Start With A Win - The Secret to Business Culture

Episode Date: July 3, 2024

In this riveting Start With a Win part two episode join host Adam Contos and Professor Jay Barney as they dive deep into the transformative power of storytelling within organizations. Discover how culture change can lead to extraordinary business success, from Gillette's breakthrough in the Indian market to Procter & Gamble's empowering approach to feminine care. With compelling narratives and theatrical examples, like a "bread and water" dinner that turned a company's fortunes around, this episode offers a masterclass in leadership and innovation. Tune in to explore the secrets of engaging employees and revolutionizing corporate culture, ensuring that every listener walks away inspired to craft their own powerful stories for 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 Intro01:15 Replacing old with the new and must demonstrate the new…04:01 Wow zero market share to 20% market share…05:48 Break the past with a path to the future, path can’t be this!07:30 A person has to build their OWN story…08:07 There has to be this for doing a cultural change…13:21 That was credible example of head and heart!16:51 How long do you think a story will distribute through a company?23:01 A massive aha moment…24:25 I ask the question this way!The Secret of Culture Change https://eccles.utah.edu/team/jay-barney/⚡️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

Because of the culture changes they engage in, their organizations are able to continue to keep people employed. Customers get their products, they get competitive advantage. Owners, shareholders make more money. I mean, everyone is better off. You want to have a direction of that cultural change, but you also want to engage the rest of your employees in helping realize that direction. This is a really rich business master class that we've just been through here. 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 Kantos with Start With A win. We have back on for this two-part series, part two of two,

we have Jay Barney, a business school professor, an author, has done a ton of study on how stories change the culture within organizations. Go back and listen to part one. We get a lot of foundation for this. We get the first two attributes of this great way to change your culture, those being authenticity and star in your own story. You're going to want to go listen to that and dig deep in those. But Jay, we've got four more to go here. So let's get right on it. What is the third attribute of creating this culture change through storytelling? The stories that you're building is you're taking old stories that support an old culture

and you're replacing them with new stories. And those new stories have to demonstrate to your employees that there really is something new. New culture is going to be developed here. I love it. Again, the book is about the story. So let me just share with you an example of this break with the path, with the path to the future. So one of our CEOs is recently hired at Gillette Corporation.

And he's in charge of the developing world business, basically India and China. Okay. And at the time that he's given that responsibility, he focuses first on India. They're basically not selling any razors in India. Not, I mean, like 2000. I mean, like none. Okay. Wow.

And people are just mystified in the company because, see, at Gillette, they had done the R&D and they had developed this new tech and great technology they thought was going to be great. They had tested this technology on Indians, men in the UK and in the Cambridge area

when they had their research labs. And the Indian man here liked it, but liked it a lot. So they thought this is a total win. And so, but they weren't selling any and so um the the culture of r&d at the product development at the time at gillette was the the labs developed the technology they ship it to us and then we that we sell. And so the CEO said,

you know, sorry, I'm going to India. And his supporters say, Eugene, what? That's not what we do here. You're going to go find the consumers? He's going, look, no, I'm going to India. Got real big pushback on that.

And finally, six or so people agreed to go with him. And so they had a little group of us over to India. And they visit potential customers. And it turns out that the way that most Indian men shave is inconsistent with the product they were selling. I'll give you an example. Many men in India don't have a separate bathroom they can shave in. They live in apartments that share a bathroom.

So you don't shave in the bathroom. You find a little room someplace in your house, and you shave with a mirror in that little room. What that means is instead of running water to clear off your razor, you basically have a little cup of water like this. Well, it's very easy for the razors to get clogged um and so uh and so gillette's razor was really good but it was also as easily clogged then they also don't have a place to store their razor separately so what they do is we have a cupboard i have a little cupboard in my bathroom where I put my razor. So instead what they do is they hang the razor on a wall up above

where they shave. Gillette's razor didn't have a nail on it. It didn't have a hole in the handle. Are you imagine? We're talking. This is pretty basic stuff, right? So they learned so much of this experience. They bring it back and

on the airplane back they actually get together on the airplane and design a new razor for the Indian market. And they go from zero market share to 20% market share in two years. Wow. Because they really came up, which is phenomenal in that market. That's huge growth. It's huge growth. I believe. in that market. That's huge growth. It's huge growth. Unbelievable. But remember,

when the culture-changing idea came up, there was resistance, which is, I'm going to India. Well, of course you're going to India. This is not rocket science. Of course you're going to go. And so,

it has to be a break with the past. This has to be completely, we're going to do a different way of doing R&D. It's not that the labs are bad. There's nothing wrong with with that it's just that we have to do something else for the developing markets uh markets in developing countries economies and um and then and then and then uh with a path to the future about how this will coin for and he began preaching this to up throughout the organization uh and and it had a big impact on Gillette's R&D strategy.

