The Smell of the Place - Fantastic Talk on Culture by Prof. Sumantra Ghoshal

Summary

The speaker discusses the difficulty of changing individuals fundamentally without a serious personal crisis, suggesting that revitalizing people is more about altering their context than the individuals themselves. They use the metaphor of Calcutta's oppressive summer versus the invigorating spring in Fontainebleau to illustrate how context affects behavior. The speaker argues that companies often create a stifling environment that constrains employees, leading to complaints about lack of initiative. Instead, they should aim to create an environment characterized by stretch, discipline, trust, and support to inspire proactive behavior and cooperation.

Takeaways

• 🌟 People don't fundamentally change without a serious personal crisis, suggesting that change is difficult at an individual level.
• 🧩 The key to revitalizing people is not about changing them but about altering the context in which they operate.
• 🌳 The 'smell of the place' is a metaphor for the intangible qualities of a company's environment that can deeply affect behavior.
• 🏙️ Companies often create a stifling context similar to 'downtown Calcutta in summer', which leads to complaints about employee behavior.
• 🌱 The essence of change is creating an environment that energizes people, like the 'Forest of Fontainebleau in spring'.
• 📈 Instead of top-down constraints, companies should establish values and ambitions that inspire employees to stretch and perform.
• 💡 Discipline should replace compliance, with employees embodying self-discipline rather than just following rules.
• 🤝 The role of senior management is to support employees by providing resources and guidance, not just to control them.
• 🔗 Trust should be a foundational element of the company culture, where employees are reliable and can be counted on.
• 🌐 It is possible to create and maintain a positive context in companies that fosters stretch, discipline, trust, and support.
• 🔄 Even companies with a negative context can be transformed into more positive environments with determined management.

Q & A

What is the main argument against trying to change individuals fundamentally?

The main argument is that individuals do not fundamentally change without a serious personal crisis, and that revitalizing people is more about changing the context they are in rather than changing the people themselves.

What does the speaker refer to as 'the smell of the place'?

The 'smell of the place' refers to the intangible qualities of a company's environment or culture that can be sensed but are hard to describe, which influences the behavior and attitudes of the people within it.

How does the speaker describe the contrast between Calcutta in summer and Fontainebleau in spring?

Calcutta in summer is described as having oppressive heat and humidity, causing the speaker to feel tired and stay indoors. In contrast, Fontainebleau in spring is described as having a crispness in the air and the smell of trees, which makes the speaker feel energetic and eager to be active.

What does the speaker suggest that most companies create internally that stifles initiative?

Most companies create an environment similar to downtown Calcutta in summer, which is characterized by constraints, compliance, control, and contract, leading to a stifling of initiative and creativity.

What are the four dimensions that the speaker suggests can create a positive context in companies?

The four dimensions are stretch, discipline, support, and trust. These create an environment where individuals are encouraged to do more, adhere to self-discipline, receive support from management, and operate within a culture of trust.

What is the difference between 'compliance' and 'discipline' as used in the script?

Compliance refers to adherence to rules and regulations often enforced by systems, while discipline refers to self-imposed norms and standards that guide behavior without the need for external control.

How does the speaker define 'support' in the context of senior management?

Support is defined as senior management's role in helping employees succeed by providing access to resources, coaching, and guidance, rather than merely exercising control.

What is the significance of the 'card' mentioned in the discussion about trust?

The 'card' is a metaphor for trust within an organization. If you carry the card, it signifies that you are part of the trusted community, and your actions will be reliable and responsible, even in the absence of direct supervision.

What does the speaker suggest is the real test of the quality of management?

The real test of the quality of management, according to the speaker, is the context that managers create that shapes the behaviors of people, specifically the ability to foster stretch, discipline, trust, and support.

What does the speaker imply about the possibility of changing a company's context?

The speaker implies that it is possible to change a company's context from one that stifles initiative to one that fosters stretch, discipline, trust, and support, even if the company initially has a more negative environment.

