Chapter 9:

ORGANIZATIONAL CULTURE
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Classification of Culture

Definition: Organizational culture

shared values
the beliefs
the legends
the rituals
the past history
the intellectual and
operational traditions
the pride in past
accomplishments

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the policies and

practices
the rules of conduct
the organization's
general philosophy of
operation
artifacts that define an
organization

Classification of Culture
1. Kotter and Heskett
2.Bardwick
3.Denison
4.The No-Rules Culture

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1. Kotter and Heskett

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Focuses on the culture where adapting to

changing business dynamics is essential.
Classify cultures as:

Theory
Theory II Cultures
Cultures
Theory
Theory IIII Cultures
Cultures
Theory
Theory III
III Cultures
Cultures
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Theory I Cultures

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Strong culture.
Firms operating in uninhabited markets where they
have almost monopolistic power can become
inwardly focused, arrogant, and bureaucratic.
These firms characterized as having strong cultures,
giving the impression that strong cultures create
excellent long-term performance.
Exist when most employees across all subunits hold
the dominant values which is institutionalized
which makes it difficult to change.
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Theory I Cultures

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STRONG CULTURES
- managers operate with a consistent set of values and
methods of doing business.
- New employees are expected to adapt.
- Changes in management create no change.
- Managers in essence are clones and a new manager
continues where the last one stopped.
- operate with effective and efficient bureaucracies that do not
tend to diminish motivation or innovation.
- Blinds employees to alternative viewpoints.

Theory II Cultures

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A good-fit culture..
Only beneficial when the patterns of behavior fit the
organizational contextits specific needs.
- the purposes
- the objectives
- the strategies of the organization.
The values must fit the behaviors of the employee.
Good-fit culture maintain an appropriate fit between
culture and context. the same culture might not
appropriate with two different organization.

Theory II Cultures

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Example:
- The cultures of slow-moving industries are quite
different from the cultures of the fast-moving
companies (performing arts vs. IT)
- The culture of an entrepreneurial venture is
different from an established firm.
Conclusion:
- The better the fit, the better the performance; the
poorer the fit, the poorer the performance.

Theory III Cultures

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Adaptive culture..
Suggests that cultures that anticipate and adapt to
environmental change will lead to superior performance.
Characteristics:
- adapt, focus on creativity, promote a proactive approach,
accept risk, and deal with uncertainties.
- receptive to change and innovation, and there is a shared
feeling of confidence and support in identifying problems
and implementing solutions.
3M is an example of a Theory III organizationit tries
consciously to adapt culture to a changing world.

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2. Judith M. Bardwick

Entitlement
Culture

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Earning
Culture

Fear
Culture

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Entitlement Culture

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Characteristics:
Demonstrate high levels of..
- apathy and complacency
- conformity to rules and
procedures
- rule checking
- bureaucracy
- dependence
- risk avoidance.

Demonstrate low levels of

- innovation,
- empowerment
- accountability
- morale
- motivation
- flexibility
- evaluation
- termination.

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Fear Culture

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Characteristics:
- a lack of security and predictability
- an absence of knowledge about just where the organizational unit is
going
- little direction from the top in the form of top-down communication.
- Turf and self-protection, denial, cynicism, and stress are apparent.
- a tendency to overreact and develop a fire-fighting mentality.
- A great deal of time is consumed in correcting mistakes.
- Blame dominates the daily scene.
- The basic philosophy says, "Just do what I tell you to do."
The fear culture resembles the typical command and control culture.

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Earning Culture

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Characteristics:
- high levels of trust, accountability, innovation, leadership,
risk taking, teamwork, and excitement.
- change is typically thoughtful and logical.
- outcome is more important than process.
- the system rewards performance.
- the unit is driven to surpass its objectives.
- constructive mavericks are respected.
- a high level of collegiality (shared power) brings divergent
personalities to focus on objectives.
- proactive
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3. Denial R. Denison

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Considers the relation between culture

and effectiveness.
Suggested four hypothesis:
The involvement hypothesis
The consistency hypothesis
The adaptability hypothesis
The mission hypothesis
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The involvement
hypothesis
The consistency
hypothesis
The adaptability
hypothesis
The mission
hypothesis

suggests that high levels of

involvement and
participation create a sense
of ownership and
commitment.
The ownership generates
greater commitment to the
organization and provides a
means for enhancing
autonomy.