So, right with the past, with the path to the future. One thing that's important to know here is that this path to the future, the business leader doesn't have to, in fact, we think it's not a good idea for the business leader to rigorously define

what that future culture is going to be. It's going to be customer oriented. But that doesn't mean we're going to do the following 17 things. It's not that level of detail because you want to have a direction of that cultural change, but you also want to engage the rest of your employees in helping realize that direction. And so if you give too much guidance about the future, you actually foreclose learning from your employees. So break with a path to the future rather than a detailed outline of here are the seven steps we're going to take to change our culture and that kind of thing. That's really important for those people listening. I mean, you can't force that direction to the future as the leader. And a lot of people look to the leader, especially in a very top-down organization, exactly, or even a founder-led organization.

They are going to hammer on that path. So, you know, leaders. I think you have a subtlety there that is not in the book, but is something we've seen, which is that many business leaders know that they don't want to over-control that change process, but the employees want that control. They want to be told what to do. And you have to turn around and say, listen, here's the principle. This is the direction we want to go. We want to move in towards a more customer-oriented. We want to move in towards a more customer oriented. We want to move in a different direction, whatever. How does that, how will that affect your job?

You have to figure that out because you know what you need to do is, this is the last thing, which is ability to story cascade. You need to build your own story inside the organization. And I can't tell you what the story is because if I did, it wouldn't be authentic to you. So you have to build your own story. And that means a path to the future, but not controlling too much. That's good. All right, let's move on to number four.

I really like this one. Head and a heart. Yes. This is really, really good, especially in today's day and age because people want to know that you care so take take us down here's the thing first of all um there has to be a business reason for doing culture change okay that's the head part if there's not a business reason then this is what you're saying it's just it's like the biggest ego strip imaginable i know there's not a business reason for doing this culture change, but I've always wanted an organization to have the same values that I have as a person.

Give me a break. Right. It's like, just give me a break, okay? I mean, I hear that and I just shake my head. So there has to be a business reason. And the business reason we found most of the time is we want to gain competitive advantage for our strategies. We want to prosper and survive. We have to change our strategies.

But to implement our strategy, we have to change our culture. And so there's – but you start with – you've got to have a good and solid business reason that appeals to your employees' heads. But this is culture. This is about identity and sense of belonging and purpose. So it's also got to address the heart. It's got to take that emotional and personal side as well. The one story that we tell, one of my favorite stories of all is

a woman who named Melanie Haley, who became the first woman vice president, first general manager of Procter & Gamble's Feminine Care Division. Now, we can talk offline why it took 50 years for a woman

to come in charge of the Femcare division, but that's a different problem. So now she's in charge and she begins to reconceptualize the FemCare business model. So the business model looks like it's not broken. That's very, very stable growth, best mill growth. It's only in growth as a function of the demographic changes. And P&G has 50% of the market and it's very profitable. And in that model, the dominant mindset, the culture in femcare has been a more manufacturing model,

which is all we want to do is want our products to work. Obviously, we want to manufacture them at the lowest cost possible because this is a not a growing market so the only way to increase our profits is keeping our costs as low as possible which increases our margins and where we go and so it's a very much a manufacturing mindset and um and she comes into this saying wait wait a second, we're talking about when young women start using our products. This is an important, not just biological, but emotional, social change in their lives. We want our products to be empowering to women. Yeah, we need manufacturing manufacture at a low cost.

I got that. But we got to go beyond that. We have to have products that treat our customers as individuals. And, you know, for boys, when they begin shaving, it's kind of seen as a rite of passage into manhood or something like that. We want that same thing to be true when women start menstruating. And our products can help them do that. Now, the story she built, so if she just stands up in front of a bunch of these male engineers

and says, oh, we want these products to be enabling and empowering to women, she would get a lot of blank stares. So she went through a process, describing the book, building stories where she had consumers would, they invited them into like a focus group, and then they divided products into various categories. And what emerged out of that process was the fact that P&G's Femcare products were effective, but they didn't delight the customer. They didn't empower the customer.

