Japan’s post-WWII economic growth through the 1980’s was nothing short of miraculous to the outside observer. Could it be that the nation’s culture was primarily responsible for transforming a small, resource-poor island country into the second largest economy in the world? And do companies, like nations, have distinct cultures? According to Gareth Morgan, in his book Images of Organization, it was the West’s difficulty in competing with Japan during the eighties that sparked a sudden interest among managers and academics to better understand organizational culture and how it might be re-shaped and designed in order to produce spectacular results.
Corporate culture is a critical concept that my clients must understand, especially in the complex globalized world we live in today. Throughout my career as an engineer and executive coach in West Michigan, I have seen first-hand how a corporate culture can either unlock human potential or constrain it.
One of the reasons that company culture is so poorly understood by many leaders is that the concept is quite abstract, so let’s try to gain a clearer understanding of what exactly we’re talking about.
Ravasi and Schultz (2006) state that:
organizational culture is a set of shared mental assumptions that guide interpretation and action in organizations by defining appropriate behavior for various situations.
Put even more succinctly by McKinsey & Company, company culture is: “how we do things around here.”
Here’s a more concrete illustration:
Joe was responsible for developing and rolling out a new product. Despite his best efforts, it was a flop and it cost the company a lot of money.
Here’s how “Company A” interprets and reacts to the event. (Company A’s culture could be characterized as Performance Based.)
Joe’s superiors angrily reprimand him for taking too much risk and not doing enough research before the product was developed. Then he’s fired. His direct reports are assigned to someone within the organization with more experience. People within the organization take note of what happens when someone tries something new and fails to deliver immediate positive results for the company. A PR announcement is soon released to skittish investors and the public that Joe is being replaced by a more senior manager.
Now let’s imagine how Company B, which has an Innovation Based culture, would respond.
A meeting is called with everyone involved in the product development and rollout. They have a discussion about what went wrong, what assumptions were probably false, and what they got right. The superiors commend everyone involved for taking a risk. They decide that Joe will retain his position, but accept additional oversight and reorganize his team. The board is privately alerted that although the product launch failed to deliver the desired revenue, management is confident that it was a risk well worth taking and is but one important step that will bring them closer to success.
Which company has the better culture?
I don’t know.
It depends on what the organization is trying to accomplish.
The appropriate company culture:
1. Assists the company in achieving its vision
2. Encourages effective leadership
3. Aligns with the leaders’ and employees’ deepest values
Every human organization will develop a distinct culture, with or without the consent of the individuals leading it.
Cultures grow, become ingrained in people and in the end tremendously impact how individuals within the organization think, feel, and act. This is why it’s so important to be conscious and intentional about the cultures we cultivate and become effected by. Is your company’s culture complementing or killing your efforts as a leader?