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The involvement
hypothesis
The consistency
hypothesis
The adaptability
hypothesis
The mission
hypothesis

emphasizes the positive

impact of culture on
effectiveness.
argues that the shared
system of beliefs, values,
and symbols i.e. culture
has a positive effect on the
ability of the organization
to reach consensus and
carry out coordinated
actions.
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The involvement
hypothesis
The consistency
hypothesis
The adaptability
hypothesis
The mission
hypothesis

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emphasizes that a culture

usually consists of
behavioral responses that
have proven in the past to
be adaptive to the
organization.
Continuously changing.
focuses on three aspects:

the ability to perceive and

respond to the external
environment
the ability to respond to
internal customers
the capacity to change
behaviors and processes
that allow an organization
to adapt.
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The involvement
hypothesis

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The consistency
hypothesis
The adaptability
hypothesis
The mission
hypothesis

provides purpose and

meaning by defining a
social role for the
organization and the
importance of individual
roles within the
organizational role.
Have a clear sense of
purpose and direction that
defines organizational
goals and strategic
objectives.
A change in mission will
lead to culture change.
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9.1.4 The No-Rules Culture

The information age gave birth to the no-rules culture
primarily associated with the computer industry.
Characteristics:
- high levels of innovation
- dedication in pursuit of goals
- willingness to work around the clock if necessary
- lack of bureaucracy
- little or no formal organization
- much social interaction.

Example- Googleplex
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9.2 Optimizing People

Involvement

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Stressing
the
Importance
of People

Identifying
the
Critical Mass

Working
with a
Lean Staff

Building
Trust

Establishing
and
Maintaining
Integrity

Expecting
Involvement

Promoting
Teamwork

Promoting
Lifelong
Learning

Insisting on
Accountability

Pursuing
Excellence

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1. Stressing the Importance of People

The distribution of any group of people shows different

levels of interest, motivation, aptitude, and performance.

Organization cannot accept below-par performance.

What should we do when a person who was hired because

of specific and desired competencies fail to meet the job
requirements?
- provide staff with the additional education or training to
improve the level of competency.
- either move him to a new position or terminate him.
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9.2 Optimizing People

Involvement

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2. Identifying
Stressing the Critical Mass
Identifying
Working
Building
the
Every activity requires
a critical
mass of Trust
talent.
the
with a
-

Importance
Critical Mass Lean Staff
of
People
having the right mix of people with the

required
competencies, whether available inside or outside of the
Establishing
organization.
Promoting

and
Expecting
Promoting
Lifelongrespect
the
talent has Involvement
the necessaryTeamwork
people skills; having
Maintaining
Learning
forIntegrity
the individual and the ability to communicate
with

other disciplines.
- having the right talent at the appropriate competence and
Insisting on
Pursuing
skill levels. Accountability Excellence
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9.2 Optimizing People

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3. Working
with a Lean Staff
Stressing
Identifying
Working
Lean, competent,
Building
and motivated.
the
the
with a
Trust
Importance
Hiring practices often
fail
to
provide
for
a
lean
organization
Critical Mass Lean Staff
of
People
because managers fail to ask the difficult questions.
Assigning coordinators implies that some group or groups
areEstablishing
not meeting their performance requirements.
Promoting

Expecting
Promoting
- Staff and
services often
become the dumping
ground forLifelong
people who
Maintaining
Involvement
Teamwork
should
undergo training,
counseling,
or be terminated.
Staff services
Learning
canIntegrity
also be the scapegoats for managerial nonperformance.

