I have discussed steps to take in order to build a culture of continual improvement in numerous posts over the years (see related links below). What it boils down to is building a system that supports that culture. Your culture is the result not your aim.
David Heinemeier Hansson put it well recently in his essay, CEO’s are the last to know:
But the bottom line is that culture is what culture does. Culture isn’t what you intend it to be. It’s not what you hope or aspire for it to be. It’s what you do.
In order to create a culture that enhances your effort to continually improve you must crate systems that move things in that direction. Part of that system will be the continual assessment of how your organization is falling short of your desired culture. This requires honest assessment of the current state. And it requires those in leadership to design systems to get a clear picture on what is really happening in their organization.
As I said on Twitter in relation to that article leaders need to understand danger of “losing touch” and take steps to counter that risk. Often the explanation for why something happened (a process producing a failure, a leader not being aware of the real culture…) is an explanation of what the system needs to be designed to address.
In many organization CEOs are not aware of what is going on. This is a weakness that must be addressed systemically. Many of the better management methods proposed by W. Edwards Deming address this issue. CEOs are given a false picture when they focus on results instead of the management system. CEOs are given a false picture when they crate a climate of fear. CEOs are given a false picture in organizations focused on achieving bonuses instead of continual improvement.
These weaknesses in CEOs effectiveness cascade down the organization with each level experiencing their own versions of these weaknesses. In order to create the right culture requires a management system that is built to support the organization in growing into such a culture. It is a dynamic process that feeds back upon itself (in very classic systems thinking ways).
What not to do: annual performance appraisal especially tied to pay, individual bonuses for good numbers, pitting employees or teams against each other, seeking to blame people instead of seeking to improve systems, hero worship (massive executive pay etc.), reward those that win the variation lottery (or who are good at fooling people using data).
What to do: build the capability of the organization to continually improve (Building Adoption of Management Improvement Ideas in Your Organization), grow the talents and skills of your people, promote those that improve everyone around them (not those that seek hero status), train supervisors (and managers and executives) to coach and expect them to make those working in their organization more effective, everyone must go to the gemba, teach everyone enough about data to make sensible evidence based decision and to avoid foolish decisions because they don’t understand variation, continually focus on how to delight the customer, delight employees through intrinsic motivation (let them have joy in work), make problems visible and encourage bringing problems to light (also encourage solving those problems), use systemic processes that use experimental data with quick iterations to make decisions on improvements (PDSA cycle), continually improve the management system itself.
What to do and to avoid is much more difficult to implement than to read. Sadly the difference between giving lip service to ideas and actually doing what is required is so vast few organizations do a decent job of creating cultures that are focused on customer focused continual improvement.
Many items included in the to do list may not seem related to culture. In my opinion, things aimed directly at culture are most often pointless. What matters is create a management system that works together to encourage the proper actions and processes. Actually applying the PDSA cycle well many times in the organization will do much more to change the culture than all the words or the CEO and statements about what the company values etc.. With the proper management system in place, the direction provided by CEOs and others can make a big difference. Without it the culture is very unlikely to change in significant ways no matter what claims are made about values.
A few other tips to consider. You must pay attention to what you learn from your iterations of changes to your management system. Maybe your vision for the culture you wish to create is not sensible for your organization. Seeking to create a culture that conflicts with the reality of your organization will not work.
Focus on iterating toward a vision. Massive change may sound impressive on an annual review (or a conference presentation) but they mainly fail.
Very few organizations take the nearly enough time to train and educate employees. If you want to create a culture of continual learning and improvement you almost certainly need to focus much more on education and learning than you are. Education can be formal but also focusing on learning as you apply quality tools is extremely useful and very overlooked. Coaching is a big part of doing this well, but coaching is another thing that is massively under-appreciated. Most supervisors and managers should be spending much more time coaching than they are.