David A. Garvin and Michael A. Roberto (HBR, Feb 2005) studied organizational transformations across multinational corporations, government agencies, and high-performing teams. Their central finding: change fails not because the plan is wrong but because leaders skip the persuasion work that must happen before, during, and after the plan is announced. Change is a political and emotional campaign — not a strategy rollout.
The anchor case: Beth Israel Deaconess Medical Center (BIDMC) turnaround under CEO Paul Levy (Jan 2002). BIDMC was losing $50M/year and facing sale to a for-profit chain. Levy — not a doctor, no hospital management experience — turned it to $37.4M net from operations by 2004. Nursing turnover fell from 15–16% to 3%.
Convince employees radical change is imperative — before the plan is announced.
Help employees interpret proposals correctly — shape the context.
Attend to the emotional climate — balance optimism and realism.
Prevent backsliding. Publicly enforce new behavioral standards.
Before Levy started, he extracted board commitments — board could not interfere in day-to-day management. His first day: all-hands email with four messages — (1) the hospital's legitimate achievements, (2) the sale threat was real, (3) what actions to expect including layoffs, (4) his collaborative management style. He disclosed BIDMC's situation to the Boston Globe and Boston Herald that afternoon. The Hunter Report (damning third-party analysis) was posted to the hospital intranet. Staff could no longer claim ignorance.
Levy accompanied the 200-page turnaround plan with a framing email built in three sections:
After the first round of layoffs, Levy sent an email explicitly empathizing: "This week is a sad one…it is hard for some of us remaining…offices are emptier than usual." Then pivoted: "our target is not just survival: It is to thrive and set an example for what a unique academic medical center like ours means for this region." He timed good financial news carefully — not too soon after layoffs. Two months in: a candid FAQ email acknowledged merit freeze while acknowledging operational progress. Public Q&A forums where employees received recognition and honest updates simultaneously.
Levy set explicit meeting rules: "state your objections" and "disagree without being disagreeable." One month in, a medical chief emailed Levy complaining about a decision made during a meeting — having stayed silent in the meeting itself. The email was copied to other chiefs and the board chairman. Levy's response: replied to the same audience, publicly reprimanding the chief for tone, lack of civility, and violation of the new meeting norm. Most CEOs would have handled this privately. The public response sent an unmistakable signal that behavioral standards were real, not aspirational.
From the Garvin & Roberto sidebar: organizations thrive on routines — predictable, automatic behaviors that enable efficient cognitive processing. Most routines are functional. Dysfunctional routines are those that were once appropriate but are now barriers to action. The critical feature: they are triggered automatically by familiar circumstances. Leaders must change the context before they can change the routine.
In cynical organizations, piling on criticism avoids risk and claims false superiority. Anyone can say "no"; no one says "yes." Named by Lou Gerstner at IBM. Most damaging in large organizations with divided subunits where powerful local leaders won't comply with corporate directives.
Process becomes more important than content. Elaborate presentations; enormous time obtaining sign-offs. Death by PowerPoint. The result: appearance of progress with little real headway. Common in bureaucratic cultures that confuse means with ends, and form with content.
To avoid facing core business challenges, managers look to new products, services, or geographies. At times healthy, but too often an avoidance tactic that keeps tough problems at arm's length while the core deteriorates and leadership chases adjacencies.
Covert resistance: cordial meetings, followed by resistance outside the room. Resisters bypass formal process and take concerns directly to the top. Politics triumphs over substance; staff meetings become rituals; meddling becomes the norm. Hard to spot because it hides behind civility.
The organization cannot settle on a definitive course of action. Continual proposals and reports; perpetual refinement without decision. Called "analysis paralysis." Common in perfectionist cultures where mistakes are career-threatening. People who rock the boat drown.
