lOMoARcPSD| 49551302
have Sikorsky building the helicopters and Lockheed Martin providing the vast array
of specialized systems that each one uses. Although the two companies have
previously competed to build presidential helicopters, they joined together to be
more competitive against rivals such as Boeing, Bell Helicopters, and Finmeccanica
SpA’s Agusta Westland.45 Joint ventures are on the rise as companies strive to keep
pace with rapid technological change and compete in the global economy. 2 Remember This
• When external factors change rapidly, the organization uncover hidden patterns and correlations so managers
experiences high uncertainty. can make better decisions.
• Strategic issues are events and forces that alter an •
Interorganizational partnerships reduce
organization’s ability to achieve its goals. As environ-
boundaries and increase collaboration with other
mental turbulence increases, strategic issues emerge organizations. more frequently.
• A merger occurs when two or more organizations
• Boundary spanning links to and coordinates the combine to become one. organization with key elements in the external •
A joint venture is a strategic alliance or program by two environment. or more organizations.
• Big data analytics uses powerful computer technology •
Sikorsky Aircraft and Lockheed Martin teamed
up to to search and examine massive, complex sets of data to
bid on a new contract for Marine One helicopters.
The Internal Environment: Corporate Culture
The internal environment within which managers work includes corporate culture,
production technology, organization structure, and physical facilities. Of these,
corporate culture surfaces as being extremely important to competitive advantage.
The internal culture must fit the needs of the external environment and company
strategy. When this fit occurs, highly committed employees create a high-
performance organization that is tough to beat.46
Most people don’t think about culture; it’s just “how we do things around here”
or “the way things are here.” However, managers have to think about culture.
Culture guides how people within the organization interact with one another and
how the organization interacts with the external environment, thus playing a
significant role in organizational success. Organizational culture has been defined
and studied in many and varied ways. For the purposes of this chapter, we define
culture as the set of key values, beliefs, understandings, and norms shared by
members of an organization.47 The concept of culture helps managers understand
the hidden, complex aspects of organizational life. Culture is a pattern of shared
values and assumptions about how things are done within the organization. This
pattern is learned by members as they cope with external and internal problems and
taught to new members as the correct way to perceive, think, and feel.
Although strong corporate cultures are important, they can also sometimes promote negative
values and behaviors. When the actions of top leaders are unethical, for instance, the entire culture
can become contaminated. Consider what happened at News Corporation, a corporate giant with a lOMoARcPSD| 49551302
lucrative string of media properties all over the world. HOT Rupert Murdoch, chairman and CEO,
has been accused of frequently applying unethi- TOPIC cal, sometimes seedy tactics in his business
dealings. In addition, Murdoch has allegedly exhibit 3.6 Levels of Corporate Culture Complete the “Small Group Breakout” on page 102 that deals with identifying cultural norms.
used “blunt force” spending to silence critics with multimillion dollar payoffs.
“Bury your mistakes,” Murdoch was fond of saying.48 But he couldn’t bury the
scandal that rocked the organization after journalists working for News Corporation
newspapers allegedly hacked private voice-mail messages and offered bribes to
police in the pursuit of hot scoops. As reported in The New York Times, journalists
went so far as to hack the voice mail of a murdered 13-year-old girl, Milly Dowler,
while she was still listed as missing.49 As this example illustrates, the values and
behaviors of top leaders have the potential to shape significantly the decisions made
by employees throughout the organization. Mark Lewis, the lawyer for the family of
the murdered girl, pointed out: “This is not just about one individual, but about the
culture of an organization.”50
Culture can be analyzed at two levels, as illustrated in Exhibit 3.6.51 At the surface
level are visible artifacts, which include things such as manner of dress, patterns of
behavior, physical symbols, organizational ceremonies, and office layout. Visible
artifacts are all the things one can see, hear, and observe by watching members of
the organization. At a deeper, less obvious level are values and beliefs, which are
not observable but can be discerned from how people explain and justify what they
do. Members of the organization hold some values at a conscious level. These values
can be interpreted from the stories, language, and symbols that organization
members use to represent them.
