Giorgio Locatelli: Culture Engagement by Example

The explosion took place in late November 2014. A boiler blast in the hotel next door blew through Giorgio Locatelli’s flagship London restaurant, Locanda Locatelli (www.locandalocatelli.com). No one was killed in the blast, but one worker went missing for 40 minutes. He was found buried under a fallen wall, shaken and shocked but otherwise OK. Beyond the explosion’s human cost there was an emotional and financial cost as well. The financial costs came from several factors. One of the great strengths of Giorgio’s cooking is his inventive use of fresh Italian/Sicilian ingredients. At the time of the blast over $3,000 worth of white truffles was ripening in the kitchen. By the time inspectors allowed the staff back in, all had rotted. Add spoiled meats and vegetables, and the damage quickly escalated.

Giorgio Locatelli

In addition to the loss of fresh inventory there was a loss of business while the damage was being assessed. The timing of the blast couldn’t have been more disastrous. Giorgio’s Michelin-starred restaurant had just reopened after a six-month, $1.8 million refurbishment. The highly profitable holiday booking season was already sold out. Now everything would shut again, this time for four months.

Giorgio had 45 staff working at the time of the blast, but he had no work for them as he entered the busy holiday season. What should he do? Most of the staff came to London from Italy. Giorgio sent them home to be with their families—with pay. They came back in the new year to a still closed restaurant, but not to a closed culture. As numerous staff volunteered to me on my first visit back after the reopening, “We are like a family here, and our culture is a family culture. Giorgio looks out for us like members of his family.”

In January 2015 Giorgio set the staff to different tasks. Some went to English school so that they could better interact with customers. Some went to wine school to gain knowledge as well as improve the customer experience of pairing food and wine. Still others went to business or other courses to further their careers. Within a couple of months staff members were allowed to reenter the restaurant and start the cleanup process.  Finally, in March 2015, the restaurant reopened to much fanfare.

I grabbed a few minutes with Giorgio at a table just outside the kitchen. His hair had gone from black to white since I’d seen him last. The stress of the blast had done an overnight job on his hair (see pic above) Sitting there allowed him to multi-task six things at once while still giving me what seemed like full attention. I told him about what the staff said about the culture of the place. Had he deliberately set out to create a highly engaging family culture? “Absolutely, it’s the way I work best.”  I noted he could have made his financial situation a lot easier if he’d just done whatever insurance would cover and let people figure out how to survive until the restaurant reopened. “Not a chance. These are the people that I depend on to make my customers happy. Why would I treat them like s**t?” I commented on the fact that several staff had volunteered their impressions of the restaurant’s culture without prompting. I thought it was a remarkable testament to the level of engagement that he had created. He shrugged his shoulders in a self-deprecating way as if this kind of effort was just natural. “It’s a tough business; why make it tougher?”

One of the most significant and enduring sources of outstanding culture engagement is being well led. It’s a joy to observe a leader like Giorgio deliberately create superior performance by going above and beyond what’s expected. Loyal and engaged customers and staff are a natural result of his extraordinary commitment to creating a highly engaging culture. Do you know someone like Giorgio who creates outstanding culture engagement? Drop us a line; we’re always looking for more culture champions to feature.

Title: Culture Clash: A Contrarian View

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I detest nearly all engagement surveys. They destroy value while promoting “satisfaction.” Nowhere is this more apparent than when an organization needs to introduce significant change that creates culture clash.

A case in point. The call from a recently promoted CEO was blunt. He was making change happen and the first engagement survey scores from his tenure showed a drop from the prior CEO’s scores. People were worried that talent might leave. He talked of his first-year accomplishments: a long-needed M&A transaction to gain market share and complementary products (a clash of complacency vs. competition); revamping an unsustainable rewards program (a clash of seniority vs. meritocracy); delayering two levels of management (a clash of tradition vs. efficiency). All this work was increasing margin and sales, but his KPIs (key performance indicators) were tied to increasing employee engagement as measured by the annual survey.

He was adding value but losing “engagement.” In fact he wasn’t losing engagement–he was losing satisfaction masquerading as engagement because of the survey’s design.The more he unpacked the situation the clearer it became that his engagement survey was one that confused productive engagement with employee satisfaction and desire to stay. He was being “punished” by the survey for doing the right thing. People naturally felt more dissatisfied during periods of change; this was more about people’s reaction to change than to him..

I texted him the photo that leads this post—the one of me standing in front of Frank Gehry’s spiral staircase at the Art Gallery of Ontario (AGO). The staircase couldn’t be more different in design from the surrounding architecture—a classic case of culture clash. It caused a real fuss with traditionalists when they saw how Gehry had “violated” the traditional museum aesthetic with his swirling, frame-breaking staircases (some of which had no stairs and were deliberately too narrow in order to get people closer together!).

I drew a lesson for the CEO from Gehry’s work at the AGO: Culture clash can be a good thing (1) when it’s done right, (2) for the right reasons, and (3) with the right leadership.

