Microsoft's Big Layoffs Lays Bare the Dangers of Cultural Change Whether you run a small company or a large corporation, changing a culture should be done with care, or risk an implosion.
By Thomas White Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Deeper in the announcement of the layoffs at Microsoft is the story of dramatic change in the tech giant's culture. The big question is how CEO Satya Nadella will navigate the four great challenges this type of change presents.
While he is not a founder of the company, he is fully inculcated with the Microsoft way and has been successful at navigating the existing culture to come out on top in the recent CEO search.
Whether you are the CEO of one of the largest corporations or the founder of a $10 million company, you will face the need to transform the culture of your organization at some point.
Corporations are started with the ideals of what's right at the time of their founding. These aspirations and values can serve a company for a few years or much longer. What is absolutely true is that no one can see so clearly into the future to know what will bring success forever.
Related: Bombshell: Microsoft to Eliminate 18,000 Jobs in Restructuring
I'm not advocating that companies change their culture at the drop of a hat because their earnings are not on target. Changing a business culture is a serious undertaking. If done well, it can change the basic fabric of what the company is. If done poorly, it can accelerate the decline and possible extinction of the business.
Cultures are modified because a leader can see that the way people work together and with their customers will not produce the best outcomes for anyone.
Cultural change can happen for three reasons:
- The business is failing, and without a radical change the future is dire.
- The business environment has changed so dramatically the company needs to operate in a new way.
- The leaders see a future where their success is in jeopardy. Even while experiencing current success, they re-design their company for this new future.
As Nadella makes decisions to change the company's culture, there are many cautionary tales of this type of change that range from ineffective to devastating.
Here are four of the biggest issues he will face:
1. Being clear about what the current culture is. I have worked with many companies, from small ones to the very largest, and this is the biggest issue companies have. They will tell you about their vision, mission and strategy. Their employee handbook is filled with their values and operating principles.
The problem is that is only the tip of the iceberg. When you start at a company you immediately realize that there is a way things get done that are not written down and rarely spoken of. Diligently exposing the true nature of an organization is uncomfortable, challenging and absolutely required.
2. Make all the changes needed at the same time. Many of the greatest failures of cultural change happen because the changes were dripped into the organization a bit at a time. When a major cultural initiative is underway, people become nervous. They wonder if there is "another shoe to drop."
Related: Wait, What? Microsoft CEO Says Company Needs to Rediscover Its Soul.
The quicker you get people focused on the changes at hand and let them know this is all there is, the faster the changes will take hold and the purpose that motivated the change will be realized.
From what I see, there may be some near-term paralysis at Microsoft until all of Nadella's plans are revealed.
3. Courage to change anything no matter the consequence. We all think we have the courage to make the changes that are needed. The truth is, we really don't know if that's true or not until we are tested. You have to be able to be steadfast in staying the course of your changes no matter who disagrees.
All change is met with resistance. This resistance will be often directed at you. Know that it's not personal -- it's the result of our human nature to keep things the way they are, even if they aren't working.
4. Embody the changes you are making in yourself. I've worked with business leaders that wanted to make big changes in how things in their companies worked. For instance, they wanted to make accountability a real part of their culture. Yet, when things got tough financially in their company, they removed accountability for financial decisions from their key leaders. The message was clear to the entire company -- accountability isn't really practiced here.
People watch leaders with laser-sharp discernment. Everything they say or do is analyzed. They are looking to see how closely their leaders are living by the same rules they extol. When a leader is impeccable in the way he or she embraces the key qualities of change, its probability of success is two times greater.
Change is tough. We all know that. Cultural change is the hardest challenge any business faces. If you are at that point in your business's life, then take a deep breath, find your courage and boldly embark on one of the most exhilarating and daunting times of your professional life.
