Interview

How To Design An Effective Cultural Change Process

In late August, an enticing tweet caught our attention. In it, the author claimed to have cracked the code to effective cultural change within business organizations. Normally, this wouldn’t get much notice, but it was the author that made this one stand out.

Bud Caddell is the founder of a new style of organizational consultancy called NOBL. Since launching five years ago, he and his team have been working exclusively on uncovering the mysteries behind cultural change and the effects it has on businesses. They’ve worked with world-famous organizations to design cultures that Bud claims have become their most sustainable competitive advantage.

We spent our time with him unpacking the reason behind the tweet and the hard won lessons gained along the way. This interview is ideal for anyone managing internal cultures and change initiatives. We also dive into key lessons for startups still in the early days of building out their teams.

TBD: Let’s dive into the tweet first. You wrote that you’ve cracked “how to design an effective cultural change process for the world we live in today.” What does cultural change encompass?

BC: I think of cultural change within an organization as everything from individual habits, to shared rituals, to the ethos and shared beliefs of that organization. Whether an external event like a merger and acquisition or a new entrant in a category or an internal change like an incoming or exiting leader, we typically work with organizations who are looking at shaping their cultures in new ways to respond to their environments and the demand from their consumers.

I think the big open question, at least in my career, was how do you actually ferry organizations through that sort of massive cultural change? To answer that, let me back up for a second. I think of myself as a recovering software developer that fell into digital transformation work. My background before NOBL was at a company called Undercurrent, which was the smartest group of people you’ve ever met in your life, working with the most ambitious clients on the planet. And yet, our success rate, as I remember it, was dismal. I look back at that time and I had a lot of decks with very, very pretty ideas and no impact in the real world. I remember feeling like, “What’s going on?”

Our primary remit was how do you bring organizations through the digital transformation, but with that comes transformation in all sorts of things – culture, organization, strategy, etc. So, the brief I gave myself was if the smartest people in the room can’t work with the most ambitious clients on the planet to make change, then what’s going wrong?

Over the last five years, I’ve hit my head many, many times building NOBL because that process is just constant failure and learning – on a very small scale. It’s also personal development work to ensure you don’t crack under that failure. In the end, I genuinely believe that we’ve built a cultural change process that works and we have the results to prove it.

TBD: What does the process look like?

BC: I think the big difference we’ve discovered is twofold. One, we don’t show up as experts. We show up as coaches. Meaning, I don’t show up saying “I’m smarter than you – let me tell you about the world and what to do about your business.” I actually just show up now and say, “What have you always wanted to do here, but have been unable or afraid to do?”

By doing this, we can generate all the collective ideas, wisdom, and insight of the organization about how their market, customers, and organization are changing. Then we surface those to the executive leadership team. It’s been a huge win for us because it creates motivation early on and people get bought into the process. They understand from the beginning that we’re not consultants doing something to them, rather someone helping them do what they’ve always wanted to do. It also helps us to just be way smarter faster, versus pretending to be an expert after simply studying a market for six weeks and claiming we’re the experts. Which is just horse shit.

The second big difference is we focus on what we call “skateboards,” which we stole outright from Spotify. When Spotify wants to build a new feature on their platform, instead of thinking about what’s the Cadillac version of that feature, they ask, “what’s the skateboard?” In other words, what still gets you from point A to B, but is scrappy – like you can make it in a day versus take five years to get there?

Sadly, every time an organization wants to change, they always go to that Cadillac version, right? They paint this super ambitious picture of themselves. “It’s five years down the road and we’re going to completely rehaul our data systems, or we’re going to completely change the way we work with customers or launch a completely new product. But for us, we think like Spotify – what’s the skateboard? Spotify would call it the minimal, lovable product. For us, it’s more like the minimal, lovable change.

To test those “skateboards” as quickly as we can, we work with cross-functional teams inside the company. I think being a former software developer, it looks like answering for how to build something really quickly that satisfies the need that you can then iterate on over time and learn from, test, and measure. From this very iterative process, it grows and grows, while reducing the risk of making that change. It makes it safe-fail versus fail-safe so that you can learn quickly and adapt.

A lot of our initial pilots with our clients at Undercurrent failed because a lot of organizational and culture change failed. But with NOBL, ours are survivable failures that we learn and can grow from. Those two things together, eliciting people’s ideas in the organizations and trusting their instincts, and helping them find small, simple ways to test those new ideas has really impacted our success rate.

TBD: Did you start out NOBL like this, or is this the iterative result you’ve figured out along the way?

BC: Oh man, totally had to figure it out along the way. 1) Just surrendering your ego to not have to show up and pretend like you’re smarter than everybody is hard. Especially, when you were raised in management consulting. 2) The iterations were always an instinct I had, but it really is hard to train clients to not swing for the fences on every single change. It’s more like, how do we hit a single? And how do we do that over and over again to work our way towards some bigger, broader change?

That just took time to learn how to train clients to do it. Not to mention, gain the confidence to really push them instead of trying to do exactly what they wanted to do which is always the big Cadillac version of change.

