You Cannot Workshop Your Way into Culture Change

What Ford’s turnaround really reveals about crisis, assumptions, and the limits of culture programs

In 2006, Ford was close to collapse. It was about to report a loss of $12.7 billion, the worst single year in its history, and over the next three years it would lose more than $30 billion. The company had become a set of warring fiefdoms. Regional divisions ran their own strategies and products. Executives guarded their turf and competed with each other more than they did with Toyota. Admitting a problem in front of your peers was treated as weakness, and weakness ended careers.

Then Alan Mulally arrived from Boeing. What he did next is now taught in business schools as one of the great turnarounds. He pulled the warring divisions under a single plan he called One Ford. He held a meeting every week where each executive reported the status of their work against the plan, marked green, yellow, or red. At the first of those meetings, every executive marked everything green, which could not have been true of a company losing billions. When one of them finally showed a red, Mulally is said to have applauded. Slowly, the room learned to tell the truth. Ford went on to be the only one of the big three American carmakers to survive the 2008 crisis without a government bailout. By 2009 it was making a profit again.

The story is almost always told as a change of culture. Mulally's own business school, MIT Sloan, describes the fixing of Ford's "discordant organizational work culture" as one of his defining achievements. McKinsey's interview with him opens by stating that a new culture had transformed how the company worked. These are not careless sources. The most respected institutions in the field hold this up as proof that culture can be deliberately changed. They also agree that culture change is one of the most failed exercises in Organization Development. That is exactly why it is worth looking at again.

To see what really happened at Ford, let's, for a moment, go back to the basics - the definition of culture. Edgar Schein, who shaped how we think about this, argued that culture sits at three levels. At the top are the things you can see: the org chart, the rituals, the values printed on the wall. He called these artifacts. Below them are the things the organisation says about itself, its stated values and beliefs. And below those, at the bottom, are the assumptions nobody states out loud. These are the beliefs about how the world works that everyone simply takes for granted, so deeply held that no one notices them as choices at all.

Three layers of Organization Culture by Edgar Schein

That bottom layer is the one that matters, and it is the one most culture programs never reach. It does not change because leaders announce new values or run better workshops. It changes only when people repeatedly run into a reality their old assumptions can no longer explain, until holding on to the assumption costs more than letting it go.

A useful way to picture it is the old line about a fish in water. Ask a fish what water is, and it has no answer, because the water is the thing it moves through without ever seeing. The deepest assumptions in a company work the same way. The people who hold them cannot describe them, because they are not aware they are holding anything. They are just describing reality as it obviously is to them. At Ford, the assumption that showing weakness would end your career was water. Nobody put it on a poster. Nobody had to. Everyone simply knew it, and behaved accordingly, without ever saying it.

It creates a very sticky problem. The top two layers can be changed fairly directly. You can redraw the org chart, rewrite the values, run a new meeting, reward different behaviour. These are things a determined leader can simply decide to do. The bottom layer is different, and not because people are stubborn or resistant. It is different because you cannot address it directly at all. You can announce a new value, but you cannot announce a new assumption, because the people holding the assumption do not experience it as a belief they could agree or disagree with. They experience it as the way things are - as reality. You can put "we trust each other" on the wall, but you cannot put "stop believing that admitting a problem will end your career" on the wall, because no one in the building thinks they believe that. They think they are simply being realistic.

This is why the bottom layer decides everything. Every change you make at the top two layers gets interpreted by the people living at the bottom one, and they interpret it through the assumptions they cannot see. The change you make at the surface is absorbed and explained away by the layer underneath, and that layer does not move. You changed what you could reach. What you could not reach changed it back.

So the real question about Ford is not whether the company performed better, which it plainly did. The question is whether that deepest layer actually moved, or whether something else happened. And the answer is written in what came next.

When Mulally retired in 2014, the worry among people who watched the company closely was not about strategy. It was whether the culture would hold without him. One analyst said at the time that the board had to make sure the company did not slide back to the old bickering. The fact that this was the live question suggests the deep assumptions may not have gone anywhere. They had been held down, perhaps, rather than replaced.

And then they came back. Under his successor, Mark Fields, observers described a return of the old turf wars. Fields eventually tried to remove his own president in what looked like exactly the kind of power play the company had supposedly left behind, and the board removed Fields instead. When the next chief executive, Jim Hackett, was appointed in 2017, Ford's chairman introduced him as a culture change agent who would "continue to transform the company's culture". Read that again. You do not announce, in 2017, that someone has been hired to transform a culture you believe was already transformed in 2009. The new announcement, at minimum, complicates the claim that the old change had fully stuck. As one industry writer put it, the Mulally years may have been the exception that proved the rule. In the end, Ford could not escape its own history.

