Topic 8: Shaping organisational culture

Topic 8: Shaping organisational culture

Topic 8: Shaping organisational culture

Learning outcomes The work that you do in this topic will help you to achieve the following learning outcomes in the subject: critically analyse and evaluate a variety of management and organisational theories and practices in the context of the contemporary business environment. reflect critically on management issues such as ethics, sustainability, innovation and entrepreneurship, and how they are shaping 21st century organisations.

It’s not the way we do things around here

Did you know that excellence in strategy execution is at the top or very near the top of lists of challenges facing public and corporate sector executives?

Does it surprise you that this is so? We begin a series of topics that have the unifying theme of strategy execution; in essence, what do we need to know and do to execute strategy well.

We are immediately faced with the dilemma here that the interpretation of ‘well’ in this context may have different meanings for different stakeholders. This is one of the challenges that managers must grapple with from day one of strategy formulation.

We will be looking at some of the major activities and roles that managers must perform, mostly with others, if they want to be effective in making strategy happen.

Just a minute podcast Click on the podcast below for a quick overview of the topic.

Strategy execution is a vital area of practice for any manager who wants to succeed, but it is not one that is handled well in management texts. Typically, execution is parcelled into specific compartments – structure, people, leadership, managing organisational change and so on. We will certainly look into these areas, however, what’s needed is an integrated, practical look at just what it takes to execute strategy successfully.

We will be looking at two things in this topic.

1. Why strategy execution unravels.
2. Organisational culture, with particular reference to shaping culture in VUCA world.

8.1 Why strategy execution unravels

Before looking into the detail of strategy execution, it is helpful to ask this question: What do we know already about the blockages to good strategy execution? This will help us appreciate the importance of the upcoming topics and their sequencing.

As a starting point, take a look at this video on strategy execution (5:33 minutes) and reflect on your reaction to it.

Watch ‘Executing your strategy’ (Kanopy) | https://csu.kanopystreaming.com/playlist/594577

Learning activity 1 What is your reaction to the take on strategy execution in this video? What are the strengths and what limitations do you see?

The two resources shared at the end of Topic 7 should have already heightened your attention and interest in strategy execution. (If you didn’t read the articles shared in Topic 7, now is a good time to hit the back button.) The causes of weakness in strategy execution that are covered in the two readings are summarised as follows:

‘Your strategy needs a strategy’ (Reeves, Love & Tillmanns, 2012):

• poor adaptive capabilities to address unpredictable environments
• cultural mismatches between traditional and dynamic environments
• poor control systems, misdirected;
• failure to recognise that units or functions may need to manage more than one strategic style at a time.

‘Planned opportunism’ (Govindaraja, 2016):

• siloed units, lacking cooperation and coordination, stifles emerging opportunities
• metrics based on short-term financial performance
• failure to distinguish what can and what can’t be controlled.

Sull, Homkes and Sull from MIT Sloan School of Management, London Business School and Charles Thames Strategy Partners add some critical insights to our understanding of why execution may fail:

Read Sull, D., Homkes, R., & Sull, C. (2015). Why strategy execution unravels— and what to do about it. Harvard Business Review, 93(3), 57-66.

The authors have conducted extensive research involving nearly 8,000 managers in more than 250 companies to support their argument that there are several myths – widely held but wrong beliefs – about strategy execution. These myths are:

• execution equals alignment: there are serious gaps in cross-functional trust and coordination
• systems for managing horizontal performance commitments lack teeth
• execution means sticking to the plan (hence, limiting agility and adaptiveness to emerging opportunities)
• once-off approaches to allocating resources (rather than taking a more fluid approach)
• poor communication of strategic objectives by leaders (communication is measured by inputs, not understanding)
• performance cultures that focus on past performance and non-financial rewards (but delay or fail to act on non- or under-performance and don’t recognise factors like agility, teamwork and ambition)
• strong top-down cultures that breed helplessness in the middle, because problems are typically ‘referred upstairs’.

These pieces of evidence and comment on poor execution have guided us in choosing what to focus on in the topics remaining in this subject. Many of these points will be considered, in one form or another, in this subject and in others that you will study if you are taking a business degree. We begin with organisational culture.

(Accessible version of elevator pitch in Word)

8.2 Organisational culture

In this part of the topic, we still answer three questions:

1. What is culture?
2. What types of culture/s do most organisations have?
3. What can managers do to shape culture?

What’s the culture like in your organisation or in that part of the organisation you work in? This is such an important question, because culture is a form of regulation of behaviour, which, in turn, shapes strategy and results.

Furthermore, culture is itself constructed from deeply held values and assumptions regarding how we will treat each other, within our part of the organisation and in our relationships with external parties, such as suppliers, customers and government agencies. So, knowing what culture is, the different types of culture and how to shape culture is very important for managers today.

