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Session 4
Organizational Culture
Culture (component parts) = rituals, rites of passage, norms, founders’ values, and
stories.
Competing approaches to study and define culture and leadership:
1. Survey Research Approach → wants to quantify and measure organizational
culture (like through surveys which help determine the group morale and
satisfaction), synonymous with ORGANIZATIONAL CLIMATE → skimming the
surface and getting some aspects of it, but not getting to the deeper levels.
2. Analytical Descriptive Approach → still wants to measure culture but breaks
culture down into analytical component parts → looks at rites, rituals, stories, and
other ‘symbolic manifestations of the deeper phenomena’ that collectively imply
culture
3. Ethnographic Approach → deeper structures of culture cannot be understood
without ‘intensive and extensive observation’ and INTERVIEWS WITH CULTURAL
INSIDERS. This is the approach that is taken by anthropologists and sociologists.
Common conceptual themes of culture:
culture implies stability over time
culture emphasizes conceptual shared meaning
culture implies patterning
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culture implies dynamics (it is stable, but there are interactions between individuals,
so it is a change as well)
culture implies all aspects of group life (applies to all departments!)
Formal Definition of Culture: A pattern of shared basic assumptions that are invented,
discovered, or developed by a given group that has worked well enough to be
considered valid, and, therefore, is to be taught to new members of the group as the
correct way to perceive, think, and feel in relation to problems.
Levels of Organizational Culture:
1. Artifacts → visible organizational structures and processes (hard to decipher)
2. Values → strategies, goals, philosophies
3. Underlying Assumptions → subconscious beliefs, thoughts, and feelings
Example: Amazon is a hard place to work. Part of it likely comes from the underlying
assumptions that the leaders have about the employees. It might be because the
managers think that the people are lazy so you have to watch them.
HBR: The Leader’s Guide to Corporate Culture
Viability and effectiveness are frequently achieved through strategy and culture.
Strategy offers a formal logic for the company’s goals and orients people around them.
Culture expresses goals through values and beliefs and guides activity through shared
assumptions and group norms.
Strategy provides clarity and focus for collective action and decision making.
It relies on plans and sets of choices to mobilize people and can often be enforced by
both concrete rewards for achieving goals and consequences for failing to do so.
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Ideally, it also incorporates adaptive elements that can scan and analyze the external
environment and sense when changes are required to maintain continuity and growth.
Leadership and culture are linked. Founders and influential leaders are usually
the ones who set values, assumptions and cultures that last for decades.
Both conscious and unconscious actions can shape culture! However, the best leaders
are always aware of the multiple cultures within which they are embedded, can sense
when the change is required, and can influence the process.
Many leaders neglect cultures. They leave it as a secondary concern. Culture eats
strategy for breakfast → culture has a strong power and dynamics
HOWEVER, CULTURE CAN BE MANAGED! Managers should first become fully
aware of the culture and how it works.
Culture shapes attitudes and behaviors in durable ways. Culture can unleash
tremendous amounts of energy toward a shared purpose and foster an
organization’s capacity to thrive.
Cultures have the following attributes:
1. Shared. Culture is a group phenomenon. It cannot exist solely with one person! It
encompasses shared behaviors, values, and assumptions and is most commonly
experienced through ‘unwritten rules’.
2. Pervasive. Culture applies very broadly in the organization. It encompasses group
rituals, physical environments, visible symbols, stories, and legends → mindsets,
motivations, unspoken assumptions.
3. Enduring. Culture can direct the thoughts and actions of group members over the
long term. Its endurance can be explained by the fact that people are drawn to
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organizations that have characteristics similar to their own, and organizations are
also likely to pick individuals who ‘fit in’. It becomes very resistant to change and
outside influences.
4. Implicit. People are hardwired to recognize the culture and respond to it.
There are two dimensions that help distinguish the cultures: people interactions and
response to change.
1. People Interactions. An organization’s orientation toward people interactions and
coordination will fall on a spectrum from highly independent to highly
interdependent. Cultures that lean toward the former place greater value on
autonomy, individual action, and competition. Those that lean toward the latter
emphasize integration, managing relationships, and coordinating group effort.
People in such cultures tend to collaborate and to see success through the lens of
the group.
2. Response to change. Whereas some cultures emphasize stability—prioritizing
consistency, predictability, and maintenance of the status quo—others emphasize
flexibility, adaptability, and receptiveness to change. Stability means following
rules, using control structures, and striving for efficiency. Flexibility means
innovating, openness, diversity, and a longer-term orientation.
There are eight different culture styles:
1. Caring → relationships and mutual trust (collaboration, warmth, welcoming).
2. Purpose → idealism, compassionate people, have a mission, focus on
SUSTAINABILITY, want to make a change in the world
3. Learning → exploration, creativity, open-minded, inventive, employees are
CURIOUS
4. Enjoyment → fun and excitement! very lighthearted, people do what makes them
happy. a good sense of humor is always appreciated!
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5. Results → achievement and winning! work environments are outcome-oriented.
employees are driven for success.
6. Authority → strength, decisiveness, boldness. Very competitive; managers control
their employees and feel confident and dominant.
7. Safety → planning, preparedness, cautiousness. everything is predictable and risk-
averse. Leaders emphasize being realistic!
8. Order → respect, structure, and shared norms. here, people play by rules if they
want to fit in. everything should be time-honored.
These eight styles fit into our integrated culture framework according to the degree to
which they reflect independence or interdependence (people interactions) and
flexibility or stability (response to change).
It is common to find organizations with cultures that emphasize
both results and caring,
but this combination can be confusing to employees. Are they expected to optimize
individual goals and strive for outcomes at all costs, or should they work as a team and
emphasize collaboration and shared success?