This is not a criticism of Mulally. Holding a destructive set of assumptions at bay for eight years, while saving a company most people had written off, is a genuine and rare achievement. The point is about how we read what he did. He did not change the water that Ford was swimming in. He froze it. Through relentless personal attention, and with the pressure of a company that was nearly dead, he kept the old behaviour in check. The moment he left and the crisis that justified the discipline faded, the water thawed and the old patterns flowed back.

Once you see that, the reason culture is so hard to change becomes clearer.

The thing that makes the deepest layer so stubborn is that an assumption is not just a belief a person carries around. It is the lens they look through. The water they swim in. It shapes what they notice and how they read what happens to them. So when you introduce a change meant to challenge that assumption, the people inside the culture do not see the assumption. They see the change through the lens of the assumption. Take the company that believes, without ever saying so, that authority has to be earned through long service inside the system, and that an outsider cannot really be competent until they have paid those years. A thoughtful leader sees the problem. The company keeps losing capable lateral hires, so the leader decides to act. They bring in a strong outsider, sponsor them publicly, give them a visible mandate and the leadership's open backing. On paper this should break the assumption: here is an outsider, plainly competent, plainly trusted from the top. But watch how the existing people read it. They do not conclude that an outsider has earned the authority through competence. They conclude that authority can now be acquired through a powerful patron too. The sponsorship, which was meant to prove competence can stand on its own, instead gets read as proof that you still rise here by being backed from above, exactly as the old assumption always held. The intervention designed to break the belief has been swallowed and turned into one more piece of evidence for it. Within two years the outsider has usually either left or quietly learned to behave like an insider, and the company reads that, too, as confirmation that it was right all along. The culture does not change.

Notice what separates the two outcomes - The lateral hire and Ford. The lateral hire's organization had a genuine intervention and no crisis. The assumption that authority had to be earned absorbed it within months. Ford had a genuine intervention and a near-death crisis. The assumption that admitting mistakes / weaknesses was career suicide was held off for eight years before it returned.

It wasn't the intervention that brought the cultural change at Ford. What moves the deepest layer is disconfirmation - the realization that old assumption was wrong - repeated until the assumption becomes more trouble to keep than to drop. A crisis is the most violent form of that disconfirmation, which is why crises move cultures when nothing else can. A company losing thirty billion dollars cannot easily tell itself the losses belong to someone else.

But Ford shows that even a crisis is not enough on its own. For eight years the new behaviour worked, and the old assumption that candour ends careers should have been disconfirmed every week in that meeting room. It was not, and here's the reason: the candour was attributed to Mulally, to his presence, his applause, his protection. People were not learning that openness is safe here. They were learning that openness is safe while he is in the room. The assumption was never actually contradicted, only suspended, because the disconfirming experience was credited to one man rather than to the way the place now worked. The moment he left, the suspension lifted. This is why sustained reinforcement so often fails where it seems it should succeed: the new reality has to disconfirm the old assumption directly, not tied to a protector whom the assumption can blame instead.

Practitioners often reach a plainer version of the same idea: a culture is shaped less by what leaders reward than by what they tolerate. The deep layer reads what you allow, not what you laminate on your walls.

This leads somewhere uncomfortable.

If the deepest layer only shifts when reality disconfirms the old assumption directly, then the consultant or HR leader hired to change a culture in a company that is doing fine has been handed an almost impossible job. You cannot manufacture a near-death experience at your whim. And even patient, sustained effort runs into the Mulally problem: as long as the new behaviour depends on you, the change agent, championing and protecting it, people attribute the change to you rather than to the way the place now works, and the old assumption is suspended rather than disconfirmed. The moment you leave, it returns. The usual response to all this is to sell the program anyway, the workshops and the new values and the launch event, all of which work on the layers that were always going to be easy to move, while quietly implying they reach the layer that will not.

There are, I think, only two honest things to do instead.

The first is to be clear about which layer you are actually working on. A great deal of what gets called culture change is really about behaviour, structures, and incentives, and most problems filed under culture can be solved right there, without ever touching the deepest assumptions, as long as nobody pretends otherwise. Changing what gets measured, rewarded, and tolerated is real work and it pays off. It only becomes dishonest when it is sold as something deeper than it is. Do that work, name it accurately, and you have earned your fee and kept your credibility.