The responsible-for approach makes assignments for an

activity without sufficient investigation as to whether that
activity is a fulltime
responsibility.
Insisting
on
Pursuing
Accountability

Excellence
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9.2 Optimizing People

Involvement

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4. Building
Trust
Stressing
Identifying
Working
Building and
Trust isthe
essential in any
dealings
between
individuals
the
with a
Trust
Importance
organizations. Trust
continues
to
be
an
essential
part of
Critical Mass Lean Staff
of People
business
operations. Lack of trust breeds suspicion and
suspicion is more contagious than trust.
Establishing
Trust
Promoting
destroyers:
and
Expecting
Promoting
- Allowing
the co-opting
or appropriating
of ideasLifelong
from others
Maintaining
Involvement
Teamwork
Learning
Integrity not keeping promises or commitments
- Managers
- Changing the rules of the game once it has started without
considering the players
Insisting on
Pursuing
- Lack of open communication
Accountability Excellence
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9.2 Optimizing People

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5. Establishing
and Maintaining Integrity
Stressing
Identifying
Working
Building
the
Integrity
the
with a
Importance
Critical
Mass Lean Staffto
involves
adhering
uncompromisingly
of People

Trust

a set of moral
and ethical principles in all relationspersonal and
business.
Establishing
Promoting
and
Expecting
Promoting
- encompasses
the way people interact in any
Lifelong
Maintaining
Involvement
Teamwork
organizational setting. It may take years toLearning
build integrity,
butIntegrity
it can be destroyed by a single incident.
- includes all of the following qualities: honesty, character,
preciseness, credibility, decency, fidelity, frankness, high
Insisting on
Pursuing
principles, loyalty,
reliability, responsibility,
accountability,
Accountability Excellence
and sincerity.
-

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9.2 Optimizing People

Involvement

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6. Expecting
Involvement
Stressing
Identifying
Working
Building
Involvement
the
from all the
managerial with
and asupporting
staff in the
Importance business is not a choice, but an Trust
organization's
expectation.
Critical Mass Lean Staff
People
The of
level
of involvement depends on how managers
manage.
Establishing
One
way to encourage involvement is empowerment.
Promoting
and
Expecting
Promoting
Lifelong
- does
not occurInvolvement
without management
Maintaining
Teamworkinvolvement.
Learning
- Staff
Integrity
should be prepared
- It takes courage to accept responsibility as they may be
scrutinized by colleagues or managers.
Insisting on
Accountability

Pursuing
Excellence
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9.2 Optimizing People

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7. Promoting
Stressing Teamwork
Identifying
Working
Building
the
the
with a
Teamwork
Importancecomes from a culture that hasTrust
Critical Mass Lean Staff
of People high levels of collegiality.
developed
Building
that collegiality begins with managers
Establishing
Promoting
Expectingof Promoting
havingand
full knowledge
Lifelong
Maintaining

Involvement

Teamwork

- theIntegrity
competencies of the team members

Learning

- personal attitudes related to developing working

relationships.
Insisting on
Accountability

Pursuing
Excellence
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9.2 Optimizing People

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8. Promoting
Lifelong Learning
Stressing
Identifying
Working
Building
Lifelongthe
learning is athe
requirement.
with a
Trust
Importance
The increasing complexity
Critical Mass
Lean Staff
of societal
interactions demands
of People
more intellectual effort.
About
50% of the learning that any professional possesses
Establishing
Promoting
at the time
will decrease
in value
unless
and of graduation
Expecting
Promoting
Lifelong
updated
continually.
Maintaining
Involvement
Teamwork
Learning
Integrity
- The fundamentals remain the same, but the new application
knowledge requires new learning.

Lifelong learning involves high degrees of curiosity.

Insisting on
Pursuing
Disregarding lifelong
learning
can
be disastrous.
Accountability Excellence
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9. Insisting on Accountability
Stressing