How does the speaker use the term 'constraint' in relation to a company's environment?

The term 'constraint' is used to describe the limitations placed on employees by a company's systems and structures, which can restrict their ability to take initiative and be proactive.

Outlines

00:00

🌳 Context Over Individual Change

The speaker emphasizes that individuals rarely change fundamentally without a significant personal crisis. Instead of focusing on changing people, the speaker suggests that revitalizing people is more about altering the context they are in. The context is likened to 'the smell of the place,' which is difficult to describe but can be felt through professional experiences. The speaker contrasts their experiences living in London and Fontainebleau, France, with their hometown of Calcutta, India, to illustrate how context affects energy and initiative. The speaker argues that many companies create a restrictive environment akin to the oppressive summer in Calcutta, which stifles initiative and then mistakenly blames employees for lacking drive. The speaker suggests that companies should instead create an environment that fosters a 'quantum blue forest,' where employees feel energized and motivated. The typical company context is characterized by constraints, compliance, control, and contract, which creates a 'smell' of compliance rather than encouraging proactive behavior. The speaker concludes by suggesting that the true test of management quality is the context they create to shape employee behavior.

05:00

🌟 Creating a Positive Work Environment

In this paragraph, the speaker discusses how to create a positive work environment that fosters stretch, discipline, trust, and support. The speaker argues against a compliance-based system and instead promotes discipline in the form of self-discipline norms. This is exemplified by punctuality and collective commitment to decisions, even if one disagrees. The speaker also highlights the role of senior management as supporters and coaches, rather than controllers. Trust is redefined beyond a contractual sense to a deeper level of confidence in colleagues, regardless of geographical distance or personal acquaintance. The speaker invites the audience to sense the potential 'smell' of such an environment and asserts that it is possible to create and maintain this atmosphere in companies. The speaker also suggests that determined management can transform a negative context into a positive one, as seen in examples like Alcoa. The ultimate measure of management quality, according to the speaker, is the context they create to shape behaviors, rather than just focusing on performance metrics.

Keywords

💡Personal Crisis

A personal crisis is a significant event or situation that disrupts a person's life and forces them to reevaluate their priorities and values. In the context of the video, it is suggested that individuals do not fundamentally change without experiencing a serious personal crisis, which implies that profound change is often a result of significant challenges or upheavals.

💡Context

Context refers to the circumstances or setting in which an event or action takes place, providing a framework for understanding. The video emphasizes that revitalizing people is more about changing the context around them rather than the individuals themselves. The 'smell of the place' is used as a metaphor for the intangible qualities of a company's context that can influence behavior.

💡Revitalizing

Revitalizing means to give new life or energy to something. The video discusses how revitalizing people in a company setting is not about changing the people themselves but about altering the environment or context in which they operate to inspire and motivate them.

💡Calcutta

Calcutta, now known as Kolkata, is used in the video as a metaphor for a challenging environment. The speaker describes the oppressive heat and humidity of Calcutta in summer, which saps energy, contrasting it with the invigorating atmosphere of Fontainebleau in spring. This contrast is used to illustrate how context can affect a person's energy and initiative.

💡Fontainebleau

Fontainebleau is used as an example of a context that naturally inspires activity and vitality. The crisp air and smell of trees in spring in Fontainebleau encourage people to be active, which is juxtaposed with the lethargy induced by Calcutta's summer climate. This illustrates how different contexts can elicit different behaviors.

💡Stretch

Stretch, in the video, refers to the idea of pushing beyond current limits or capabilities. It is about setting ambitious goals that encourage individuals to continually strive for more, rather than settling for the status quo or mere compliance with existing standards.

💡Discipline

Discipline, as used in the video, does not refer to control imposed from the outside but to self-discipline. It is about internalizing norms and values that drive individuals to act in ways that are beneficial to the organization, such as being punctual, adhering to decisions once made, and maintaining a high standard of performance.

