October 4, 2011

Corporate Culture
Getting it Right
Naomi Stanford
2011 by Naomi Stanford Adapted by permission of John Wiley & Sons, Inc. ISBN: 978-0-470-93219-3

Introduction
In Corporate Culture, Naomi Stanford shows how a companys culture can make or break the organization and that getting the culture right is a fundamental part of a successful business strategy. She beings by tracing the history of the concept of corporate culture to the 1980s when two books, In Search of Excellence by Tom Peters and Robert Waterman and Corporate Cultures by Terrance Deal and Allen Kennedy, were published. These books led to an awakening of business interest in organization culture. Management theorists began taking an interest in the concept and over the years have developed a body of theory and research that seeks to explain the role of culture in organizations. drawn from a synthesis of all three: 1. The integration perspective suggests that an organization has a single culture that is clearly identifiable and potentially measurable, and that employees are committed to supporting it (or at least going along with it). 2. The differentiation perspective sees organizations as complex, many-faceted sets of sub-cultures within one overarching culture, interacting to manage their diverse and often competing interests and objectives. 3. The fragmentation perspective emphasizes ambiguities of interpretation, irony, paradox, and irreconcilable contradictions that cross-cut, undermine, and confuse any organization-wide or sub-culture claims of consensus or clarity.

What is Corporate Culture?

The author presents three perspectives on corporate culture, making the point that each perspective is incomplete and a view of corporate culture must be

Business Book Summaries October 4, 2011 Copyright 2011 EBSCO Publishing Inc. All Rights Reserved

Corporate Culture

Naomi Stanford

Stanford believes there is no value in taking a reductionist approach to defining corporate culture. It is not a phenomenon that can be reduced to a meaningful short label or a single agreed-upon definition. Corporate culture is an organizationally specific experience felt both subjectively and individually by insiders and outsiders. An organizations culture is not a thing where a label suffices to describe it, nor is it a set of discrete elements that can be easily manipulated either separately or together. Across an organization, there is an overarching look and feel that is expressed differently but relatively predictably within business units. On a day-to-day basis, employees respond to whatever comes up within appropriate and culturally acceptable norms. It is helpful to think of corporate culture as analogous to climate and weather climate reflecting the more predictable pattern, applicable to the larger entity, and weather being chaotic and unpredictable. People living within a specific climate zone become familiar with the characteristic weather patterns and respond to the day-to-day variations in weather. An organizations culture is experienced in a similar way, and like the climate and weather, is simultaneously shaping and is shaped by the context. Over time it can and does change whether by design or by default. In the same way that people are conscious of the climate and the weather, they are conscious of corporate culture and make choices in relation to it. Thinking about corporate culture as analogous to climate, sub-climate, and weather helps explain why changing the culture is complex. The author recommends these three approaches to defining corporate culture: 1. Be clear about what the company stands for, what its strategy is, and the way it practices its corporate values as events unfold. 2. Be culturally relevant in each market, adapting to local customs and traditions as appropriate. 3. Stay alert and respond to changes in the external culture.

Key Concepts
Corporate culture is like both climate and weather climate reflecting the more predictable pattern of what is expected, and weather being the chaotic and unpredictable things that happen day to day. Measuring an organizations culture involves not only qualitative and quantitative approaches but also factoring in the interests of competing cultures, subcultures, individuals, and groups. There are as many external factors influencing corporate culture as there are internal ones. Culture matters because it is an intangible asset that is distinctive to that organization and which either adds or diminishes value. The choices made in relation to operating the business model and the consequences of these choices influence and are influenced by the organization culture. Everyone in the organization is responsible for the culture, has an ownership stake in it, and is accountable to it. The right organizational culture is one where people feel they are doing meaningful work and can make sense of it in their scheme of things. Learning how to fit in and succeed in a corporate culture takes a carefully planned approach, a respect for the norms and protocols of the new organization, and the skills and attributes required to establish and build trust with the existing members of the organization.
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Information about the author and subject: www.naomistanford.com Information about this book and other business titles: www.wiley.com Related summaries in the BBS Library: Built on Values Ann Rhoades

Can Culture Be Measured?