Identifying
Accountability
implies
obligation toWorking
do something.Building
the
with
a all the participants
Innovation
Trust
depends onthe
accountability
from
for
Importance
Critical
Mass
their of
contribution
to
the final
effort.Lean Staff
People
Failure is part of the innovation process.
There
is a distinct difference between failure that occurs as a
Establishing
Promoting
result ofand
experimental
activities and
failure due to
negligence.
Expecting
Promoting
Lifelong
Negligence
Maintaining
Teamwork
cannotInvolvement
be accepted. Failure
from trying
the new will
Learning
always
exist, and lessons can be learned from those failures.
Integrity
Innovators are accountable for those failures and they accept
responsibility.
Accountability is aInsisting
two-wayon
street:Pursuing
- Innovators are accountable
Accountability
Excellence
and their
managers are accountable for
the actions of the innovators.
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10. Pursuing
Excellence
Stressing
Identifying
Working
Excellence
Building
done with
the involves doing the best that can be
the
with
a
Trust
available
knowledge and resources.
Importance
Critical Mass Lean Staff
of
People
Perfection considers some ultimate state that can no longer
be improved with the available knowledge and resources.
Establishing
Excellence,
which implies outstanding quality
or superior
Promoting
and
Expecting
Promoting
merit, is
not difficult
to define, but
it must be described
Lifelong in
Involvement
theMaintaining
context in which
it is being Teamwork
used.
Learning
Integrity
Emphasizing the pursuit of excellence applies to daily work,
even the details.
Insisting on
Accountability

Pursuing
Excellence
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9.3 Guiding Management Practices

To develop a culture that fosters
innovation.

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Defining Purposes, Objectives, and Strategies

Communicating and Communicating More
Providing Leadership
Establishing Operational Discipline
Focusing on Outcomes
Seeking Breakthrough Opportunities
Taking Acceptable Risks
Introducing Change
Making Timely Decisions
Disregarding the Management Gurus
Starting to Think About Systems
Anticipating Future Events
Making Time for Innovation

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9.3.1 Defining Purposes, Objectives,

and Strategies

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3 simple wordspurposes, objectives, and strategiesbut

they are so difficult to develop and communicate.
What may appear to be clear and concise at the executive
level needs to be translated into meaningful terms as it flows
down through the organization.
Management needs to answer these questions:
- Why does this organization exist?
- What are the short- and long-term objectives of the organization?
- What are the objectives of the many organizational units to achieve that
corporate objective?
- Finally, what is the organization's strategy to achieve its objectives and
meet the purposes for which it exists?
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9.3.2 Communicating and

Communicating More

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Lack of adequate communication is the precursor to

project and organizational contentiousness.
The organization's purposes, objectives, and
strategies must be communicated effectively.
Communication is a two-way street.
Most project failures begin with a lack of two-way
communication.

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9.3.3 Providing Leadership

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Society generally views leadership as taking place at the top

of the organization.
But leadership is not about where one sits in the
organizational hierarchy.
People display leadership throughout the organization, at all
levels, and in all disciplines.
Leadership is about doing; it is not about being in charge or
winning a popularity contest.
Leadership is about making the difficult decisions that impact
not only the lives of the organization's constituents but also
society.
Not every manager or every professional is able to provide
leadership, but there must be a sufficient number of leaders
at all levels.
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9.3.4 Establishing Operational

Discipline

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It is important to set guidelines, set appropriate rules of

conduct, insist on meeting commitments, and adopt a "no
excuses" approach to meeting those commitments.
Three other issues relate to operational discipline:
- Lack of understanding of how objectives are achieved
- Removal of the word "think" from the organization's vocabulary
- Disregard for just what it takes to accomplish some specific objective

Too many projects begin without sufficient thought given to

the required up-front work. Target dates are important but
resources must be available.

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9.3.5 Focusing on Outcomes

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The theory is that if you follow the prescribed process with its
fixed methodologies you will be successful.
But not every problem or opportunity can be resolved with the
same process. Process tools must be applicable to the
problem.
Focusing solely on outcomes can be equally dangerous if the
effort only considers short-term impact.
Example:
- reducing investment in innovation can provide immediate
financial benefits but have a negative impact on the flow of
new products. Cutting back on investments in
manufacturing equipment will provide short-term benefits
but lead to future problems.
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9.3.6 Seeking Breakthrough

Opportunities

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Organizations need to direct attention to breakthrough

improvements and/or opportunities in performance.
Breakthroughs are normally associated with products and
processes.
- The breakthrough products provide significant growth opportunities.
- Breakthrough processes can destroy competitors.

