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Chapter 12 - Leadership and Culture
12-1
whole or part.
II. Organizational Culture
1. Every organization has its own culture.
a) An organization’s culture is similar to an individual’s personality—an
basis for action.
b) In much the same way as personality influences the behavior of an
individual, the shared assumptions (beliefs and values) among a firm’s
2. A member of an organization can simply be aware of the organization’s beliefs
and values without sharing them in a personally significant way.
a) Those beliefs and values have more personal meaning if the member views
them as a guide to appropriate behavior in the organization and, therefore,
complies with them.
b) The member becomes fundamentally committed to the beliefs and values
when he or she internalizes them; that is, comes to hold them as personal
beliefs and values.
c) In this case, the corresponding behavior is intrinsically rewarding for the
member—the member derives personal satisfaction from his or her actions in
the organization because those actions are congruent with corresponding
personal beliefs and values.
d) Assumptions become shared assumptions through internalization among an
organization’s individual members.
e) And those shared, internalized beliefs about values shape the content and
account for the strength of an organization’s culture.
B. The Role of the Organizational Leader in Organizational Culture
1. The previous section of this chapter covered organizational leadership in detail.
shaping organizational culture.
b) Several points in that discussion apply here.
c) It is important to emphasize that the leader and the culture of the
organization s/he leads are inextricably intertwined.
Chapter 12 - Leadership and Culture
12-2
whole or part.
2. The leader is the standard bearer, the personification, the ongoing embodiment of
3. As such, several of the aspects of what a leader does or should do represent
4. How the leader behaves and emphasizes those aspects of being a leader become
C. Build Time in the Organization
1. Some leaders have been with the organization for a long time.
a) If they have been in the leader role for an extended time, then their
sustaining continued success.
c) The problematic long-time leaders are those who have built a successful
enterprise that also sustains a culture that appears unethical or worse.
media-intense business world.
e) And in their setting, while the culture may be exceptionally strong, their role
in creating it usually means they seemingly hold sway over the culture rather
than the other way around.
2. Many leaders in recent years, and inevitably in any organization, are new to the
top post of the organization.
culture.
c) This may be quite useful in helping engender confidence as they take on the
task of leader of that culture, or, perhaps more difficult, as change agents for
3. In the other situation, a new leader who is not an “initiated” member of the
culture, or tribe faces a much more challenging task.
somewhat resistant to change.
b) And, very often, they are being brought in with a board of directors desiring
change in the strategy, company, and usually culture.
and its CEO, Read Hastings.
Chapter 12 - Leadership and Culture
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whole or part.
4. Ethical standards are a person’s basis for differentiating right from wrong.
a) An earlier section of this chapter emphasized the importance of “principles”
an effective leader.
b) We need not repeat those points in the context of being a leader, but it is
critical to recognize that the culture of an organization, and particularly the
personifies.
c) Enron, Worldcom, Qwest, Computer Associates, Ken Lay, Jeff Skillings,
Sanjay Kumar, Joseph Nacchio, Bernie Ebbers, and Martha Stewart are
imprinted in each of our minds.
d) They speak volumes about this very point: Leaders, and their key associates,
play a key role in shaping and defining the ethical standards that become
5. Leaders use every means available to them as an organizational leader to influence
an organization’s culture and their relationship with it.
vision and strategy are also a leader’s key “levers” for attempting to shape
organizational culture in a direction s/he sees it needing to go.
D. Emphasize Key Themes or Dominant Values
1. Businesses build strategies around distinct competitive advantages they possess or
seek.
2. Quality, differentiation, cost advantages, and speed are four key sources of
competitive advantage.
3. Insightful leaders nurture key themes or dominant values within their organization
6. They are most often found as a new vocabulary used by company personnel to
explain “who we are.”
E. Encourage Dissemination of Stories and Legends about Core Values
Chapter 12 - Leadership and Culture
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distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.
1. Companies with strong cultures are enthusiastic collectors and tellers of stories,
anecdotes, and legends in support of basic beliefs.
2. The examples in the text are very important in developing an organizational
culture, because organization members identify strongly with them and come to
share the beliefs and values they support.
F. Institutionalize Practices That Systematically Reinforce Desired Beliefs and Values
1. Companies with strong cultures are clear on what their beliefs and values need to
2. Most important, the values espoused by these companies underlay the strategies
they employ.