💡Support

Support in this context means the active assistance provided by senior management to help employees achieve their goals. It contrasts with the idea of management as controllers and emphasizes a role of enabling and coaching to help employees access resources and succeed.

💡Trust

Trust in the video is described as going beyond a contractual relationship. It is about a deep level of confidence in an individual's abilities and integrity, such that they can be relied upon to act responsibly and effectively, even in the absence of direct supervision or when meeting for the first time.

💡Constraint

Constraint in the video refers to limitations placed on individuals by the systems and structures within a company. It is depicted as a 'box of constraint' that can stifle initiative and creativity, as opposed to the empowering context that the video advocates for.

💡Compliance

Compliance is used to describe the behavior of individuals when they are primarily focused on adhering to rules and regulations. The video suggests that while compliance is necessary, it should not be the dominant behavior in a company; instead, discipline and initiative should be encouraged.

💡Control

Control in this context refers to the systems and structures that are used to manage and direct behavior within an organization. The video argues that an overemphasis on control can create a stifling environment, and suggests a shift towards a context that fosters self-discipline and support.

Highlights

Individuals rarely change fundamentally without a serious personal crisis.

Revitalizing people is more about changing the context than changing the person.

Senior managers create the context around their people, which can be described as 'the smell of the place'.

The speaker's personal experience of energy levels in different environments (Calcutta vs. Fontainebleau).

Large companies often create a restrictive environment similar to downtown Calcutta in summer.

The importance of changing the context within companies to promote initiative and cooperation.

The typical context in many companies is characterized by constraint, compliance, control, and contract.

Companies create an infrastructure that results in a 'smell' of compliance.

The need for senior management to shift from control to support.

The concept of trust goes beyond contract and is crucial in the company context.

The dimensions of stretch, discipline, trust, and support create a positive company environment.

Stretch is about individuals always trying to do more rather than less.

Discipline in a company context means embodying norms of self-discipline.

Support from senior management is about helping employees access resources and providing guidance.

Creating a context that promotes stretch, discipline, trust, and support is possible and can be sustained.

Management can transform a restrictive company context into a more positive one.

The quality of management is tested by the context they create that shapes people's behaviors.

Transcripts

Individuals do not change

fundamentally in who they are without.

A very serious personal crisis of some kind.

But the conclusion, again, for us, perhaps

the key conclusion is that is the wrong question to ask.

Revitalizing people has a lot

less to do with changing people,

and has a lot more to do with changing the context.

But companies that senior managers that people in this room

create around their people.

Now context, some manager called it the smell of the place.

It's it's a hard thing to describe.

And then let me try to describe it the best way

I experience it through my professional experience.

If you wish.

I teach at the London Business School.

I live in London, have done so for the last year and a half.

Before that I lived in Fontainebleau in France for about eight years.

But one look at me and then one sound of my accent.

And you know I do not come from either of these two wonderful places in the world.

I come from India, from the eastern part of India.

My hometown is the city of Calcutta.

So every year I go to Calcutta in the month of July.

That's the only time when my children have a summer vacation.

But Calcutta is a wonderful town.

And in winter, autumn and spring.

But summer.

Well, the temperature is 100 and 203.

The humidity is about 99%, and I feel very tired.

Most of my vacation. I'm tired.

I'm indoors.

I used to live in Fontainebleau.

And this I genuinely challenge you.

Go to the Forest of Fontainebleau in spring.

Go with a firm desire to have a leisurely walk.

And you can't.

The moment you enter the forest, there is something about the crispness of the air.

There is something about the smell of the trees in in spring.

You want to jump, you'd want to jog.

You want to catch a branch to run?

Do something.

That I believe is the essence of the problem.

Most companies, particularly large companies,

have created downtown Calcutta in somewhere inside themselves.

And then they complain to say, you know,

you are lazy and you don't take initiative and you don't take cooperation.

You are not changing the company.

This series is not about changing me.

I have a lot of energy in Spring and Fontainebleau,

and I am a bit tired in summer and in Calcutta.