And out of that, by the way, comes an entire new product line, which is based on a pearl. Pearl is smooth, and it's elegant elegant and it has style. And so they introduced a brand of Tampax that's called the Pearl. And if you go to a grocery store, you'll see that half of that store, those shelf space is now this Pearl design. And the first thing they did, for example, is they replaced a cardboard applicator with a smooth plastic pearl color applicator. I mean, all sorts of stuff. And remember, this is a very, very mature market. And in a relatively short period of time, market share goes up dramatically. They've introduced this new product. You now have a higher market share,

higher prices, higher margins, lower costs, total win strategy-wise. And by the way, there's a business model there, so it's hand, but it's join me in empowering your daughters. Right. That's a noble cause. Yeah.

And so that's the hard part of it. It's just a phenomenal story. She's an amazing woman. That's an incredible example of tying so that's the heart part of it it's just a phenomenal story that that is just she's an amazing woman that's an incredible example of tying the head to the heart and and we've seen that a couple times with some of these different um you know like dove uh has done that there's there's been a few of them out there that i would encourage everybody to look into but i mean talk about a winning culture change strategy there huge so and and uh and you know you're not saying that the old manufacturing culture was wrong

right that's i'm not making something wrong here it's about saying we can do more we can do the head and we can do the heart and we can make a big difference here so yeah totally absolutely all right take us on to number five. Number five is this is the biggest surprise to me was how theatrical many of these story building things are. I mean, we got CEOs dressing up in costumes. We got them doing stuff that is so non-CEO like part of it's what theatricality does is it helps people remember the stories because they are just amazing and and and also it it because you're because the CEO is doing this stuff that is so theatrical it it it's a strong commitment very hard to back off

from those kinds of things. So it makes people. Here's an example. This is a, I'll try to remind you, was a CEO of a software company and they had been doing pretty well, but then they had a bad year. It was a very bad year. There was a lot of money.

They figured out they actually didn't have a strategy. They hired a consulting firm. They worked together to develop a new strategy, but the new strategy meant that they're going to have to lay off 20% of their employees. That's a lot.

It was going to be a big layoff. The first in the history of the company. So they had scheduled already a celebration dinner for the year that supposedly was going to be really good. And the C.S. says, well, we can't have a celebration dinner when it wasn't my neighbor. We're going to just lay all these people off. And the woman who was in charge of organizing that said, well, we've already paid for the venue

and it's at a very fancy hotel. She said, well, get out of this. Well, we can't get out of it. She says, well, I can't change the meeting. We have to go to this fancy hotel, but I'm going to change the content of the meeting. I going to build a story right to help us get ready for action so people arrive and you play an hour and they go into the dining room and then this you know just very very high-end hotel china and and uh fancy galba sign line on it and it's time to

people sit down and do it out comes the first course, which is bread and people get water. And then comes the second course. And it's also bread and water. At which point the CEO stands up and says, we suck. Our business has been terrible. We're losing money. We're bad for our owners. We're bad for our employees.

We're going to have to do this big layoff. We don't deserve a celebration. We don't deserve anything tonight except bread and water. And so we're going to have a seven-course meal tonight and it's still going to be bread and water because that's what we deserve as a company.

But we're going to use tonight as the beginning of the turnaround so that next year we'll come back to the same exact hotel in the same ball in the same value room and we're going to have a full celebratory dinner and god how long do you think it took for that bread and water dinner to heat store to be spread throughout the company instantly instantly and i always joke about it because this guy's a c-dow's a good friend of mine i joke i said there were 25 people at that bread and water dinner and there were 75

people who claimed to be at that bread and water we only deserve bread and water and that's all we're gonna have wow now i will say this um the hotel was in san franc and San Francisco has good bread. So I'm right there. But that's the last theater. Wow. And that's just one example. There's seven or eight examples of this, you know, making a totally memorable event

that makes the story so easy to spread throughout the organization. Wow. All right. Now, that was number five, the story building as a theater. Take us home. Number six. Number, that was number five, the story building as a theater. Take us home. Number six.

Number six, building the story cascade. So our research shows that the story building starts at the CEO level or the general manager, whatever the business leader responsible is.

It starts at that level. But if it stays at that level, then we're not really going to change the culture. So ultimately, what has to happen is different people inside the organization, different levels of the organization have to start building their own stories. And so the story building is cascaded down. example, you can actually go to a business and if you're the CEO, you can go to one of your vice presidents too and says, you know, you've got to build this. Would you build a story?

