 3

courage Level 4

creativity Level 5

excellence Level 3

integrity Level 5

long-term perspective Level 7

passion Level 5


strategic alliances Level 6

vision Level 7




achievement Level 3

authoritarian (L) Level 1

being the best Level 3

competitive (L) Level 2

demanding (L) Level 2

determination Level 4

excellence Level 3

knowledge Level 4

power (L) Level 3


risk-taking Level 4


How Darth sees

himself

How Others

see Darth

Matching Values

0%

0%

0%

0%

0%

30%

30%

10%

20%

10%

0% 20% 40% 60%

1

2

3

4

5

6

7

9%

18%

9%

0%

0%

36%

0%

0%

0%

27%

0% 20% 40% 60%

1

2

3

4

5

6

7

Darth Vader

C

T

S



CTS = 60-10-30Entropy = 0%

CTS = 0-27-73Entropy = 36%

Darth's Values

Assessors' Values



104

Darth Vader Video

105

Building Internal Cohesion in the Leadership Team

• Mutual Trust• Shared Accountability

106

Trust

Character

Intent

1. Caring

2. Transparency

3. Openness

Integrity

4. Honesty

5. Fairness

6. Authenticity

Competence

Capability

7. Skills

8. Knowledge

9. Experience

Results

10. Reputation

11. Credibility

12. Performance

Mutual Trust: The Trust Matrix Exercise

Inspired by Stephen Covey: The Speed of Trust

107

Shared Accountability: State of Grace Document

Stage 1

Leadership Values

Assessment with 2-3 hours

coaching

Stage 2

Team WorkshopStory of Me

Document

2 days

Focus on Self-Knowledge and

Personal Mastery

Stage 3

Team Workshop Story of UsDocument

2 days

Focus on Group Knowledge and

Cohesion

The New Leadership Paradigm: Pages 344 - 349

The expectations and agreements contained in the document enable the team to design how they want to be and act in their business relationships together, develop protocols for facing conflict head-on in an open and mature manner, and make sure there are no elephants in the room that are not being addressed. It is a blueprint for how the team works together.