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Lead The People is your guide to unlocking your true potential as an authentic leader. Hosted by Dr. Matt Poepsel—The Godfather of Talent Optimization—this podcast dives deep into the art and science of what it takes to lead at the next level. With insightful conversations and practical strategies, each episode equips executives, strategic HR pros, and aspiring leaders with the tools it takes to boost performance, inspire teams, and drive meaningful impact. Whether exploring the latest workplace trends or tackling real-world leadership challenges, Lead The People offers an enlightened approach to leadership. Embark on a rewarding journey to become the leader your people deserve—the leader you were meant to be.
Kevin Oakes (00:00):
If a manager asks an employee, "Hey, you're overseeing this project, what I'd like to see from you within a week or so is a project plan." If that employee comes back in 15 minutes or half an hour and said, "Hey, here's the project plan. I did it through ChatGPT or Claude," how's the manager going to view that? Does the manager view that that employee just cheated and took a shortcut and doesn't trust it? Or do they view it as this employee really knows how to leverage AI and is being incredibly efficient? That's what I want to see from other employees.
Matt Poepsel (00:35):
If you think AI is forcing you to build an entirely new culture, you might be asking the wrong question. Today, we're getting into what actually separates the rare companies that pull off culture change from the ones that quietly fail. We're asking whether a culture that's worked for 20 years deserves to survive AI, and we're asking whether businesses chasing purpose over pure profit are gaining ground or losing it. Our guest is Kevin Oakes, founder and chief strategy officer of I4CP, the world's leading human capital research firm. He wrote Culture Renovation, an Amazon bestseller based on one of the largest studies ever conducted on corporate culture, and became the playbook companies like Microsoft used to change how they operate rather than just talk about it. Before ICP, he took a software company public and helped engineer more than a dozen acquisitions, so he's watched plenty of businesses outgrow the culture that built them.
(01:22):
Kevin, welcome to the show.
Kevin Oakes (01:24):
Thanks, Matt. Great to be here.
Matt Poepsel (01:26):
I had been familiar with I4CP for a long time, and I was so excited to be able to chat with the person who created it and co-founded it and grew it to what it is today. It's amazing to have this chance to talk to you.
Kevin Oakes (01:37):
Great. Well, hey, I'm excited to talk to you and your audience.
Matt Poepsel (01:40):
Well, I know that you've spent all these years studying the small number of organizations that actually pull off culture change. And my first question for us, Kevin, is what separates those who succeed versus everybody else who talks about culture change, but then they go try and it just doesn't work out so well?
Kevin Oakes (01:55):
It's a good first question here, Matt, because most companies who try to change their culture do not succeed. But let me take a step back and just talk a little bit about how we do our research because that'll help in understanding what separates great cultures from poor cultures. So in all of our research, and you mentioned we do more HR research than just about anybody on the planet, we're always separating high-performing organizations versus low-performing organizations. We measure performance by revenue growth, market share, profitability, and customer satisfaction. And when you look at that separation, the research is really clear that companies with healthy cultures outperform their competition. In fact, our research shows that high performance organizations are five times more likely to report that they have very healthy cultures versus low performance organizations. But it doesn't stop there, Matt. There's a lot of other benefits to having a healthy culture.
(02:48):
Those companies are twice as likely to say that they have increased employee productivity. Three times as likely to say that they attract top talent, four times more likely to retain top talent. And so all that is critical in having a healthy culture. But what I get asked a lot by CEOs is that's great. I inherently understand that. How do I change it? Changing culture is really, really challenging. In fact, my dad many years ago took over an insurance company as CEO. And after he read my book, he said, "Boy, I wish I had this book when I was doing that because I could not change the culture. I felt like the culture was in the woodwork of this hundred-year-old insurance company." And I think that's the way a lot of companies feel. We were really fueled in our research around corporate culture by one statistic, and that's only 15% of companies that try to change their culture actually succeed.
(03:42):
That means most companies who try to do this fail. But the successful ones, they don't treat it as a side project or a branding exercise. They were very serious about it. And as we were doing our research, we were using the term culture transformation, which is what everybody uses. But as we started looking at these successful companies, we realized none of these companies transformed themselves. They didn't become something completely different. Instead, they renovated themselves. What they did was kept what made them great to begin with, kept what was hard to replace, kind of like an old house that you're renovating, and simply renovated to improve the value like you would with an old house. And what they mostly did was aligned culture with business performance. They wanted to make sure that they understood how culture impacted that performance. They measured culture. They used both qualitative and quantitative measures of culture.