Some values become so deeply embedded in a culture that members are no
longer consciously aware of them. These basic, underlying assumptions and beliefs
are the essence of culture and subconsciously guide behavior and decisions. In some
organizations, a basic assumption might be that people are essentially lazy and will
shirk their duties whenever possible; thus, employees are closely supervised and
given little freedom, and colleagues are frequently suspicious of one another. More
enlightened organizations operate on the basic assumption that people want to do
a good job; in these organizations, employees are given more freedom and lOMoARcPSD| 49551302
responsibility and colleagues trust one another and work cooperatively. At Menlo
Innovations, for example, which is part of the trend toward bossless organizations
that we discussed in Chapter 2, the culture promotes trust and collaboration. This
chapter’s “Manager’s Shoptalk” further describes the bossless trend.
Innovative
Richard Sheridan, James Goebel, Robert Simms, and Thomas Meloche founded Menlo
Innovations to create custom software for organizations, but one of their primary goals was Way to create a unique
culture that embraces the values of equality, teamwork, trust, learning, Menlo Innovations and fun. Menlo infuses
happiness into the often lonely grueling work of software development by making it communal.
At many software companies, developers work alone and are driven to meet rigorous
performance goals, but at Menlo, col aboration is valued above anything else. Everyone works in
a large, open room with no barriers of any kind to limit communication and information sharing.
Employees work in pairs, sharing a single computer and passing the mouse back and forth as
they brainstorm ideas and troubleshoot problems. The pairs stay together for a week and then
al switch around to new partners. The variety of partners and tasks helps keep energy high as
wel as brings fresh perspectives to ever-evolving projects.
Curiosity, wil ingness to learn, and the ability to “play wel with others” are the qualities
Menlo wants in its employees. To keep the culture strong, Menlo uses a weird approach to
interviewing job candidates. People who apply for jobs are divided into pairs and assigned three
exercises, then evaluated on how effective they are at making the other applicant look good. It’s
tough for some people to handle—trying to make sure a competitor looks good enough to get
the job you want. However, at Menlo, if you can’t do that, you won’t fit the culture—and fitting
the culture is essential. Anyone who says, “I’m right, so let’s do it this way” won’t last long.52
At Menlo, the goal for each person is not to get the right answer, make the right
connection, be the smartest, or know the most, but rather to bring out the best in
one’s partner. The cultural values encourage and support everyone feeling that they
are pulling together. An organization’s fundamental values are demonstrated
through symbols, stories, heroes, slogans, and ceremonies. SYMBOLS
A symbol is an object, act, or event that conveys meaning to others. Symbols can be
considered a rich, nonverbal language that vibrantly conveys the organization’s
important values concerning how people relate to one another and interact with
the environment.53 At Menlo Innovations, the open workplace is a physical symbol.
Mindy Grossman, CEO of HSN Inc., found that sometimes even mundane things can
be highly symbolic. When she became CEO, Grossman found a business that was
fundamentally broken and employees who were beaten down and uninspired. To
fix it, she needed to change the culture. She used physical symbols to give people
hope and motivation. One day, Grossman brought in Dumpsters to headquarters
and told people to start throwing away all the broken-down furniture and clutter.
Then, she had the buildings pressure-washed and painted and bought everyone a
new Herman Miller Aeron chair.54 For employees, these acts symbolized a new
company value of caring for employees. lOMoARcPSD| 49551302 STORIES
A story is a narrative based on true events that is repeated frequently and shared
among organizational employees. Stories paint pictures that help symbolize the
firm’s vision and values and help employees personalize and absorb them.55 A
frequently told story at UPS concerns an employee who, without authorization,
ordered an extra Boeing 737 to ensure timely delivery of a load of Christmas
packages that had been left behind in the holiday rush. As the story goes, rather
than punishing the worker, UPS rewarded his initiative. By telling this story, UPS
workers communicate that the company stands behind its commitment to worker
autonomy and customer service.56 MANAGER’S Shoptalk The Bossless Workplace HEROES
2001, became one of Inc. 500’s fastest-growing privately
he organizational hierarchy with formal bosses worked
held firms in the United States. Menlo’s bossless hiring
well in the past. Then a few leaders began to realize
process is called “extreme interviewing,” and it bears a
that all the bosses were actually slowing down T
striking resemblance to speed-dating. Applicants— p
roductivity and stifling employee creativ-
sometimes as many as five for each open position—are
ity, thus prompting experiments with the “bossless”
brought into the offices for a series of rapid-fire workplace.
