Changing culture is easy - just change what you measure

As an agile coach I am always pushing for cultural change. That's what agile is really - it's not a delivery mechanism, it's a fundamental change in the culture of an organisation. What do we mean by organisational culture? There are many definitions but the one that I like is that culture is a shared understanding of values. It's the understanding everyone has of what the organisation thinks is important. Culture drives behaviour - people will seek to maximise what is considered important in the culture and will behave in ways that do that.

The problem of course is that, as anyone will tell you, cultural change is hard. CEOs are tasked with changing culture and spend years failing to do it. People say that the only way to change culture is to change all the people. Or that cultural change only happens when a generation of employees retire. I don't agree. Cultural change is really easy. You just need to let people know what the organisation values. "Hang on", I hear you say, "Just wait a minute. Organisations have been putting out statements for years about what they want in their new culture. People can often quote chapter and verse from the CEO's latest values statement. Millions are spent on flashy communications. And nothing changes."

That's absolutely right. No amount of that sort of communication will change culture because that's not the way an organisation decides what's important. Just because the CEO appears in a flashy video spruiking "our new way of working" it doesn't mean anyone thinks it's important. That's just marketing. No, what really tells an organisation what is important is what the organisation measures. The CEO can talk all s/he likes about this new culture, but if the organisation measures its staff based on the old culture then guess what will happen? People will optimise the things they are measured on.

Measurement drives behaviour. You cannot change the behaviour without changing the measurement.

Imagine a group of project managers at a large organisation. The senior management has been talking a lot about efficiency and agility and getting stuff done and delivering value. They come to their friendly agile coach and say "we can run 10 projects at a time in our group right now. How can agile help us become more efficient so that we can run 20? ". At this point their friendly agile coach launches into the WIP discussion - don't run 10 projects at once, run a couple, get them done, start less finish more, and how all this fits nicely with all the words that their management has been saying about delivering efficiently. But they still want to run more and more projects at once. Even worse, they start talking about running larger and larger projects. They get WIP. They understand the message, but they still want to run more projects and make those projects larger.

What's going on? Why do these clearly intelligent people want to do something so daft? Why do they want to go against the clear message that their management is giving them? Easy. It isn't daft and that's not the message their management is really giving them. Take a look at the report they give to their management every month. What's the very first number right on page one? Yep - "Number of projects in progress" . And right next it it is "Total value of projects in progress". The very first thing their boss sees when he looks at their report is how any projects they are running and how much they are worth, with bigger being better. That's what the organisation is telling them is important. The more projects you run and the more they are worth, the more important a PM you are. Your promotion to senior PM or program manger depends on the size and value of your project portfolio. They are very sensibly trying to drive the things they are measured on in the desired direction.

Measurement drives behaviour. People will optimise what they are measured on. If your words and your measurements don't line up then it's the measurements that people will take their lead from.

Change the measurement, change the behaviour.

So cultural change is easy. All you need to do is make the measurement match your words. Want to foster collaboration? Change the measurement from an individual one to a group measurement where everyone needs to collaborate to succeed. Toyota famously does this with their factory managers. Their bonuses aren't calculated on the performance of their individual factory but of all factories of the same type. If one factory is doing poorly it will impact all managers so the incentive is to help out. If one is doing well then the incentive is to share whatever it is that makes it do well with all the others so the group can do better.

Imagine what would happen to our group of PM's if senior management aligned their words and their measurements by having the lead metric on the report be something like project cycle time. What behaviour would that drive? Would the incentive still be to maximise the number and size of projects?

The main reason cultural change initiatives fail is because the words and the measurements don't line up. They change the words but leave the old measurements in place. This leads to the old behaviours being followed.

So cultural change isn't hard, it's really easy. All you need to do is change the measurements. Changing measurements though...that's really hard. People have built their entire careers either defining, collecting or optimising towards those measurements. Resistance to change is enormous. You are changing things that directly impact people's bonuses and promotion prospects. In our group of PMs, the current senior guy, the one who can juggle 20 huge projects at once, may well find himself at the bottom of the pack under a new cycle time metric.

Changing words is easy. Changing measurements takes a great deal of courage, sensitivity and real leadership.