In contrast, a culture that emphasizes caring and order encourages a work environment
in which teamwork, trust, and respect are paramount. The two styles are mutually
reinforcing, which can be beneficial but can also present challenges. The benefits are
strong loyalty, retention of talent, lack of conflict, and high levels of engagement.
The challenges are a tendency toward groupthink, reliance on consensus-based
decisions, avoidance of difficult issues, and a calcified sense of “us versus them.”
When you are evaluating how culture affects outcomes, the context in which the
organization operates—geographic region, industry, strategy, leadership, and
company structure—matters, as does the strength of the culture.
There are following insights:
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1. When aligned with strategy and leadership, a strong culture drives positive
organizational outcomes:
the first priority of the company was to provide top-notch service → there was a
simple rule “Do right by the customer”, and there were training programs for HRs to
help every salesman feel like they are contributing to something legendary.
employees were encouraged to ask customers about their needs and preferences
this retailer had a combination of RESULTS and CARING, it also had elements of
LEARNING and PURPOSE
the company made their norms and values clear to all their employees
the leadership was always cherishing culture!
when the company expanded, it saved its culture by carefully picking new leaders
and designing an onboarding process that reinforced core values and norms.
here, culture is strongly aligned with strategy and leadership!
2. Selecting or developing leaders for the future requires a forward-looking
strategy and culture.
agriculture business with CARING and PURPOSE
“You feel like part of a large family when you become an employee at this
company.”
the successor understood the culture but was more risk-averse (SAFETY) and
respectful of traditions (ORDER) than the rest of the company
then, the board was choosing between three candidates and chose the
AUTHORITY ONE because the company was competing and had to restructure to
prepare for growth.
3. In a merger, designing a new culture on the basis of complementary strengths
can speed up integration and create more value over time.
M&A’s can either create or destroy value
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two food retailers with cherished and distinct cultures merged and each wanted to
preserve their culture
there was a need for the COMBINED CULTURE
both companies emphasized RESULTS, CARING, and ORDER and valued high-
quality food, good service, treating employees fairly, and maintaining a local
mindset
but one operated in a more top-down manner (AUTHORITY)
Therefore, leaders prioritized PURPOSE and CARING because both companies
valued teamwork and investments in the local community
their strategy required moving from AUTHORITY to LEARNING style to encourage
innovation
a program was launched to promote cultural alignment with an emphasis of
clarifying priorities, making authentic connections, and developing team norms
leadership was modified as well: (with culture in mind) reward systems, promotions,
training and development…
4. In a dynamic, uncertain environment, in which organizations must be more
agile, learning gains importance.
RESULTS is the most popular culture style
however, there has been a trend of LEARNING to promote innovation as
businesses respond to more unpredictable and complex environments
small companies and new industries score high on LEARNING
a Silicon Valley company was results-oriented, very CARING, and had LEARNING,
so innovation, but their revenue was declining
therefore, they decided to focus on LEARNING even more
5. A strong culture can be a significant liability when it is misaligned with
strategy.
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the European company’s strategy was cost leadership, but now it needed to shift to
greater service differentiation.
its strong culture was blocking success, though
the culture was RESULTS, AUTHORITY, and some CARING
the leaders decided to shape it around PURPOSE, LEARNING, and CARING and a
decrease in AUTHORITY and RESULTS
the current culture served the organization well…
cultural evolution did happen, but it took a lot of effort!
the CEO introduced new leadership development and team coaching programs
the shift in the culture did work…
Four Levers for Evolving Culture:
1. Articulate the aspiration. Analyze the current culture and discuss a prospective
one with the members of your organization. Leaders must understand what
outcomes cultures can produce + analyze whether the current culture aligns with
the position of the business in the market
2. Select and develop leaders who align with the target culture. Culture and
leadership should match. Leaders serve as an important catalyst for change by
encouraging it on all levels. Leaders can be energized with training and education
about culture and strategic direction (their relationship). It may help, but it may also
cause a turnover: people can start feeling like they do not longer fit the organization.
3. Use organizational conversations about culture to underscore the importance
of change. Current and desired culture styles should be discussed. Structured
group discussions, listening tours, and road shows can all encourage discussions
between managers and employees.
4. Reinforce the desired change through organizational design. when company’s
structures, systems and processes are aligned and support the culture and strategy,
it is easier to instigate new cultures. performance management can be used to
encourage employees to embody cultural attributes.
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Lumen Learning
Any company disconnecting culture and strategy puts itself at risk.
Yet companies still keep spending a lot of time on their strategy and omit thinking about
culture.
Strategy, capabilities and culture have to be aligned.
Strategy, capabilities and culture leadership is about a series of related choices
about “where we going to play”, “how are we going to win and differentiate”, “what
capabilities need to be in place to execute”, “what are the cultural imperatives to enable
differentiation and execution”?
culture = MODERN COMPETITIVE ADVANTAGE!
Just like the strategy is reviewed and refreshed every 3-5 years, culture (values and
goals) and capabilities should be reviewed along.
This does not mean changing the values of the company, it means in the context of
the strategy, business model, brand positioning … what capabilities are required and
what are the critical few cultural capabilities required to enable and drive success?
others can copy your strategy, but not your culture!
How to cultivate culture?
1. A purpose beyond profit
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2. Creating a shared vision and common direction (communicate vision, mission,
strategy, values…)
3. Visualize the ‘journey’ (visual reminders in offices)
4. Involve the whole organization → create a dialog!
5. Do something together (go out and volunteer, cook…) → team building activities
6. Create wins. → celebrate successes, even small victories matter, celebrate
milestones
7. Measure early and often.
Culture is made of 5 components: behaviors, relationships, attitudes, values, and
environment.
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