interviews with a range of current employees. The
What are the key success factors of a bossless company?
emphasis is on “kindergarten skills”: geniality, curiosity,
• Reduce hierarchies starting from the top down. Dov
generosity. Technical proficiency is less important than a
Seidman, head of LRN (formerly Legal Research Network),
candidate’s “ability to make [his or her] partner look
stood in front of 300 employees and ripped up the
good.” (Sample interview question: “What is the most
organization chart, proclaiming that “none of us would
challenging bug that you helped someone else fix?”)
report to a boss anymore.” Seidman says, “This has to
• Expect bumps in the road with a flat organizational
start at the top of any organization.” Everyone now
structure. Retaining highly motivated workers is vital to
reports to the company’s mission rather than to other
making a boss-free system work. Most employees take
people. The only control is shared values. Twenty teams
anywhere from six months to a year to adapt, and some
from around the globe spent six months imagining what a
leave for more traditional settings. “It’s absolutely less
self-governing LRN would look like. Employee councils
efficient upfront” says Terri Kelly, chief executive of W. L.
handle recruiting, performance management, resource
Gore, the maker of Gore-Tex and other materials. “[But]
allocation, and conflict resolution. People can take as
once you have the organization behind it…the buy in and
much vacation as they like, so long as it doesn’t interfere
execution happens quickly.” One study found that teams with their work.
of factory workers learned to “encourage and support
• Develop a bossless environment that “fits” the each
organization. 37signals, a Chicago software firm, got its
other....They collectively perform the role of a good
start in 1999 and appointed a manager in 2013. Jason manager.”
Zimdars, the reluctant manager appointee, said that he
Sources: Matthew Shaer, “The Boss Stops Here,” New York Magazine (June
would rather write code and make things. Disdain for
24–July 1, 2013): 26–34; Rachel Emma Silverman, “Who’s the Boss? There Isn’t
management is true at many newer companies with One,” The Wall Street Journal Online, June 19, 2012,
young employees who need to be creative. “We want
http://online.wsj.com/article/SB
people who are doing the work, not managing the work,”
10001424052702303379204577474953586383604.html (accessed September
said Zimdars. Employees are free to overrule the new
26, 2013); John Southerst, “First We Dump the Bosses,” Canadian Business (April
1992): 46–51; Rachel Emma Silverman, “Some Tech Firms Ask: Who Needs
boss if they feel strongly about green-lighting a creative
Managers?” The Wall Street Journal Online, August 6, 2013, http://online.wsj.com project.
/article/SB10001424127887323420604578652051466314748.html (accessed
August 6, 2013); Dov Seidman, “Letting the Mission Govern a Company,” The
• Recruit and hire employees who can adapt to a bossless
New York Times, June 23, 2012, http://www.nytimes.com/2012/06/24/jobs/a -
culture. Menlo Innovations, founded in
company-lrn-adopts-col aborative-management.html (accessed June 23, 2012). lOMoARcPSD| 49551302
Around the offices of Tradesy, the high-fashion consignment
e-commerce site that blossomed
into a $10 mil ion business in just
about three years, employees like
to tell the story of how Tracy
DiNunzio started her business.
Desperate for start-up capital, she
sold many of her belongings, but
when she stil didn’t have enough to pay the web developers she was working with, Tracy
started renting out her bedroom through the hotel-alternative
Web site Airbnb while she slept
on her own couch. The story is
important to Tradesy because it demonstrates the passion and
commitment that is part of the corporate culture .