And that started to change.

Ultimately, beyond all these abstractions of strategy, of organization processes.

At the end,

the issue is how do we change the context?

How do we create quantum blue forest inside companies?

Now what's what's the typical context?

Typical, maybe too strong a word,

but what is the context that you find in many companies,

not from the esoteric level where most of the people in this room

sit back from from the perspective of this frontline

person, the salesman in Leo

top management create strategy.

Chris talked about it and that.

How did it come down to this frontline person?

To me, the salesman in Leo constrained.

It tells me by product, by customer what I can do.

It's a box of constraint, the smell.

And then try to relate to that metaphor.

we all see it.

We entered a place in the first five minutes.

You get a smell, you get it in the hum of people.

You get it in the quality, the color.

The smell is constraint compliance.

Companies create this elaborate infrastructure of systems,

planning systems, budgeting systems, financial systems.

All of it boils down by the time it travels down.

To me, the smell it creates for me is compliance.

I got to comply control

my relationship not just with my boss, but with the entire management.

Infrastructure is one of control.

It exists to control me and finally contract.

We repeatedly use the word.

You know your job is a personal contract.

Relationship with the company is a contract, but it is a personal contract.

Once the price of the contract.

So constraint compliance, control contract.

That's the smell we create.

That's what I live in.

And then we say, you know you've got to proactively create change.

You have to take initiative. You have to cooperate.

Where are you going to get those behaviors.

What we found in our research, on the other hand, is

the few companies that have created an environment

that we describe as the dimensions

of stretch, discipline, trust and support.

And, let me take a minute or two to explain them what top management

does not create the strategy that rolls down to constraints,

but rather creates an exciting set of values?

an aggressive ambition, all of which

create a small stretch, not stretch.

We want to be $100 billion company or anything, but stretch in the sense

every individual, all the time is trying to do more rather than less.

not not compliance for all the systems that create compliance.

Not compliance, but discipline embodying norms of self discipline.

And you can see that in companies.

You can see where day to day behavior is shaped

by these embedded norms of self-discipline.

Self-discipline is yes, it's meeting the budget, but it's much more.

It is.

If a meeting starts at nine, everybody's there at nine.

It is.

If people collectively agree to a decision in the management committee,

even if individually you disagree, you do not start challenging

that decision or unraveling it immediately outside in the corridor.

I mean, they didn't tell you see this norm, agree or disagree, but commit.

Yes. People debate, people argue, but at the end the decision is taken

and then agree or disagree.

But commit self discipline also not control, but support

the whole role of senior management changes where we are

not seen as the exercises of control, but as those who exist with one purpose

only, which is to help me win my access

to resources by coaching, by guidance,

and finally not contract the trust and trust

more than this very contractual sense in which we use the word trust.

Trust in the sense that says if you carry that card,

I may be in Australia and European United States, I may have never met you,

but the fact that you carry the card is good enough for me to let go

of the safety of business as usual, and an employee

knowing that you will be the safe pair of hands at the other end.

So stretch

discipline,

support, trust and I I'll invite you.

But don't take those words.

Don't, don't, don't intellectualize those words.

But try to sense the small that that can be created.

If those are the norms of behavior.

And our research says two things.

One, it is possible to create that smell in companies.

There are companies.

And of the companies that were part of our sample, three employees is one example.

But the management can create the smell and protect it over long periods of time.

That's assertion one.

It is possible to do it and protect it.

Assertion two it is also possible for a determined management

that has inherited more of the downtown Calcutta in the summer

to convert it, to do the quantum do for us to that new context.

And then while,

we do not know Alcoa

very well, I mean, from the discussions we are having this morning,

some of that has been done in their companies,

but we have seen others where it has been possible.

And and then the statement that that we would make is ultimately

what's the test of quality of management of a company.

Performance we know is a very noisy measure.

This, to our mind, is a real test of quality of management,

the context that managers create that shapes the behaviors of people.

Creating the stretch, discipline, trust and support.