If you’re a 129-year-old global organization, how do you handle a breakup?
General Electric (GE) and Johnson & Johnson (J&J) have both recently announced large-scale demergers. GE plans to divide itself into three separate entities which will focus on healthcare, energy, and aviation. And from this point moving forward, J&J will operate as two different companies with one focusing solely on pharmaceuticals and the other focusing on consumer products.
This is a trend in the market of late, with more focused businesses as the goal. With many large-scale companies facing outside pressure to break into smaller parts (Macy’s and Shell among them), many are wondering how these companies will maintain business continuity, particularly when it comes to culture.
[newsletter_module]Why focus on culture?
When companies of this size and scale, with global reach, influence, and market infiltration make such sweeping changes, it creates a domino effect in the marketplace. If these companies cannot maintain business continuity, supply chains could break down, affecting multiple industries, and ultimately, the end consumer.
In order to make this work, leaders must create clarity, alignment, and accountability at all levels of their new entities. Representatives from GE have stated they recognize the importance of focus and accountability, and also know that change takes time. Yet, creating a strong, results-driven culture can often be an accelerator of change. When a culture is agile and accountable, it embraces and implements changes quickly, creating growth.
In companies which are over 100 years old, you might expect a deeply-rooted culture, which brings with it good and bad. But this is a chance for all of these new spin-off companies to build strong, positive cultures. Leaders must ensure the negative aspects of their former cultures do not follow them into their new business operations.
The safety of honest feedback
Teams may feel these large-scale changes in every facet of their roles. The ways in which they complete their daily tasks and duties may shift dramatically. With this in mind, leaders need to create a safe space for feedback in order to determine the future success or failure of their efforts.
The GE board has said there will be no tolerance for spin or rhetoric; everyone must remain grounded in reality. And the reality is this: some employees are not going to like the changes being made.
When a person in any job faces changes dictated by leadership, they will fall somewhere along the “buy-in” spectrum, ranging from total buy-in (I accept and embrace these changes) to none at all (I do not like these changes and will not participate in them).
Leadership at GE and J&J should hold space for employees to give honest feedback without fear of consequence. This is the only way for them to understand how quickly and easily their changes will be implemented. In cultures where employee feedback is valued, solicited, and taken into consideration, employees are happier and stay in their positions for longer.
For employees that fall on the “no thank you” end of the spectrum, the best way to move forward is by finding out what experiences they need in order to accept and comply with the changes. For some, it might be a pay increase. For others, just having the opportunity to be heard and feel valued is enough. However, some people may always be resistant to changes. Whatever the case may be, the key is to listen.
Building a cultural framework
If Strategy=What We are doing, and Culture=How We Do It, here is where GE and J&J stand today:
- Strategy: We are splitting into separate companies to allow us to focus more on the areas where we see growth opportunities.
- Culture: What are the intentional experiences we can create, given this shift, to engage our teams and help them see the critical role they will play now and in the future in these separate companies?
Before making any sweeping changes, leaders must be strategic about building the kind of culture that yields their desired results. This starts with mission, purpose, and branding. Depending on the desired results, they must build a purpose for people within the organization. Without a clearly communicated purpose, teams may lose focus on the goals of the company.
In order to convey purpose, leaders within the organization need to create a set of experiences for their people. These experiences will lead to beliefs about the company (and their value to the company), which lead to actions, which ultimately lead to results.
Creating a solid framework and being deliberate about what types of experiences you want people to have is the best way to achieve your desired results. And much of this starts with being open to feedback.
Ultimately, GE and J&J will need to make sure they communicate all changes, receive feedback, and curate experiences the right way; otherwise, their efforts may fail. However, if they create a solid framework, and maintain their focus on culture, these demergers won’t upend everyone’s working life, and they will begin to see the results they are looking for.
