The Cold Truth: Culture Is Still Key

It was an August day in Dallas, 105 degrees outside but a chilly 62 in the CEO's conference room.

It was an August day in Dallas, 105 degrees outside but a chilly 62 in the CEOs conference room. My partner, Linda, and I were meeting with the executive team of a large manufacturing company. We were discussing the dramatic opportunities and challenges facing this company as it set out to re-engineer its order fulfillment and customer service processes.

Meeting this opportunity would require strategic changes, operational changes, systems changes ... and something more. It would require the company to change a long-standing set of management beliefs regarding control, reward systems and human behaviors. In short, it would require the company to swallow hard and introduce a degree of entrepreneurship into the business that was scary and unprecedented. The question we were discussing was simple: Was the management team up for this level of change?

Despite my excitement about the opportunity we were discussing, I was distracted. It was cold. Dallas loves its air conditioning, but this was ridiculous. As I sat with my teeth chattering, I noticed I wasnt alone in my discomfort. Several of the executives were visibly cold, and a few threw a glance over at the thermostat. But no one made a move toward it. Finally, 45 minutes into the meeting, the CEO got up and raised the temperature. Linda and I glanced at each other. After the meeting, she voiced what we were both thinking. "This is a company where it takes the CEO to change the thermostat. What chance do we have to make real change happen?"

The rise of the Internet raised enormous expectations for the transformation of business. After the first rush of enthusiasm, we are now realizing that the technology, while powerful, is having a widely variable impact. Companies such as Cisco, Schwab and GE are experiencing dramatic benefits. But many others are finding that their Internet investments have been expensive distractions. Why the variable impact? Id like to suggest that the difference is related to culture. In a corporate version of the rich get richer, the companies with cultures that support change and flexibility realize the greatest benefits.

The Internet creates opportunities to lower costs, increase revenues and improve customer service, but it demands three critical things. First, it requires a willingness to rethink and redesign core business processes so they best exploit the power of the Internet. Second, it requires a hardheaded financial and operational orientation. Third, it requires a culture of openness and empowerment. Much of the potential of the Internet is tied to an enterprises ability to allow low-cost, in-depth, real-time sharing of information with customers, suppliers and partners. But companies have to be willing to share information and design their business models to exploit the information available. Immediate access to critical information is worthless unless employees are freed from bureaucracy and able to make rapid, informed decisions.

Does this imply a corporate "digital divide" in which many companies are fated to fail in their Internet efforts? Not necessarily. Our Dallas company, despite our initial skepticism, managed to shift its culture and realize significant bottom-line benefits. In my next column, Ill describe how they did it and how you can as well.