Where prior leaders proclaimed crisis but made few substantive changes, employees are jaded. They develop a bunker mentality and a reluctance to respond to management directives. The wisest move becomes working around new initiatives, or simply waiting them out.
| What You Observe | Likely Routine | Displacement Approach |
|---|---|---|
| Great presentations, lots of meetings, nothing changes | Dog and Pony Show | Reward decisions over process; reduce approval layers; set decision deadlines |
| Agreeable meetings; resistance appears later via back-channels | After the Meeting | Make in-meeting dissent explicitly safe and rewarded; publicly call out covert resistance (Levy model) |
| Employees have seen 3 CEOs promise transformation; morale flat | This Too Shall Pass | Make burning platform undeniable with facts; early irreversible structural moves; quick wins that prove this time is different |
| Same initiative re-scoped four times; no launch date | Ready, Aim, Aim... | Separate exploration meetings from decision meetings; enforce decision deadlines with named owners |
| Every new idea immediately critiqued into non-existence | Culture of No | Name it explicitly (Gerstner model); require critics to pair every objection with a constructive alternative |
| Leadership chasing new geographies while core slides | Grass Is Always Greener | Anchor strategy to Rumelt's honest diagnosis; make core challenge the explicit metric-tracked focus |
Brad Power (HBR, November 2013) challenges the conventional wisdom that culture change takes years. His thesis: organizations that treat culture change as explicit, intentional, and first — rather than a hoped-for byproduct of process changes — see faster results. The case: Trane, the $8B subsidiary of Ingersoll Rand (HVAC and building management systems).
Remove barriers that prevent the target behavior. Give people structural permission, time, and space to behave differently. If the behavior isn't allowed by the structure, no encouragement produces it consistently.
Recognize and reinforce the target behavior immediately, specifically, publicly. Make clear the old behavior will no longer be rewarded. Formal and informal reward systems must align with the target culture — not the old one.
Leaders personally demonstrate the target behavior. If leadership says "direct communication" but gossips, the culture learns from behavior not words. Modeling is the most powerful lever because it is undeniable evidence of what's real.
Trane defines target culture explicitly with three elements that must connect directly to business strategy:
Starting point: One Trane sales office with the lowest employee engagement score across all of North America. New leader appointed; single mandate: improve the culture.
Target behavior chosen: "Direct with Respect" — people talk directly to each other about issues, rather than behind each other's backs. Nameable, specific, behaviorally observable.
ARM in action:
— Allow: Leaders ensured employees heard news from them directly before the grapevine. Structural permission to speak directly without political consequences.
— Reward: When a leader observed "direct with respect," they recognized it immediately with a thank-you. When the behavior was absent, they specifically asked for it next time.
— Model: Leaders demonstrated directness AND respect simultaneously in every interaction — not one or the other.
Measured at a 6-month pulse survey (not annual): Attrition dropped from 12% to 6%. Market share grew 2 points without new products. A customer called to say: "What is going on over there? I see something very cool in how your team is serving me." Trane North America overall: Y/Y operating income grew 20%+ without new products or market growth.
CIBC was, for decades, the most structurally and culturally troubled of Canada's Big Five. Its problems were not primarily strategic in the abstract — they were cultural: siloed divisions competing internally rather than serving clients, a risk culture that swung from reckless (2008 US structured finance exposure: $2.9B writedown) to over-cautious, and a talent culture that made CIBC a chronic feeder for TD and RBC.
Phase 1 (Setting the Stage) — the hardest: CIBC's burning platform was real (2008 writedowns, talent exodus) but Dodig's challenge was constructing urgency without a survival crisis — the bank remained profitable. Past CEOs had also announced transformations. "This Too Shall Pass" is the dominant dysfunctional routine. His answer: anchor urgency to competitive position (CIBC's NPS gap vs. TD is the burning platform) rather than financial distress. Competitive threat, not survival threat.
Phase 2 (Framing): "One CIBC" is a powerful frame because it names the dysfunction explicitly — the bank was operating as multiple CIBCs. Naming the problem makes it discussable. The purpose statement, office redesign, and cross-bank NPS as a shared metric all serve as framing devices that make the change legible.
