The Corporate Culture Survival Guide: New and Revised Edition, summarized by arrangement with John Wiley & Sons, Inc., from The Corporate Culture Survival Guide: New and Revised Edition by Edgar H. Schein. © 1999, 2009 by John Wiley & Sons, Inc.
In this summary...
- Learn what culture is and why it's important, how to evaluate your organization's culture, and how to improve it.
- Develop a clear understanding of how to manage your culture at three levels, from visible artifacts to espoused values to shared tacit assumptions.
- Discover how your corporate culture can aid or hinder your company's current performance and its future effectiveness.
- Succeed at leading cultural change in your organization by following specific guidelines for companies that are young, mature, declining companies.
- Increase your chances of making culture change stick by grasping a three-stage model of learning: (1) unfreezing, (2) learning, and (3) refreezing.
The Corporate Culture Survival Guide
In order to manage culture, you must understand what culture is and how to assess it. The biggest danger in trying to understand culture is to oversimplify it.
It is tempting to say that culture is just "the way we do things around here," "the rites and rituals of our company," "our basic values," and so on. These are all manifestations of the culture, but none is the culture at the level where culture matters.
A better way to think about culture is to realize that it exists at three "levels," and that we must understand and manage the deeper levels. The levels of culture go from the very visible to the very tacit and invisible.
The easiest level to observe when you go into an organization is Level One, consisting of artifacts — what you see, hear, and feel as you hang around. Think about restaurants, hotels, stores, banks, or automobile dealerships. Note your observations and emotional reactions to the architecture, the decor, and the climate, based on how people behave toward you and toward each other.
You can sense immediately that different organizations do things differently. For example, in the computer firm Digital Equipment Corp. (DEC), people were constantly in meetings with each other, there were no walls or closed doors, they dressed informally, and you got a sense of fast-paced action.
In the Swiss chemical and pharmaceutical firm Ciba-Geigy, on the other hand, everything was very formal. People worked behind closed doors, conversations were hushed, dress was formal, and you got a sense of careful deliberation and slow movement.
As a customer or new employee, you may like or dislike one or the other of these organizations; you may think to yourself that DEC and Ciba-Geigy have different cultures. But you have to be careful. All you know for sure is that they have different ways of presenting themselves and different norms of how people deal with each other. What you don't know is what this all means.
In other words, at the level of artifacts, culture is very clear and has immediate emotional impact. But you don't really know why the members of the organization are behaving as they do and why each organization is constructed as it is. Just by hanging around and observing, you cannot really decipher what is going on.
You have to be able to talk to insiders and ask them questions about the things you observe and feel. That takes you to Level Two: espoused values.
Imagine yourself to be a new employee or manager, offered jobs at two companies that differ as much as DEC and Ciba-Geigy did. Should you go to work for the one whose entry lobby and security procedures make you feel most comfortable? Do you know enough about either culture from experiencing the artifacts and behavior patterns, or should you dig more deeply?
To dig deeper means to start asking questions about the things the organization values. Why do they do what they do? Why did DEC create open office areas while Ciba-Geigy put everyone behind closed doors?
These questions have to be asked, especially about those observed artifacts that puzzle you or that seem somehow inconsistent with what you would expect. For this purpose, you need to find insiders who can explain their organization to you.
The first things you learn when you start asking questions is that the organization has certain values that are supposed to create an image of the organization. In DEC, you were told that they believe in teamwork, that you cannot get good decisions without arguing out what everyone's point of view is and obtaining buy-in from those who have to implement decisions. Therefore, they had to make it easy for people to communicate with each other.
You may even have been told that these values came directly from Ken Olsen, the founder of the company and that at one time in the company's history he had even forbidden having doors on offices. In this company, when they had meetings, they tended to be free-for-alls and highly emotional.
You may also have been given some documents, pamphlets, or short papers that described the company's values, principles, ethics, and visions and been told that these documents reflected their basic values: integrity, teamwork, customer orientation, product quality, and so on.
In Ciba-Geigy, you were told that good decisions cannot be made without careful thought and that they value privacy and the opportunity for employees to really think things through before taking action. You would have heard that this approach was necessary because the nature of their technology was such that careful individual research and thought was the only way to reach a good decision.
In this company, meetings were formal and consisted mainly of senior people announcing the decisions that now had to be implemented by junior people.
In Ciba-Geigy, you would also have been given various documents that purported to describe the company's values and principles. But to your surprise, many of the points on the list of values would be almost identical to the ones that DEC gave you.
Ciba-Geigy was also customer-oriented, cared about teamwork, product quality, integrity, and so on. How could two organizations that espoused so many of the same values have completely different physical layouts and working styles?
You also may have noticed that some of the values mentioned did not seem to fit the observed behavior. For example, both organizations espoused teamwork as a value, but both were highly individualistic, encouraged competitive behavior among their employees, and had reward systems that were geared entirely to the individual.