TBD: It makes sense the way that you set it up because you’re not threatening the team on the client-side with unintentional thoughts of your purpose being to facilitate layoffs. Instead, you’re asking them to talk about what they’ve always wanted to try or do, which is also very different from “let’s look at the problems.”

BC: Yeah, exactly. And there’s a lot of positive psychology behind these things. Which, if I’m completely transparent, I didn’t understand until I started hiring people who were smarter than me and had trained in things like organizational psychology and change management. I mean, getting people to focus on what they can do versus what the problems are, just helps unlock a lot of motivation.

TBD: Digging into Google, we noticed that in the beginning, your focus was on organizational change, which seems to be an accurate description today. When did you shift this positioning to “culture” and how has that affected the work you do and the type of clients you attract?

BC: I mean the central question that we’ve always pursued is how do you help a lot of people work together to change the organizations they work in. It’s taken some different flavors and some different positionings with clients to get here because, for a long time, we just said we help leaders make change. We were pretty agnostic to the kind of change that leaders wanted to make. More and more though, I feel like people are finally open to talking about culture. I’ve seen a dramatic change and they’re starting to see that culture is a competitive advantage – it’s not soft stuff. We’re in LA, New York, London, and Vancouver and we’re seeing that in all of our locations now.

TBD: When doesn’t NOBL’s process work? Have there been situations where no matter what you tried, you couldn’t overcome internal hurdles?

BC: Yeah. A few examples. One way it can fail we found when we were exploring this idea of really opening up the opportunities for change for people who are inside the organization to tell us what to do. In a couple of client environments, it turned out that people’s sense of agency and efficacy in their own work was so low they actually couldn’t give us ideas. Which was mildly depressing, to say the least, but helped us realize that we had to be a little prescriptive in our process.

Somebody could understand we can describe their pain or what they’re trying to accomplish, but we really need to bring in outside examples to help teach them. That’s why we have a research team that studies high performing teams in other companies and collects new ways of working in organizations. Armed with this research, we can say things like, “Spotify kind of had this problem, or Google may approach it like this.” Though, we do that with a heavy caveat of you’re not Spotify and you’re not Google. The idea isn’t to copy and paste the way they approach this, but rather to learn from their example and maybe borrow a principal or guiding tenet from that process to bring back to your organization.

So every client, we kind of have to dial up, how good are they at actually generating their own solutions? And how much do we need to be research partners or coaches to help them find their way? That’s one way it’s failed.

Another way it’s failed, even when doing some really amazing work, is when a new leader comes in and sort of shakes the etch-a-sketch. Often, they’re just trying to quickly prove themselves, but one of the simplest ways to do this is by borrowing what worked at their last company. Sadly, this ends up demolishing all the goodwill, participation and positive change that people have created in their organization prior. When that’s happened, it’s been incredibly defeating. Our approach, in some ways, is radically democratic and for a lot of leaders, they’re just not used to working that way.

TBD: When you mentioned that you would do research on how other teams are working today, are you referring to secondary research or are you sending team members behind closed doors to see what works?

BC: A bit of both. I mean, 1) we just sort of cull the internet constantly, because we just live in an era where teams are publishing more of their practices. 2) Once we find a really interesting example, we’ll just go interview those people off the record, to build a bit of a library. We have a public library on our site called the Academy. We’re also building a platform for teams to share their ways of working called Workhub. In addition to those, we’ve gathered a lot of private information that we’ve learned from teams that we’ve interviewed.

TBD: To follow the theme of when things don’t work, when and how do you know you’re not a good fit for a company?

BC: That’s a good question and it’s not actually easy to answer in the moment. It took us a long time to figure this one out. You know, we’re a strange pill, in terms of solving these problems in a very different way. If you want a traditional approach, there’s a lot of consulting companies that exist that show up with a plan, tell you what to do, and give you a Gantt chart with a “good luck” when things go awry.

For us, a leader has to be equally ambitious and compassionate. That’s the number one thing we’ve found. They have to be interested in new ideas and new possibilities, and they have to see the people who work with them as partners in that change. If they don’t, then they’re just imposing their own will on the organization and that’s just not our process.

The other factor is the organization itself. One of the really important things is that they have to be able to de-prioritize things because our process is a bit more intensive than the traditional approach. We’re actively involving lots of people in it. If leadership can’t say, “yes, you can participate in this and I’ll remove this off your plate to do so,” then it’s really hard to get people’s time and capacity to do the kind of work that we do.

When we show up in organizations that don’t really have a strategy, or the ability to choose between two choices, that’s when it becomes really difficult in terms of making time for people and making time for them to participate in the process. I worked a lot in strategy and it is very easy to mistake a plan for a strategy or a timeline. That’s when people start to think that they have a strategy. But no, a strategy is a set of choices and trade-offs. Right? Like you are winnowing choices down, you’re making choices between two things. And a lot of organizations, especially very large ones, exist by inertia. We choose them because we’ve always chosen them as brands or products, and there’s some level of momentum that just by the nature of existing, they’ll continue to exist for some period of time.

