Late last year, Frans van Houten, CEO of Royal Philips described in an inspiring blog how he is taking the company through a transformation, not only strategy-wise from being a (lagging) diversified industrial holding company to a focused, vibrant leader in health technology.
Over the past years, Philips has exited businesses like consumer electronics and lighting, while raising their investments in R&D and carrying out new acquisitions related to health technology. Philips have shifted their business model, too, moving from a transactional approach to a more consultative model where the company supports customers with solutions – technology married to software and services to help address Philips customer’s more complex healthcare challenges.
Shifting purpose and mission
Philips now has a clear mission to improve lives with meaningful innovation, coupled with a goal to improve the lives of three billion people a year by 2025. These are compelling rallying cries for their employees, partners and other stakeholders, giving real purpose to their brand and work.
Not enough
Yet Philips is an example of many companies these days who realize that having a great purpose and mission, plus crisp strategy and planning, while essential, are not enough.
Most industry watchers are familiar with management guru Peter Drucker’s famous term: “culture eats strategy for breakfast.” Drucker summed up that all great thinking is rendered useless if employees are not fully engaged behind company values: customer focus, integrity, quality, sustainability, teaming, taking ownership, speed, inspiration, continuous improvement and, for example, valuing learning over blaming for mistakes.
Why culture is critical?
Leadership and culture are the elixirs required to fully deliver on the company’s full potential. Leaders embody the culture or capability of the company and perpetuate it through their thought and actions. Culture integrates the “head, heart and hands” of employees. Put another way, culture is what people and teams do when nobody is looking! Vibrant and effective cultures are values-driven, mission-focused and vision-guided. They display high levels of values alignment and have low Cultural Entropy scores. Vibrant cultures have high levels of performance because they create internal cohesion, attract talented people, and inspire employees to go the extra mile. The leaders of such companies and organisations practice values-based leadership and care about the well-being of all their employees.
A competitive weapon
Our maxim is that leadership actions and behavior drive company culture which drives the collective performance of all in the company. Not surprisingly, Philips’ conclusion is that leaders need to role model the desired culture every day. This, in turn, requires a new level of analysis and inspiration at the highest levels of the company. As ancient Chinese general and philosopher Sun Tzu pointed out: know yourself first and you can win all battles.
Leadership offsites have been an important part of Philips’ management agenda for a number of years but, in 2018, the company took a group of 60 of their leaders to a week’s offsite in the raw, awe-inspiring wilderness of Arizona and Utah. This took the leaders out of their comfort zones, testing them physically and mentally. They discarded luxury; accommodation was rudimentary. Laptops and mobile phones were stowed 100 miles away. In short, Frans van Houten and his leadership group created the conditions for real deep reflection and bonding. A carefully orchestrated leadership development program helped guide them to honest insights and a clear understanding of what is important to accomplish as individuals and as a group. This is how relationships improve, in a ‘safe’ environment where personal feedback can be given and received. Their offsite became a place where ‘statements’ became ‘commitments’ and concrete pacts were formed. This offsite allowed deeper searching questions to be asked, such as: Are we delivering to our full potential? Do we role-model the right behaviors to succeed on our company purpose and strategy? Do we act courageously and drive breakthroughs to go from ‘good’ to ‘great’? Do we demand these behaviors of our teams? What do we need to change in terms of resources, capabilities and ways of working to effectively deliver value to our customers?
Deep commitment to win – together
The group benchmarked themselves, using 360-degree feedback to gain insights into personal traits, where each of them recognised that they can and want to do better. The company devised action- and improvement-programs to close the gaps on key imperatives. Moreover, it created a deep commitment to win together as a team.
The leadership group shared many of their learnings with the broader employee population. The leadership group asked them, too, to candidly measure themselves against the behaviors they require of them, enabling the desired culture to seed. Most importantly, Philips started to create a more empowered environment where required behaviors can flourish. Philips’ culture is thus built on a foundation of actions; not words. Employees are responding and customers are starting to experience the difference. The company is seeing the impact in improved operational results.
Evidently a company culture is not something you declare: it’s ultimately the consequence of a whole series of behaviors and actions; how the leadership role-model and uphold values; who is promoted; who is released etc. Once embarked on the culture journey, leaders and employees realize this train will never stop. At Philips for instance, it requires the same amount of innovation and continuous improvement as all their breakthrough technology development.
Starting small another option?
Philips is just one example of many companies and organisations, who are realizing today more than ever that having and living the right culture and values is invaluable to achieve and more importantly sustain high performance over a longer period of time and attracting and retaining a motivated workforce. Employees want to bring their whole ‘self’ to work. Of course, Philips’ holistic and strategic approach described above is exemplary and we encourage companies and organisations to similarly take a whole system’s approach. Nevertheless, there is ample opportunity also to start small and take a focused team or group approach, e.g. find out if your leadership team is working to its highest potential. Discover the inherent strengths of the leaders, how they experience the leadership team culture now, and how they would like to improve it for tomorrow. Learn what factors get in the way of leaders working together effectively. Learn which values are most important for the success of the leadership team. Explore the leadership culture from a strategic perspective to help the group develop their plan for the future.
How we can help?
We can help you to review the data from different angles to deepen the exploration and understanding of the leadership culture. When people are open to sharing, getting individual reports can help create a deeper dialogue and build cohesion. For this purpose, we can use a small leadership team values assessment (SLTVA):
The SLTVA can generate deep meaningful discussions about what is working and not in the leadership team you are assessing.
The SLTVA highlights which leadership values are important to the team and serve as guides in their decision-making.
The SLTVA normally uses a standard template of values that does not require customisation.
We are open to assist and facilitate diverse leaders and organizations on their journeys embedding their desired culture and values, using proven survey tools based on years’ of research and application. We encourage you to continue to ask yourself how you can improve your culture and make it a competitive differentiator and/or supportive of the purpose(s) for the greater good. If you want to obtain more information regarding this topic, please contact Circle Coaching & Consulting at info@circlecoachconsult.com or call +31 6 42410740.