Corporate Culture: Power to Greatness

Corporate Culture: Power to Greatness
September 2003
by Alice Branch of FutureSense, Inc.

What makes a company great, regardless of size? What makes a company great whether it employs a hundred or a hundred thousand employees, and yields a hundred million or a hundred billion dollars in annual net revenues?

It’s in the culture. Culture? Like it or not, every business has a culture – that intangible thing that governs how we actually interact with each other, how we communicate, how we behave, how change is handled, how all of the people-related side of the business occur. It’s common to hear that this or that company believes that “people are our most valuable resource.” However, the proof of that lies in a company’s culture.

Some basic considerations about corporate culture

In the beginning, cultures reflect the founder(s)’ values regarding business in general and their company in particular. Over time, these values are either strengthened (to the benefit or detriment of the company) or weakened (again, to the benefit or detriment). Whether the culture works to support or impede the company depends on the nature and strength of the founder(s)’ values and the business practices of the company.

Cultures need to morph with the changes in business and business climate. What worked well in years past may not work well for today or for the future. “Why not?” you might ask. When a company is small, everyone knows everyone else; the rules are easy to learn and understand. When a company experiences growth, things get more complicated, there is less time for everyone to get to know one another, and people can no longer assume that everyone knows everything about what’s important. 

Cultural morphing can be unintentional or (preferably) intentional. 

What is in corporate culture?

There are many ways to “slice & dice” a culture. One of the simplest (and best) is illustrated in the figure below, which shows six dimensions to corporate culture (Weisbord 1978).

The more in balance these six dimensions are, the easier it is to align the culture; the easier to align the culture, the healthier the culture; and the healthier the culture, the stronger your company’s business performance can be … assuming, of course, that the boxes are in positive alignment. 

How should cultural dimensions be aligned?

Studies have shown that business performance is positively impacted when an organization’s culture[1] :

Places a premium on employees’ direct involvement with the business, whether in decision-making, innovation, or product and service generation and delivery. You don’t need a beer-bust or coffee and donuts in the morning so much as you need to have your people thoroughly understand and participate in the business. 

Has a strong market-driven focus that emphasizes business results through customer-centric and other stakeholder-centric practices. Over the years, we’ve learned that customer focus is very important, but not too many companies actually practice TCE – or total customer experience, which examines the customer’s experience with the product or service from the very first point at which a product is envisioned (“conception”) to the very first point a customer will come into contact with the product to the purchase and ultimately, to the end when the customer no longer wants or needs it (“death”).

Is clearly articulated and systematically integrated into internal and external business practices.

Corporate culture as power behind business performance

In the early 1990’s, Alberto-Culver North America found itself dangerously stagnant, earning roughly one cent for each bottle of its most popular shampoo brand. The CEO set out to systematically turn the company around from this dismal performance through revitalizing the culture (Bernick 2001). Since 1994 (start of the cultural shake up), Alberto-Culver NA gained an increase of 83% in sales and 336% in pre-tax profit. Employee turnover was cut in half. States Bernick, “culture and performance tend to become self-perpetuating circles.” 

Home Depot’s CIO describes the corporate culture as one that emphasizes doing “what’s right for the customer, the employee, and the community” (Bresnahan 2001). To ensure customers have a great experience, employees undergo extensive training on home building tools and materials, as well as engage in construction projects so that they can provide informed advice to customers and get to know the products. In addition, Home Depot employees often exercise the opportunity to use their skills within the community through projects such as building homes for low-income families. By making sure their employees can relate to the customer, Home Depot ensures they get a sizable portion of the $50,000 that the average American homeowner spends in his or her lifetime on home improvements. 

Kyocera Corporation, headquartered in Japan, was founded on an initial investment of US$8,300 and became a multi-billion dollar, multinational company (Kotter & Rothbard, 1993). Among the practices originated by its founder is the “amoeba” management style that creates a flattened organization where title and seniority are not the basis for power, and individuals are engaged in running the business in a hands-on way. Although now a global corporation, Kyocera consciously keeps a “small organization” feel by limiting the size of the business units to about 200 people. 

There are many more examples of companies that have done well through wielding the power of their corporate cultures. Among these include such very different companies as Shell Oil, Levi-Strauss, and Hewlett-Packard. Just about any company can wield its corporate culture to sustain and/or improve business performance. You don’t have to be in the Fortune 50, or 100, or 500, or 1,000 to be a great company.

It is admittedly unusual to ascribe corporate culture as a “power” and to say things like, “wielding the power of corporate culture.” It is probably not a politically correct thing to say that corporate culture is a resource or tool that can be used consciously for business performance. The reality, however, is this: corporate culture exists, is born out of the dynamics between leaders and people interacting with each other, and sets the pace from the beginning of how business gets done. When properly and consciously engaged, it can be a force behind a company’s performance. “People are our best resource.” 

Who or what wields the power?

You probably already know the answer -- the company’s leadership, and specifically the CEO with his/her executive team (if not, then the company is probably in trouble). We have a glimpse into the significance of leadership in corporate culture. We mentioned that culture begins with the strength and nature of the founder’s values. Our six-box model states that leadership’s role in culture is to keep all of the other five boxes in balance. In each of our real life examples, leadership sets the tone for sustained excellence in business performance.

References

Bernick, C.A. (2001, June). When your culture needs a makeover. Harvard Business Review, pp. 53-61.
Bresnahan, J. (1998, May). Shoptalk: Home Depot’s Ron Griffin on how IS benefits from corporate values. CIO Magazine, 2p.
Dominguez, A. (1998, July 6). Bossless company goretex maker gaining reputation for unusual ‘boss-less’ management style. Greensboro New Record, B8.
Duffy, D. (1999, January 15). Cultural evolution. CIO Enterprise Magazine, 5p.
Kotter, J.P. & Rothbard, N. (1993). Kyocera corporation. Publishing Division, Harvard Business School, Case Number 9-491-078.
Maignan, I, & Ferrell, O.C. (2001). Antecedents and benefits of corporate citizenship: An investigation of French businesses. Journal of Business Research, 51(1), 37-51.
Maignan, I., Ferrell, O.C. & Hult, G.T.M. (1999). Corporate citizenship: Cultural antecedents and business benefits. Journal of the Academy of Marketing Science, 27(4), 455-469.
O’Reilly, C.A. & Thuraisingham, C. (2001). Homestead technologies: a start-up built to last. Graduate School of Business Stanford University, Case Number: HR-18.
Rowlinson, M. & Procter, S. (1999). Organizational culture and business history. Organization Studies, 20(3), 369-396.
Salva-Ramirez, M-A. (1995). McDonald’s: A prime example of corporate culture. Public Relations Quarterly. 40(4), 30-32.
Stoica, M. & Schindehutte, M. (1999). Understanding adaptation in small firms: Links to culture and performance. Journal of Developmental Entrepreneurship. 4(1), 1-18.
Weisbord, Marvin (1978). Organizational diagnosis: a workbook of theory and practice. Addison-Wesley: New York.[/size]

Footnotes

[1] See Maignan, et al (1999) & Maignan, etal (2000); Anfuso (1999), Dominguez (1998), Duffy (1999), O’Reilly & Thuraisingham (2001), Rowlinson, M. & Procter, S. (1999), Salva & Ramirez (1995), and Stoica, M. & Schindehutte, M. (1999).