About Our Guest: If there were an aristocracy among experts in the field of organizational development, Dr. Edgar Schein would likely be king. For many years, he was a professor at the MIT Sloan School of Management. But he is known primarily for his prolific writing. He is author of more than a dozen books dealing with organizational performance issues. He holds degrees from the University of Chicago, Stanford, and Harvard. – Doctor Duncan
Many years ago you were credited with coining the term “corporate culture.” How do you find that term used and abused in the workplace today?
Managers today understand the importance of culture as a factor in whether a company performs well or not. But many of them mistakenly believe they can arbitrarily decide whether or not you will have a good culture. They still don’t understand that culture is a product of years of learning and experience, not something you “implement.” You can find companies whose culture helps them perform, but they acquired that culture over a period of years through leadership that worked. You can find in those same companies a drop in performance as the very culture that made the company successful became a liability when changes occurred in technology and in the market. This is the story of Digital Equipment Corporation. The same culture explained both its success and its failure.
In what important ways are culture and leadership fundamentally intertwined?
In a mature company run by promoted general managers, as opposed to entrepreneurs or founders, the culture will reflect the past history of founders and leaders and will limit what kind of leadership is possible. If a new leader such as Carly Fiorina comes into a company like Hewlett-Packard with a long history and strong culture, there will be conflict between what the new leader tries to impose and what the culture will allow. The leader will win in such conflict only by firing large numbers of the carriers of the old culture, as turnaround managers usually do. The new leader can then start [fresh] by imposing new values and behavior patterns. But this is not a new culture until it succeeds for a number of years and becomes internalized by the employees. So you can talk about destroying an old culture, but you cannot create or impose a new culture, only new values and behavior patterns.
When Lou Gerstner went into IBM, his success was based on figuring out what the culture was that had led to IBM’s success. He noticing that the company had drifted away from some of the elements of that culture and he found a way to revive it. He worked on the culture by reviving and reinvigorating the best elements of what was there, not by “changing” the culture.
How does culture influence the leadership styles that “work” or fail to “work” in an organization?
In general, the culture is stronger than the new leader and either limits or ignores new leaders who do not fit into the culture. The HP culture emphasized good relations between people, teamwork and humility. Carly Fiorina was able to impose some new goals and values, but her flamboyant style did not fit the culture at all and caused her ultimately to lose credibility and effectiveness. When John Sculley became CEO of Apple, he got the board to fire Steve Jobs. Then Sculley then was himself succeeded by several outsiders. The Apple culture never adapted to these new CEOs and limited their effectiveness because Apple was a technically based culture in which marketing-oriented CEOs never gained respect. When Steve Jobs came back, there was once again mutual congruence between the culture and the CEO’s style and values.
We know that culture influences leadership. In what ways can leadership influence culture? For example, how can a leader reinforce the “helpful” aspects of a culture and dilute the culture’s “harmful” attributes?
In both cases, what the leader can do is to impose new behaviors and hope that performance improves. But the new behavior has to solve a problem. In a company whose culture leads salesmen from different units to visit the same customers and cause confusion and subsequent loss of those customers, the new leader might announce “from now on we will have a culture of teamwork in our sales force and we will work together.” But this will be meaningless until it is analyzed in behavioral terms. In this future “culture,” what exactly are salesmen supposed to do differently? When the leader announces that from now on customers will be serviced by account teams of salesmen from different units and that individual salesmen will be rewarded by how the account does, and changes the structure and reward system to make that happen, then the new teamwork values will mean nothing. If that is implemented and succeeds over a period of time, then we can talk about a new “team culture.”
Most culture change programs fail because they are just announcements of new values without a change in what new behavior will be required and how the structure and reward system will make that happen.
What are some of the early warning signs that an organization’s culture needs to change?
The warning signs are never “cultural.” They are always performance issues that lead to specifying new behaviors needed to fix the problem. The culture gets involved if the new behavior won’t work because of the culture. At Digital, they needed engineers to build simpler turnkey products to survive. But the engineering culture had been built on creating sophisticated, fun products, so the engineers did not respond to the new requirements. To fix such a problem, you have to destroy elements of the old culture. But the focus has to remain on fixing the business problem and only then seeing how culture will aid or hinder the fix.
Various forms of resistance often thwart attempts at culture change. Why do people resist change, and what are the keys to turning resistance into support?
Resistance to change is a normal response because what we are doing is based on past success, so why should we change what has worked in the past? The only way you can convince me to change is to show me that the old behavior no longer produces results and show me what new behavior would work better. You have to convince me that there is a business problem and show me how the new behavior that you are demanding will fix the problem and then provide me with the resources, and training in the new behavior and give me new incentives to learn it.
Further resources on corporate culture:
Change-Friendly Leadership: How to Transform Good Intentions into Great Performance by Rodger Dean Duncan.