A hero is a figure who exemplifies the deeds, character, and attributes of a strong
culture. Heroes are role models for employees to follow. Heroes with strong legacies
may continue to influence a culture even after they are gone. Many people have
wondered if the culture that Steve Jobs created at Apple would be sustained after
his death in 2011. Jobs to employees. For example, Disney uses the slogan “The
happiest place on earth.” The Ritz-Carlton adopted the slogan, “Ladies and
gentlemen taking care of ladies and gentlemen” to demonstrate its cultural
commitment to take care of both employees and customers. “We’re in the service
business, and service comes only from people. Our promise is to take care of them,
and provide a happy place for them to work,” said general manager Mark DeCocinis,
who manages the Portman Hotel in Shanghai, recipient of the “Best Employer in
Asia” award for three consecutive years.59 Cultural values can also be discerned in
written public statements, such as corporate mission statements or other formal
statements that express the core values of the organization. At DreamHost, a Web-
hosting company where the culture reflects a serious commitment to democracy,
the CEO (who was elected by employees), asked a team of workers to draft a mission
statement and constitution to guide how the company makes decisions.60 CEREMONIES
A ceremony is a planned activity at a special event that is conducted for the benefit of
an audience. Managers hold ceremonies to provide dramatic examples of company
values. Ceremonies are special occasions that reinforce valued accomplishments,
create a bond among people by allowing them to share an important event, and
anoint and celebrate heroes.61 In a ceremony to mark its 20th anniversary,
Southwest Airlines rolled out a specialty plane called the “Lone Star One,” which had
the Texas state flag painted on it to signify the company’s start in Texas. Later, when lOMoARcPSD| 49551302
the National Basketball Association (NBA) chose Southwest Airlines as the league’s
official airline, Southwest launched another specialty plane, the “Slam Dunk One,”
colored blue and orange with a large basketball painted on the nose of the plane.
Today, ten specialty planes celebrate significant milestones in Southwest’s history
and demonstrate key cultural values.62 Remember This
• A hero is a figure who exemplifies the deeds,
character, and attributes of a strong culture.
• Organizational culture is the set of key values,
• Steve Jobs is a hero at Apple, representing the
beliefs, understandings, and norms shared by
creativity, risk taking, and striving for excellence that members of an organization.
define the company’s culture.
• A symbol is an object, act, or event that conveys
• A slogan, such as Disney’s “The happiest place on meaning to others.
Earth,” succinctly expresses a key corporate value.
• A story is a narrative based on true events and is
• Managers hold ceremonies, planned activities at
repeated frequently and shared among
special events, to reinforce company values. organizational employees. Types of Culture
A big influence on internal corporate culture is the external environment. Cultures
can vary widely across organizations; however, organizations within the same
industry often reveal similar cultural characteristics because they are operating in
similar environments.63 The internal culture should embody what it takes to succeed
in the environment. If the external environment requires extraordinary customer
service, the culture should encourage good service; if it calls for careful technical
decision making, cultural values should reinforce managerial decision making. lOMoARcPSD| 49551302
In considering what cultural values are important for the organization, managers
consider the external environment, as well as the company’s strategy and goals.
Studies suggest that the right fit between culture, strategy, and the environment is
associated with four categories or types of culture, as illustrated in Exhibit 3.7. These
categories are based on two dimensions: (1) the extent to which the external
environment requires flexibility or stability, and (2) the extent to which a company’s
strategic focus is internal or external. The four categories associated with these
differences are adaptability, achievement, involvement, and consistency.64 exhibit 3.7
Needs of the Environment Four Types of Corporate Achievement Involvement Culture
SOURCES: Based on D. R. Denison and A. K. Mishra, “Toward a Theory of Organizational Culture and Effectiveness,”
Organization Science 6, no. 2 (March–April 1995): 204–223; R. Hooijberg and F. Petrock, “On Cultural Change: Using the
Competing Values Framework to Help Leaders Execute a Transformational Strategy,” Human Resource Management 32, no.
