Originally posted for SmartBlog on Leadership: http://smartblogs.com/leadership/2014/12/22/injecting-a-new-culture-and-quickly/
When I took over ACAM Advisors in early 2003, investment returns had been below average for several years, and two important clients had recently defected. The majority owners hinted to me that, in their view, layoffs might be in order. From my perspective, the firm’s client list had enough A-list names still on it, and the CVs of the professional staff looked impressive. Surely there was value here.
When a new manager takes over a troubled business unit or company, often the culture of that unit or company demands immediate attention. But how to do it quickly? Turnaround situations call for urgent moves, and entrenched cultures are highly resistant to change. It usually takes a long time to change the existing one or to create a new one.
In such situations, a manager must look for openings where an action on his or her part will send a short, sharp message that things are changing. These “openings” ideally should constitute situations that lean heavily in the direction of a desirable outcome from the staff’s point of view. If the team sees that something new is going to improve their job performance, or get them recognition for their hard work, or simply make their daily environment more pleasant, a new manager has a good chance of getting quick buy-in and effecting rapid change.
As part of my day-one orientation at ACAM, I sat in on the weekly investment committee meeting. Presiding was a caretaker chief investment officer (CIO) who had been placed temporarily in the role after the former CIO resigned. I had been told that the previous CIO, as well as the caretaker, liked to make the final investment decisions themselves. That was not unusual. However, what I observed during this initial meeting was definitely unusual.
The ten-person investment team sat silent and near motionless at a long conference table as the caretaker read through the notes and facts of the various investment options. After each recitation he suggested a course of action. The individuals before him would then nod or voice a gentle “sounds good” and he would then move on to the next one.
This had to change. While it is common for CIOs to have final say, that final say must be informed by the research and opinions of the investment team, especially if the investment team, like this one, is made up of intelligent, well-educated and experienced research analysts.
Over the next few days I learned that investment committee decisions had been made this way for some time, with the obvious (to me anyway) result that people had stopped speaking up. I resolved to change this at the next meeting, my first as official CIO. However, telling people they would be expected to speak up or ordering everyone to be prepared in advance might send the wrong signal. Firmness was not what this group needed; they needed encouragement.
Asking for ideas
I decided that, at the meeting, I would ask for investment ideas, and sit silently waiting for a response. My hope, or my gamble, was that the team would have thoughts prepared, someone would volunteer to get the ball rolling, and that one of the first two or three ideas offered would be a strong one. At that point I would do everything possible to move that idea to full approval by the entire team in a minimal amount of time. My goal: plant the seed that well-researched and supported ideas could be carried straight to the top of the list by any analyst doing the work.
At the meeting I began briskly, “OK, what have you got?” Ten sets of eyes stared back, waiting. I did not speak, but instead looked back at them, going from face to face around the table. Finally, at the end of the right side of the table, Kevin waived a hand.
“Kevin, what have you got?”
Although tentative at first, Kevin outlined an opportunity to invest in a hedge fund which pursued a novel credit-related strategy. He detailed the analysis he had done over the past six weeks, and noted how recent events in the market had made the fund’s prospects stronger. His work had been complete, and it was clear this represented something that made great sense for our clients and fit our risk parameters.
After he finished, I asked for questions of Kevin. Again I was silent. Someone then asked a question, which Kevin fully answered, and then another, and a third question came from someone else. When there were no more questions, I asked if all of the formal due diligence had been done. Kevin said yes.Then I seized the opening, this time using the go-along complacency of the group to my advantage. “Does anyone else think we should take a vote on this?” I said, and when I received the expected couple of nods, I continued, “All in favor?” I waited until everyone raised their hand.
We had approved the investment recommendation with full participation, as introduced to the committee by a senior research analyst, in less than 10 minutes. Kevin had just become the instant star of the meeting, and the realization suddenly hit the other committee members: they could all be a part of this!
At the next meeting, everyone brought at least two ideas to the table. I let the group push the momentum, and they did it actively. To their credit, the three ideas we approved at that meeting were the three that had been most thoroughly researched. My sense of an opening at the previous meeting to inject a significant culture change, and my faith that someone would have a truly good idea, had both been justified.
I would not have seen that opening, however, if I had not been seeking it. The culture at ACAM changed instantly. Indeed, investment performance and client satisfaction improved with such speed that many of the other moves I had contemplated proved unnecessary. There were no layoffs, and by year-end we gave raises to everyone and instituted a formal bonus plan.
The natural instinct of hard-working, intelligent individuals to share their well-earned discoveries had been unleashed. Once unleashed, the new culture thrived; we became known as a firm with a serious and deep research process where all members of the investment committee had a stake in the decisions. Business performance followed: when I stepped down five years later as CIO and CEO, the equity value of the firm had increased 900%.
Changing a poor culture is challenging, and is best done through small actions and examples taken and set, and repeated over many months. Sometimes, though, delaying will not do. In that case, look for an opening where you can draw out dormant energy to spur the team into participation and change their attitudes from negative to positive. Take a small gamble. The rewards may surprise you.