What is corporate culture? And why should you care?

The thought crossed my mind the other day when I saw a presentation from a small consulting firm designed to energise and threaten the assembled managers into buying the services being offered. And the threat part was clear: if you can’t figure out how to make your culture “work”, you’re in big trouble. The implication: that’s why you need us.

The difficulty with presentations like these is that there is no such thing as “one size fits all” when it comes to culture. What works for Facebook will not work for General Electric, despite the fact that GE is at least as much of a technology company as Facebook. But saying that there is more than one way to build a winning culture is not the same as saying that all cultures are effective.

It’s imperative to spend time assessing culture.

With this in mind, here are five points to consider whether you’re an executive struggling with culture, a mid-level manager living under a cultural regime that works well, or doesn’t, or part of the “culture industry” of consultants, professors or executive coaches charged with finding solutions.

Corporate culture is just a phrase that describes how things get done in your organisation. It is a mixture of how people think and act as they go about their work. The old expression that “culture eats strategy for lunch” is more true than not: no matter how great your ideas may be, it is the people in your organisation who will bring them to life. Understanding how people think and work will go a long way toward your success.

It’s imperative to spend time assessing culture whether you’re interviewing for a new job, considering an acquisition of another company, or about to move up to a senior position where managing culture becomes part of your mandate.

There are many types of cultures, and one is not necessarily better than another. One of my favourite — and straightforward — depictions of corporate culture comes from Robert E Quinn and Kim S Cameron at the University of Michigan, the co-authors of Diagnosing and Changing Organizational Culture. 

Quinn and Cameron define four different types of culture.

Cultures can be hierarchical. Many failing organisations that are slow to adapt to change (focused on internal controls) are hierarchical. But so are successful organisations like the US military.

Cultures can be market-oriented, which describes most traditional competitive businesses.

Cultures can be clan-like — internally focused, yet flexible and adaptive — as is commonly the case in family-run enterprises.

And cultures can be “adhocracies”; think Google and a generation of start-ups that are continually adapting to changing circumstances.

Knowing the culture of an organisation is valuable for job seekers looking for fit.

This is not the only way to classify organisational cultures, but it’s a perfectly good way to do so. Knowing the culture of an organisation is valuable for job seekers looking for fit, managers dealing with peers and higher-ups, and senior executives responsible for reinforcing values and beliefs that drive culture and results.

The trend toward a more ad hoc manner of operating, a la Silicon Valley, is definitely picking up steam. The ability to adjust, adapt, and pivot from one potentially winning strategy to another is the hallmark of these companies, and doing so requires a nimble culture. It’s not hard to see why traditional, hierarchical companies find it so difficult to adapt to change. They live with a culture designed to exploit existing business via efficiency, rather than one that encourages experimentation with new opportunities via innovation.

Control, efficiency, and structure are essential ingredients to maximise profitability. Getting there for start-ups intent on making it big is a classic problem of culture: Once you build your creative adhocracy, how do you get the kids to start paying attention to every detail? Having studied business and leadership failures for decades, I can attest to the unfairness of it all! The stuff that accounts for your early success — an ad hoc culture — can be precisely what makes it so hard to leap to the next level that almost always calls for at least some degree of hierarchy and control.

The key to culture is alignment. That means that when people in your organisation have similar preferences when it comes to things like teamwork, compensation, delegation, performance feedback, and a raft of other cultural factors, you can imagine that the organisation will be pushing in the same direction, leading to greater success.

Misalignment inevitably leads to people feeling like they don’t fit in.

Misalignment, on the other hand, inevitably leads to people feeling like they don’t “fit in”, or worse, nothing seems to get done in a timely and effective manner.

Corporate culture can be a company’s strongest asset. But that very strength can slow down a company’s ability to adapt and adjust when the world changes dramatically.

While a strong and aligned corporate culture will help get you to the winner’s circle, when times change (as they always do) it might also account for your eventual downfall.

Sydney Finkelstein is the Steven Roth Professor of Management and Director of The Leadership Center at the Tuck School of Business at Dartmouth College. His new book is Superbosses: How Exceptional Leaders Manage the Flow of Talent (Portfolio/Penguin, 2016). You can learn more at www.superbosses.com.

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