1 (1993): 29–50; and R. E. Quinn, Beyond Rational Management: Mastering the Paradoxes and Competing Demands of High
Performance (San Francisco: Jossey-Bass, 1988). ADAPTABILITY CULTURE
The adaptability culture emerges in an environment that requires fast response and
highrisk decision making. Managers encourage values that support the company’s
ability to rapidly detect, interpret, and translate signals from the environment into
new behaviors. Employees have the autonomy to make decisions and act freely to
meet new needs, and responsiveness to customers is highly valued. Managers also
actively create change by encouraging and rewarding creativity, experimentation,
and risk taking. When he was 20 years old, Aaron Levie co-founded Box, a company
that provides online file storage for businesses, based on the values of an adaptability culture.
Innovative
Aaron Levie, the young CEO of Box, based in Los Altos, California, is constantly reminding
people that they can do things “10 times bigger, 10 times better, and 10 times faster,” a core Way value he
cal s “10X.” Other core values at Box are “Get s--- done” and “Take risks. Fail fast.” Box
Levie says his main goals are “to innovate and to disrupt.” He adds, “Also, I want to
avoid being disrupted.” Those goals are reflected in the company’s culture, which lOMoARcPSD| 49551302
emphasizes speed, flexibility, and pushing the boundaries. Taking risks is essential
for the company to remain competitive, but failing fast means that people can correct
mistakes quickly. For a company of 600 people competing with companies that have tens
of thousands, speed is crucial. The culture is focused on how much people can get done
in as little time as possible. The bar is set very high, and the culture values solving as a
team any problem that comes along. No one at Box has a private office, including
Levie, and the open floor plan lets people interact and col aborate continual y. The
44 rooms that could be offices serve as conference rooms instead, where people
brainstorm and hash out ideas. The glass wal s are meant to be written on. People are
encouraged to “throw their ideas on the wal .” Many of the conference rooms are named after Internet icons.
The fast pace and aggressive goals can mean high pressure, but Box also encourages
fun. “We have one of the world’s best jugglers and one of the country’s best baton
twirlers,” Levie says. “Circus skil s are a pretty important quality around here.”65
The fun, fast, risk-taking culture at Box has helped the company adapt in a
turbulent industry and grow quickly, more than doubling its sales every year since it
was founded in 2005. Many technology and Internet-based companies, like Box, use
the adaptability type of culture, as do many companies in the marketing, electronics,
and cosmetics industries because they must move quickly to respond to rapid changes in the environment. ACHIEVEMENT CULTURE
The achievement culture is suited to organizations concerned with serving specific
customers in the external environment, but without the intense need for flexibility
and rapid change. This results-oriented culture values competitiveness,
aggressiveness, personal initiative, cost cutting, and willingness to work long and
hard to achieve results. An emphasis on winning and achieving specific ambitious
goals is the glue that holds the organization together.66 Both Oracle and EMC have
been criticized for having aggressive, take-no-prisoners cultures, but leaders at the
companies make no apologies. Jack Mollen, executive vice president for human
resources at EMC, says “Some people might feel it’s aggressive, but our people want
to be put in jobs where they can work hard, take risks, and get recognized.” As for
the critics, he adds, “I ask the search firms to name the three hardest companies to
recruit [management talent] from, and they say ‘Intel, Oracle, and EMC.’ ”67 INVOLVEMENT CULTURE
The involvement culture emphasizes an internal focus on the participation of employees to adapt rapidly to changing
needs from the environment. This culture places a high value on meeting the needs of employees, and the
organization may be characterized by a caring, familylike atmosphere. Managers emphasize values such as
cooperation, consideration of both employees and customers, and avoiding status differences. Four Seasons
Hotels and Resorts, for example, has been named one of the “100 Best Companies to Work For” by Fortune
magazine every year since the survey’s inception in 1998. With 86 luxury properties in 35 countries, Four Seasons
managers have built a corporate culture that values employees above all other assets. Every location has a
committee made up of people from all departments that meets with the general manager each month to discuss
workplace concerns. The relentless commitment to employees has sustained Four Seasons during an economic
recession that battered many companies in the hospitality industry. Four Seasons clarified its corporate vision to
include both being a first-choice ranking among guests and being the best employer.68 lOMoARcPSD| 49551302 Would you rather CONSISTENCY CULTURE work in an organization
The final category of culture, the consistency culture, uses an internal focus and a with an adaptability,
consistency orientation for a stable environment. Following the rules and being achievement,
thrifty are valued, and the culture supports and rewards a methodical, rational, involvement, or
and orderly way of doing things. In today’s fast-changing world, few companies consistency culture?
