In the business setting, this system is often referred to as the corporate culture. Each organization has its own unique culture. Just as no two individual personalities are the same, no two organizational cultures are identical. Yet, there are some common cultural elements that yield stability and meaning for organizations.
Organizational members need to know the real mission of the organization, not just the pronouncements to key constituencies, such as stockholders. By talking to one another, members will naturally develop an understanding of how they contribute to the mission.
The final issues in external adaptation deal with two important, but often neglected, aspects of coping with external reality. First, individuals need to develop acceptable ways of telling outsiders just how good they really are. Second, individuals must
collectively know when and how to admit defeat.
Through dialogue and interaction, members begin to characterize their world. They may see it as malleable or fixed, filled with opportunities or threats. Real progress toward innovation can only begin when group members believe that they can change important parts of the world around them and that what appears to be a threat is actually an opportunity for change.
Each one of these areas would provide you with different aspects of ‘how we do things around here’ – the essence of organizational culture.
Resolving the issues of internal integration helps individuals develop a shared identity and a collective commitment. It may well lead to longer-term stability and provide a lens for members to use to make sense of their part of the world.
While subcultures are unique, their members’ values do not clash with those of the larger organization. Interestingly, strong subcultures are often found in task forces, teams, and special project groups in organizations. The subculture emerges to bind individuals working intensely together to accomplish a specific task.
Every large organization imports potentially important subcultural groupings when it hires employees from the larger society. In North America, for instance, subcultures and countercultures may naturally form based on ethnic, racial, gender, generational, or locational similarities. In Japanese organizations, subcultures often form based on the date of graduation from a university, gender, or geographic. location. In European firms, ethnicity and language play an important part in developing subcultures, as does gender. In many less developed nations, language, education, religion, or family social status are often grounds for forming popular subcultures and countercultures.
Within an organization mergers and acquisitions may produce adjustment problems. Employers and managers of an acquired firm may hold values and assumptions that are inconsistent with those of the acquiring firm.
Beyond becoming culturally sensitive, difficulties often arise with importing groupings from the larger society. Some of these
groupings are relevant to the organization whereas others may be quite destructive.
Figure 15.1
The figure illustrates the observable aspects of culture, shared values, and underlying assumptions as three layers. The deeper one digs, the more difficult it is to discover the culture but the more important an aspect becomes.
Important parts of an organization’s culture emerge from the collective experience of its members. These emergent aspects of the culture help make it unique and may well provide a competitive advantage for the organization. Some of these aspects may be directly observed in day-to-day practices.
Many consultants suggest that organizations should develop a “dominant and coherent set of shared values.” The term shared in cultural analysis implies that the group is a whole. Not every member may agree with the shared values, but they have all been exposed to them and have often been told they are important.
At the deepest layer of cultural analysis are common cultural assumptions; these are the taken-for-granted truths that collections of corporate members share as a result of their joint experience. It is often extremely difficult to isolate these patterns, but doing so helps explain why culture invades every aspect of organizational life.
Sagas are important because they are used to tell new members the real mission of the organization, how the organization operates, and how individuals can fit into the company.
Rituals are systems of rites. Rituals and rites may be unique to particular groups within the organization. Subcultures often arise from the type of technology deployed by the unit, the specific function being performed, and the specific collection of specialists
in the unit. A unique language may well maintain the boundaries of the subculture. Often, the language of a subculture, and its rituals and rites, emerge from the group as a form of jargon. In some cases, the special language starts to move outside the firm and begins to enter the larger society.
In organizations, what works for one person is often taught to new members as the correct way to think and feel.
Important values are then attributed to these solutions to everyday problems. By linking values and actions, the organization taps into some of the strongest and deepest realms of the individual.
Some successful organizations share some common cultural characteristics. Organizations with “strong cultures” possess a broadly and deeply shared value system.
When it is established over a long period of time, a strong culture can be a double-edged sword. A strong culture and value system can reinforce a singular and sometimes outdated view of the organization and its environment. If dramatic changes are needed, it may be very difficult to change the organization.
Common organizational myths include:
Senior management has no risk bias.
The presumption of administrative competence based organizational self-assessment.
The denial of trade-off places emphasis on singular department goals while neglecting other goals.
Innovation is the means by which creative ideas find their way into everyday practices—ideally practices that contribute to improved customer service or organizational productivity.
Figure 15.3
The innovation process: a case of new product development.
1. Idea creation—to create an idea through spontaneous creativity, ingenuity, and information processing;
2. Initial experimentation—to establish the idea’s potential value and application;
3. Feasibility determination—to identify anticipated costs and benefits;
4. Final application—to produce and market a new product or service, or to implement a new approach to operations.
In practice, the innovation process is not always a straightforward process and can include many stops and starts, blind alleys, and deviations for the main ideas, and development of a completely new set of ideas.
The innovation process is never really over: astute innovators continually listen to customers and clients to make further improvements and adaptations.
A number of studies suggest that the key difficulty associated with product development is the integration across all of the units needed to move from the idea stage to final implementation. Culturally, new product development often challenges existing practice, existing value structures, and common understandings.
One of the most interesting and difficult types of process improvement is that of management innovation. Obviously,
much management innovation comes from the vast industry known as management consulting, Unfortunately, many of the new management practices emanating from these outside units are more fashions and fads than workable solutions to the problems faced by individual firms.
Refining an existing product to make it more saleable in a new market is an example of exploitation.
Although some radical departures are built on existing competencies, often the adoption of a radically
new product or process means that the existing knowledge within a firm is invalidated. Conversely, an emphasis on exploitation stresses control and evolutionary development. Such exploitation can be planned with tight budgets, careful forecasts, and steady implementation. It is often much easier to stress exploitation because most organizations have a structure and culture that emphasize stability and control.
Managers may attempt to solve this tension between exploration and exploitation in a variety of ways. One partial solution is to have separate units for the two types of activities. Others rely on middle managers to reconcile the tensions stemming from attempts to link explorative and exploitative groups. However, the desired mix of explorative and exploitative may well depend on
the industry setting.
The process of managing organizational culture calls for a clear understanding of the organizational subculture at the top and a firm recognition of what can and cannot be changed. The first step in managing an organizational culture is for management to recognize its own subculture.
When the management philosophy stresses security and stability, management reinforces such values as benevolence. Such firms tend to be less innovative than when the management philosophy is more self-directive and reinforces risk taking. When the management philosophy stresses reaching out to others, embracing novel situations, and collectively developing a new path toward new visions of success, there is greater innovation.
One of the key ways management influences the organizational culture is through the reward systems it establishes. In many larger U.S.-based firms the reward system matches the overall strategy of the firm and reinforces the culture emerging from day-today activities.
Early research on culture and cultural change often emphasized direct attempts by senior management to alter the values and assumptions of individuals by resocializing them—that is, trying to change their hearts so that their minds and
actions would follow. The goal was to establish a clear, consistent organization-wide consensus. More recent work suggests that this unified approach of working through values may not be either possible or desirable.
Observable aspects of organizational culture such as rites, rituals, and cultural symbols often have powerful underlying meaning for organizational members. In a way they are symbols of prior successful ways to cope with external adaptation and internal integration. Individuals are often wary of abandoning the successful for an unproven new approach.
If left uncontrolled, rule changing can yield runaway industry change that can quickly lead to chaos. While rule following can lead to a more stable industry structure and/or controlled industry change, there is also a danger of reinforcing cultural lag.