Business Growth & Strategy

Does Organizational Culture Matter? Part 1 of 2

It is arguable that organizational culture gets more press than just about any business topic out there today. Some attribute problems in operational execution with an issue in the culture of the organization. Most would agree that a certain type of culture is required to be innovative and excel in developing breakthrough technologies and services. Everyone can get on board with the assertion that businesses are formed to produce financial returns. If so, culture would appear to only matter if it is integral to improved financial performance. That statement, however, presents a challenge. Empirical evidence linking culture to performance is largely missing. That can be attributed to the fuzzy definitions of culture, therefore obfuscating what it means to organizations. Sometimes even diagnosing a need for cultural change is among the most difficult of tasks to complete in the overall job of correcting sub-par business results. By defining culture in real-life terms, it can take on a more meaningful form that allows leaders to identify cultural characteristics and better determine if problems exists, then how to go about making change if it is required. This segment of a two part article series looks at some criteria to help identify culture hotspots and make the determination if problems exist. In the second part of this article, we will explore how changes can be made to culture, once problems are identified.

How would your employees describe your organization’s culture?

One group that matters a great deal in learning about the organization’s culture are the employees. It is important to pick and chip through the culture puzzle by surveying employees to find out what they really think. In employee surveys conducted by Method Frameworks across industries, the majority of respondents indicated little or no clear understanding of their organization’s strategic priorities or what management valued in relation to achieving strategic objectives. That finding has major implications to culture because it is hard for employees to be supportive of the company’s vision and strategy if they do not know what is valued as an organization. That lack of connection to strategy and “valued actions” in regard to achieving the strategic objectives is a clear indication of an opportunity for cultural correction. Employees must know what management values in order to help achieve desired results and strengthen the organization’s culture.

For example, in a software company, most employees may be focused on making better software through enhanced technical design, not on improving the end-customer’s overall experience. Technical improvements, while important, will likely not be appreciated by the customer as much as a focus on the customer’s overall experience. In this example, the cultural disconnect is with a system-wide misplaced focus on the technical instead of the qualitative aspects of the software.  Customers determine value on the larger overall experience, not just the software’s functions. Their perception of value is derived based on how they interact with the software and how they can get help when it is needed. Therefore, in this case, the culture is allowing for the focus to be misplaced on how the software is being built, not on improving the experience the product provides.

One word of caution though. Surveys can certainly help uncover problems, but of course, no one likes to consider themselves to be a part of the problem. “Yes, there is a problem, but it is not with my department.” Be prepared to see blame placed everywhere but where you are asking the questions.

How would customers describe your organization’s culture?

Focusing on culture translates to tuning in to the organization’s employees and their relationship to the overall experience the business provides to its customers. Logically, the next recommendation is to find out how customers view the organization’s culture. Enthusiasm is palpable when you do business with an organization that is fanatical about making your experience the best it can be. You know that when dealing with that business, you will consistently experience that level of passion and excitement because it has become a part of the DNA of the organization. It is in the culture. Such experiences are the result of a business culture that cares about the customer and understands what priorities management values the highest. Surveying customers, like employees, can be telling. In an interview with Mckinsey, Bombardier CEO Pierre Beaudoin proves the point. He said, “we had an organization that was very proud of being number one and had all kinds of metrics to measure why we were very good. But when we talked to our customers, they were saying we weren’t very good.”

Not understanding your culture means not understanding how it affects your customers. Good or bad, culture represents the predominant attitude within the organization. “That’s the way we’ve always done things around here” can become a thematic tide that is hard to swim against.

What is the management culture?

While it may not be the most important factor in determining if an overall culture problem exists across the organization, there can be cultural problems at the management level that can be very damaging as well. Such problems may even be fairly benign on the surface, making them hard to spot. One such example is “happy talk”; a condition where the culture is one of avoiding putting facts on the table, accountability is ill-defined and management spends time convincing itself how good the business is doing. This goes hand-in-hand with complacency; where goals are defined in such a way so that management can surpass them and feel good about its performance. Another very common cultural issue is silos, where people are focused on their own tasks and there is very little teamwork.

Coming up next, part two.

In part two of this article, we will explore how changes can be made to culture, once problems are identified.

In the meantime, here are some recommended articles on this topic:

A Fish Rots From the Head: A Commentary On Corporate Culture

Kiss A Lot Of Frogs: Business Strategies For Innovation

Why Organizational Innovation Is So Difficult

Category: Business Growth & Strategy

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About the Author: Joe Evans

Since 2006, Joe Evans has been President & CEO of Method Frameworks, one of the world's leading strategy and operational planning management consultancies. The firm provides services for a diverse field of clients, ranging …

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  1. Michael Petit, Ph.D

    April 8, 2012 at 8:25 am

    Discussions about culture’s influence over an organisation’s strategy and performance are often confused and confusing. Ever since Jay Barney suggested that culture could be an organisation’s greatest competitive advantage people have been trying to understand what culture is and how it can be changed. The best known study on the relationship between and organisation’s culture and performance was conducted by John Kotter at Harvard. Kotter was interested in whether a strong culture resulted in better performance. Perhaps unsurprisingly Kotter found that a strong culture could result in better performance but it could equally result in poor performance. While there are diagnostic tools and methods available for getting a picture of culture they all have significant shortcomings. In my own research on the concept of dominant logic I have developed a framework for thinking about culture in relation to an organisation’s strategy, leadership and change for performance improvement. But in order to do so I had to look at organisation’s through an unconventional frame of reference. Rather than adopt the dominant metaphors of organism or machine with their shared underpinning assumptions of rationality, stability and uniformity I adopted the schismatic metaphor which recognises that there are various forces within organisations that work to hold them together while at the same time working to push them apart. Central to the schismatic metaphor is the role of conflict, specifically symbolic conflict, which is ultimately at the root of all culture. It explains not only how a particular culture arises but also why it persists. The framework that I developed sees culture simply as a legitimising mechanism. In other words it legitimises what behaviours are acceptable, what questions can be asked, how they can be answered etc. Organisational leadership is simply legitimised authority to determine what is legitimate, and strategy is ultimately legitimised action. The problem is that culture constrains strategy to action which is considered to be legitimate. Unfortunately, as the environment in which an organisation operates is not constrained in the way it changes problems can arise when the legitimate responses of an organisation are deficient in light of those external changes. At that point the organisation enters what has elsewhere been described as a stall point. For further discussion please visit my blog through my linkedin profile.  

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