operate in a stable environment, and most managers are shifting toward Complete the “new
cultures that are more flexible and in tune with changes in the environment.
However, Pacific Edge Software (now part of Serena Software), successfully Manager Self-test”
implemented elements of a consistency culture to ensure that all its projects to get an idea of
stayed on time and under budget. The husband-and-wife team of Lisa Hjorten what type of culture
and Scott Fuller implanted a culture of order, discipline, and control from the you would be most
moment they founded the company. The emphasis on order and focus meant comfortable working in.
that employees could generally go home by 6 p.m. rather than working all night
to finish an important project. Although sometimes being careful means being slow,
Pacific Edge managed to keep pace with the demands of the external environment.69
Each of these four categories of culture can be successful. In addition,
organizations usually have values that fall into more than one category. The relative
emphasis on various cultural values depends on the needs of the environment and
the organization’s focus. Managers are responsible for instilling the cultural values the organization needs to be
successful in its environment. • The adaptability culture is characterized by values
that support the company’s ability to interpret and
translate signals from the environment into new behavior responses. Remember This
• An achievement culture is a results-oriented culture
• For an organization to be effective, corporate culture
that values competitiveness, personal initiative, and
should be aligned with organizational strategy and achievement.
the needs of the external environment. •
• A culture that places high value on meeting the
Organizations within the same industry often
needs of employees and values cooperation and
reveal similar cultural characteristics because they
equality is an involvement culture.
are operating in similar environments.
• A consistency culture values and rewards a
methodical, rational, orderly way of doing things. Shaping Corporate Culture for Innovative Response lOMoARcPSD| 49551302 Culture Preference
The fit between a new manager and Each question
organizational culture can determine success and satisfaction. To p
ertains to one of the four types of culture in
understand your culture preference, rank the items here from 1
Exhibit 3.7. To compute your preference for each
to 8 based on the strength of your preference (1 = strongest). type of culture, add together the scores for each set of two questions as follows:
1 . The organization is very personal, much like an extended family.
Involvement culture — total for questions 1, 5: _____
2 . The organization is dynamic and changing, where people Adaptability culture — total for questions 2, 6: _____ take risks.
Achievement culture — total for questions 3, 7: _____
3. The organization is achievement-oriented, with the focus
on competition and getting jobs done.
Consistency culture — total for questions 4, 8: _____
4 . The organization is stable and structured, with clarity and A lower score means a stronger culture preference. You established procedures.
will likely be more comfortable and more effective as a
new manager in a corporate culture that is compatible
5. Management style is characterized by teamwork and
with your personal preferences. A higher score means participation.
that the culture would not fit your expectations, and
you would have to change your style and preference to 6.
Management style is characterized by innovation and risk be comfortable. Review the text discussion of the four taking.
culture types. Do your cultural preference scores seem 7.
correct to you? Can you think of companies that fit
Management style is characterized by high performance demands and achievement. your culture preference?
8 . Management style is characterized by security and
Source: Adapted from Kim S. Cameron and Robert D. Quinn, D iagnosing and predictability.
Changing Organizational Culture ( Reading, MA: Addison-Wesley, 1999).