The longer you hang around and the more questions you ask, the more you see obvious inconsistencies between some of the espoused values and the visible behavior.
For example, both companies espoused customer orientation, yet neither was producing products that were particularly easy to understand or use, and neither had people who seemed very polite or service-oriented.
What these inconsistencies tell you is that a deeper level of thought and perception is driving the overt behavior. The deeper level may or may not be consistent with the values and principles that are espoused by the organization. If you are to understand the culture, you must decipher what is going on at this deeper level, which takes you to Level Three: shared tacit assumptions.
To understand this deeper level, you have to think historically about these organizations. Throughout the history of the company, what were the values, beliefs, and assumptions of the founders and key leaders that made it successful?
Organizations are started by individuals or small teams who initially impose their own beliefs, values, and assumptions on the people whom they hire. If the founders' values and assumptions are out of line with what the environment of the organization allows or affords, the organization fails and never develops a culture in the first place.
But suppose, for example, that Ken Olsen, the founder of DEC, believed that to obtain good decisions and implementation of those decisions, people must argue things out and get buy-in on all decisions, and that the imposition of this way of working created a set of products that were successful. He could then attract and retain others who believed the same thing.
If, by this means, they continued to be successful in creating products and services that the market liked, these beliefs and values would gradually come to be shared and taken for granted. They would become tacit assumptions about the nature of the world and how to succeed in it. As DEC continued to succeed and grow, these assumptions would grow stronger.
In analyzing DEC's culture, you would observe two other factors. Olsen was an American and an electrical engineer who grew up in the academic environment of MIT's Lincoln Labs. Many of the values and assumptions he brought to the table reflected U.S. values, academic norms of open debate, and the technological realities of electrical engineering and computer design.
No one knew what was possible in interactive computing, so strong debate was a far better problem-solving method than arbitrary authority. Experimentation and internal competition were appropriate to the development of a new technology.
In Ciba-Geigy, the founders were Swiss-German chemists working on dyestuffs and agricultural chemicals. Unlike electrical engineering, chemistry is a much more hierarchical science, in which experiments have to be very carefully done because of the dangers of mistakes.
Individual creative thought was more relevant than group debates, and researchers with more knowledge and experience were more valued and trusted.
A highly disciplined organization that could efficiently implement solutions would attract people who liked discipline and order, and as they succeeded, they also would come to take it for granted that hierarchy, discipline, and order were the only way to run an effective organization based on chemistry and basic research.
In either case, then, one could "explain" the essence of the culture if one understood national background, the core technology underlying the business, and the personalities of the founders.
The essence of culture is then the jointly learned values and beliefs that work so well that they become taken for granted and non-negotiable. At this point, they come to function more as tacit assumptions that become shared and taken for granted as the organization continues to be successful.
It is important to remember that these assumptions resulted from a joint learning process. Originally, they were just in the heads of founders and leaders. They became shared and taken for granted only as the new members of the organization realized that the beliefs, values, and assumptions of their founders led to organizational success and so must be "right."
Consider the case of Atari. Many years ago, it brought in a new CEO whose background was in marketing. His cultural background told him that the way to run a company was to get a good individual incentive and career system going.
Imagine his chagrin when he discovered a loosely organized bunch of engineers and programmers whose work was so seemingly disorganized that you could not even tell whom to reward for what. The CEO was sure he knew how to clean up that kind of mess. He instituted clear personal accountabilities and an individualistic, competitive reward system symbolized by identifying the "engineer of the month" — only to discover that the organization became demoralized and some of the best engineers left the company.
This well-meaning CEO had not realized that, in its evolution, the company had learned that the essence of the creative process in designing good games was the unstructured collaborative climate that enabled designers to trigger each other's creativity. The successful game was a group product. The individual engineers shared an assumption that only through extensive informal interaction could an idea come to fruition. No one could recall who had actually contributed what.
The new individualized reward system gave too much credit to the "engineer of the month" named by the CEO, and the competitive climate reduced the fun and creativity. This leader did not understand a crucial tacit assumption of the culture he was entering, so he made some decisions that changed a key element of the culture in a dysfunctional way.
So, now that we've explored the three levels of culture, how do we define culture? Culture is a pattern of shared tacit assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, which has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.
What really drives daily behavior are the learned, shared, tacit assumptions on which people base their view of reality — as it is, and as it should be. It results in what is popularly thought of as "the way we do things around here," but even the employees in the organization cannot, without help, reconstruct the underlying assumptions on which their daily behavior rests.
They know only that this is the way, and they count on it. Life becomes predictable and meaningful. If you understand those assumptions, it is easy to see how they lead to the kind of behavioral artifacts that you observe. But doing the reverse is very difficult; you cannot infer the assumptions just from observing the behavior.
The implications of this way of thinking about culture are profound. For one thing, you begin to realize that culture is so stable and difficult to change because it represents the accumulated learning of a group — the ways of thinking, feeling, and perceiving the world that have made the group successful. For another thing, you realize that the important parts of culture are essentially invisible. Members of the organization cannot tell you what their culture is, any more than fish could tell you what water is.