Culture clash can be done right. There are many ways to screw up cultures that clash at work. According to the Harvard Business Review, companies spend more than $2 trillion on acquisitions each year, with between 70% and 90% of them failing to reach their economic targets because of culture clash and loss of key talent. Culture clash can be painful, even debilitating. M&A is the most dramatic source of culture clash, but other more mundane reasons abound: reorganization, leadership change, compensation/bonus schemes, generational shifts, etc. Our research shows that individuals going through significant change at work can become up to 60% less productive for extended periods of time. Many organizations compound the ill effects of culture clash by failing to measure and reinforce the constructive aspects. For example, traditional engagement surveys often overweigh the emotional symptoms of dissatisfaction when what’s needed is “root cause” information on how the culture clash is being managed. For nearly three decades we’ve found that organizations that correctly measure strategic engagement during times of culture clash (or disruption) wind up with superior results in spite of the dissatisfaction. Here’s what gets reported to the CEO and goes into his/her KPIs (what gets measured gets noticed):

  1. The extent to which people fully understand the long-term direction of the organization. When they are clearly focused, they are able to connect their activities to co. direction.
  2. The level to which people feel that objectives are truly stretching, but attainable.
  3. Change orientation. The sense of how well the organization responds to change, keeping unnecessary procedures to a minimum and encouraging the questioning of established ways of working.
  4. The extent to which people are able to get on with their jobs, making decisions without checking with their manager. They feel accountable and are prepared to work outside the remit of their jobs to deliver results.
  5. The degree to which reward is directly and differentially related to performance. People know how well they are doing, feel valued and appreciated.
  6. The level of importance that is attributed to the role of the team; there is a shared commitment and sense of alignment to team goals.

Notice how different this measure of engagement is from typical surveys. It gives the CEO or BU leader the tools to focus on the right kind of activity and catch people “doing things right” for the business challenges. It can also capture the necessary discomfort that comes with growth, change, and culture clash. This way of managing culture clash directs resources and money into strategically significant engagement rather than chasing momentary “feel good” initiatives (HR can earn a seat at the table by making this distinction).

Culture clash can be done for the right reasons. The right reasons for the AGO to introduce culture clash came from a $500 million donation from Kenneth Thomson (of Thomson Reuters). AGO commissioned Gehry to make a bold design statement, commensurate with Thomson’s gift. Years ago Gehry helped me when I needed fresh thinking about complexity, culture clash, and change. He offered a key insight: have the courage to challenge the way things work if work no longer fits the purpose. Gehry invited culture clash for the right reasons at AGO. He used the clash of ideas, space, and culture as a way to get people more engaged with the AGO rather than less so. He designed a new façade for the museum that had no room to expand since it already fronted the sidewalk. He enlisted 50 Italian families living in Toronto to each donate $50,000 for an elegant glass and wood façade that soared over the sidewalk, hence the new Galleria Italia. It brought light into the museum’s new collections while working with incredible space constraints (a must see on your next Toronto visit). The end result? A culture clash that increased the economic and aesthetic value of AGO rather than destroying it.

I think of two past clients who excelled at doing culture clash for the right reasons. MTV Networks thrived on chaos and clashes. The average age of an executive at the network: 28. Clashes were seen as vital to surfacing new voices and POVs that challenged existing ways of programming, going to market, etc. It wasn’t for everybody, but for those who understood the purpose behind the noise it was magic.

A second client had a more formal approach to culture clash. Nissan created several automobile categories under the guidance of its design center leader Jerry Hirshberg. Jerry, who wrote a book titled The Creative Priority, laid out eleven principles for increasing business creativity, and the Nissan Design International (NDI) practiced all of them. One of the principles was to embrace conflict. Better design came from people who knew how to clash for the right reasons. Systematically building conflict and clashes into your operating platform may not be everyone’s choice, but if innovation, change, the creation of crisis, or momentum is a fundamental need for your business, then it’s essential to constructively plan for and manage culture clashes.

Culture clash can be done with the right leadership. Two aerospace firms came together through a merger of equals (on paper). The two senior teams came together for their first offsite with the purpose of reviewing the results of their respective culture surveys. They showed clear agreement in mission, vision, and strategy. They were not in agreement about customers. One valued service above all else. The other valued volume above all else. As they got into the customer issues, their emotions and tempers increased—reason fled the building. As their facilitator I called a timeout and had a sidebar “chat” with the two leaders. They needed to find a way to optimize the differences rather than demand capitulation from each other. They each had loyal customers for a reason, so their job was to find a way to retain and grow the existing customer base. They agreed to reframe their culture clash and give me the rest of the day off in the wine country while they sorted through their issues privately. When I joined them for dinner, the climate had clearly changed—for the better. They happily informed me the clash had opened up new ways of thinking about customers, markets and a unique value proposition. A joint market team was working overnight to propose a “third way” to optimize service and volume. The two leaders demonstrated the right mix of assertiveness, clarity, and involvement. They were also quick to take coaching! All these elements were needed to turn a culture clash into an economic opportunity.