It has these six attributes. What did they all say? Well, so what do you want me to build? And the answer is, I can't tell you what story to build because it has to be authentic to you. But it should be consistent with these cultural values. So you can see story building. The thing I also want to do

is you want to get employees of every level of organization engaging in FTVs that are consistent with the new culture but then but then

and then let them know about those stories. So one of the examples in the book is it's a company called Traeger Grills which is a big

big operation here in the states well known i'm a customer um anyway um they uh um the ceo uh gets long story short buys the company closes its operations in oregon and moves me here to Utah. The culture in Oregon was toxic, toxic. So he had to build a new culture. So he actually moved the organization to create the opportunity. It's a very strong move. And one of the values he was trying to get into this new culture is this unlimited commitment to customers. He saw how to differentiate your products. He's not cheap. We're charging a high price. We want these customers to be satisfied. And so he's preaching that.

He's trying to do stuff. So what happens is some lower-level guy, the following occurs. It starts on a Friday. He gets this phone call from a customer who is a manager at one of their big customers, Costco, in Seattle.

And the guy says, my trigger's not working. He says, oh, tell me what's wrong. And he diagnoses the problem. He says, okay, no problem. He diagnoses, goes to the office, picks up the part that he needs to fix the problem, gets on an airplane, flies to Seattle with the part, fixes the guy's trailer, helps him marinate the beast, and then gets back on the airplane and flies back.

Wow. And that's on his own. Nothing, nothing. Just, you know, this is the value, right? Right. And then on Monday, the VP of sales and trigger comes into the CEO's office. Do you know what Bob did over the general manager at Costco, who then called the corporate, uh, VP of sales at Costco,

who then talked to Costco merchandising corporate, who then contacted the VP of sales. And that's how they found out about this guy. So all that's, you know, incredible positive vibe from that customer. Um, and what's Bob doing? He he's coming to work and he's

just working on some spreadsheet he doesn't even know he's done a big deal wow um so what do they do well they so and when when the ceo hears this he goes it's working yeah that's culture change time to celebrate bob too yeah and so you celebrate bob so absolutely so you uh the the customer service award is now i mean the bob spiff whatever it is award and and you know they give out they give out cash and bonuses for outstanding customer service on and on it's it's uh and so they reinforce that that culture change one but but when when you know you've got culture change when someone now that organization's beginning to engage in those and building their own stories that are consistent with those old values.

Incredible. This is, I mean, these six traits. I mean, this is a really rich business masterclass that we've just been through here on how so many of these businesses have impacted themselves through building stories and building their culture with those stories. I can't encourage people to check out this book enough. I got mine on Amazon. I'm sure you can get it wherever books are sold. The Secret of Culture

Change, How to Build Authentic Stories that Transform Your Organization. Jay Barney, you've got a couple of co-authors that worked on this with you. Just a fantastic book to lean into to build a great organization. Take us home, Jay. Anything that has really been a massive aha in developing this book? I have actually come to respect the business leaders to figure out they need to change their culture and then do what's necessary to make it happen. I know we don't have an algorithm for culture change. It's not some simple process. But the CEOs we've talked to, they're 80% of our CEOs,

just they get it. And they do, they're heroic because of the culture change they engage in, their organizations are able to continue to keep people employed. Customers get their products. They get competitive advantage.

Owners, shareholders make more money. I mean, everyone is better off because of this culture change these people go through. They take some hits in the process, and yet they remain focused. I'm just really impressed. Awesome. That was my big surprise is how much I came to respect these them. Awesome. I was, that was my big surprise is how much I came to respect these people. Awesome. Jay Barney, a great leader, great business school professor. You're, you're educating on culture here. This is fantastic. I have one question. I ask all

the great leaders on start with a win. Jay, how do you start your day with a win? That's a great question. As a professor, I have a lot of flexibility in deciding. I always say I have a flexible schedule unless it's not flexible. When I have to teach, I have to teach. But I literally start every morning by saying, okay, as I set my agenda

for the day and for the week, I ask the question. I don't ask the question, what the day and for the week i ask the question i don't ask the question what do i have to do i ask the question what i'm what do i really want to do what's what's going to give me the most joy over the next 24 hours 48 hours wherever it is and there's a lot of stuff you got to do but you just keep coming back to the thing that gives you the most joy. And for me, it turns out it's doing this kind of work. It just gives me enormous satisfaction. So that's what I do. Awesome.

Yeah, I love that. What do I really want to do? What's going to give me joy? Jay Barney, business school professor, author, and a great friend who knows how to change culture or the formula behind it. I mean, it's up to us to make that happen, folks. That's correct. So check out Jay's book. Look up Jay online and at the University of Utah at the business school there.

Your good friend, Jay, thanks for bringing all of this to us. And thanks for starting with a win. Thank you.