Multinationals like Shell prepare all their new ventures and takeovers extremely well and evaluate them thoroughly afterwards. As it turns out, too few of their transactions are successes. And every time, the reasons why are the same: not enough time and attention were devoted to the so-called soft capabilities. We’re talking about things like cultural incompatibilities, an inability to agree on and strive for a common goal, an incapacity to bring potential synergy to fruition, and clashes in leadership and management styles.

These cultural elements overlap to a large extent with what Colin Price and Scott Keller call ‘health factors’. Organizations that are ‘healthy’ by Price and Keller’s standards outperform the market. Luckily, we now have a quantitative underpinning for this argument. In Beyond Performance, Price and Keller demonstrate that healthy companies not only outperform the market, but also show that such organizations are 2.2 times more likely to outperform the median.

Not intangible

So it seems fair to conclude that organizations’ soft capabilities make or break their ability to reach their goals. But this conclusion has far-reaching consequences. If soft capabilities have so much impact, we need to work just as hard on systematically analyzing and influencing our soft skills as our hard goals. However, this is far from the norm. Many people think of this soft side of business as intangibles. Culture, climate, values, behavior and leadership are seen as the domain of a few experts who think they can tell others how to develop and perfect an organization’s “soft side.” No wonder the soft side remains a kind of black box to most employees. Soft capabilities are therefore often conflated with the concept of ‘organizational culture’.

That’s a practice I actively oppose. It is eminently possible to develop your organization’s soft capabilities, as Edgar H. Schein of the Sloan School of Management has shown. Schein argues that the only way to develop your organization’s culture is through the development of actual behavior. And to develop behavior, you need to choose a limited number of specific behavioral themes that have a direct relationship with specific goals and business processes. In other words, cultural change works only in context.

Soft capabilities include culture, behavior, leadership style and cooperation. Hard capabilities comprise processes, structure and technology. Turner Consultancy has developed an online research tool: SECA.NU to assess an organization’s execution capacity or change capacity. This tool can be used to measure both its hard and soft capabilities.

Plaques

Forget those inspirational plaques with your organization’s core values. They have zero bearing on the day-to-day, or on innovation. Here’s how you design the soft capabilities in two steps:

1. Select a maximum of five behavioral themes
   Each theme describes a type of conduct and the shift in behavior that will reinforce your goals and develop the culture. Your description must clearly connect the behavior to your hard goals and specify where in the overall design—in which business process—the behavior in question needs to take place. Behavioral themes must have a one-to-one correspondence with your strategic objectives.

2. Select a maximum of ten interventions.
   Defined as a conscious stimulus or activity related to a behavioral theme, an intervention is run parallel with the hard activities of a particular initiative to foster the behavior necessary to achieve your hard goal. To ensure impact and focus, attempt no more than two interventions per behavioral theme. Otherwise, your approach runs the risk of degenerating into a general cultural program.

This is the way to explicitly work on your soft capabilities and get results. You’ll never get any lasting results by running just a culture change program. Culture is an outcome, not an independent issue. You can’t independently change the corporate climate. Organizations are complex structures where every change has ripple effects. When employees are given new responsibilities, they will see their contribution in a new light and adjust their behavior and values accordingly. Just focus on real goals, tasks and initiatives in a way that keeps hard and soft elements in equilibrium and the culture will change in its wake. See figure 1 for how to assess your key competencies in strategy execution.

It’s all about balance

All eyes on the soft capabilities, in other words? No! It’s all about balance. The balance between hard and soft is what really makes the difference. It is often said that a project’s success is determined by how it starts out. Everyone agrees that there needs to be a robust, substantial roadmap and a clear goal. The soft element that is crucial at the start is the engagement of the executive who draws up the plan and gets others to commit to the project. This is what I call the psychological check-in, a crucial but generally forgotten or ignored aspect of every project. All too often, senior managers do nothing more than make a quick phone call the day before kickoff. The truth is every minute invested in thorough discussion of roles and responsibilities pays off exponentially in the end results. But it has to be real engagement, not fake commitment.

False dilemma

In the New Normal, the choice between top-down and bottom-up change management is a false dilemma. As we all know, it’s not either-or, it’s both. The idea that top-down change doesn’t work is an old, discredited idea that some people try to pass off as new. Similarly, we must quickly dispense with the dogma that bottom-up change is the only way. When large organizations start complex, multidisciplinary projects to execute real innovation, it’s risky to assume that every individual involved is able to analyze and decide how things should be improved (bottom-up change). You can’t do without a clear top-down framework. And it’s unacceptable for departments or individuals to reject best practices just because someone else thought them up. The “not invented here” syndrome is an unproductive and undesirable characteristic for tomorrow’s employee.

Modern attitude

Leaders must take a modern attitude towards change management. New generations of professionals have come to expect that attitude and feel uncomfortable having to seek consensus on every decision. They want to deliver high-quality work when they’re playing first fiddle on an initiative. And when they’re playing second fiddle, they expect whoever is taking the lead to have the same attitude. The taboo on top-down frameworks and rollouts is unjustified. Many organizations make the mistake of not delineating clear frameworks because they believe “employees should come up with the ideas themselves.” The solution is to strike the right balance between bottom-up and top-down.

Strategy = Execution. Improve, Renew and Innovate Faster

How can organizations make strategy execution their number one priority? And improve, renew and innovate faster? This I describe in my book Strategy = Execution. Strategy = execution is based on the research that Turner started years ago into the success factors of strategy execution and innovation. We interviewed 60 directors and professionals and analyzed more than 75 cases, 300 relevant books and articles.