Start With A Win - Strategic Storytelling and Leadership with Jay Barney

Episode Date: June 26, 2024

In this captivating Part 1 episode of Start with a Win, host, Adam Contos welcomes guest Jay Barney, a leading expert in strategic management, listen as they delve into the transformative power of storytelling in organizational culture. Jay, with his extensive background and groundbreaking research, reveals the secrets behind fostering a thriving business environment through authentic, story-driven culture change. Discover how effective leaders leverage narrative to align strategy and culture, overcome internal resistance, and achieve sustained competitive advantage. Tune in to unlock invaluable insights from real-world examples and practical methodologies that can revolutionize your organization's success.Jay B. Barney is a Presidential Professor of Strategic Management and holds the Lassonde Chair of Social Entrepreneurship at the Eccles School of Business, University of Utah, and is a Senior Research Scholar at INSEAD. His research on firm resources, capabilities, and competitive advantage has been widely recognized, with over 200,000 citations. He has published over 100 articles and eight books. He has held various editorial positions, including editor-in-chief of the Academy of Management Review. A Fellow of both the Academy of Management and the Strategic Management Society, he has received numerous awards, including the Irwin Outstanding Educator Award (2005), Academy of Management Scholarly Contributions Award (2010), and the CK Prahalad Scholar-Practitioner Award (2019).00:00 Intro02:45 Is there a secret to cultural change?06:55 Your cultural is already there, is it the right one?08:59 This statement is useless if can’t change this…11:15 Employees share what they see so that will create this!13:58 There are six attributes to change cultural.18:30 Where does the change start?20:50 This matters not that from the CEO!23:34 CEO talks to help line and here is what happens…⚡️FREE RESOURCE: 𝘞𝘩𝘢𝘵'𝘴 𝘞𝘳𝘰𝘯𝘨 𝘸𝘪𝘵𝘩 𝘠𝘰𝘶𝘳 𝘓𝘦𝘢𝘥𝘦𝘳𝘴𝘩𝘪𝘱?  ➡︎ https://adamcontos.com/myleadership===========================Subscribe and Listen to the Start With a Win Podcast HERE:📱 ===========================YT ➡︎ https://www.youtube.com/@AdamContosCEOApple ➡︎ https://podcasts.apple.com/us/podcast/start-with-a-win/id1438598347Spotify ➡︎ https://open.spotify.com/show/4w1qmb90KZOKoisbwj6cqT===========================Connect with Adam:===========================Website ➡︎ https://adamcontos.com/Facebook  ➡︎ https://facebook.com/AdamContosCEOTwitter  ➡︎ https://twitter.com/AdamContosCEOInstagram  ➡︎ https://instagram.com/adamcontosceo/#adamcontos #startwithawin #leadershipfactory

Leadership presence is a lacking skill in this day and age. So if you want to change an organization's culture, you've got to change the stories that your employees share with each other. Jason is just turning the thing flipping upside down. Welcome to Start With A Win, where we unpack franchising, leadership, and business growth. Let's go. And coming to you from Area 15 Ventures and Start With A Win headquarters, it's Adam Kontos with Start With A Win. Do you ever wonder how some companies maintain a

competitive edge while others struggle to keep up? Today on Start With A Win, we're delving into the world of strategic management with Jay Barney, a true powerhouse in the field. With over 100 articles, eight books, and countless accolades under his belt, Jay's insights are like gold for anyone seeking to understand what sets successful businesses apart. From his tenure at prestigious institutions like the University of Utah to his extensive consulting work with top organizations, Jay brings a wealth of expertise to the table. So if you're ready to unlock the secrets behind sustained competitive advantage, you're in for a treat with Jay Barney. Jay, welcome to Start With A Win.

Good to see you too. I mean, you've been traveling all over. I know you just got off of an international trip talking about the new book that I want to talk about today, The Secret of Culture Change. Here's the magic, folks. How to build authentic stories that transform your organization. The key word there, stories. I mean, this is a really cool thing because we've always seen storytelling as a big part of culture. You know, you go back to the, you know, cave dwellings and people would draw stories on cave walls or you look at, you know, like Native American culture was always about the storyteller in the tribe

telling stories to the young braves and how they can carry forth the culture of their tribe. But you dug into business, and I want to get into that extensively. But first of all, you are a business school professor also. This is a lot of factual information that has gone into this. It's not just somebody going, hey, you should tell a story to adjust your culture. So give us a little bit of your background and why you wrote this book. That's a great question. I'm actually a little bit of your background and why you wrote this book. That's a great question. I'm actually a professor of strategic management. And interestingly enough, I don't think you'd notice in the book, I take a pretty economic approach to analyzing strategies. So my training and my previous position is economics. That said, as I work with companies and helping them choose and modify and implement their

