On Culture: The Case for Continuous Transformation

Myste Wylde
Jun 5, 2024
5 min read

Dear Culturati Insider,

Predicting future trends is challenging, and leaders must discover and be able to act on their options quickly. This week, we explore how L’Oréal's rapid digital shift and adaptable systems drove success during the pandemic. Their story emphasizes the power of modularity and flexibility in volatile times.

We also delve into Microsoft's cultural transformation under Satya Nadella, showcasing the shift to a growth mindset that propelled the company to new heights. Learning, humility, and leveraging diverse talents are key takeaways for leaders seeking to foster continuous improvement.

Meanwhile, as Big Tech grapples with energy demands for AI-driven data centers, the push for sustainable power solutions becomes crucial. The surge in renewable energy investments highlights the urgent need for breakthrough technologies to support digital infrastructure growth.

And, despite attacks from the anti-woke regime, many leaders recognize DEI's impact on recruitment, retention, and reputation, some even doubling down, underscoring its strategic importance in today’s business environment.

Lastly, a challenge to traditional transformation models. Adopting a culture of continuous transformation positions companies to proactively navigate disruptions, seize emerging opportunities, and achieve long-term resilience and growth.

So stay agile, stay curious, and keep moving the needle, my friends.

In partnership,

Myste Wylde, COO

P.S. We've just launched early bird sales for Culturati: Summit 2025 and will be celebrating our 10 year anniversary on April 6 & 7 at Campus on Lake Austin. Early registrants will be invited to an intimate dinner in our CEO's home and will help define our programming pillars. There are only 30 spots available. If you are an executive with authority, responsibility, and spend towards culture and would like to request an invite, please reach out.

Engineer Your Own Luck

MIT Sloan Management Review

By Mark J. Greeven, Howard Yu, and Jialu Shan

Summary: Predicting future trends is inherently challenging, yet some companies excel despite uncertainty. L’Oréal thrived during the COVID-19 pandemic by quickly shifting to digital platforms and enhancing virtual try-on technology through its 2018 acquisition of ModiFace. This adaptation led to a fivefold increase in usage and tripled conversion rates, benefiting retailers like Amazon and Sephora. By modularizing and externalizing capabilities, L’Oréal was able to rapidly integrate and scale. Research shows that companies with modular, adaptable systems, like Mastercard, Nvidia, and Xiaomi, outperform in volatile environments. Leaders must focus on developing core strategic capabilities, codifying process knowledge, and fostering an open, flexible architecture to enable rapid response to market shifts and drive sustained growth.

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Satya Nadella’s Three Word Description of Microsoft’s Culture Should Inspire Leaders to be Learners

Fast Company

By Stephanie Mehta

Summary: In 2014, Microsoft began a profound cultural transformation, with CEO, Satya Nadella, shifting the organization from a "know-it-all" mindset to a "learn-it-all" mindset. Primary execution emphasized learning, listening, and leveraging individual talents. This cultural change, combined with strategic decisions like cutting failing projects, investing in cloud computing, and leading in AI through partnerships, propelled Microsoft's market cap to over $3 trillion. Inspired by Carol Dweck's growth mindset research, key takeaways from Nadella for leaders include valuing humility, learning from failures, and creating policies that promote curiosity and continuous improvement. Effective leadership requires embracing feedback, remaining open to learning, and leveraging diverse talents to drive organizational success.

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The Big-Tech Clean Energy Crunch Is Here

Wired

By Morgan Meaker

Summary: Big Tech is grappling with a clean energy crunch as it races to build AI-driven data centers in Europe, pushing energy grids to their limits. Amazon has claimed more than half of the Moray West wind farm's 880 megawatts to power its data centers, underscoring the demand. In 2023, $79.4 million was spent on European data centers, with 2024 already seeing massive investments: Microsoft’s $3.2 billion in Sweden and $4.3 billion in France, and Amazon’s $8.5 billion in Germany and $17.1 billion in Spain. Despite aggressive renewable energy contracts, grids are buckling, forcing companies like Meta and Google to explore off-grid power solutions. By 2026, data center power demands are expected to double due to AI, demonstrating the urgent need for breakthrough energy technologies like advanced nuclear reactors and hydrogen fuel cells. This situation poses critical questions for business leaders: how can digital infrastructure be sustainably scaled, and what innovative energy solutions will arise to support this explosive growth?

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The Vast Majority of C-suite Leaders Say They’re Doubling Down on DEI, but They’re Still Fighting an Uphill Battle

Fortune

By Paige McGlauflin and Emma Burleigh

Summary: Despite challenges, corporate leaders are resolutely doubling down on DEI, as highlighted by a new Bridge Partners report surveying over 400 executives. Nearly 72% of C-suite and HR leaders plan to enhance DEI programs in the next two years, despite high-profile attacks from figures like Elon Musk and Bill Ackman. Around 94% of respondents recognize DEI's positive impact on recruitment, retention, and company reputation. While only 73% view DEI as more important today than five years ago, down from 82% last year, the commitment remains strong. The share of companies increasing DEI investment, though slightly reduced, still stands at 66%. HR leaders are particularly steadfast, prioritizing DEI more than board members and shareholders. While progress continues, it remains an uneven journey, reflecting a clear but contentious business case for DEI.

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A New Model for Continuous Transformation

Harvard Business Review

By Michael Mankins and Patrick Litre

Summary: Traditional transformation models, like Kurt Lewin’s "unfreeze, change, refreeze," are outdated in today's dynamic business landscape. Effective for discrete projects, this approach fails to support the continuous evolution required now. To thrive, organizations must adopt an agile mindset, use aspirations to continuously challenge themselves, and integrate transformation into their operating rhythm. Leaders can achieve this by fostering a culture of continuous improvement, setting dynamic goals that evolve with the organization, and embedding change initiatives into daily operations and governance processes. With over one-third of large companies engaged in transformation, the conventional model's limitations are evident. A shift to continuous transformation—embracing perpetual rethinking, reshaping, and repeating—ensures businesses can adapt swiftly, maintain relevance, and achieve sustained growth in a rapidly changing environment.

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