Phase 4 (Reinforcing Habits) — the ongoing work: The core dysfunctional routine to displace is silo protection — divisions guarding their P&L rather than referring clients across the bank. Requires explicit behavioral enforcement: recognizing and rewarding cross-divisional collaboration; publicly calling out territory-protecting behavior when it appears at the leadership level.
Allow: CIBC Square's physical design — open collaboration spaces, no private offices for most leaders, shared amenities across business lines — removes structural permission for siloed behavior. You cannot avoid cross-functional interaction when the building doesn't support it.
Reward: Moving client NPS from a divisional metric to a bank-wide metric shared across all business lines. When compensation and performance evaluation include cross-bank client satisfaction, the reward system ARM-s "One CIBC" behavior rather than siloed behavior. The measurement model (Bonchek & Libert) must shift to sustain the mental model change.
Model: Dodig's consistent public communication about purpose — in every earnings call, employee communication, and external interview — models client-centricity from the top. Leaders learn what's real from what the CEO talks about and measures, not from the lobby poster.
CIBC's right quest: Customer Focus (reconfigure client experience — serve the whole client across the bank) with elements of Nimbleness (digital transformation, faster delivery). The trap Dodig must avoid: being seduced by Global Presence (PrivateBancorp US expansion creates that temptation) when the core culture transformation at home is still incomplete. JCP's Ron Johnson equivalent: prioritizing US growth before the domestic culture is fixed.
TD Bank Group's culture transformation under CEO Ed Clark (2002–2014) is one of Canada's most studied deliberate culture change stories. Clark inherited a bank that had survived near-bankruptcy in the 1990s through the Canada Trust acquisition (2000) and was carrying the cultural residue of two incompatible institutions: a risk-taking, trading-heavy Bay Street culture and Canada Trust's client-centric community banking culture. His solution: choose explicitly — and scale the Canada Trust culture to the whole organization.
TD's decision to offer banking hours from 8am to 8pm, seven days a week was not primarily an operational move — it was a cultural signal. In Murray & Richardson's terms: a Speed move that made the new culture physically real and irreversible. Banks don't extend hours because competitors force them — they extend hours because their culture demands serving customers on the customer's schedule. The move demonstrated, structurally rather than rhetorically, that "legendary customer experience" was the organizing principle. No employee could say "this too shall pass" after the hours changed — the structural change was undeniable evidence that this transformation was different.
Phase 1 (Setting the Stage): Clark's burning platform — near-bankruptcy and merger instability — was undeniable. Unlike CIBC's Dodig, Clark did not need to construct urgency; it was evident. He chose which culture would win, stated it publicly, and committed immediately to structural moves (hours, branch design, exit from structured products) that made the choice real and irreversible.
Phase 2 (Creating the Frame): "Legendary customer experience" served as the frame that made every subsequent decision coherent. Why extended hours? Legendary experience. Why Commerce Bank (US acquisition target)? Culture-compatible legendary experience. The frame anticipated and answered objections before they were raised — the same logic Levy used at BIDMC.
Phase 3 (Managing the Mood): Exiting structured products was painful — profitable, high-status traders left. Clark had to manage the mood of bankers who had built careers in the old model while reinforcing that customer-serving banking was the higher-status path forward.
Phase 4 (Reinforcing Habits): J.D. Power rankings, branch NPS, and customer complaints tracked at CEO level made the culture tangible and measurable. Decisions evaluated by "how does this affect the customer experience?" rather than "how does this affect branch P&L?" — a behavioral norm enforced from the top.
Allow: Frontline staff empowered to resolve customer issues without managerial escalation — given tools, authority, and budget to solve problems on the spot. Without this authority, "legendary service recovery" is impossible regardless of cultural intent.
Reward: Branch performance measured on customer satisfaction alongside financial metrics. Managers evaluated on NPS alongside revenue. The reward system aligned with the target culture — high performance rating was impossible with low customer satisfaction scores.