strategies, I have routinely over the years bumped into the problem of a mismatch between a new strategy we've been working on, implement, and a firm's organizational culture. I first had this experience in the 80s, so how I spent. At the time, I was doing a lot of work with a well-known company. I won't mention his name, just the initials, HP. And at the time when a person, when a business leader developed a new technological idea and invested in it, it didn't work. It was treated as an opportunity to learn.

So a very impressive place. As I was working with them, I got a phone call from another company. That one truly unnamed. And they asked me, they said, we understand you know a lot about HP. I said, yeah. Well, we compete with them. I said, I know.

We're not doing very well. I said, yeah, I know that too. And they said, so what we like, we just finished it. They said, we just finished a six-month study of our organizational culture, and we decided we're risk-averse. Now, in the Valley, they were known as the most risk-averse firm in this industry. It's a six-minute conversation, not a six-month conversation. But the fact that it took them six months to figure out they were risk-a is, in fact, an indicator of just how risk averse they were. And so they said, what we want to do is we want to hire you

to help us get rid of our old culture and put a new culture in place, and we want you to do that in six weeks. I knew that was absurd on his face, okay? I knew that they really weren't interested in changing their culture. It's just what I'd sign up. But I also had to be honest with myself that I didn't have a theoretical tool or a methodology that I could use, but actually that I can legitimately say is designed to change your organization's culture. In fact, we talk about it in the book.

People who I, who I respect, who are really changed management scholars of the highest order, really are very skeptical about the ability to change an organization's culture. And so I was sort of in that same mode. I'm not sure how to do it. I don't have the tools to do it. Culture is diffuse. It's intangible. All those things that make it difficult to change. No one's in charge of culture, you know. Everyone's in charge of culture. Therefore, no one's in charge of culture. And yet I just kept bumping into it as a problem and as a challenge,

as mismatch between strategy and culture. Then what happened is I met Manuel Amaran. We happened to go to the same church, and he just had moved to where I live in Park City, Utah. And he was a recently retired four-time CEO. So as I often do, I said, hey, I'm a business school professor. Let's have lunch together. See how your athletes are.

What's going on? And so that lunch was scheduled for an hour. And four hours later, we had basically debriefed his career. And what he had specialized in was culture change. Wow. And he had done this four times. He didn't know that he was in culture change. I labeled it.

He really understood what I meant. And he also had a know that he was in culture change i i labeled it he he really understood my math and he also had a methodology that he had developed also not explicitly it was just sort of this is what he did um and it was having to do with building stories um to replace souls you know so you take old culture stories and you build new stories that replace those old stories with new changes so you you guys studied a whole bunch of different companies for this book and pulled out some of the best stories or the results that you were looking at. Obviously, comparatively speaking, you don't have a story. You really don't have a great path

for your culture, I would assume. Well, this is what we know. We um that cultures are created and maintained through the stories that employees tell each other about what's expected at a firm the norms the exhibition execifications of the firm and so um and so uh so the stories are already there they may not be the stories you want to be there, but they're already being shared. And with social media, they're shared even more especially than they ever were in the past. So you mean it's not the employee handbook? I'm glad you're sitting down. I know that's a shocking conclusion.

One of our stories is a version of the employee handbook. An entrepreneur generates this list of values that he thinks his company should have. He writes it up and goes to his office, thinks deeply, and writes it up and puts it on the wall. And a week later, he asks one of his supporters, what do people say about my list of values? And he said, they're mocking them. He said, they're mocking my values yeah because the values of the organization the values you list are unrelated and and uh and besides some of the values you think are so important we don't think are important and so uh yeah so yeah there

was a there's a has not very little to do with it i will say this going back to hp the hp handbook actually reflected their culture in friday it's called the hp way i don't know it's never okay it was unusual in that way but most of the time the handbook is sort of independent of what's going on culturally okay so i want to i want to bring up um something that i mean i i think this is probably overplayed and under or misunderstood a lot. And that's this Drucker quote of culture each strategy for breakfast. Right. There's, I mean, having spoken with you before, obviously there's more to it than that. Can you tell us, because everybody always goes culture each strategy for breakfast, but that's, that's where the conversation stops.

