Strategy Chapter 12 – Flashcards
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Corporate culture is the character of a company's internal work climate—
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* the shared values,
* ingrained attitudes,
* core beliefs and
* company traditions that determine norms of behavior, accepted work practices, and styles of operating.
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A company's culture is important because
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it influences the organization's actions and approaches to conducting business. It can be thought of as the company's organizational DNA.
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The key features of a company's culture include
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* the company's values and ethical standards,
* its approach to people management,
* its work atmosphere and company spirit,
* how its personnel interact,
* the strength of peer pressure to conform to norms,
* the behaviors awarded through incentives (both financial and symbolic),
* the traditions and oft-repeated "myths," and
* its manner of dealing with stakeholders.
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A company's culture is grounded in and shaped by its core values and ethical standards. Core values and ethical principles serve two roles in the culture-building process:
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(1) They foster a work climate in which employees share common and strongly held convictions about how company business is to be conducted, and
(2) they provide company personnel with guidance about the manner in which they are to do their jobs—which behaviors and ways of doing things are approved (and expected) and which are out-of-bounds. They serve as yardsticks for gauging the appropriateness of particular actions, decisions, and behaviors.
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Company cultures vary widely in strength and influence.
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* Some cultures are strong and have a big impact on a company's practices and behavioral norms.
* Others are weak and have comparatively little influence on company operations.
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Strong company cultures can have either positive or negative effects on strategy execution. When they are in sync with the chosen strategy and well matched to the behavioral requirements of the company's strategy implementation plan, they can be
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a powerful aid to strategy execution. A culture that is grounded in the types of actions and behaviors that are conducive to good strategy execution assists the effort in three ways:
* By focusing employee attention on the actions that are most important in the strategy execution effort.
* Through culture-induced peer pressure for employees to contribute to the success of the strategy execution effort.
* By energizing employees, deepening their commitment to the strategy execution effort, and increasing the productivity of their efforts
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It is thus in management's best interest to
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dedicate considerable effort to establishing a strongly implanted corporate culture that encourages behaviors and work practices conducive to good strategy execution.
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Strong corporate cultures that are conducive to good strategy execution are healthy cultures. So are high-performance cultures and adaptive cultures. The latter are particularly important in dynamic environments. Strong cultures can also be unhealthy. The five types of unhealthy cultures are those that are
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(1) change-resistant,
(2) heavily politicized,
(3) insular and inwardly focused,
(4) ethically unprincipled and infused with greed, and
(5) composed of incompatible subcultures. All five impede good strategy execution.
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Changing a company's culture, especially a strong one with traits that don't fit a new strategy's requirements, is a tough and often time-consuming challenge. Changing a culture requires
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competent leadership at the top.
It requires making a compelling case for cultural change and employing both symbolic actions and substantive actions that unmistakably indicate serious commitment on the part of top management.
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The more that culture-driven actions and behaviors fit what's needed for good strategy execution, the less
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managers must depend on policies, rules, procedures, and supervision to enforce what people should and should not do.
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Leading the drive for good strategy execution and operating excellence calls for three actions on the part of the manager in charge:
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* Staying on top of what is happening and closely monitoring progress. This is often accomplished through managing by walking around (MBWA).
* Mobilizing the effort for excellence in strategy execution by putting constructive pressure on the organization to execute the strategy well.
* Initiating corrective actions to improve strategy execution and achieve the targeted performance results.
