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Home » Leadership

Corporate Culture’s million dollar question

Submitted by on Tuesday, 10 March 20093 Comments

‘If you take a chance based on the best information available and you get it right, you get a small reward.

‘If you take a chance based on the best information you have and you get it wrong, you get a medium-sized punishment. ‘If you take no chance, and just go along with the boss or go along with the majority, you get a small reward. So what would you do?’

So asks Jim Kerr, GE’s ex-Chief Learning Officer. What would you do? This is what I call corporate culture’s million dollar question. Million dollars, because that is how much it is undoubtedly costing companies every time it is tacitly asked by the people working for them.

‘In such a system,’ he concludes, ‘you end up with tremendously risk-averse behaviors. The leaders, lacking self-awareness, don’t realize they’ve caused this, and they complain about their “gutless colleagues” who take no chances. But the culture flows from the rewards and punishments in place.’

The question is taken from a book called How, which if you have the opportunity, is well worth the read. Dov Seidman tackles a number of topics which really cut to the heart of organisational leadership, and corporate culture is one of them.

Corporate culture is one of those things which we know exists yet are not quite sure how we can affect it. It has a huge effect on determining whether talent stays and flourishes in that organisation, whether it is given the opportunity to grow; or whether it is stifled and forced to leave.

Yet time and time again I see insufficient attention given to this phenomenon, and you can see its effects in everything from multinational companies, sports clubs, societies, governments, and even the UN.

There are many ways of characterising culture, but I think Dov Seidman does a great job so I would like to share his insights into culture with you here.

While his is a conceptual model, without any empirical research behind it, I feel it’s perceptive enough to be worth summarising and elaborating on.

Seidman characterises culture in four dimensions: anarchy, blind obedience, informed acquiescence, and self-governance, the latter being the desired state.

1. Anarchy.

Anarchy doesn’t just happen in ‘failed states’, but in any organisation where there is no following of any shared concept or set of rules. In How he describes a factory visit where there is no respect for rules, safety, or even human life. In this culture self-interest reigns, and it’s each for his own. Another way of seeing this culture is through its inherent lawlessness.

Examples of anarchistic cultures include: Certain modern-day Wall Street firms, 1920s Hollywood production companies, failed states

2. Blind Obedience.

Here people act not because of any shared vision, but through deference to the boss. Blind obedience is the culture that many Asian enterprises find themselves in, but also, some firms in Wall Street (the recent shenanigans in some of the finance companies could be classed somewhere between anarchy and blind obedience). Blind obedience cultures are usually hierarchical ones.

 “Where gold speaks every tongue is silent.”

Italian Proverb

Examples of blind obedience cultures include: Modern-day Zimbabwe and Burma, Enron (though with tinges of 1), ‘Godfather’ type companies, especially in the Asia-Pacific region (note there is a difference in what the rules are in these different organisations)

3. Informed acquiescence.

These are ‘rule-based’ cultures – though ones in which the participants are not invited to question those rules. Increasingly we find this the norm among companies that implement Six Sigma processes yet in so doing, unwittingly encourage the participants to leave their heads behind. ‘Top-down’ organisations usually operate through the means of informed acquiesecence. This is a leadership by megaphone, ‘Head Office says’ type of culture. They try to minimise the variables of individual behaviour and reduce operations to a box-filling routine. People share information, but in a controlled way.

Examples of informed acquiescence cultures include: 90s Sony, most ‘Big Oil’ companies and other multinationals, the present Bush administration (though with tinges of 2).

4. Self-governance cultures.

howbookOne word stands out in these cultures: TRUST. People living in this cultural dimension seem to look out for each others as humans. They are guided by a set of inner values that goes beyond self-interest (1) and external rules & processes (2 & 3). They act through belief – not because they are told to or are simply serving their own self-interest. Because trust permeates these cultures, individuals have a higher amount of freedom and empowerment.

Examples of Self-governance cultures include: US Airlines such as Southwest and Jetblue which encourage a high-degree of individual autonomy, in turn translating into a greater customer experience; Virgin Atlantic (notice how companies in industries seem to follow each other!); GE Durham and teams such as the Brazil football side in their pomp.

Jim Kerr’s question revisited

Steve Kerr’s question needs to be asked more constantly by CEOs and leaders from all organisations. Some see their job as being done when strategy is executed or targets met. But these are short term phenomena.

Jim Collins, who studied a vast number of American organisations in Built to Last and Good to Great, introduces the difference between two types of senior leadership: those that build the clock, and those who tell the time. Most performance management systems are skewed to the latter, but Collins focuses on companies that build their cultures over time, resulting in organisations that become truly great (examples he gives are companies such as 3M and Hewlett Packard). Perhaps this one of the defining characteristic of higher trust organisations: their time-frame is different, so there is greater tolerance for mistakes.

Risk-averse organisations may feel they are gaining in the short-term (by minimising mistakes). But it’s likely that they are losing in the longer term, as a culture of toadyism and, at best, informed acquiescence prevails. This is what happened to Sony when they lost the whole Walkman market space to Apple, or to NASA as their space programme went badly off course with calamitous consequences. Both had ‘informed acquiescence’ cultures.

Dov Seidman has a free pdf on his site here, outlining some of the characteristics of these cultures, as well as outlining some of the characteristics of ‘self-governance’ cultures.

How does your company stack up? Culture 1,2,3 or 4? Let us know!

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