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Fruitful Experiments in the Culture Lab
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The word “laboratory” may suggest images of beakers and pipettes, but a lab is any place that provides the opportunity to experiment, observe, and practice. For companies focused on redefining their culture, one way to effectively change behavior is to create a “culture lab.”

Culture labs are an Agile way of ensuring a new corporate culture takes hold while also getting good business results. Rather than relying on executives to simply pitch the case for change, culture labs generate excitement among staff by showing the positive results that flow from it.

Redefining culture must happen first. This includes describing the organization’s purpose, values, and desired behaviors. Too often companies stop here, mistakenly believing that simply communicating that new culture will be enough. In fact, more work is required before any organization will see a true change in the way its people work.

Culture labs help companies take that next step. After a company has identified the culture it wants to cultivate, executives identify business issues that can be solved only with new behavior. They prioritize a few of these problems and entrust each to a cross-functional team. Those teams then break the tasks into modules and work on them in short cycles known as sprints.

The leadership team ensures these teams work in a safe “bubble,” free from other business distractions, and removes impediments along the way. This helps leaders understand what will need to change for the new behavior to spread throughout the company. They then celebrate and communicate these teams’ successes, generating the energy needed to push the cultural change throughout the organization.

Testing media mix

Recently, a consumer products company found itself contemplating a panoply of media opportunities ranging from new online platforms to fresh creative content and different ways of targeting audiences. Unsure which step to take first and traditionally reliant on outside media agencies and a backward-looking media-buying model, management decided that the best way to figure out the right mix was to start testing. This had to be a fast-paced process with a focus on learning from both failure and success, so the company created culture labs. Cross-functional Agile teams made up of representatives from the media and brand teams focused on two specific brands and started by creating a long list of ideas to test and how they might do that systematically. The unified team adopted Agile ways of working, including daily stand-ups to tackle challenges and biweekly sessions reviewing progress and plans. Management coaches helped members develop a mindset of learning from their experiments, balancing their need for success.

Tests included:

  • Whether it made more sense to spend advertising dollars on the master brand or on spin-off products. They found that a focus on the master brand created a halo effect over all subbrands and had a better return on investment.
  • Whether they should update their advertising in the middle of the holiday season or use the same messages throughout. Testing showed that changing the creative messages worked best. People early on bought the product for different reasons than they did in the final days, so ads targeted to specific uses outperformed.

Testing led to shifts in the brand’s media budget and activities. Leaders had to become comfortable changing prior decisions based on test results and accepting that not every test proved the hypothesis they had expected. The brand teams had to look past what their finely tuned media-mix model said was the most efficient media spending by brand and channel, then try new things. Sometimes it was necessary to rip up plans they’d put a lot of work into for a chance at something better. In time, the company stopped relying on outside media agencies to run the whole program, and instead looked to those agencies for support and advice on their in-house efforts.

The process was sometimes uncomfortable, but the teams generated $25 million of new revenue, plus a significant increase in profit. This testing approach has now spread to other parts of the business, including e-commerce. 

Cultivating trust

Culture labs also recently helped a well-established European retailer understand what needed to change at the top of the organization for its culture to take root broadly. The retailer operates under different names in different countries and serves a variety of customers at a variety of prices.

Trust had long been a corporate value, but the company’s centralized decision making was resented by local markets. When the company designed a new operating model that gives much more control to local operators, executives wanted to ensure the two groups could work collaboratively.

The 2020 annual budgeting process provided the opportunity to begin building trust. Held on a compressed timetable, and not face-to-face due to Covid-19, management combined central and local organizations into teams that handled the process. It was made clear who was responsible for what in the new operating model, and the teams were expected to follow that structure. It took some time, but eventually teammates easily identified when they had strayed from the new model and fallen into old habits, and they found ways to overcome that through collaboration. Impressed, top executives applied the model these teams had built to their own work.

Culture labs feature teams like these that solve high-profile business issues in ways that reflect the organization’s desired culture. They recognize that culture can be changed only through practice in the course of daily operations. When culture labs succeed, they become associated with stronger business results, and that’s the best case any organization can make for a cultural change.

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