G. Adapt Some Very Common Themes in Their Own Unique Ways
importance of informal communication; and (8) a belief that growth and profits
are essential to a company’s well-being.
a) Every company implements these beliefs differently to fit its particular
legendary figures in leadership positions.
b) Accordingly, every company has a distinct culture that it believes no other
company can copy successfully.
c) And in companies with strong cultures, managers and workers either accept
the norms of the culture or opt out from the culture and leave the company.
c) However, their cultures are dysfunctional, being focused on internal politics
or operating by the numbers as opposed to emphasizing customers and the
people who make and sell the product.
recognize cultural diversity.
Chapter 12 - Leadership and Culture
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distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.
3. Values and attitudes about similar circumstances also vary from country to
country.
4. Where individualism is central to a North American’s value structure, the needs of
5. Religion is yet another source of cultural differences.
6. Holidays, practices, and belief structures differ in very fundamental ways that
must be taken into account as one attempts to share organizational culture in a
global setting.
7. Finally, education, or ways people are accustomed to learning, differ across
national borders.
8. Formal classroom learning in the United States may teach things that are only
learned via apprenticeship in other cultures.
9. Because the process of shaping an organizational culture often involves
considerable “education,” leaders should be sensitive to global differences in
approaches to education to make sure their cultural education efforts are effective.
I. Manage the Strategy-Culture Relationship
1. Managers find it difficult to think through the relationship between a firm’s
culture and the critical factors on which strategy depends.
a) They quickly recognize, however, that key components of the firm—
structure, staff, systems, people, style—influence the ways in which key
managerial tasks are executed and how critical management relationships are
formed.
b) And implementation of a new strategy is largely concerned with adjustments
in these components to accommodate the perceived needs of the strategy.
c) Consequently, managing the strategy-culture relationship requires sensitivity
to the interaction between the changes necessary to implement the new
strategy and the compatibility or “fit” between those changes and the firm’s
culture.
d) Exhibit 12.9, Managing the Strategy-Culture Relationship, provides a
simple framework for managing the strategy-culture relationship by
identifying four basic situations a firm might face.
2. Link to Mission
a) A firm in cell 1 is faced with a situation in which implementing a new
strategy requires several changes in structure, systems, managerial
assignments, operating procedures, or other fundamental aspects of the firm.
Chapter 12 - Leadership and Culture
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whole or part.
(1) However, most of the changes are potentially compatible with the
existing organizational culture.
(2) Firms in this situation usually have a tradition of effective performance
and are either seeking to take advantage of a major opportunity or are
proven core capabilities.
(3) Such firms are in a very promising position: They can pursue a strategy
requiring major changes but still benefit from the power of cultural
reinforcement.
a strategy-culture relationship in this context:
(1) Key changes should be visibly linked to the basic company mission.
(a) Because the company mission provides a broad official foundation
for the organizational culture, top executives should use all
available internal and external forums to reinforce the message that
the changes are inextricably linked to it.
(3) Care should be taken if adjustments in the reward system are needed.
(a) These adjustments should be consistent with the current reward
system.
(b) If, for example, a new product-market thrust requires significant
compensation, common themes should be emphasized.
(c) In this way, current and future reward approaches are related, and
the changes in the reward system are justified (encourage
development of less familiar markets).
3. Maximize Synergy
a) A firm in cell 2 needs only a few organizational changes to implement its
new strategy, and those changes are potentially quite compatible with its
current culture.
current culture.
Chapter 12 - Leadership and Culture
12-7
distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.
roadblocks to the desired culture.
4. Manage around the Culture
a) A firm in cell 3 must make a few major organizational changes to implement
its new strategy, but these changes are potentially inconsistent with the firm’s
current organizational culture.
b) A firm can manage around the culture in various ways: create a separate firm
or division; use task forces, teams, or program coordinators; subcontract;
bring in an outsider; or sell out.
(1) These are a few of the available options, but the key idea is to create a
incompatible cultural norms.
(2) As cultural resistance diminishes, the change may be absorbed into the
firm.
5. Reformulate the Strategy or Culture
culture relationship.
(1) To implement its new strategy, such a firm must make organizational
changes that are incompatible with its current, usually entrenched,
values and norms.
(2) A firm in this situation faces the complex, expensive, and often long-
impossible.
b) When strategy requires massive organizational change and engenders cultural
resistance, a firm should determine whether reformulation of the strategy is
appropriate.
successful?
(3) Is these answers are yes, then massive changes are often necessary.