I’m acutely aware a lot of culture clash takes place because of the wrong approach, the wrong reasons, and/or the wrong leadership. Sometimes this is inevitable because financial or other pressures  drive people to make bad decisions. In those cases the clash leads to a crash. But there’s no point in making the situation worse by using faulty methods or leadership to assess what’s really going on with culture engagement. Learn from Frank Gehry: bring on the clash—intelligently.

In Praise of Pop-Up Kitchen Culture

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An innovation culture is inspirational, until you’re asked to live it. Then it can be highly disruptive and uncomfortable. This week I watched a CEO confront the reality of living with innovation in a way that was truly inspiring, but not without its costs. Celebrity chef Michael Smith recently bought the Inn at Bay Fortune on Prince Edward Island, and he’s renovating and expanding the inn’s kitchen—big time. When he’s finished he’ll have a unique innovation, the world’s only multipurpose Fire Kitchen designed to heat, roast, barbeque, and grill a splendid five-star feast of sea/farm-to-table cuisine. For now he, the staff, and guests are highly inconvenienced while the construction bangs on.

Any innovation has its pains, whether in a Fortune 500 company or at the Inn at Fortune Bay. The change that comes with innovation is hard on employees and customers alike. Fortunately, Michael, like many owner/chefs, is a highly intuitive leader, and his project followed three principles right out of our best practice research on keeping people engaged and performing in times of disruption: clarity, connection, and commitment.  1. Clarity. In our longitudinal research we found people and organizations that take off their rose-colored glasses and realistically acknowledge the discomfort of change are 60 percent more likely to show performance stability as opposed to those who deny the disruption. Somatic disorders increase by 27 percent in control subjects who deny change is disruptive. Chef owners are no exception to these findings, and talking with Michael revealed he knew there would be chaos with this innovation. He embraced the opportunity to strategize ways to minimize the discomfort guests would feel in order to maximize their anticipation of seeing his creation fulfilled. First, he decided to make as much change happen as could be managed rather than letting it dribble out over time. His vision called for changes in food preparation, booking, cooking, guest experience, and pricing. He introduced as many of these changes as his staff could manage in order to get through the pain quickly. For his guests he slashed the price of his new nightly feast.  I have no idea what the normal price will be (come July), but the guests we ate with were delighted to tell their friends they had a Michael Smith feast with all the extras for a fraction of what they’d expect to pay. His pricing strategy created a viral buzz of good will in addition to minimizing the discomfort of change. 2. Connection. Before Michael bought the inn, patrons sat at traditional four-seat tables. He changed the seating to communal tables so that people would talk with fellow guests. This encouraged new ideas and connections, something he saw as integral to his way of working. This new arrangement works even for introverts (most of the time!) because of his guests diverse backgrounds and experiences.

Most importantly Michael set up an outdoor pop-up kitchen alongside the path to the dining room. The smell of a wood fired convection oven (see pic above) gets people excited on so many sensory levels even before they’ve arrived on site. The inconvenience of construction is overwhelmed by the smells and sights coming from the pop-up kitchen. Kurt Lewin couldn’t have designed a better example of his formula for overcoming resistance to change! Everyone wants to stop and discuss what’s cooking over the fire pit with the chef. The pop-up kitchen creates an expectation that something different is literally cooking at this place, and the integration of traditional outdoor cooking with something entirely yet unseen is truly remarkable.  Any business leader wanting to engage teams in embracing change and innovation could do well by asking, “How do I integrate the best of what was known of the old while previewing what is yet to come?” 3. Commitment. The new kitchen is sealed off from the current one by clear plastic so you can see but not touch the work in progress. It’s clear (no pun intended) that the new kitchen represents a real innovation in cooking and presentation. He says he scoured the world for examples of what he wanted and couldn’t find any. So what you see is a unique innovation. In fact it takes a while to figure out just how this kitchen will work if you try viewing it through traditional eyes. The confusion caused by the new is part of what convinces you that Michael is committed to finding a truly innovative way to serve his guests on the property where he first began his career. Back then the inn was owned by the actress Colleen Dewhurst and her partner George C. Scott. It served as a getaway for East coast actors who needed to prepare for their next movie or stage role. It’s really quite remarkable to see the commitment to still stage a presentation every night, this time not with scripts but with a memorable dining experience.

In our research we found that high performing leaders and organizations who practiced all three aspects of constructive change created a virtuous cycle with each turn of the cycle leading to deeper understanding, more efficient learning, and greater acceptance of novelty where it added value. I have no doubt that a year from now the Inn at Bay Fortune will be on numerous “must taste” lists. The outdoor pop-up kitchen will be gone by then, but the innovation culture it represents will still be thriving.