Managers who are unable to describe their organizations culture yet are convinced that they need to change or manage it often turn to quantitative orga-

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Corporate Culture

Naomi Stanford

nizational surveys to help them decide what to do, in the belief that what gets measured gets managed. There are three ways of trying to measure the culture of an organization: 1. Quantitatively using surveys 2. Qualitatively using interviews or focus groups 3. A combination of the two the preferred method

financial assets and tangible assets. They are less clear about the intangible assets such as management skills, brand image, customer loyalty, and so on. Most would agree that the competitive position and potential of their enterprise rests on how well the three types of corporate assets financial, tangible, and intangible are managed and deployed Although cultural characteristics vary, these ten are common to most organizations:

There is no comprehensive checklist of elements to look for Despite theories, perspectives, definitions, labels and inventowhen trying to size up an organizations culture, and measuring ries that claim to measure it, culture is largely an unknown the culture may or may not help quantity. in the drive to change or manage the culture. Unless there is a clearly expressed, 1. A story or stories act to reinforce (or deny) a comwell-understood, and good reason for attempting panys vision, values, and ways of doing business to measure the organizations culture, it is pointless 2. A purpose and a set of values intended to be instruto even consider undertaking this complex process, mental in providing the guidance that shapes the and the reason must always relate to business stratconduct of the company egy and have an external perspective. Circumstances where this kind of cultural measurement may be 3. A strategy summarizes the desired future for the useful include: organization Merger or alliance opportunity Issues related to new business strategy Opportunities related to growing the business Issues related to a competitor challenge 4. An attitude toward people in the workforce 5. A global mindset needed to get a harmonious interface between the national cultures and the organizational culture 6. A relationship network concerned with identity, aspiration, structures, and practices that serve relational ends such as ethnicity, heritage, norms, and beliefs 7. A digital presence an expression of the culture and operation of the organization on its own Web sites and on social networking sites 8. A reputation crucial in building and sustaining culture 9. A customer proposition the point where national cultures and organizational cultures meet 10. A horizon scanning ability predicting or preparing for the future

Does Culture Matter?

The immediate answer to this question is Yes, of course. Intuitively people know that culture matters but they have difficulty explaining why it does. All organizations have assets, and most managers have no difficulty understanding that these include both

About the Author

Naomi Stanford has spent more than 20 years in the field of organizational design and culture change, working for leading companies and consulting firms in the United States and Britain. She is the author of Organisation Design: the Collaborative Approach and The Economist Guide to Organisation Design.

These characteristics are present in different combinations and different strengths and are interdependent. All organizations that care about their culture and are truly focused on success will pay attention to these
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Corporate Culture