(04:40):
And there's probably some listeners that think, how do you measure culture? But you absolutely can measure culture. They really ensured it was leader-led. It's really hard, Matt, for a company to change their culture if the CEO is not completely on board or the majority of that senior leadership team wasn't committed to changing that culture. If they are not, it just probably won't work. But they do more than that. They reinforce culture throughout the organization, not just by messaging it and saying, "Hey, this is what we want to do." But they get cooperation at the ground level and they get it from some very key people throughout the organization. And they also create this sort of co-creation mindset inside the company, and they make everybody feel like they are part of changing that culture for the good going forward. In the research, as we looked at it, Matt, we recognized that there were some very common steps that each of these successful companies took.
(05:38):
And from it, we created a blueprint that had 18 total leadership actions that organizations could take to proactively change corporate culture. You mentioned Microsoft, they're a fabulous example of a company that really did a 180 on their internal culture and the results followed. But we have hundreds of examples like that where companies have made a concerted effort to change your culture and have seen the business results follow that. And many of them follow these 18 steps. We're not going to go into 18 steps, but I want to call out just a couple of them that I think are important. The very first step is around corporate listening. We've always felt that it's very important to deploy a comprehensive listening strategy for any CEO, whether they're new, whether they've been there for a while, or whatever the reasons might be for changing culture. Listen to what employees are saying.
(06:34):
Listen to customers first and foremost, because I guarantee what happens in many organizations is that the senior leadership team, they kind of lock themselves in a conference room and they decide amongst themselves what's good about the culture and what's bad about the culture. And almost always they will get it wrong because things get filtered up to that leadership team and they don't really know what's happening at the ground level. So it's very important to really understand what is happening at the ground level. And then to enlist the influencers and we call them the energizers at the ground level. You have people like this in your life, Matt, and so do your listeners. There are people you turn to on a frequent basis for subject matter expertise, for information. Oftentimes you just turn to them for energy. You talk to them and you walk away from those conversations kind of fired up and they were fun, you laughed, you learn something.
(07:27):
And then there's the opposite. There are people you talk to that just suck the life out of you like Darth Vader. You want to make sure that you understand who those influencers and energizers are throughout the organization because I guarantee they're all over the organization. But most of the time that senior leadership team doesn't know who they are. In fact, if you ask them who they are, they tend to think in terms of the org chart. And so they'll pick out people that are in prominent positions on that org chart. Most of these influencers and energizers are buried in the org chart. They're in lower levels, they're not exactly where you think they'd be. And sometimes they're introverts, not extroverts, but they still are the people everybody turns to. If you're trying to change culture, you want them on board. Microsoft called this the culture cabinet.
(08:13):
Other companies have termed this different things, but they have through some different techniques, and the one that we like is called organizational network analysis. They've uncovered who these people are and then bring them into the camp, under the tent, and those are the people who evangelize this and make it happen at the ground level. So those are just a couple of things out of the 18 steps that these organizations do to successfully renovate culture. It was remarkable how often we found that the very successful ones did the exact same thing.
Matt Poepsel (08:44):
I'm encouraged by at least three things that you shared with us. The first that culture can be measured, really powerful because it feels squishy, to be honest. I think a lot of times people have a hard time even defining what it is. And we all know it feels a certain way to work at a place. The second is that it can actually be deliberately changed, modified, and we'll talk in a second about the difference between renovation and transformation. I got a follow-up question for you on that one. But the third is that there's at least hundreds of companies that have evidenced the fact that it is possible. So I think it's encouraging to know that we don't have to accept it as just something that is soft or amorphous in some way, but actually there are companies who are changing it. I'll throw in a fourth that it actually drives the business in the way that you started the entire thing.
(09:28):
What I want to talk about for a second is that this notion that how do you even know whether it's a transformation or renovation, however you want to think, how do you even know that your culture needs to change? Is it simply business results are faltering? Is that the only way or perhaps the best way?