The second is harder, and I want to offer it as the one door left open rather than as a method, because it is the part I am least able to hand anyone as a tested technique. If you cannot manufacture a crisis, and you cannot be the protector the change depends on, the move left at the deepest layer is to find a contradiction the company is already carrying, and make it impossible to ignore. Most organisations hold two beliefs that quietly pull against each other. Return to the company that will not accept lateral hires. Its surface assumption is that only home-grown people can be trusted with authority. But underneath that sits a deeper commitment the company would never disown: that it must survive and win in its market. The moment those two beliefs collide, when the business needs technical skills no insider has, when the home-grown bench cannot meet what the market now demands, the company has a contradiction of its own making. The work is not to argue that outsiders are competent. That argument loses, because it comes from you. The work is to make the company feel, as its own problem, that its preference for insiders is now costing it the thing it cares about most. Then the pressure to change comes from inside the culture rather than against it, and it is the one kind of pressure the lens cannot simply reinterpret, because it is the culture arguing with itself. The craft, if there is one, is in helping a company feel the crisis it is already walking toward, before that crisis becomes the kind that nearly killed Ford. I will not pretend there is a reliable set of steps for this. I will only say it is the one path the mechanism leaves open to someone without the power to break down walls.

Which brings us back to where we started. The culture change success story survives, against its own dismal odds, because we read it the way an unchanged culture reads itself. We see the turnaround and we credit the heroic leader, and we quietly leave out the crisis that did the actual work. The Ford story holds up even at MIT Sloan for the same reason a company can sincerely believe it promotes on merit while everyone watches it promote on loyalty. The visible result gets read through the flattering belief, and the machinery underneath goes unexamined.

For us - the HR professionals and consultants, diagnosing the culture is straightforward but that awareness does not bring change (I will write about the "How to" of culture diagnosis in my next blog). Most organizations do not move without a crises knocking at their doors and that shock cannot be faked. The intervention lives and dies with the sponsor. The real work of bringing cultural change lies at the intersection of these three.

References

1. Schein, E.H. (2017). Organizational Culture and Leadership (5th ed.). Hoboken, NJ: Wiley. Key insight: Culture works at three levels, artifacts, espoused values, and basic underlying assumptions, and only the deepest layer decides whether surface change lasts. Relevance: Supplies the layered model the essay turns on, and the warning that the visible surface cannot be read correctly without understanding the assumptions beneath it, which is the trap the Ford myth falls into. Read further: https://www.wiley.com/en-us/Organizational+Culture+and+Leadership%2C+5th+Edition-p-9781119212041

   
   

2. Argyris, C. (1990). Overcoming Organizational Defenses: Facilitating Organizational Learning. Boston: Allyn & Bacon. Key insight: Organisations build defences that protect them from the very learning that would change them, and tend to read a challenge as confirmation of what they already believe. Relevance: Explains why a faithful culture programme gets absorbed rather than changing anything. It is the engine underneath the essay's central argument, cited as established ground rather than a new claim. Read further: https://www.pearson.com/en-us/subject-catalog/p/overcoming-organizational-defenses/P200000003988

   
   

3. Hoffman, B.G. (2012). American Icon: Alan Mulally and the Fight to Save Ford Motor Company. New York: Crown Business. Key insight: The definitive inside account of the Ford turnaround, documenting both the scale of the losses and the discipline Mulally imposed. Relevance: The main source for the Ford story the essay re-reads, valuable because it preserves the specifics that complicate its own triumphant framing. Read further: https://en.wikipedia.org/wiki/American_Icon:_Alan_Mulally_and_the_Fight_to_Save_Ford_Motor_Company

4. Kirkland, R. (2013). "Leading in the 21st century: An interview with Ford's Alan Mulally." McKinsey Quarterly. Key insight: Frames the turnaround explicitly as a transformation of culture, in Mulally's own words. Relevance: Evidence that the culture-triumph reading is held by the most credible sources, which is what makes it worth questioning rather than a straw man. Read further: https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/leading-in-the-21st-century-an-interview-with-fords-alan-mulally

   
   

5. "Ford CEO tried to fire his president, then got booted himself" (2017). NBC News. Key insight: Under Mulally's successor, observers reported a return of the old turf wars, ending in Fields's own removal. Relevance: Documents the reversion that undercuts the deep-change claim, with the succession doing the argument's work. Read further: https://www.nbcnews.com/business/autos/ford-ceo-tried-fire-his-president-then-got-booted-himself-n767046

   
   

6. "New Ford CEO promises to be a 'cultural change agent,' Bill Ford says" (2017). CNBC. Key insight: In 2017, Ford's chairman introduced a new chief executive as a culture change agent who would continue to transform the company's culture. Relevance: The re-announcement of a transformation supposedly finished in 2009, which the essay reads as a quiet admission that it had not stuck. Read further: https://www.cnbc.com/2017/05/22/new-ford-ceo-promises-to-be-a-cultural-change-agent-bill-ford-says.html