Naomi Stanford

tion. Whatever the positive attributes of the culture, if the business model is flawed, success will prove elusive. Conversely, if the culture is good, a flawed business plan is much less likely to exist. Taking a systems approach that involves knowing the business model, making informed choices about the elements of it, and determining how it should be operated are good beginnings for understanding where and how the culture is or can be connected to business success. Even with this knowledge, there are some intervening factors that can act to disrupt any connection, mainly deriving from the external Treating organization culture as a management tool that can environment. Developing a busibe quickly deployed to improve business performance will not ness model and an aligned culture that have the attitude and aptiguarantee a successful outcome. tude for adaptation to changing circumstances will reinforce the Is Culture Related to Business Success? connection between culture and business success. Connecting business success and culture seems to Culture: Creation, Accountability make intuitive sense, and many people believe that and Responsibility the connection is strong. However research suggests Leaders can and do set the cultures tone and groundthat the link is not that easy to make. The choices and work they create the culture. Edgar Schein of MIT decisions on what specifically constitutes business Sloan School of Management believes that the only success must be organizationally determined, and thing of real importance that leaders do is to create how such choices and decisions are made depends and manage culture. Accountability for the culture on complex interactions among all the elements of an defining or reinforcing the norms and expectations organization in its operating environment. A business is primarily the role of the CEO with the support strategy that measures success in more dimensions of other champions. Leadership entails painting a than simply quarterly profit improvements and recvision of where the organization wants to go, estabognizes the value of cultural assets in contributing lishing priorities for getting there, building the right to business performance suggests an ability to keep team, aligning the organization, and holding people the organization aligned, adaptive, and healthy. Busiaccountable for results. It also requires an ability to ness success is more than meeting quarterly earnings communicate effectively so that everyone is on the targets. The ability to think about and act on a broad same page. In addition, effective leaders create culrange of success factors rather than just quarterly tures where mistakes are acceptable. There should be earnings is an intangible cultural asset. a single point of accountability a person whose job If the assumption is made that business success is the is to define, model, and nurture the culture through result of successful execution of a good strategy that various rewards and sanctions and make clear to is measured by more than financial results, the conmembers of the organization what the cultural expecnections between culture and business success may tations are. There should also be specialists (human become clearer. This is because this shifts the focus resources staff, organization development consulfrom strategy formulation to strategy execution, and tants, chief culture officers) who are responsible for culture is all about execution how well the characstewarding, supporting, and directing the culture. teristics comprising the culture are used, and are able These designated stewards are constantly nudging to facilitate value delivery. and reinforcing an organizations culture. The business model is the terrain of the organizaAll members of the organization should understand
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ten characteristics. In different organizations, and even in different parts of an organization, these attributes may look and feel different, and cluster and interact in different ways. Each has a part to play but they cannot be treated independently; they are all contributory parts of the culture and operation of the organizational system. Because the culture is dynamic and continuously forming, adapting and reconfiguring in response to conditions and mediating factors, it is impossible to quantify a level of significance for a named characteristic.

Corporate Culture

Naomi Stanford

that everyone is responsible for the culture, has an ownership stake in it, and is accountable to it. Owning the culture is part of every employees role. Everyone can and should take responsibility to fit in, meet cultural expectations, and develop the culture. Simply by virtue of working together, each in their own way and in line with their background and experiences, people have an impact on the culture and it has an impact on them. Collectively, they are the de facto owners of it. How much they feel a sense of ownership or a pride of ownership depends on a number of factors. Generally, where people feel encouraged or able to take responsibility for the culture there is a greater sense of ownership. This is one of the hallmarks of a healthy culture.

of society as a whole. Individuals experience culture in very different ways, however. What is right for one person may be wrong for another. Given that corporate cultures should enable and encourage good and meaningful work it is nave to assume that this can be accomplished only in a specific type of culture or that one type of culture is right for all organizations. Managers often discuss corporate culture in terms of polarities, with collaborative perceived to be the right type and controlling the wrong type. They also tend to talk about changing their corporate culture from something to something else. One danger of such polarized thinking is that it does not allow for the great likelihood that there are multiple and sometimes competitive organization sub-cultures. It is normal for the overarching cultural statement to be reflected differently in different parts of the organization.

Accountability and responsibility are not the same thing. Accountability means an employees obligation to report progress, at the request of a third party, on agreements and expectations. Responsibility means owning, or Characteristics that matter greatly in one part of an organizafeeling a sense of ownership of, tion are reflected at different strengths in different parts of the tasks and situations for which a person is accountable. Thus organization, but it should all stay recognizable as the same someone takes responsibility and culture. An analogy is an apple pie: it can be made with more is held accountable. In most orga- or less sugar, with added spice, with brown or white flour, but nizations, the requirement to take it is still an apple pie. responsibility for the role they play is an implied part of every Labels attached to cultures, such as collaborative employees contract with the organization. However, or entrepreneurial are shorthand for the predomithe extent to which people feel or are able to exercise nant and recognizable characteristics of that type of that ownership varies from organization to organizaculture. Stanford asserts that these labels can serve tion. only as high-level descriptors. Cultures are not purely one culture but rather exhibit characteristics of sevWhat Is the Right Organization Culture? eral, partly because there are numerous sub-cultures, The right culture is one where people share systems each with its own characteristics. As a result, they are of meaning and are encouraged to do high-quality, both/and as in both open and secretive, both engaging work within an ethical framework, and one collaborative and competitive, both innovative and where there are stated and demonstrated purposes risk-averse depending on circumstances. beyond making money. Such a culture should also value and respect an individuals contribution and allow for growth and development. Research and experience suggest that most workers aspire to do good work, defined as work that is of high quality, socially responsible, and meaningful to the worker. This notion of good work brings into play the idea that the right corporate culture is one that supports the well-being of those who work for it and Cultural clashes are an inevitable part of corporate life and resolving them can be difficult. They can be the result of mergers and acquisitions, generational conflicts, national differences, or strategic or leadership change. One way of handling these constructively is to develop cultural fluency in the workforce. Cultural fluency is the appropriate application of respect, empathy, flexibility, patience, interest, curiosity, openPage 5