Kevin Oakes (09:44):
I think you've got to ask the question, is our culture advancing our strategy or is it hurting our strategy? That's sort of the basic level question. There's a lot of indicators, canaries in the coal mine around your culture that you can look at. Are you retaining top talent? Everybody has attrition in their organization, but when you separate it into regrettable attrition versus other types of attrition, what you really want to understand is do we have too much regrettable attrition in the company? I guarantee that a lot of that attrition is because of cultural issues, not anything else. And we know the common reasons why people leave a company. It's also around attraction of top talent. The one metric that a lot of companies use is employer net promoter score. Just like customer net promoter score, what you're trying to measure is would your employees say, "This is a great place to work and would I recommend this place to my friends, to my family to come work?" If your ENPS is going up, then you generally have a healthy culture.
(10:46):
If it's going down, it's generally the opposite. So there's a lot of metrics you can use around the culture itself, but ultimately it just boils down to the business performance. Are we performing to what we had planned to do? And is that culture helping that performance? It's really, really hard. I'm not going to say impossible, to have a company that is performing very well and has a horrible culture. That's the hard way to do it. The easy way to do it is to create a great culture and performance will follow. They really go hand in hand, and our research has shown that time and time again. I
Matt Poepsel (11:18):
Talk to a lot of CEOs that know that they have gaps in where they would like the culture to be. Maybe the strategy's changed, maybe it hasn't, but they suspect that there's some soft spots, some things that aren't that great. They know their Glassdoor ratings, they know their ENPS scores, they know their regrettable turnover at some level, but a lot of times they say, "Well, what are you going to do?" And the answer is, "Well, Kevin just gave us 18 things that we can do." I think we've taken away that sort of, "Well, nobody can fix it." No, it absolutely can be addressed. It takes prioritization and effort and resources and sponsorship and all the things that you just shared. But the question that I have for you, Kevin, is when you think about this nature of where we're in now, because you've been doing this work on culture renovation for a bit, even before AI really started to kick in.
(11:57):
And now whenever I turn on anything, nowadays any device, even my toaster seems to be AI powered, it's all transformation. Everything's going to be totally different. We're reinventing work. You're hearing blow it up, blow it up, blow it up. But my question for you is, has it changed your thinking at all about renovation versus transformation? Or it's kind of evolved in your own experience, research and thinking in a post-AI sort of world that we're in now?
Kevin Oakes (12:23):
Yeah. If anything, the AI boom has reinforced what's important about culture renovation. I would never recommend to a company blow it up. Typically, if you've been successful, your culture is an asset, an asset that you want to nurture going forward and take that more of that renovation mindset. How can we improve on this asset? AI has introduced a lot of new things, not too dissimilar. I'm old enough and you're old enough to remember when the internet first came out, Matt. I'm recognizing a lot of the same patterns that we're going through right now. Frankly, it's a lot of the same patterns that companies went through when the computer first entered our lives. So we've done a lot of research on AI even before ChatGPT came along, and it's very clear that the companies that are successfully leveraging AI recognize this isn't a technology issue. This is much more of a culture issue, but it's also a leadership issue and a workforce readiness issue all at once.
(13:20):
It's interesting because AI has almost become sort of a cultural stress test. It's kind of forcing clarity on whether organizations are learning organizations, are learning cultures, and whether they're actually sharing knowledge inside the organization. But it also is showing whether a culture allows experimentation and with it, the failure that comes along with it, and do they tolerate that failure? And whether they trust employees. Trust is suffering a great deal these days, and that's such a huge component of having a healthy culture versus a poor culture. So if I was going to rewrite this or add a chapter about AI, I'd probably talk about how AI fluency is a cultural norm. It's not something that you should view as a technical skill. We'd be talking about shifts from more of a skills-based organization. It's not role-based work. This is much more about capability-based work, and just the need to have a psychologically safe environment.
(14:21):
Do I have an environment where people aren't afraid of adopting AI because they think it might be a trap? We've read a lot of stories about layoffs in corporations these days and AI being blamed for those layoffs. There's a lot of stories about employees intentionally sabotaging AI efforts inside of organizations because they do feel like it's a trap. So in that way, we shouldn't view it maybe as a technology or a tool. It's more of a mirror on the organization. And sometimes that mirror, these companies don't like what they're seeing in that mirror, but they certainly need some written policies that guide effective use, have good governance around AI, but it's more about the unwritten norms inside the organization. And are leaders signaling the right behaviors around AI in that culture? Is the culture ready to embrace or resist AI-ready talent? Here's a good example, simple one.