Research conducted by a Stanford University professor indicates that the one factor
that increases a company’s value the most is people and how they are treated.70 In
addition, many top leaders cite organizational culture as their most important
mechanism for attracting, motivating, and retaining talented employees, a
capability considered the single best predictor of overall organizational excellence.71
In a survey of Canada’s top 500 companies, 82 percent of leaders said that culture
has a strong impact on their company’s performance.72 Consider how an
“employees first” corporate culture drives stellar financial performance at
Southwest Airlines. Profitable every year since 1972, and touting the lowest ratio of
complaints per passengers in the industry, Southwest offers industry-leading salaries and
benefits, intense career development programs, and a commitment to diversity
among its workforce. In addition, Southwest promotes a strong collaborative culture
and fosters a good relationship with organized labor.73 At Southwest, a positive
culture that reflects an intense commitment to employees results in a competitive advantage. lOMoARcPSD| 49551302
Corporate culture plays a key role in creating an organizational climate that
enables learning and innovative responses to threats from the external
environment, challenging new opportunities, or organizational crises. However,
managers realize that they can’t focus all their effort on values; they also need a
commitment to solid business performance.
MANAGING THE HIGH-PERFORMANCE CULTURE
Companies that succeed in a turbulent world are those in which managers are
evaluated and rewarded for paying careful attention to both cultural values and
business performance. Exhibit 3.8 illustrates four organizational outcomes based on
the relative attention that managers pay to cultural values and business results.74
For example, a company in Quadrant C pays little attention to either values or
business results and is unlikely to survive for long. Managers in Quadrant D
organizations are highly focused on creating a strong cohesive culture, but they
don’t tie organizational values directly to goals and desired business results.
When cultural values aren’t connected to business performance, they aren’t
likely to benefit the organization during hard times. The corporate culture at the
LEGO Group, with headquarters in Billund, Denmark, nearly doomed the toymaker
in the 1990s when sales plummeted as children turned from traditional toys to video
games. At that time, LEGO reflected the characteristics found in Quadrant D of
Exhibit 3.8. Imagination and creativity, not business performance, were what guided
the company. The attitude among Attention to Values
SOURCES: Adapted from Jeff Rosenthal and Mary Ann Masarech, “High-Performance Cultures: How Values Can Drive
Business Results,” Journal of Organizational Excellence (Spring 2003): 3–18; and Dave Ulrich, Steve Kerr, and Ron
Ashkenas, Figure 11-2, GE Leadership Decision Matrix, The GE Work-Out: How to Implement GE’s Revolutionary Method
for Busting Bureaucracy and Attacking Organizational Problems—Fast! (New York: McGraw-Hil , 2002), p. 230. lOMoARcPSD| 49551302
Johnson & Johnson, makers of a
wide range of consumer, health, and prescription products, is
considered a high-performance workplace. the company has a
rich heritage of shared corporate values, and employees are focused on winning by serving
their customers. the corporate
culture encourages employees to
work in teams, think like owners, and remain open to action and change.
