A Case Study in Transformation through Culture Change

A Case Study in Transformation through Culture Change

Note: This blog was written by Jim Frost, a protégé of Don Rust. Jim is a retired GM operations executive who works as a change agent, executive coach, and leadership expert. We invited him to share his experience in transforming a failing company into a highly energized employee- and customer-centric company.  

            I had the opportunity in 1982 and 1983 to work for Don Rust at the GM Tonawanda Forge plant, where I witnessed firsthand the changes in culture that took place there. Don taught me the importance of developing a healthy culture through faith, trust, and treating people with respect. His mentoring has had a lasting effect on my leadership capability and coaching of leaders.

            In their book, Unleashing Human Energy through Culture Change (purchase here: http://tinyurl.com/y69nn5d2) , Don Rust and Alan Weinstein show readers why and how culture provides the human environment for energy and purpose. What I learned from Don and then from Toyota in the late 1980s and early 1990s was that a success-driven culture was characterized by customer satisfaction, respect for people, teamwork, continuous improvement, learning, and growth. In his book Drive, Daniel Pink shows the connection of these organizational characteristics to human motivation—autonomy (respect), mastery (continuous learning), and purpose (customer satisfaction)—and how they serve to motivate people.

I have had many opportunities to lead change in the past 36 years as well as teaching others about change and transforming culture. One experience was a family-owned $60 million precision machining company established in 1909 that found itself in a decline that nearly caused it to go out of business in 2008.  It had focused its goals on short-term financial performance and had a very dysfunctional management team. Morale was low, and quality, product delivery, customer satisfaction, and performance were poor.

Working as a change agent with the owners, management team, and employees in three locations allowed us to accomplish a turnaround. One of the first steps we took was to coach managers and supervisors who did not buy into the leadership behaviors that we saw were needed for the turnaround. If they chose not to accept or make the changes in behavior, they were let go or left voluntarily because the new accountability for the intended behavior caused them to realize they no longer fit in with the new culture. We engaged everyone from the president of the company to machine operators on the shop floor in embracing customer satisfaction and problem-solving activities that eliminated the blaming and “us-versus-them” mindset. Listening and responding to workers, customers, and “value-adders” in manufacturing and engineering led to a feeling of respect and teamwork from all involved. Meeting monthly customer satisfaction and continuous improvement goals led to trust and extraordinary results. We created coaching and training programs to promote a learning environment.

Customer satisfaction efforts, respect, teamwork, and continuous improvement became the normal behavior at all three plants owned by this company. In 2014, the company had a growing and profitable $90 million enterprise. Safety, quality, productivity, revenue, and profits all improved. It was clear that the new culture was instrumental in leading to this successful turnaround. That same year, the aging owners decided to sell two of its three plants. The new culture improved the sale value and allowed a successful transition to new owners.

In summary, through changes in leadership style and culture that management and employees participated in, energy in the organization shifted from a reactive fixing of quality issues after the fact to a proactive prevention of quality issues. Likewise, blame and “us-versus-them” mindsets changed to respect for internal and external customers, and a fixation on short-term profits was refocused to a concentration on team problem solving, recognition and rewards for solving problems, and a commitment to continuous improvement. Profits followed.

Postscript

I wish I could say that the plants that were sold continued to invest in the healthy culture that allowed the company to transform itself. Unfortunately, after I left, the culture deteriorated in one of the sold plants. Management lost sight of what had energized the members of their workforce and failed to maintain the trust and respect of them. The lesson learned here is that a healthy culture requires strong leadership that is both employee and customer centric.