(15:14):
If a manager asks an employee, "Hey, you're overseeing this project. What I'd like to see from you within a week or so is a project plan. Show me the critical path, show me all the dependence variables as part of that project plan and get that out to me." If that employee comes back in 15 minutes or half an hour and said, "Hey, here's the project plan. I did it through ChatGPT or Claude." How's the manager going to view that? Does a manager view that that employee just cheated and took a shortcut and doesn't trust it? Or do they view it as this employee really knows how to leverage AI and is being incredibly efficient? That's what I want to see from other employees. I think that's sort of a mind shift that a lot of managers need to get over. And frankly, I don't think many have gotten over that mind shift.
Matt Poepsel (16:00):
No, and I love the point that you're making, which is that when something like this happens, it tends to expose the cracks in the foundation. I'll use your renovation analogy that we're already there. And it's so true that the technology waves that we've lived through, so if you think about the internet, it was like, wow, okay, let's get our head around this. And then cloud came in. Okay, all right, let's think about this. Now AI's here. And I think what's different about it is that both the internet and the shift to cloud created this reasonable amount of fear among employees and this adjustment, this discomfort maybe is an even better word. But AI is creating an unreasonable amount of discomfort because it's making us question exactly what you're saying. What value do I bring relative to this thing? And that did not happen with the internet or with cloud.
(16:48):
It's happening with AI. And to your analogy, you used the example about a manager saying, "Well, wait a second. Are you working?" You're like, "Yeah, I'm watching Claude work. That's what working is now." And you're like, "Well, is that what I'm paying you for? What am I paying you for? And what are you supposed to think? Because now Claude's doing all your thinking for you." It's fundamentally shifting our identity with work and with ourselves really. And I see this only getting worse in the next coming years as AI becomes even more and more capable. The things that seem to be like, "Oh man, how to do that? That seems very human-like are only going to go off the charts." In which case, how can you help companies feel like they belong and they're safe? The answer's culture. So I think that if you have a weak culture now, one that's not fully aligned with your strategy, one that doesn't make people feel like they belong and that they're safe, it's only going to get worse for you.
(17:36):
So I'm so glad your research is still as relevant, I would argue more relevant than ever, considering what we're navigating into. And
Kevin Oakes (17:42):
A lot of this is about how quickly do we adapt over time. So we have seen this with previous technology shifts. I agree with you, Matt, this is happening faster than what we've seen in the past. But I think the companies that win long-term are the ones that they look at change not as something to fear or an annoyance, but they look at change as an opportunity. And these change-ready cultures are ones that always succeed over time. They're constantly trying to exploit it. So when something like AI comes along, it's all right, how can we use this internally to make ourselves more efficient? How can we use this externally to make us more effective in our audience or in our industry with our customers, et cetera? And they're figuring it out. But they're also recognizing it's not just adopting it for adoption's sake, they're really applying it to where it makes sense.
(18:34):
And now we're in the awkward teenage phase, maybe even earlier than that right now where we don't know what we don't know and we're trying to get through it. But you've got, on the one hand, a lot of companies were telling employees, "Go use AI. We're not quite sure what to use it for, but just use it." And now you have the token economics backlash. It's like, well, holy crap, how much are we spending on AI? And are we using it for the right things? We've got a lot of companies saying, you know what? Geez, humans are a lot better right now and more effective and cost-efficient at doing that particular task or role than AI is. And it's going to take some time to figure this all out. It never happens quite as dramatically as we think it will right at the beginning. We have a lot of missteps, but eventually this'll just become a way of life.