Yeah. Well, so you should know, I've spoken to the people at the Drucker Institute and they actually say that Drucker never said that, but that's his opinion. So he could have said it, but apparently they couldn't find it. I couldn't find this source, but nevertheless, I qualify that in the book. I think the fact that culture eats each strategy breakfast really shows that if there's a mismatch between your strategy and the cultural organization, the culture will dominate. But that statement is useless. It has no major impact if you can't change culture. Now, one way you can do it is you can modify your strategy to make it a little more consistent with your culture. But if your strategy is market determined, that is, you've gone from a regulated to an unregulated market, you've gone from a

local to a global market, whatever is going on, and you've had to change your strategy in order to keep up with and to gain competitive advantage, keep up with competitors and to gain competitive advantage, then you're going to have to change your strategy, but that implies the need to change your culture. And the Drucker points out the need to change your culture, but does not write a methodology to do so. So you've figured out a methodology for that well it seems no i think what we did is we we described what people were already doing

i don't think we invented anything here i mean the as i've said to you before the heroes in this book are the business leaders who shared their experiences on changing culture with us we we were able to describe it label, make some logical sense out of it. But yeah, this is very much an inductive kind of study where we thought out what these people were doing. Okay. And then we described it. Well, let's dig into that then.

Give me a basis for the study and how you got to proving your, or finding your outcomes, I guess, how you got to proving your, you know, or finding your outcomes, I guess, in the study. Sure, sure. So, the logic is actually incredibly simple, I think, which is we've already established that we know that culture is created and maintained in organizations by the stories employees tell each other. So, if you want to change an organization culture, you got to change the stories that your employees share with each other. So if you want to change an organization's culture, you got to change the stories that your employees share with each other. That's pretty straightforward. And how do you do that? Well, you got to have new stories to replace the old stories because, you know, social structure,

of course, a vacuum. So you have to build new stories. So what you want to do is you want to engage in, as a business leader, you want to engage in activities that are different than, not to take, in fact, the old culture, but are consistent with a new culture. You want to engage in those activities. Then what happens is your employees see you're doing those things, and they start building the stories. They start saying, do you see what's going on here? Our CEO is doing this all of a sudden, which is inconsistent with the way we've been doing things historically. And that then leads to the diffusion of new stories around an organization that replace those old stories. And in that process, while the business leader engages in activities that lead to the stories being built, the diffusion of those stories means that the new culture is co-created with the business leader and with employees as they replace old stories and new stories.

Okay, so something I've noticed about businesses, most people in an executive role are not very, I guess, aggressively present in order to start in these stories, if you will. You know, we've got, I always say we have leaders and we have hiders. Sure. That's right. The leaders lead, the hiders hide. I was just working with a company and I was talking about culture change, which is really an issue in the company. I just know that about that. And one of the supporters of the CEO I was talking to said, you know, it turns out in order to build a story, you have to leave your office a second once in a while. That's a hider. Right. Interesting. But I mean, and it's fascinating because

leadership presence is a lacking skill in this day and age in so many different businesses. You have leaders who are on video and physically present who constantly set that tone and come up with those stories. And frankly, I mean, leaders, here's a cheat code for you. If you are present, you're going to develop stories most likely. It's going to happen. Exactly. Whether you want them or not, that's the question. It will happen by present. Well, we actually use a slightly different language, but I think it's very consistent with

your observation. Our first criteria, we identified six attributes and stories we have to have in order to be likely to generate culture change. And the first one is authenticity. And by that, we mean that the values and beliefs and expectations that you're trying to create with a new story have to be consistent with the business leader's personal values. This sounds like a pretty straightforward idea. It's actually quite important in its implications and counterintuitive in

some ways as well. So for example, if, if you believe that you're going to already implement a strategy, your culture needs to be transparent and risk-taking and you as a business leader are either transparent or risk-taking, you you as a business leader are neither transparent or risk-taking, you may not be the right person to lead culture change. So, or another version of that is, let's suppose you've hired a senior manager

who's worked with you for years, and he was hired, he or she was hired in the old culture and is completely successful in that old culture, one of the high performers, but is very reluctant to go to a new culture. It's not yet authentic to them, and so they're very concerned about the way it is. You may have to let that person go because they're not helping you build that new culture.

