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13Corporate Culture and LeadershipScreen graphics created by: Jana F. Kuzmicki, Ph.D. Troy State University-Florida and Western Region13-1

An organizations capacity to execute its strategy depends on its hard infrastructure its organization structure and systems and on its soft infrastructure its culture and norms. Amar Bhide

Chapter Roadmap Building a Corporate Culture that Promotes Good Strategy Execution

What to Look for in Identifying a Companys Culture Culture: Ally or Obstacle to Strategy Execution? Types of Cultures Creating a Strong Fit Between Strategy and Culture Grounding the Culture in Core Values and Ethics Establishing a Strategy-Culture Fit in Multinational Companies Staying on Top of How Well Things Are Going Pushing Company to Achieve Good Results Keeping Internal Organization Focused on Operating Excellence Exercising Ethics Leadership Making Corrective Adjustments

Leading the Strategy Execution Process




2005 The McGraw-Hill Companies, Inc. All rights reserve

Its core values, beliefs, and business principles

The Defining Characteristics of a Companys Culture

Patterns of how we do things around hereits style of Oft-told stories illustrating companys values Its approach to people management Ethical standards Internal politics Traditions13-5

operating and ingrained behaviors of company personnel

Dedication to customer satisfaction Zealous pursuit of low costs Frugal operating practices Strong work ethic

Features of the Corporate Culture at Wal-Mart

Ritualistic Saturday morning meetings Executive commitment to Visit

stores employees suggestions

Listen to customers Solicit13-6

Deliver exceptional customer service to customers

Features of the Corporate Culture at Nordstroms

Company motto Respond to Unreasonable

Customer Requests Out-of-the-ordinary customer requests

viewed as opportunities for heroic acts Promotions based on outstanding service Salaries based entirely on commission13-7

Features of the Corporate Culture at General Electric Hard-driving, results-oriented atmosphere prevails All

businesses are held to a standard of being #1 or #2 in their industries as well as achieving good business results

Cross-business sharing of ideas, best practices, and learning Reliance on workout sessions to identify, debate, and resolve

burning issues Commitment to Six Sigma Quality Globalization of the company13-8

Long work hours of programmers Emotional peaks and valleys in

Features of the Corporate Culture at Microsoft

encountering and overcoming coding problems Exhilaration of completing a complex program on schedule Satisfaction of working on cutting-edge projects Rewards of being part of a team responsible

for a popular new software program Tradition of competing aggressively13-9

A companys culture is manifested in . . . Values, beliefs, and business principles 13-10

What to Look for in Identifying Corporate Culture

management preaches and practices Official policies and procedures Its revered traditions and oft-repeated stories Attitudes and behaviors of employees Peer pressures that exist to display core values Its politics Approaches to people management and problem solving Its relationships with external stakeholders Chemistry and personality permeating work environment

Where Does Corporate Culture Come From? Founder or early leader Influential individual or work group Policies, vision, or strategies Traditions, supervisory practices,

employee attitudes The peer pressures that exist Organizational politics Relationships with stakeholders Companys approach to people management13-11

How Is a Companys Culture Perpetuated? Selecting new employees who will fit in Systematic indoctrination of new employees Senior management efforts to reinforce core values, beliefs,

principles, key operating practices

Story-telling of company legends Ceremonies honoring employees

who display cultural ideals who follow cultural norms

Visibly rewarding those13-12

Forces and Factors Causing Culture to Evolve New challenges in marketplace Revolutionary technologies Shifting internal conditions

Internal crisis Turnover of top executives

Arrival of a new CEO Diversification into new businesses Expansion into foreign countries Rapid growth involving adding new employees Merger with or acquisition of another company13-13

Culture: Ally or Obstacle to Strategy Execution? A companys culture can contribute to or hinder

successful strategy execution A culture that promotes attitudes and

behaviors that are well-suited to first-rate strategy execution is a valuable ally in the strategy execution process A culture that embraces attitudes and

behaviors which impede good strategy execution is a huge obstacle to be overcome13-14

Why Culture Matters: Benefits of a Tight Culture-Strategy Fit A culture that encourages actions and behaviors supportive ofgood strategy executionProvides employees with clear guidance regarding what behaviors and results constitute good job performance Creates significant peer pressure among coworkers to conform to culturally acceptable norms

A culture imbedded with values and behaviors

that facilitate strategy execution promotes strong employee commitment to the companysVision Performance targets Strategy13-15

Optimal Outcome of a Tight Culture-Strategy Fit A good job of culture-building by managers Promotes can-do attitudes Encourages acceptance of change Instills strong peer pressure

for strategy-supportive behaviors to achieve company

Enlists enthusiasm and dedicated effort


Closely aligning corporate culture with the requirements for proficient strategy execution merits the full attention of senior executives!13-16

The Perils of Strategy-Culture Conflict Conflicts between culturally-approved

behaviors and behaviors needed for good strategy execution send mixed signals Should

employees by loyal to the culture and company traditions and resist actions and behaviors promoting better strategy execution? Or should they support the strategy by engaging in behaviors that run counter to the culture?

When a companys culture is out of sync with what is needed for strategic success, the culture has to be changed as rapidly as can be managed!13-17

Types of Corporate CulturesStrong vs. Weak Cultures Unhealthy Cultures

Adaptive Cultures13-18

Conduct business according to a clear, widely-understood

Characteristics of Strong Culture Companies

philosophy Considerable time spent by management communicating and

reinforcing values Values are widely shared and deeply rooted Have a well-defined corporate character,

reinforced by a creed or values statement Careful screening/selection of new

employees to be sure they will fit in13-19

How Does a Culture Come to Be Strong? Leader who establishes values and behaviors

consistent with Customer needs Competitive conditions Strategic requirements

Values Customers Employees Shareholders

A deep, abiding commitment to espoused

values, beliefs, and business philosophy Practicing what Customers Employees Shareholders13-20

is preached!

Genuine concern for well-being of

Characteristics of Weak Culture Companies Lack of a widely-shared core set of values Few behavioral norms evident in operating practices Few strong traditions No strong sense of company identity Little cohesion among departments Weak employee allegiance to

companys vision and strategy13-21

Characteristics of Unhealthy Cultures Highly politicized internal environment Issues resolved on basis of political


Hostility to change Avoid risks and dont

screw up Experimentation and efforts to alter status quo discouraged Not-invented-here mindset company

personnel discount need to look outside for Best

practices New or better managerial approaches Innovative ideas13-22

Hallmarks of Adaptive Cultures Willingness to accept change and embrace challenge of introducing

new strategies Risk-taking, experimentation, and innovation to satisfy stakeholders Entrepreneurship is encouraged and rewarded Funds provided for new products New ideas openly evaluated Genuine interest in well-being of all key constituencies Proactive approaches to implement workable solutions


Dominant Traits of Adaptive Cultures Any changes in operating practices and behaviors Must

not compromise core values and long-standing business principles satisfy legitimate interests of key stakeholders


Customers Employees Shareholders Suppliers Communities13-24

Creating a Strong Fit Between Strategy and CultureResponsibility of Strategy Maker Select a strategy compatible with the sacred or unchangeable parts of organizations prevailing corporate culture

Responsibility of Strategy Implementer Once strategy is chosen, change whatever facets of the corporate culture hinder effective execution13-25

Fig. 13.1: Changing a Problem Culture


Menu of CultureChanging Actions Make a compelling case why a new cultural atmosphere is in

best interests of both company and employees Challenge status quo Create events where employees

must listen to angry key stakeholders Continuously repeat messages of why

cultural cha