Culture Determines Strategic Execution

Credit union leaders face a continuously challenging environment of change from technology, regulation, intense competition, and economic and political uncertainty. During periods of turbulence, a robust organizational culture provides a strong foundation for the stability needed to advance strategy. Satya Nadella, Microsoft’s CEO, relates: “The C in CEO is for curator of culture.” His recent book, “Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone,” conveys how when he became CEO in 2014, morale was low, and PC sales were declining in favor of tablets and phones. Other products were not major successes, and its Bing search engine was not contending effectively with Google. In the face of these challenges, Nadella articulated a strategic vision of Microsoft as the chosen platform for the technologies of the future, such as machine learning and artificial intelligence, cloud computing, robotics, big data and the internet of things.

Yet, Nadella saw that the existing culture would hinder rather than support progress of any strategy. He recognized that a shift was needed to create an empowering culture to drive his strategic vision, and he knew the CEO must lead the change. When taking the helm, he found Microsoft’s culture as rigid and hierarchical. The employee evaluation system, which incorporated forced attrition, was intended to reward talent and weed out non-performers. However, it often sabotaged cooperation and resulted in destructive competition. Employees had to prove they were among top performers as compared to colleagues. This caused unintended results, such as people avoiding working on teams with the highest performers for fear of falling to the bottom, and managers of high-performing teams not being incented to help manage out low performers on other teams. Fear of failure and of not being the smartest one in the room meant that meetings were formal and scripted, leaving little room for creativity. Risk-taking and innovation suffered.

Nadella focused on transforming the culture to one focused on cooperation and collaboration. Listening, learning, and harnessing individual passions and talents were touchstones. Building on the work of Stanford psychologist, Dr. Carol Dweck, Nadella worked to shift thinking to a “growth mindset” from a “fixed mindset.” A fixed mindset is a belief system that sees one’s traits are fixed and native ability as immutable. A growth mindset means that talent, ability and even intelligence can increase through curiosity, learning and discipline. It means there is potential for talent to be developed in everyone, so managers look for, expect and then work to expand leadership potential in all employees. They set up conditions to build and harness leadership capacity. Conversely, a fixed mindset creates a system of haves and have-nots, where a handful of “star” performers are highly valued.

Employees in a growth mindset culture are more engaged and employee engagement leads to higher revenues, profit and financial returns. Dweck found that in companies with growth mindset versus fixed mindset cultures, employees are 47% likelier to see their colleagues as trustworthy, 34% likelier to feel a strong sense of ownership and commitment to the company, 65% likelier to say that the company supports risk-taking, and 49% likelier to say that the company fosters innovation. Growth mindset cultures also serve as a talent recruitment tool.

Your credit union can take practical steps to harness a growth mindset that increases your leadership capacity. As Nadella pointed out, it starts at the top with senior management. Consistent communication, reward systems, evaluation methods and learning programs support the view that the employees possess growth potential and are a worthy focus for talent development. The talent pool expands when people not previously on the radar are identified or step forward to move into leadership roles. Rapid learning through fast failure and risk-taking that advances organizational goals are rewarded.

Face time through in-person encounters, and efficient and productive meetings build collaboration and trust. Best practices for meetings can be learned and are integral to a healthy culture. Best practices include: Establishing ground rules, like starting and ending on time; making sure all voices are heard; yielding the floor and assuring equality of people’s participation. Leaders prepare agendas that describe desired outcomes. They know when to meet, who should meet and conclude meetings with an action plan.

Strategy combined with a mindset and practical steps that create a robust healthy culture is the secret sauce to increase leadership capacity and give your credit union an edge.

Stuart R. Levine is Chairman and CEO of Stuart Levine & Associates LLC and EduLeader LLC. He can be reached at 516-465-0800 or slevine@stuartlevine.com.