So authenticity is actually what leads you to be present in a way that actually is uh has a positive impact on culture change uh our experience the data show overwhelmingly that um employees can smell cultural hypocrisy from miles away right and so uh by the way that doesn't mean you have to be perfect in terms of, you know, implementing culture change. We have a story you may have read. This is about a really of business that really respects the client and respects the consultants and tries to build this really high level of personal integrity and respect. And he's been working long hours. He's traveling all over a lot of stuff. And he's leaving his office late at night, tired. And this subordinate comes up to him and says, hey, I just finished that report, should you want it? Here it is.

And he hands it to him and he looks at it. This is BS. There are a bunch of errors in there. This is BS. He throws it back at the guy and storms off home. Completely inconsistent with the culture he's trying to create. And later on that night, it's now, you know, nine after dinner, nine, 10 o'clock at night, that subordinate calls him on the phone and says, listen, I really didn't like what happened there.

I didn't like that you said my work was BS. Listen, I may have made mistakes. It's not perfect, but you were not being respectful for me. And the subordinate called him out on it. And this entrepreneur said, you know, you're right. I blew it. I personally apologize for doing that. I will look at your report tomorrow in new ways.

And will you do me an additional favor? This is the building story part. Will you tell everyone that I screwed up and you called me on it tell everyone that story because that's exactly what the kind of organization we want to have so that's taking a mess up i mean he messed up he did and turned it into a story that actually helps build the culture change wow very clever guy yeah i mean talk about authenticity also oh right there man right there if you. Right there. If you're not, if you're not, because, you know, you know how easy it is to get the ego involved here and how you can respond by saying, well, I'm your boss.

Shut up. No, that's very effective. Yeah. Right. I mean, that's a big problem. That is, I guess you can't go past step one if you don't have step one. I mean, that's... It is.

And it is bad news for some CEOs I've worked with who say, yeah, I know we need to change our culture. I know we need to go in this direction. But that's not who I am. We need a really outgoing, charismatic person. By the way, that's a little oversold. You don't have to be outgoing and charismatic to build stories, but it could help. But it's not a requirement.

Okay, so let me take you to the question of, you know, we always hear, you know, the top doesn't create the culture, but culture starts at the top. Is that kind of where that comes from? So we would agree with that. I think our, listen, we have no examples in our data we have a data set of over 170 stories okay um from uh from uh over almost 70 interviews that we get and not all of them are positive outcomes not all of them are negative outcomes there's a mix but we have no data no examples in our data of successful culture change that didn't start at the top wow that doesn't start at the top.

Wow. That doesn't mean there isn't some discontent. There isn't some mismatch. People are not happy. But the CEO starts it. The business leader. It could be a business general manager, a division general manager, or a functional vice president, or whatever, or CEO. It starts at the top.

And the reason for that is culture change is so difficult and so risky. You can't expect some support to take all the personal risks associated with that. We have examples in the book. We can talk about them of where someone tried to change the culture, a manufacturing culture, for example, in a plant level and a plant level and was just absolutely squashed by corporate. And so that, that, that event delayed that culture change for almost 20 years,

20 years, one of it. So it's, so it's a very, very risky thing. Amazing. We also, by the way, we have no, so it starts at the top, but that includes other people that includes everyone as you as you as the story building process proceeds we can talk about that later in something we call a story cascade but another thing that's interesting is we have no examples in our data set i mean zero this is kind of an amazing since that the finding wasn't there it't, a successful culture change doesn't start with the announcement of a culture change.

Right. No, the CEO doesn't get up and say, okay, ladies and gentlemen, we're going to have a new culture in a year. And that's because that's just cheap talk. It's just, it's like, okay, absolutely boss. Thanks for the heads up.

I now know where to put my head down i'll sign out i'll sign all the the things i'll go to the training blah blah blah it just cheap talk and so uh what matters is what the ceo does not what the ceo says and in order on there's a lot of talking but it's all about action yeah totally so totally. So, all right, we've got number one, authenticity. Yeah, it's often just to catch up. I mean, it's obviously, you know, you've got to be present. It's critical. And you've got to be consistent as a leader, because if you're inconsistent, you're just going to confuse the hell out of everybody. But by the way, confusion is good. Tell me. Let me say. Tell me. When you first start

implementing these, engaging these new activities or getting used to the old culture, people who are very familiar with the old culture will look at what you're doing and say,

what are you doing? This is very confusing, Charlie. That's a sign that you're moving in the right direction. I love it. I love it. Awesome.

Take me to number two. Number two is you've got to star in your own story. So this paper, this book is about, not about storytelling. And there's nothing wrong with storytelling where, you know, you talk about, you know, some entrepreneur or some incredible athletic achievement. All that stuff is great. Motivational, fine. It's great. It's probably good for communication.