Breakthroughs obviously involve greater risks and resolution

of greater uncertainties but also provide significantly greater
benefits.
Administrative breakthroughs are involve simplifying routine
jobs that consume resources.
- not quite as glamorous as the new products or processes, but they can
provide significant savings.
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9.3.7 Taking Acceptable Risks

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Focusing on innovation involves taking risks.

There is no guarantee that the product will be timely
or that it will fully meet the customers' requirements.
The person with industry knowledge can minimizes
the risk.
- has a sense of the industry's history
- knows the related technologies
- familiar with the market requirements
- has developed a client list of industry leaders can easily
appraise the viability of going in new directions.
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9.3.8 Introducing Change

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Change obviously creates levels of discomfort.

- bringing in a new CEO or making some lower level management
changes.
- to introduce new technologies, enter new markets, consolidate
operations, make organizational changes
- introduce minor changes in administrative procedures.

Change is absolutely essential for survival.

- Society would not give up the automobile, the airplane, the highway
system, and the infrastructures that allow society to function. Society
accepts these changes in lifestyle. They provide higher levels of
comfort.

Innovation will not take place when those who resist change
dominate an organization's direction.

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9.3.9 Making Timely Decisions

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Managers who delay decisions create levels of

frustration that decrease motivation.
Also create a form of chaos that flows through many
functions.
Delays in any function -product development,
manufacturing, marketing, accounting can result in
losing significant market revenue.
The decisions made by the professionals or their
entities most likely will be required by others in the
workflow chain and must be accommodated.
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9.3.10 Disregarding the Management

Gurus

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Management gurus have their place, but too many

have taken organizations down the wrong track.
Focusing solely on a single issue even if that issue
is innovation will not guarantee business success.
Executives should not need consultants to tell them
that they have problems.

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9.3.11 Starting to Think About Systems

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The systems approach

- is the process-oriented discipline of problem solving. It includes the
integration of people, products, processes, and procedures in order to
translate user needs into design requirements and then into an
operational system that includes the complete life cycle.

Activities allocated to functions cannot be accomplished

independently or irrespective of the needs of associated
disciplines.
This lack of coordination of the functional activities leads to a
situation where priorities often lack consistency.
- How can a product development group not take into account the need
for new manufacturing facilities until the product is developed?
- How can that same development group disregard the needs of the
marketplace?
- How can executive management tolerate this lack of integration
between functions and disciplines?
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9.3.12 Anticipating Future Events

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The future relates to issues affecting their business, their

technologies, their markets, their resources, and the
technologies that they use to optimize their output.
The statement made many years ago that the "future
belongs to those who prepare for it" was not an idle
statement.
Whether an organization is able to anticipate the future
depends on the people they have hired over the years.
The professional people in all disciplines cannot
disregard the importance of future needs and directions.

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9.3.13 Making Time for Innovation

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Innovation must be on the organizational priority list.

It means making time available for thinking, and
thinking is hard work.
Time can be found for innovation by examining work
methods and eliminating the non-value-adding
activities.
Tools to improve effectiveness and efficiency:
- Telephones, cell phones, voice mail, all kinds of beepers,
laptops, e-mail, the Web, all types of computer-aided
programs and a multitude of software programs

All improve opportunities for saving time when used

wisely.
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9.4 Encouraging Professional

Attitudes

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The attitude with which we approach an activity

makes a significant difference in the outcome.
Attitude affects performance.
organization cannot progress and meets its
purposes without taking initiatives to develop
positives attitudes.
Negativism is not an acceptable behavior in
fostering innovation culture.

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9.4

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9.4.1 Creating a Sense of Excitement

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A sense of excitement about work can easily be identified.

