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The Challenge: Balancing Operations and Innovation
StorageTek, a $2 billion global company in data storage solutions, historically struggled to maintain a balance between operational management and the innovation necessary to compete in the fast-paced IT industry. Despite a 34-year history of ups and downs, the company once again found itself in a state of "unbalance" in the early 2000s, marked by stagnant revenue growth and eroding market share. Previous turnaround attempts had failed, signaling the need for a more systematic, long-term plan to transform the company into a high-performance organization.
The corporate culture had both strengths and weaknesses. While employees felt valued and respected, the organization was also known for slow, consensus-driven decision-making, inconsistent execution, and rewarding "fire fighting" over permanent solutions. With employee turnover approaching 25%, it was clear that a foundational shift was required.
A Three-Stage Transformation Plan
The organization development team developed a long-term transformation plan designed to be sustainable without creating excessive bureaucracy. The plan built upon existing company foundations, such as its core values, to avoid a "flavor-of-the-month" perception.
Phase 1: Defining the Challenge
The initial phase focused on two primary goals: defining the target state and creating a sense of urgency.
Defining the High-Performance Goal
Based on best-practices research, StorageTek defined its desired high-performance culture across three key dimensions:
- Performance Ethic: A relentless drive to satisfy customers and outperform competitors, supported by clear goals and performance feedback.
- Open, Trusting Environment: Candid communication and a commitment to follow through, fostering individual and organizational growth.
- Effective and Growing Organization: The practice of six core capabilities: shared mindset, speed, accountability, collaboration, learning, and talent.
Progress was tied to existing metrics, including annual goals, employee satisfaction surveys, and business results like customer loyalty and market share.
Creating a Sense of Urgency
To mobilize the organization, CEO Pat Martin convened a leadership conference to frankly discuss the state of the business and the competitive landscape. The conference used a "learning map" from RootLearning to engage leaders in an interactive dialogue about the company's challenges. This initiative was later rolled out to all employees worldwide to ensure everyone understood the necessity of change.
Phase 2: Working Through the Change
This stage focused on embedding the new culture through concrete actions and systems.
Focusing on Results and Expectations
To create strategic clarity, a Web-based tool was developed to make goals visible across the organization, linking them directly to individual performance reviews. The performance management system was redesigned to assess employees on three fronts:
- Results: Achievement of performance goals.
- Development: Growth in skills and knowledge.
- Behaviors: A 360° assessment of how employees demonstrated core values.
Crucially, managers were required to adhere to a forced distribution curve for performance ratings, ending the "peanut butter" approach and ensuring that performance was genuinely differentiated.
Improving Management Competency
StorageTek established a clear leadership brand: "StorageTek leaders act with speed, simplicity and accountability." A new curriculum was created to build these competencies at all levels of management. The company also set a goal to increase its ratio of internal promotions to external hires for leadership roles, supported by robust succession and development planning.
Growing Organizational Capabilities
To build a competitive advantage, the company focused on cultivating six key organizational capabilities:
- Shared Mindset
- Talent
- Collaboration
- Speed
- Accountability
- Learning
These capabilities were woven into training, performance management, and communication programs. For example, a new Business Management System (BMS) was introduced to improve quality and accountability, while employee communication was redesigned for clarity and impact.
Phase 3: Attaining and Sustaining Improvement
With the new systems in place, the focus shifted to sustaining momentum and building a foundation for the future. Initial employee satisfaction surveys showed a dip, a common reaction to significant organizational change. However, leadership addressed this by requiring managers to set specific goals for improving their teams' satisfaction, leading to a slight recovery in the following year.
The company continued to align all HR practices, such as rewards and recognition, with the high-performance model. The result was a significant turnaround. After a period of flat revenue, StorageTek reported revenue growth, increased market share, and strong earnings, demonstrating that the "cadence of change" had delivered tangible results. The challenge ahead was to maintain the delicate balance between operational excellence and continuous innovation. '''