Case of the week: Garvin, D., Natarajan, G. & Dowling, D. (2014). Can a strong culture be too strong?. Harvard Business Review, 92 (1/2), 113-117. ‘Topic 8 Shaping organisational culture & Topic 10 Designing organisations’ (YouTube) | https://youtu.be/TcrwII6gbTU This case takes you to two GREAT BIG challenges facing contemporary organisations: entrepreneurship and innovation. What management problems do you believe confront the protagonists at Parivar? At one level, the case centres on the choice between (so-called) love or money. How far should we go in creating a family-like culture? When does this kind of culture lose momentum? Is a warm, open, ‘love culture’ less important than money? There are several issues to consider in this case, and they all revolve around this management dilemma for the folk at Parivar, a Chennai-based IT services company.

Culture is…

As the reading below (Samson, Donnet & Daft, 2018) explains, culture is the set of key values, beliefs, understandings and norms shared by members of an organisation (or, part of an organisation). The latter, added qualification signals that there is rarely just one type of culture in an organisation – there are many, and these are shaped by context; for example, professional groups, geographical location, organisation structure, and market characteristics. The reality is that there are probably many cultures in a single organisation. So, we need to be careful not to generalise or stereotype culture. Perhaps Sam is doing this in the elevator pitch.

Read Samson, D., Donnet, T. & Daft, R.L. (2018). The environment and corporate culture. In Management (6th Asia Pacific ed.). South Melbourne: Cengage. Read pages 88-133.

Watch This video (16:14 minutes) gives a nice summary of the meaning of organisational culture. ‘Introduction: the culture’ (Kanopy) | https://csu.kanopystreaming.com/video/organisational-cultures-0

In the reading above (Samson, Donnet & Daft, 2018), the authors explain that culture doesn’t just happen overnight: it emerges over time – learned by members of an organisation as they cope with external and internal problems. It is also transferred – taught to new members as the correct way to perceive, think and feel. How? Culture can be apparent and learned via dress, language, other symbols, office layout, stories, slogans and ceremonies.

Take note of the powerful role that values and beliefs play in shaping culture – they are invisible and deeply embedded; which is why cultural change is so difficult to do and can so easily be undermined by inconsistencies between what is said and what is done.

If cultures are not value-neutral, it follows that they can also sometimes promote unhelpful values and behaviours. This example from Uber is thought-provoking. 

Read Craig, C. (2017). Uber ugliness unmasks silicon valley’s bro culture. InfoWorld.Com. Retrieved from https://search-proquest-com.ezproxy.csu.edu.au/docview/1871789499?accountid=10344

Learning activity 2 Let’s make this a little more practical. One way to do this is to apply the definition of culture to your own experience, either in work organisations or in another organisational setting such as a community group. Think of at least two examples that demonstrate one or more elements of the organisation’s culture. Be as specific as you can. To the best of your knowledge, how have these pieces of culture emerged, and how do they persist? Then, reflect on whether these pieces of culture help or hinder the strategy or objectives and the performance of the organisation. This is important because we are interested in how culture impacts performance.

In Samson, Donnet and Daft’s reading you see the example of Zappos.com, an online retail store that sells a wide selection of shoes. Under the direction of founder Tony Hsieh, Zappos proclaims that its culture is one of the reasons it is so successful. You’ll see what this means in practice. Here’s a video (5.41 minutes) that brings the company’s culture to life.

Watch ‘Zappos Company Culture’ (YouTube) | https://www.youtube.com/watch?v=WiIeImBFRK4

Learning activity 3 What is your opinion on the culture of this company and the claims made that this culture is key to its performance? Are there aspects of the culture of Zappos that you are excited about? Are there aspects you’re not so thrilled about? Would you like to work in a company that has this culture?

Understanding culture in VUCA world: Types of culture

Sometimes, people speak loosely about culture as if it were a homogenous thing. It isn’t. There are, in fact, several types of culture, and your organisation will have more than one of these. Why? Because, as Samson, Donnet and Daft explain in the following reading, culture is in part a function of the external environment of an organisation and, in turn, its strategy and goals. For example, if the external environment requires a high emphasis on innovation and customer service, the culture should support this.

Read Samson, D., Donnet, T. & Daft, R.L. (2018). 3.4 Types of culture. In Management (6th Asia Pacific ed.). South Melbourne: Cengage. Read pages 125-128.

We have seen earlier in this topic that culture is one of the key barriers to executing strategy, particularly in dynamic environments. Thus, in a VUCA environment, it is critical to understand how the external environment connects with desired cultural characteristics. The following learning activity helps you to analyse this connection.

Learning activity 4 Which of the four types of culture discussed in the reading above would you think best aligns with the characteristics of VUCA world (revisit Topic 2 if needed here)?

As we did before, let’s apply this knowledge. This is a good way to digest it.

Learning activity 5 Thinking about the case of the week, what type of culture do you see at work in Parivar? Do you think this type of culture is appropriate to the demands of the external environment of Parivar and to its strategic focus? (You will need to read the extract from Samson & Daft to answer this question.)