I think our work does force some strategic choices because we get into things. We typically start with what we call systems – things that govern individual behavior, whether that’s how teams make decisions, share information, form teams, or how teams get their work done. Once we start to experiment in those things, usually a question around structure comes up. Do we need a reorganization or not? We never start there, because it mostly just does damage. However, at some point, we’re testing whole new ways of working that start to say we need to be far more cross-functional. This leads to the question, “what would a cross-functional structure look like?” Then that really calls into question what’s our overall strategy and what are we trying to accomplish? And unless you have capital “S” strategies, you’re making choices just purely based on egos looking at structure. At some point, it really forces an answer to the question, “why do we exist in this market and what are we choosing not to pursue?”

TBD: Does the work NOBL does with a company better set them up for the type of innovation work you’ve done in the past while at companies like Deutsch?

BC: Yeah, that’s what we’ve seen and was also what motivated me to do this work. Whether it was digital transformation, or inventing new products and services, it would see such a terrible success rate that I thought I must be solving the wrong problem. You know, it’s not the golden egg, it’s the goose, right? What we’ve seen in our clients is, not only have they become more profitable and increased employee engagement – which we can measure – but they’ve actually started to launch new products and services and generated press for that.

If I’m honest, I think the thing that is really connected to those two things is just the idea of human agency. I don’t necessarily think that our goal is to make you more innovative. I think our goal is to give the people who work inside the organization more power, freedom and flexibility to do new things in the organization starting with just changing the way they work. Once you wake up to the fact that you can change the environment in which you work, you can then change the things you do together.

TBD: Based on what you’ve learned thus far, how can a startup with just a few people, ideally structure themselves from day one?

BC: Oooh, it’s a good question. We partner with a couple of different VC firms and have helped seed stage companies. An example, there was a VC client in the UK where one of the things that we did was to map the founder’s journey and the challenges the founding team was going to run into from seed to series A.

There are a billion ways to structure an organization and all of them are terrible. All of them are painful. There is no perfect way to get started. The only thing that you have to be very conscious of is having a coherent connection between the changes that you see in the environment. What I mean is what are we creating a company in response to? Given those changes, what’s the purpose of the organization? Then what are the strategies that are necessary to enact that purpose? Answering these questions gives you your structures.

To be clear this is something I stole from a very old book called The Visible Hand, by Alfred Chandler, and is one of the very first business history books. It’s his study of organizations that survived the Intercontinental railroad in the US as it was being developed. And this idea of going from mom and pop organizations, local stores, and very traditional factories to suddenly, the whole of the United States was interconnected in a way that’s never been before. Now, you could be in Florida, buy timber from Oregon and sell your products all over the US. Chandler basically found that the organizations that survived that cataclysmic connectivity in the US did so because they were able to restructure themselves as their strategies changed. The organizations that died off were the ones who became fixed in their existing structure.

I say for startups don’t fall in love with your structure. It’s hard, but continue to iterate on your strategy and create enough flexibility and clarity. The trick of a small company is in retaining a lot of flexibility, but having clarity between the people who work there. And if you can do those two things in your early days, you can be far more successful.

TBD: To wrap things up, let’s get back to the tweet that started this all. With a seemingly successful niche business already, what do you mean by now wanting to focus on how to make a business out of this? What’s missing?

BC: The first five years were really trying to figure out how to make organizational cultural change work and stick. I think that took a lot of time and a lot of at-bats. Our process is in such a way that our failures are small. We were able to learn from them and I can’t really point to very unhappy clients. To steal a line from First Man, “we fail on the ground, so we don’t fail up there.”

At the same time, we face a few challenges as a company. The work that we do for the people who work at NOBL is incredibly emotionally taxing. We are holding space with lots and lots of people through cultural change. Just to be super candid, this is a lot of emotional labor that our folks do and we haven’t always figured out the right way to restore people through that process that work at NOBL.

We’re trying everything from mental health stipends to testing a four day work week, and artificial scarcity. For instance, people can only work on X number of projects and things like that. I think we’re figuring that out, but it’s one real challenge we face and it’s hard work. You’re living inside the client’s company and can’t run away from it. You’ve really got to deal with the changes that are happening and how people are responding to it. That’s number one what we have to figure out in the next five years.

The second thing is we’re still niche in that we have to convince people that this way is the better way. It’s just like in advertising, it’s always going to be easier to buy louder, dumber advertising. In what we do, it’s still just too easy to hire McKinsey and Deloitte. There’s just a level of false security they give you. You know the phrase “no one’s ever been fired for hiring IBM.” Well, no one’s ever been fired for hiring McKinsey. I think we still have to prove to people in very tangible ways that this is a more effective way to do things. How we go to market with that and how we talk about it is something we’re still figuring out.

To learn more about Bud and NOBL, you can visit the company website or listen to Paul McEnany’s interview with him on the Real Famous podcast.

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