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Corporate Culture

Naomi Stanford

ness, the willingness to suspend judgment, tolerance for ambiguity, and a sense of humor. Cultural fluency can be developed by taking the following six steps: 1. Appreciate the differences that culture can make. 2. Develop awareness of how cultural differences influence ways of seeing the world. 3. Provide forums for education about different cultures. 4. Be flexible with other parties in problem-solving, negotiations, or culture clash resolution efforts.

the wider society in which it operates. Some changes that corporations have had to grapple with over the past decade are flexible information technologies, various historical and political events, demographic changes, the 2008 financial crisis and recession, and increasing discussion about climate change. In these circumstances aiming to create, change, or protect the culture is challenging and takes time. If responded to with foresight, sensitivity, and skill the result can be an extraordinarily beneficial cultural transformation.

The term creating a culture is appropriately used in relation to only two situations: a newly created com5. Recognize possible cultural differences that might pany and the merger of two or more companies with result in a clash. the aim of creating a genuinely new entity as opposed to subsuming one into the other. Even in a start-up, 6. Be willing to adapt. the attributes, preferences, and experiences of the founder(s) and People have different perspectives on what taking responsifirst employees, together with the bility for the culture is in practice. Getting a good balance business model and the underlybetween fitting in and rocking the boat is both an individual ing business strategy, already exist and an organizational trade-off. and play a part in the development of a distinctive culture.

Can Culture be Created, Changed, or Protected?

An organization both is and has a culture. Culture is highly mutable, flexible, and open to shaping from many directions at once in its changing environments. It is a result of constructions continuously debated and contested among its independent members. Organizational culture is not an entity or a thing independent from the business strategy, or something that can be manipulated by pulling levers. Organizations with a clearly articulated strategy that engage and energize employees by appealing to their higher ideals and values and rallying them around a set of meaningful, unified goals, have the platform for developing the shared systems of meaning and experience that create the culture. Rather than introduce culture creation or change initiatives it is better to look at what the business model and strategy are, the way work is done, and the supporting infrastructures, and use these to change the culture over time. An organizations culture, like a societys culture, changes continuously regardless of any formal or informal transformation efforts. It is always responding to changes in the organizations markets and in

In the area of mergers and acquisitions, trying to consolidate two organizations that have no shared history, systems of meaning, experiences, working patterns or values is like trying to consolidate two nation states into one. The due diligence associated with mergers and acquisitions should include discussions of the cultural fit, compatibility, and value that each culture brings. The author suggests these nine strategies that can help achieve a smooth merger: Consider and assess cultural compatibility. 1. Think through how employees are likely to react to the merger news. 2. Plan for challenges in helping people work together in new ways. 3. Develop a flexible and comprehensive integration plan. 4. Share information and encourage communication. 5. Encourage employee participation and involvement. 6. Enhance commitment to the new entity. 7. Manage the transition.
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Corporate Culture

Naomi Stanford

8. Be sensitive to individual and timing considerations.

Any decision to try to make a planned change to an organizations culture should derive from a perceived and communicable shortfall in business performance or change in business strategy. Because planned culture change is a slow and often To function effectively within an organization, all those who painful process, it should not be undertaken without a compelling belong to it have to learn the culture and adapt their learnbusiness reason. ing as it changes. This is not surprising as culture develops

tise. People will not be accepted into the organization unless they can both meet performance objectives and fit in socially. People new to a role have to learn it from four different angles: industry, organization, job content, and group processes. Each is equally important in achieving success.