It has nothing to do with culture change. So this is about the business leader engaging in activities that are inconsistent with the old and inconsistent with the new culture. And so for that to happen, the business leader has to star in the story. What does that mean, star in your own story? Tell me. It means, well, let me give you an example. Let me tell you a story.

There we go. So the seminal story of the book is the one that I heard at that lunch with my thoughts. I'm right. of the book is the one that I heard at that lunch with my boss, Emmanuel Amaral. He's going from an organization, this is a telecommunications company in Brazil, that was in a regulated monopoly and had developed a very top-down hierarchical culture. And they're moving to a deregulated monopoly in telecom with new telecom competitors, plus the internet, mobile, telecom. It's just a radical change. And the old top-down culture was not going to work. You needed to have a customer-oriented, innovative, risk-taking culture.

Quick opposite culture. For good strategic reasons. We can go into that later too but um so uh one of the products they have is a is a telecommunications so internet connection product and it's not working very well and and uh manuel is the ceo he um he buys this for his home and it can't doesn't make it can't make work. So he calls up the helpline. There's a story in there too, but again,

I'm looking to keep things short. He calls up the helpline and he gets hooked on it. He's hooked up with this guy as a part-time call center employee. And, and they're on the phone for over an hour and a half trying to get this thing to work. And it never works. You can't get to work.

At which point, Manuel says to the guy, you know, I'm, I'm the CEO of the company. And it never works. You can't get it to work. At which point, Manuel says to the guy, you know, I'm the CEO of the company. And the guy says, yeah, right. Yeah, you're the CEO. You spent an hour and a half with me. You're not just CEO.

I said, no, I really am. And there's a story there too. But finally, Manuel says, what would you need to know in order to have solved my problem? And the guy says, here are the 14 things. There was a list of 14 things that I would have needed to know to be able to solve.

And I don't know them. We don't have access to that information. I said, okay. Next week is the executive committee meeting of the corporation. Would you and a couple of your colleagues be willing to come to that executive meeting and present this list of 14 things? Okay. Remember, this is top-down, hierarchical culture.

I'll give you some sense. In the old culture, no employee could get on the same elevator as the CEO. Wow. And this is a call taker getting invited by the CEO? It's just turning the thing flipping upside down. Are you kidding me? It's the hourly employees, part-time employees are lecturing the senior management team about what needs to happen. And here are the 14 things. And they think that the call center guys, they go away. And the CEO says, how many of these 14 things did you know about? He said, well, we know about cinema. I said, okay, here's what we're doing.

Step one, we're suspending product sales of this product. We're not going to sell a product that we can't support. And by the way, all of their bonuses, including the CEO's bonus, depended on sales on that product. So he basically said, this is authenticity, right? Say, we're not messing around. We're not going to sell a product that we can't support. Step two, I want you guys, you two in charge of this, to tell us how we're going to get

information on these 14 items. And I want you to present it at our next executive meeting, which was two weeks away. And by the way, you're going to present it to these call center employees as well as to us. And all that happens and they turn it around. And that's the beginning. That's the beginning of this fundamental shift. Now, it could have been the case that the way that the CEO solved that problem is he

could have called up the IT guy and the VP of IT in the company and said, dude, I was on the phone for two hours and couldn't get this thing to work. There were 14 things you didn't know. Get this fixed. Could have done that way. But then he's not building a story.

He's not changing the culture. He's solving the problem, which is the narrow problem, which is the technology's not working. But he's not solving the bigger problem, which is it's problem, which is the technology is not working. But he's not solving the bigger problem, which is it's got the cultural mismatch. So he does it in a public setting, this executive committee, and he's there, he is making it happen. So he stars in that story that he's building.

That's awesome. That's the essence is a classic just that all these six attributes are very, very common. Almost all of them. There are very few stories where successful culture changes did not include the business leader starring story. I could tell you another one. We can go on, too. Wow. Okay.

So, folks. I got 60 stories in the book. All right. Well, tell you another one. We can go on too. So, wow. Okay. So folks, I got 60 stories in the book. So I got, we'll tell you what, this is a, this is a two-part podcast. This is the end of part one on part two. Everybody make sure you tune in next week for more Jay Barney on how to change the culture in your organization. Remember there's six attributes. We've been through two of them. The first one, authenticity. The second one, start in your own story. We will see you back on part two of two with Jay Barney on Start With A Win.