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Reinvent Your Company Through Culture

Harvard Business Review

In both C suites and boardrooms, discussions about business performance usually center on topics like market momentum, M&A opportunities, capital management, and productivity enhancements. While these factors are important, in my experience they are best leveraged when employees are engaged, aligned, and motivated to win.

In the course of leading six successful turnarounds and transformations at Schering-Plough, Pharmacia, Pharmacia and Upjohn, Wyeth, and two operating units within Novartis, I've learned that culture can be powerfully leveraged to enhance long-term success. Yet many executives don't make culture a priority. It was this disconnect that prompted me to write my recent book, Reinvent: A Leader's Playbook for Serial Success.

Every individual on every team in a company can strive, together, to deliver beyond what is deemed possible. For employees to do that, they need to feel a powerful sense of purpose, reinforced by a culture of ownership, accountability, and continuous learning.

In 1997, when I first took over as the new CEO of Pharmacia & Upjohn, the company had just undergone a merger that had gone very bad. One reason was a disjointed leadership structure — comprised of three "business centers" in Stockholm, Milan, and Kalamazoo, Michigan, and one new "management center" in Windsor, near London — that had been negotiated as part of the 1995 merger. Internal tribalism was hurting the company.

To align and motivate employees to work together, we eliminated all four centers and created one new streamlined operation in New Jersey. We also shrank the corporate management team by half. This also helped us get rid of a few "culture resisters," senior people who opposed constructive change. Pharmacia & Upjohn made a startling turnaround and then merged with Monsanto in 2000 to triple its size to a $52 billion market cap.

These are some of the steps that helped me reinvent through culture:

Set clear expectations
Show the path of the journey, set an ambitious strategy, and get a mandate for change from the people, so they become ready to make the necessary sacrifices.

Role model positive attitudes and behaviors
Leaders, starting with the CEO, must consistently act with the same business authenticity that they want to see in their teams.

At all the companies I led, we published five or six behaviors we all expected of each other so that we could share, learn, innovate, and grow as individuals and as members of a team. I remember visiting our Schering-Plough team in Seoul, South Korea, in 2009 and was impressed with how well our local team had built ownership and resonance with this list of behaviors. They told me they wanted to do this because they sensed authenticity within the top ranks.

Build trust
Trust in the senior leadership team is an important indicator of organizational health. To build trust, CEOs must actively show employees that they make fair decisions, value people, and value good work.

This also means valuing integrity. When I joined Schering-Plough as CEO in 2003, the company was in trouble with authorities over alleged marketing practices. We subsequently cut the commission structure, and I had to face 3,000 employees, most of them unhappy, at the national sales meeting.

I knew my methods were controversial, but I wanted these employees to consider themselves medical information providers, not just commission-driven sales representatives. I told them, as their new CEO, to walk away from any sale that would undermine their integrity and encouraged them to choose long-term trust building over short-term financial gain. Many were surprised at the resulting standing ovation.

The meeting was a game changer. We went on to deliver 17 consecutive quarters of double-digit sales growth.

Execute via a high-performance culture
A culture of ownership, accountability, and continuous learning leads to powerful execution. Leaders should keep encouraging employees to take ownership of both the problems and the solutions.

In 2004, when Schering-Plough had to go into a clean-up mode after severe compliance challenges in manufacturing and marketing, our compliance team, led by Brent Saunders (now CEO of Bausch+Lomb), put mirrors throughout the global network of sites with a phone number to call if they witnessed any wrongdoing. The mirrors signaled our new culture in which employees looked at themselves in fixing compliance and turning the company around.

In today's era of accelerating — and even lurching — change, culture can still lead to unexpectedly strong performance. The good news is that while it requires time, commitment, and a strong CEO leader, a high performance culture can be built into almost any business. And serial success can follow.

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