Furthermore, you begin to realize that there is no right or wrong culture, except in relation to what the organization is trying to do and what the environment in which it is operating allows. In some markets and with some technologies, teamwork and employee empowerment are essential and the only way the organization can continue to succeed. In other market environments or with other technologies, tight discipline and highly structured relationships are the prerequisites to success.
How to Assess Your Culture
Culture assessment comes into play when an organization identifies problems in how it operates or as a part of a strategic redirection relating to mergers, acquisitions, joint ventures, partnerships, or other collaborations in which more than one culture will be involved.
The potential insights that culture can bring to you will occur only when you discover that some problem you are trying to solve or some change that you are trying to make depends on cultural forces operating within you and within your organization.
But how should you proceed to do a culture assessment?
Remember that cultural assumptions are shared, tacit, and out of awareness. This does not mean that they are repressed or unavailable. If you want to access your organization's culture, bring together a group of employees who represent the parts of the organization that may be most involved with solving the business problem that is motivating this exercise.
Bring in a facilitator who does not belong to the group that is doing the exercise. The group of 10 to 15 should be people who cut across the levels and functions that are most likely to care about the business problem you are trying to work on.
Here are the steps to assess your culture:
- Meet in a room with lots of wall space to hang flip-chart paper. Sit in a circle to facilitate face-to-face communication.
- State the business problem. Start the meeting with a review of something you need to fix, something that could work better, or some new strategy that you need to launch.
- Review the concept of culture and its levels. Once you agree on the things you want to change or improve, review the concept of culture as existing at the three levels of visible artifacts, espoused values, and shared tacit assumptions.
- Identify and list artifacts. Start by identifying lots of the artifacts that characterize your organization. Ask the newest members of the organization what it is like to come to work there. What artifacts do they notice? Write down on flip charts all the items that come up. To make sure you cover all of the areas in which cultural artifacts are visible, be sure to consider the following elements:
- Dress codes
- Level of formality in authority relationships
- Working hours
- Meetings, including how often, how run, and timing
- How are decisions made?
- Social events
- Jargon, uniforms, and identity symbols
- Rites and rituals
- Disagreements and conflicts: How are they handled?
- Balance between work and family
- Identify your organization's espoused values. Ask the group to list some of the espoused values that the organization holds. Some of these may have already been mentioned, but list them on pages separate from the artifacts.
- Compare values with artifacts. As the values are listed in the previous step, cross-check those values against the artifacts. Next, compare the espoused values with the artifacts in those same areas. For example, even if the organization espouses the value of "open communication" and "open-door policies" with respect to bosses, you may find that whistle-blowers and employees who bring bad news are punished. These inconsistencies tell you that, at the level of shared tacit assumptions, your culture may really be closed, that only positive communications are valued, and that if you cannot come up with a solution to the problem you are bringing up, you should keep your mouth shut. The way to deeper cultural levels is through identifying the inconsistencies and conflicts you observe between (1) overt behavior, policies, rules, and practices (the artifacts) and (2) the espoused values as formulated in vision statements, policies, and other managerial communications. You must then identify what is really driving the overt behavior and other artifacts. This is where the important elements of the culture are embedded. As you uncover deeply shared assumptions, write them down on a separate page. You will begin to see what the patterns are among those assumptions, and which ones seem to really drive the system in the sense that they explain the presence of most of the artifacts that you have listed.
- Assess the shared assumptions. Since culture is very difficult to change, focus most of your energy on identifying the assumptions that can help you. Try to see your culture as a positive force to be used, rather than a constraint to be overcome. If you see specific assumptions that are real constraints, then you must make a plan to change those elements of the culture.
- Decide next steps. You may now have sufficient insight to plan the next steps in your change program, using culture to aid you and identifying cultural elements that will require culture evolution. You may discover that this group's analysis does not clarify the culture sufficiently or that differences among the members reflect the presence of subcultures that would require separate assessment. Or you may decide that you want additional groups to cross-check what you have learned so far.
- 8a: Proceed with the change program using cultural strengths. Because you and the others in the group are "in" the culture, you will be able to perceive strengths that outsiders might not notice. You then go back to the planning of your change program for the business problem you identified and examine systematically how the culture can help you accomplish your goals. If you also perceive that some elements of the culture will be obstacles or hindrances, you proceed to the next step and define the overcoming of these obstacles as a new change initiative that you then have to launch.
- 8b: Proceed with a culture change program to overcome barriers. If some cultural elements clearly prevent you from achieving your business goals, you must design a culture change program, realizing, however, that you are only proposing to change some elements of the culture. One step then, which will be illustrated later, is to see how some of the cultural strengths can help you change those cultural elements that need to be changed.
Now that you understand something of the process of cultural assessment, you are ready to think about how to build, evolve, enhance, or maybe even change your culture.