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Organizational Culture and Leadership

 

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"We tend to think we can separate strategy from culture, but we fail to notice that in most organizations strategic thinking is deeply colored by tacit assumptions about who they are and what their mission is."

 

—Ed Schein

MIT Sloan School of Management

 

 

Services - Organizational Culture and Leadership

 

Our whole systems view of organizational performance highlights the interdependence between business strategy and organizational culture. In our culture work, we draw upon our over 25 years of work with the foremost expert in this field, Ed Schein, from the MIT Sloan School.

Oftentimes we are called in to address a strategy issue, but find instead that the problem is really a cultural one. One such example was with a diversified Fortune 150 enterprise in the western states. We had been hired by the company to assist them with strategic planning. Following the lead of the corporate Director of Strategic Planning, we had focused on critical issues that stood in the way of the company’s achievement of their strategic goals. After some four months of developing these critical issues, we were asked to present them to the Executive Committee. In total, there were approximately 23 of these barriers to success. The challenge was how to present these in a way that was intelligible and that could be acted upon. After some reflection and analysis on our part, it occurred to us that most of the issues could be distilled into one root issue – namely, “What kind of a company do you want to be?” This exhibit was to become the cornerstone of our presentation to the Executive Committee.

In the presentation, we explained that many of the critical issues that they were experiencing came down to a choice between two different cultures. On the one hand, was the original entrepreneurial culture of the company, with its emphasis on internal control, creativity, empowerment and individual autonomy. On the other hand was a professional management culture that stressed, among other things, external control, hierarchy, scientific management and top-down decision-making. Now that the company had grown to be a multi-billion dollar establishment there were factions that felt stricter controls were necessary. Representative of this viewpoint was the CFO, who was heard to articulate the message that, “We want to be an entrepreneurial company, but with controls.”

Using the exhibit we had developed, we explained that critical issues were masquerading as visible surface elements of this cultural clash. For example, the questions of structure (should we be centralized or decentralized?), the questions of strategy (should we compete on the basis of cost leadership or differentiation?) and questions of control (how much autonomy should the divisions have?) were all manifestations of the unresolved cultural conflict that was occurring.

To the credit of the executive team, they made a decision to stay with the existing entrepreneurial culture. They realized that their historical success had been based upon this culture and that there was no serious reason to change it. In the ensuing year, they went on to experience the most successful year in the history of this very old company. For some of our other cultural case studies, see Executives Beware -- Your Culture May Be Deadly.