Understanding culture in VUCA world: Shaping organisational culture for innovation

An adaptability culture that supports responsiveness and flexible organisational culture is important in VUCA world. Now to a big question, which engages with one of the GREAT BIG challenges that we encountered in Topic 3. How can managers shape the cultures of their organisations to stimulate innovation? This may be a question that you can relate to. It is absolutely a question that Sudhir Gupta and Indira Pandit of Parivar can relate to in the case of the week. Is it by creating a ‘love’ culture? Is it by paying more money? Is it by hiring the best and brightest and leaving them to do their thing? What do you think?

Samson, Donnet and Daft look at how to shape culture in a VUCA environment (although they don’t use this acronym). Values are a big part of their conceptualisation of how managers can shape culture.

Read Samson, D., Donnet, T. & Daft, R.L. (2018). The environment of management. In Management (6th Asia Pacific ed.). South Melbourne: Cengage. Read the Environment and Corporate Culture Chapter 3

The tool discussed by Samson, Donnet and Daft (2018, p. 123) is useful for managers to analyse their own organisational contexts, to form a view about change, and to commence an action plan.

The authors have a few things to say about what to do in shaping culture, but not a great deal. Academic research can help to fill this gap, specifically, the research that has been conducted on innovation orientation and the role of organisational culture.

The following resource is just one of many articles and books that are around on how culture supports innovation orientation. Understandably, this is a hot issue for managers today.

Read Naranjo‐Valencia, J. C., Jiménez‐Jiménez, D., Sanz‐Valle, R. (2011). Innovation or imitation? The role of organizational culture. Management Decision. doi: https://doi.org/10.1108/00251741111094437

There are several take-aways from this article for managers:

• Innovation orientation and organisation culture are linked – make no mistake about that. In turn, the link is mediated by strategy, which gives you important signals about criteria for success.
• The link can be positive or negative. This will depend on the type of culture. The authors use a different typology of cultures to the one you saw in the Samson, Donnet and Daft reading. Main thing is to take away the characteristics of the different cultures and map these into your own reality. Labels are second order.
• The paper has some very practical points about just what actions and behaviours managers should be looking to order to foster the ‘culture of choice’. You can readily construct your own to do list from this paper.

Design thinking and culture

In recent years there has been growing interest in a set of principles known as design thinking as a way of developing a responsive, flexible organisational culture. Design thinking began as a way to improve the process of designing tangible products. Since then, these principles have been advocated and applied to strategy-making and to the management of organisations like Samsung and by the larger consulting houses as a way to adapt the management of organisations for a VUCA environment.

Design thinking aims to operationalise the following principles:

• Empathy with users
• Creating models to examine complex problems
• Using prototypes to explore potential solutions
• Tolerance of failure
• Exhibiting thoughtful restraint.

The following resources will give you more insight into this leading-edge practice. The first source will give you an overview of design thinking and some critical thinking points about the clarity and novelty of this practice. The second article is a critical thinking piece that cautions against over-hype.

Read Kolko, J. (2015). Design thinking comes of age. Harvard Business Review, 93(9), 66-9. Carlgren, L., Rauth, I., & Elmquist, M. (2016). Framing design thinking: The concept in idea and enactment. Creativity & Innovation Management, 25(1), 38-57. doi:10.1111/caim.12153

As you can see in the second resource (Carlgren, Rauth & Elmquist, 2016) there are some cautions to be aware of in applying design thinking. However, both resources offer useful food for thought for managers looking to transform culture in VUCA world. Note the practical suggestions for enacting a design-centric culture that come out of the research conducted by Carlgren, Rauth and Elmquist at page 50 of their article.

To make this work just a little more practical, take a look at the experience of Samsung in this area. As you will see in this optional resource, although design thinking was transformative, it was by no means easy to sustain in an organisation that had a very different type of culture since its birth. Bottom line – design thinking is promising, but handle with care.

Read Yoo, Y., & Kim, K. (2015). How Samsung became a design powerhouse. Harvard Business Review, 93(9), 72-12.

Learning activity 6 What is your response to the concept of design thinking and design-centric culture? Do you think it has merit for organisations that live in VUCA world? Can you see how it might be used in your organisation?

We have covered quite a large territory in this topic. After setting the scene by looking at the reasons by strategy execution unravels, we have studied the nature of culture, types of culture and some options for shaping culture. It’s time to bring this work together in a further discussion of the case of the week.

Case discussion activity: Garvin, D., Natarajan, G. & Dowling, D. (2014). Can a strong culture be too strong?. Harvard Business Review, 92(1/2), 113-117. Using the knowledge that you have gained from the topic and other resources that you locate, answer the following questions: What conflicting values are evident in this case? What advice would you give Indira Pandit and Sudhir Gupta about a way forward that resolves the values conflict? What management competencies do you believe this case highlights that are important for the 21st century leader-manager in VUCA world?

Topic 8 has given you a taste of working with organisation culture. To some, it may sound vague and hard to get a grip on. However, the importance of culture is widely recognised by practitioners as being responsible for making or breaking many a good strategy. You’ll be able to learn more about this area of management in the CSU subject, HRM552 Organisation Behaviour.

In the next topic in this taste of management journey we turn to another practice that is critical for strategy execution – managing people.