Walk into a laboratory, a product development group, or any
organizational setting and the sense of excitement becomes
immediately apparent.
Excitement is contagious and enthusiasm can be contagious,
although it is true that not every person can become excited
about their work or remain in a constant state of intellectual
challenge.
A real sense of excitement can make the difference in the
organization's future, even though there are many routine
tasks to be accomplished that seldom generate excitement.
Innovation needs access to that sense of excitement
access to those units that demonstrate high-spirited
intellectual curiosity and that are willing to put their jobs on
the line.
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9.4.2 Fostering Creativity

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Creativity involves more than instituting a companywide suggestion program and hoping that some
great revelation will come out of that box.
Creativity goes beyond generating suggestions and
ideas.
Creativity requires action. Innovation dies without
creativity.
Although everyone has the opportunity to be
creative in some venue, not all will take up the task.
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9.4.3 Taking Initiative

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Characteristics of an Initiator:
- courage, prefer to look for problems than to be assigned
problems, and possess significant levels of security.
- know where they want to go and they go there quickly.
- workaholics dedicated to the organization.

The organization needs to reward the initiators in

both tangible and emotional ways, similar to the
primarily emotional rewards they receive outside the
organizationfrom family, friends, and colleagues.
Innovators take the initiative and do not ask for the
next project. They are the next project.
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9.4.4 Providing Flexibility

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Conforming to patterns of behavior provides security but

destroys initiative. It is time to change.
Conformity in thinking can devastate an organization. If
flexibility in thought and action provides benefits, then the
question becomes, how much flexibility should the
organization provide?.
Flexibility and conformity must be balancedenough to raise
the critical and controversial issues but not so much that it
hampers meeting the objectives.
Flexibility needs to be dispensed to those who can manage it.

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9.4.5 Motivating Through Example

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Motivation through action begins at the top of the

organization and at least at the first levels of
management.
It will be exceedingly difficult to motivate a group if
the immediate manager seems to lack interest and
approaches the unit's work in a relaxing manner.
Managers need to recognize that motivation
depends on them, they need to show high levels of
motivation through their actions.

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9.4.6 Giving Freedom to Act

Innovation
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Manageme
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WBB1020

Giving freedom to act provides a real challenge to

many managers.
Innovators need freedom to act. Without some fairly
high level of freedom, not much innovation will
occur.
Freedom must be guided by some operational
discipline. There are some expectations that must be
met.

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9.4.7 Acting with Confidence

Innovation
nt
Manageme
2
WBB1020

A person who speaks and acts with confidence immediately

gains credibility.
An individual who lacks confidence and attempts to gain
management backing to promote a concept will find it difficult
to obtain that backing.
Management usually relies on the display of confidence. That
confidence must be grounded in knowledge and facts. If you
know your topic, it is easy to demonstrate confidence.
Innovators must know their topic.

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9.4.8 Promoting on Performance

Innovation
nt
Manageme
2
WBB1020

Giving a one or two percent increase as merit pay for

exceptional performance is not merit pay: It's bringing
everyone down to the lowest common denominator.
Merit pay must include at least a minimum increase of 5
percent (not a magic number100 percent could be more
appropriate in certain circumstances) over and above the
annual increase.
Managers should be given the authority to decide how
available funds should be distributed within their group.
The innovator's criterion for success may not be money, but
money needs to be there.

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9.4.9 Defining Job Security

Innovation
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Manageme
2
WBB1020

Job security is what you have in your head - your

knowledge, your many skills, your integrative skills.
You own them and no one can take them away from
you.
All the learning that has taken place resides with the
individual.
At the professional level, job security depends on
performance.

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9.4.10 Reducing Dependence on the

Organization

Innovation
nt
Manageme
2
WBB1020

Society continues to expect more and more from industry and

government.
People have become dependent on the organization for
services.
Professionals began to hold industry responsible for their
professional development.
Justified if new knowledge was required because of some
actions taken by the organization, but not when the courses
served a strictly personal benefit.

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9.4.11 Managing Inadequate

Performance

Innovation
nt
Manageme
2
WBB1020

Accepting inadequate levels of performance tends to erode a

culture.
The difficulties occur when too many managers lack the
knowledge and courage to evaluate performance against
objectives.
A culture that tolerates inadequate performance not only
begins to destroy motivation but too often destroys careers.
Positive performance appraisal is easy.
Negative appraisals become difficult and require honesty and
integrity from both the reviewer and the person being
reviewed.
Innovation depends on excellent performance by many
people of different disciplines, and managers cannot avoid
their responsibility of making the difficult decisions.
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Innovation
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Manageme
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WBB1020

Thank you

59