(19:20):
Right now we have chief AI officers and we have departments focused on AI inside of organizations. Well, we had the same thing when the internet first came out. We had chief internet officers, we had chief web officers, we had internet departments, and then it just became a way of life, and that's the way AI is going to be long-term. I think
Matt Poepsel (19:37):
That's definitely true. And I like that you're saying that we're in the teenage years. We've been talking a lot about culture, but this whole conversation about AI makes me think about some of your more recent research at i4CP, which talks about culture, yes. But also when you talk about skills readiness, AI readiness, in addition to that culture readiness we've kind of been talking about. But the thing that strikes me most is how interconnected they are when we tend to think about them separately. We're talking a lot about skills in a vacuum. We've been talking about culture. Some companies think about it in a vacuum. Why is it that we tend to silo these? And what does your research suggest about how we can maybe think about them better?
Kevin Oakes (20:16):
I think too many leaders think in terms of an org chart, and org charts kind of trick people into thinking about things in silos in separate ways. And what we've been writing about is that future readiness is all about the combination of culture readiness, skills readiness, and AI readiness. But too often in companies, they think about culture in terms of HR. They think about it maybe as a communication issue. They think about skills as a learning or talent issue. They think about AI as a technology issue, and that's what causes friction. If you're thinking about these things separately, you're not getting the momentum you would get if you are combining those things and thinking about them together. And so we have a lot of examples about companies who are creating a future-ready culture by thinking about these things all combined, but how is this one agenda versus separate agendas?
(21:07):
And I'd argue the history's littered with organizations that weren't future-ready. If we go back to Kodak or Polaroid or Digital Equipment or Blockbuster Video, who I had a lot of examples in my book, I would argue that those organizations did not create a future-ready culture. They were clinging to the past and their workforce wasn't embracing change.
Matt Poepsel (21:28):
Yeah, and I think it's so true. It can be tempting to say, well, you can't hardly predict the future, but we know it's going to be different. So I think future-ready probably in your research would know this the best. It's got to be some level of agility, some nimbleness, some ability to flex, to accommodate and adapt whatever comes next, but also to just honor the past, but a little bit let go of it. And it's paradoxical in a way what you're asking us to do, which is to say, let's not let go of the parts of culture that have served us well to get us to this point, but let's not hold too tightly if there's going to be ways that we're going to need to adapt and change and flex post-pandemic, post-hybrid work, post-AI, post-Gen Z, post-post-post. It's all going to continue coming at us faster than ever.
(22:09):
So I get future ready. It's not about being certain about what comes next, it's about readiness.
Kevin Oakes (22:15):
Yeah, I think it's all about readiness. And how do you create that culture, like I said before, that does embrace change and looks at it as an opportunity?
Matt Poepsel (22:22):
Yeah. And I think it's very clear that the nature of work is changing. We understand that what AI is doing in every industry, it's just really the beginning. And I think it's not going to slow down and it's only going to increase. But it makes me wonder, and I do think a lot about purpose. I think people are going to have this renaissance of something we felt in the post-pandemic aftermath, which was around I'm giving my time for work. I want to work for good companies, good actors. I want to shop with good actors. There was a time when there was a lot of move toward stakeholder capitalism, conscious capitalism. It goes by different terms, I guess. And then there was a correction back to economic focus, which is great. These things are cyclic. And so my question is, is purpose likely to make a comeback in the face of increasing AI capabilities and business taking a new shape, or are those days over?
(23:14):
Just help me think about that part of it.
Kevin Oakes (23:17):
Yeah, those days are not over for sure. I do think the best companies still hold their purpose near and dear to their heart and to what they're doing. I think the reality is that when companies are under pressure, they talk less about purpose and more about productivity. It's why we've had AI cited so much in the context of these layoffs. Companies are trying to show that, especially to investors and to analysts that follow them, that they're winning that AI race and becoming more efficient. And so that's why you keep hearing more about efficiency. It's a big component in driving stock price, share price versus being more principled. But I think the more principled companies are also the ones that are embracing efficiency. So these companies are combining both. You don't need to choose one or the other. They're using purpose as a filter as they should around what they should not only embrace, but to automate.
(24:12):
Our purpose should help drive a lot of decisions like what to invest in, what to not invest in, what to stop doing. So I don't think stakeholder capitalism purpose, it's not disappearing. It's just becoming more operational and maybe less performative in general.