Model: Clark banked at TD branches as a regular customer — not on CEO inspection visits, but as a genuine user of the service. This single behavior modeled the culture more powerfully than any all-hands address: if the CEO treats TD branches as real, everyone understands the culture is real.
When TD expanded to the US, Clark chose Commerce Bank not for financial metrics but for its culture. Commerce Bank was known as "America's Most Convenient Bank" — same extended hours philosophy, bright accessible branches, customer-first service model. The logic: acquiring a culture-compatible US bank meant Phase 1 (Setting the Stage) was pre-solved — employees already shared the target values. TD preserved and extended Commerce Bank's culture rather than imposing its own on a culturally hostile acquisition. Result: TD Bank USA became J.D. Power's #1-rated large bank in the US for customer satisfaction.
| Dimension | TD Bank (Clark) | CIBC (Dodig) |
|---|---|---|
| Burning Platform | Near-bankruptcy + merger instability — undeniable, survival-level | Competitive weakness + talent exodus — real but required construction |
| Cultural Choice | Explicit: chose Canada Trust culture; rejected Bay Street model publicly | Explicit: "One CIBC" — named the dysfunction and the required solution |
| Structural Anchor | Extended hours — irreversible behavioral proof that the culture was real | CIBC Square — physical proof that collaboration was structurally enabled |
| Quest (Anand & Barsoux) | Customer Focus — clear, uncontested, every decision aligned to it | Customer Focus + Nimbleness — fused by digital transformation imperative |
| Measurement Model | J.D. Power rankings; branch NPS tracked at CEO level; customer complaints | Cross-bank NPS; digital engagement metrics; talent retention rates |
| Hardest Phase | Phase 3 (Mood) — managing exit of high-status Bay Street traders | Phase 1 (Stage) — constructing urgency without a financial survival crisis |
Culture is the substance of the winning conditions: Murray & Richardson's Guidance, Speed, and Momentum are structural conditions. Garvin & Roberto's 4 phases are the cultural and communicative conditions. Speed without the persuasion campaign = structural moves that don't stick. The persuasion campaign without structural speed = good intention with no momentum.
ARM operationalizes the mental model shift: Bonchek & Libert said you must change the mental model before the business model. Power's ARM framework is the mechanism for doing so at organizational scale. Allow removes structural barriers to new thinking. Reward makes new thinking reinforced and visible. Model shows what new thinking looks like in leadership behavior.
Quest determines target culture: The right quest defines what target culture must look like. A Customer Focus quest (TD Bank) requires specific target behaviors — legendary service, empowered frontline, client-first decisions. ARM those behaviors. Misdiagnose the quest, and you ARM the wrong culture — with full commitment and no results.
Culture integration is where deals succeed or fail: TD's Commerce Bank acquisition succeeded because Clark chose a culture-compatible target — Phase 1 (Setting the Stage) was pre-solved. The GE integration playbook (Session 6) addresses this explicitly. The Garvin & Roberto 4 phases apply directly to post-merger culture integration: setting the stage for the acquired company's employees, framing the combined entity, managing retention-level mood, reinforcing new norms across both workforces.
Turnaround is culture change under extreme time pressure: Every turnaround requires breaking the dysfunctional routines that created the crisis and replacing them with new behaviors — fast. The BIDMC case sits at the intersection of turnaround and culture change and illustrates that the 4-phase persuasion campaign is the turnaround leader's primary tool, not the financial restructuring plan.
Culture as the implementation variable: For your final exam company, run the full Session 4 diagnostic: What is the target culture? Which dysfunctional routines are active? Which of the 4 persuasion phases has been handled well — and which neglected? What are the ARM levers available? This diagnostic sits beneath every major strategic decision and determines whether strategic intent becomes organizational reality.
Apply Fast Forward Ch.5, Garvin & Roberto's 4-phase persuasion campaign, and Power (HBR) to each bank's culture change challenge. Framework application is graded — name the tool, then use it.