at Zynga, the Web’s largest social games company, is damaging the
organization. Zynga, founded in July 2007 and led until recently by CEO Mark Pincus,
met ambitious revenue and profitability goals (which is rare among Internet start-
ups), but the relentless focus on financial performance took a heavy toll. Teams for
each game, like FarmVille and CityVille, work under aggressive deadlines and are
continuously challenged to meet lofty goals. Managers emphasize performance
reports, relentlessly aggregating data, and using the data to demote or fire weak
employees. Little attention is paid to cultural values that bind people into a unified
whole. Employees began voicing their frustration, complaining about long hours and
aggressive deadlines. Former employees describe emotionally charged encounters,
including loud outbursts from Pincus, threats from top managers, and moments
when colleagues broke down in tears. The company’s success likely cannot be
sustained without an increased focus on building a more positive culture. Many
valued employees have been lured away by competitors in an industry where talent is scarce.76
Finally, companies in Quadrant B put high emphasis on both culture and solid
business performance as drivers of organizational success. Managers in these
organizations align values with the company’s day-to-day operations—hiring
practices, performance management, budgeting, criteria for promotions and
rewards, and so forth. Consider the approach that GE took to accountability and
performance management. When he was CEO, Jack Welch helped GE become one
of the world’s most successful and admired companies. He achieved this by creating
a culture in which risk was rewarded and accountability and measurable goals were
keys to individual success and company profitability.77 The company’s traditional
approach had achieved stellar financial results, but managers motivated people to
perform primarily through control, intimidation, and reliance on a small circle of
staff. Welch was interested in more than just financial results—he wanted managers
to exhibit the following cultural values in addition to “making their numbers”:78 ●
Have a passion for excellence and hate bureaucracy lOMoARcPSD| 49551302 ●
Be open to ideas from anywhere ●
“Live” quality, and drive cost and speed for competitive advantage
“Leaders often treat culture
business performance. Quadrant D organizations represent the
high-performance culture, a culture that (1) is based on a solid
as a happy accident—
organizational mission or purpose, (2) embodies shared
something that develops
adaptive values that guide decisions and business practices, and
(3) encourages individual employee ownership of both bottom- organically, driven by
line results and the organization’s cultural backbone.79 personalities. What a
One of the most important things that managers do is create
and influence organizational culture to meet strategic goals
mistake. Culture is a critical
because culture has a significant impact on performance. In
Corporate Culture and Performance, John Kotter and James
building block of success.”
Heskett provided evidence that companies that intentionally
—hiroShi MikitAni, founDEr AnD CEo of rAkutEn
managed cultural values outperformed similar companies that
Welch knew that for the company to
did not. Recent research validates that elements of corporate
succeed in a rapidly changing world,
culture are positively correlated with higher financial
managers needed to pay careful performance.80
attention to both cultural values and CULTURAL LEADERSHIP
A primary way in which managers shape cultural norms and values to build a
highperformance culture is through cultural leadership. Managers must
overcommunicate to ensure that employees understand the new culture values, and
they signal these values in actions as well as words.
A cultural leader defines and uses signals and symbols to influence corporate
culture. The leader clarifies what the new culture should be and crafts a story that
inspires people to change. A cultural leader is the “chief marketing officer” for the
desired cultural values.81 Cultural leaders influence culture in two key areas:
1. The cultural leader articulates a vision for the organizational culture that
employees can believe in. The leader defines and communicates central values
that employees believe in and will rally around. Values are tied to a clear and
compelling mission, or core purpose.
2. The cultural leader heeds the day-to-day activities that reinforce the cultural
vision. The leader makes sure that work procedures and reward systems match
and reinforce the values. Actions speak louder than words, so cultural leaders “walk their talk.”82
When the culture needs to change, cultural leaders make sure that people
understand that the old way of doing things is no longer acceptable. For example,
when he was corporate ombudsman at KeySpan Corporation (now part of National
Grid), Kenny Moore held a “funeral” for everyone to say goodbye to the company
as it once was.83 Then, managers widely communicate the new cultural values
through both words and actions. Values statements that aren’t reinforced by
management behavior are meaningless, or even harmful, for employees and the
organization. Whole Foods founder and CEO John Mackey wants his managers to
place more value on creating “a better person, company, and world” than on
pursuing personal financial gain. To demonstrate his commitment to this belief, he
asked the board of directors to donate all his future stock options to the company’s
two foundations, the Animal Compassion Foundation and the Whole Planet Foundation.84 lOMoARcPSD| 49551302
Cultural leaders also uphold their commitment to values during difficult times or
crises. Upholding the cultural values helps organizations weather a crisis and come
out stronger on the other side. Creating and maintaining a high-performance culture
is not easy in today’s turbulent environment and changing workplace, but through
their words— and particularly their actions—cultural leaders let everyone in the
organization know what really counts. lOMoAR cPSD| 49551302 • • • • Copyright 2016 Cengage
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