Matt Poepsel (24:28):
Yeah. Hopefully in the future, we'll go back to something you said at the top, which was the business strategy needs to be supported by the culture. Is it propelling us toward that strategy or not? And if the strategy does open up in the future to bring purpose maybe on even footing with efficiency, because we don't want to run inefficient businesses or certainly not unprofitable businesses, but we have to look at the opportunity we have to have business be about more than just those things. Again, a culture that drives toward all those outcomes and not seeing them siloed and separate, but rather as possible and even self-referential and self-enhancing, I think is probably a more complex future, but one that hopefully if we have more of these capabilities inside our organizations fueled by technology, et cetera, perhaps we can actually get there. Yep,
Kevin Oakes (25:12):
Absolutely. Well, I
Matt Poepsel (25:13):
Wanted to shift gears for us a little bit. I mentioned to you, I love to have a trivia segment for my guests, always inspired by guest background. And I know that you had actually started off closer where I am now out here in Massachusetts in Boston, and you moved to Seattle when Microsoft's co-founder Paul Allen had invited you out, I think. Have I got that more or less right? How's that work?
Kevin Oakes (25:32):
Yeah, well, I sold my first company that was created just outside of Boston to Paul's first company he created after Microsoft actually. Gotcha. And we did that one together. Yeah.
Matt Poepsel (25:40):
Excellent. So then you made the long trek. So what I though we would do is we would have a trivia question about road trips of all things. Sounds good. So here's our trivia question. This is AI generated, of course. So what famous American highway, often called the main street of America, originally stretched from Chicago to Los Angeles? Was it A, the Pacific Coast Highway? B, Route 66, or C, Interstate 95? What do you think? That was
Kevin Oakes (26:02):
Route 66. It's got it. I actually happened to be on an old part of Route 66 in Arizona near the Grand Canyon just a couple months ago, and it was great. There's a whole bunch of paraphernalia and tributes to Route 66 in a town. I forget the name of the town, but it's about 30 miles south of the Grand Canyon. I love
Matt Poepsel (26:22):
It. See that audience? We got a ringer. Kevin knew it straight away. It was absolutely correct. Established in 1926, the ultimate symbol of the American Road Trip. Kevin, that was amazing. But here's something even more amazing. Where can my listeners go to learn more about you and about I4CP?
Kevin Oakes (26:36):
Just i4cp.com is the main place. Tons of information there. The book, Culture Renovation, does have its own website, culturerenovation.com, so you can find more info on the book at that site. I love
Matt Poepsel (26:48):
It. Listeners, I'm going to have both those links for you in the show notes. You're only one click away from connecting with Kevin in his fantastic book, Culture. There's Never Been a Better Time to get it right. So I'm so glad that we got actionable tips today. We got the right perspective, the right way to think about it. Kevin, thanks so much again for spending some time with us today. I really appreciate it. Thanks,
Kevin Oakes (27:05):
Matt. It was great.
Matt Poepsel (27:11):
Here are my top three takeaways from the conversation I just had with Kevin, all about culture renovation. The first was the importance of measurement. I love the notion that we can actually measure culture. It doesn't have to be as amorphous as it feels. Sometimes it can seem squishy to some executives and level down managers. And the reality is that it doesn't have to be. And it's so important. It's great to know that we can quantify it, we can improve it, we can deliberately verify that it's aligning with our strategy and propelling the business forward. The second is around being future ready. I think Kevin and I had a really strong conversation there about how we can't predict the future, but it doesn't mean that we can't be ready for whatever comes next. And that's a combination of both AI readiness, skills readiness, and culture readiness.
(27:52):
These things are not independent. They all come together. I thought that was a really important insight. And then finally, purpose. I was encouraged by what Kevin said about how purpose is still present. Maybe the volume got turned down a little bit compared to efficiency for a bit, but that he foresees that in the future it's going to remain important, that that's something that's going to perhaps come back into frame a little bit. I certainly hope so. I know that it's possible for us, but it's going to take a different approach than what we historically have done, at least recently.That's it. I really enjoyed the conversation with Kevin. Makes me think a lot about the collective efforts of people working together. Certainly something that's from a behavioral perspective, the predictive index we know a lot about. And so it was a fabulous chance to talk to Kevin, get his take all from I4CP's research and writing.
(28:34):
Great resources to check it out. Hope you check out those links in the show notes. So thanks so much for listening for always. And again, as always, don't just manage the business when you can Lead the People.