When questions about protecting through the interaction of people making sense of their world. an organizations culture arise, To help mitigate the risks associated with integratthey typically relate to perceived threats to a culture ing new employees, most large organizations have an that works. This usually occurs when one company induction or orientation process that usually provides buys another, or when an organizations heritage or such information as organization charts, statements traditional cultural strengths are undermined, perof values, and explanations or particular processes. haps as a result of actions taken in response to market Many organizations fall short in providing informachanges and threats. tion on less tangible aspects, such as assumptions Can Culture be Learned? about the role, the best style to use for getting quick results, and the organizational norms and expectaStaying in tune with the corporate culture is a contions in a word, the culture. This tacit knowledge tinuous process of learning and adaptation for all of is difficult for newcomers to grasp without the help an organizations members. To learn the culture well of insiders who point them in the right direction enough to fit in and succeed, individuals have to demand explain what is expected. People cannot learn onstrate certain attributes. The most important are: the culture by themselves; they are reliant on the a commitment to develop links with others; help of others both in and outside the organization. strong motivation and the appropriate skills to They have to show that they have learned it within an learn what is needed; acceptable time frame, and they have to pay the price of membership. The price of membership refers to astute situational awareness and responsiveness; the cost to the new joiner of being culturally assimi the possession of values that match those of the lated. It is usually a high-profile make-or-break event, organization or are adaptable to them; and often related to the completion and presentation of an ability to align personal knowledge, experia first task or project that has to be quickly and sucence, values, and sense of importance with the cessfully achieved. It marks the point of crossing the organizations values, goals and plans. boundary from being an outsider to being an insider. Recognizing the signs of successful acceptance means Culture can be learned if these attributes are in place. reading social and cultural signs accurately. The clues It is essential for newcomers to be adept at reading are often subtle, although in some organizations there and adjusting to the culture. If they cannot do this, is a formal rite of passage. they will be shunned or expelled from the organization. Learning how to fit in and succeed in a corporate culture is not easy. However, it can be done with a There are certain attributes a newcomer needs to have carefully planned approach, a respect for the norms and demonstrate on entering a new culture. These and protocols of the new organization, and the skills relate to aspects of fitting in socially and getting on in and attributes required to establish and build trust terms of achieving performance objectives. They are with the existing members of the organization related more to personality than to technical experBusiness Book Summaries October 4, 2011 Copyright 2011 EBSCO Publishing Inc. All Rights Reserved Page 7

Corporate Culture
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Notes and references Index

Features of the Book

Reading Time: 6.5 Hours, 245 pages Corporate Culture is written for organizational leaders and human resource professionals who would like to build an effective corporate culture linked to their business strategy, as well as those who want to understand a particular organizational culture. It provides accessible information on culture and explains the complexities of managing corporate cultures, and was written for those who need practical, realistic and pragmatic approaches that will help them understand and work with the elusive concept of culture. The book contains many case histories and real life examples from companies such as IKEA, McDonalds, Ford, Toyota, Disney, and others. Each chapter ends with a list of recap points, a detailed case history, a review of lessons learned from that case history, and a chapter summary. Readers are referred to exercises (in Appendix 3) designed to strengthen their understanding of the concepts put forward in each chapter.

Contents
Acknowledgements Preface 1. What is corporate culture? 2. Can culture be measured? 3. Does culture matter? 4. Is culture related to business success? 5. Culture: creation, accountability, and responsibility 6. What is the right organization culture? 7. Can culture be created, changed, or protected? 8. Can culture be learned? Appendices Glossary Cultural Assessment Tools Useful exercises

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Corporate Culture

Naomi Stanford

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