Professional Documents
Culture Documents
19e Section6 LN Chapter12
19e Section6 LN Chapter12
CHAPTER 12
CORPORATE CULTURE
AND LEADERSHIP: KEYS TO
GOOD STRATEGY EXECUTION
CHAPTER SUMMARY
Chapter twelve explores the two remaining managerial tasks that shape the outcome of efforts to execute a
companys strategy: creating a strategy-supportive corporate culture and exerting the internal leadership needed
to drive the implementation of strategic initiatives forward and achieve higher plateaus of operating excellence.
LECTURE OUTLINE
I. Instilling a Corporate Culture that Promotes Good Strategy Execution
1. Every company has its own unique culture. The character of a companys culture or work climate is
a product of the core values and business principles that executives espouse, the standards of what
is ethically acceptable and what is not, the work practices and behaviors that define how we do
thing around here, its approach to people management and the chemistry and the personality
that permeates its work environment.
2. The meshing together of stated beliefs, business principles, style of operating, ingrained behaviors
and attitudes, and work climate define a companys corporate culture. Importantly, corporate
cultures vary widely.
CORE CONCEPT
Corporate culture refers to the character of a companys internal work climate as
shaped by a system of shared values, beliefs, ethical standards, and traditions that
define behavioral norms, ingrained attitudes, accepted work practices, and styles of
operating.
A. Identifying the Key Features of a Companys Corporate Culture
1. A companys corporate culture is mirrored in the character or personality of it work environment:
The chief things to look for include the following:
a. The values, business principles, and ethical standards that management preaches and practices
actions speak louder than words
b. The companys approach to people management and the official policies, procedures and
operating practices that paint the white lines for the behavior of company personnel
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c. The atmosphere and spirit that pervades the work climate. Is the workplace vibrant and fun?
Methodical and all-business? Tense and harried? Highly competitive and politicized? Are
people excited about their work and emotionally connected to the companys business, or are
they just in it for the paycheck
d. The way managers and employees interact and relate to each otherthe reliance on teamwork
and open communication, the extent to which there is good camaraderie, whether people are
called by their first names, what the dress codes are
e. The strength of peer pressure to do things in particular ways and conform to expended norms.
f
The actions and behaviors that are explicitly encouraged and rewarded by management in the
form of compensation and promotion.
g. The companys revered traditions and oft-repeated stories about heroic act and how we do
things around here:
h. The manner in which the company deals with external stakeholders (particularly vendors and
local communities where it has operations.
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e. Making the display of core values and ethical principles a big factor in evaluating each persons
job performance.
f. Making sure that managers at all levels are diligent in stressing the importance of ethical
conduct and observance of core values.
g. Encouraging everyone to use his or her influence in helping enforce observance of core values
and ethical standards.
h. Periodically having ceremonial occasions to recognize individuals and groups who display the
company values and ethical principles.
i. Instituting ethics enforcement procedures.
7. The Role of Stories: Frequently, a significant part of a companys culture is captured in the stories
that get told over and over again to illustrate to newcomers the importance of certain values and the
depth of commitment that various company personnel have displayed.
8. Forces that Cause a Companys Culture to Evolve: New challenges in the marketplace,
revolutionary technologies, and shifting internal conditionsespecially an internal crisis, a change
in company direction, or top executive turnovertend to breed new ways of doing things and, in
turn, drive cultural evolution.
B. Strong vs. Weak Cultures
1. Corporate cultures vary widely in the degree to which they are embedded in company practices and
behavioral norms.
2. Strong-Culture Companies: The hallmark of a strong-culture company is the dominating
presence of certain deeply rooted values and behavioral norms that regulate the conduct
of company personnel as they go about the companys business. Two factors contribute to the
development of strong cultures:
a. A founder or strong leader who establishes values, principles, and practices that are consistent
and sensible in light of customer needs, competitive conditions, and strategic requirements
b. A sincere, long-standing company commitment to operating the business according to these
established traditions, thereby creating an internal environment that supports decision making
and strategies based on cultural norms
CORE CONCEPT
In a strong-culture company, deeply rooted values and norms of behavior are widely
shared and regulate the conduct of the companys business.
3. Weak-Culture Companies: In direct contrast to strong-culture companies, weak-culture companies
are fragmented in the sense that no one set of values is consistently preached or widely shared,
few behavioral norms are evident in operating practices, and few traditions are widely revered or
proudly nurtured by company personnel. Very often, cultural weaknesses stems from moderately
entrenched subcultures that block the emergence of a well-defined companywide work climate.
4. Weak cultures provide little or no strategy-implementing assistance because there are no traditions,
beliefs, values, common bonds, or behavioral norms that management can use as levers to mobilize
commitment to executing the chosen strategy.
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
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E. Unhealthy Cultures That Impede Good Strategy Execution: The distinctive characteristic of an un
healthy corporate culture is the presence of counterproductive cultural traits that adversely impact the
work climate and company performance. There are five particularly unhealthy cultural traits:
1. Change-Resistant Cultures
a. In less adaptive cultures where skepticism about the importance of new developments and
resistance to change are the norm, managers prefer waiting until the fog of uncertainty clears
before steering a new course.
b. Change-resistant cultures encourage a number of undesirable or unhealthy behaviorsrisk
avoidance, timidity regarding emerging opportunities, and laxity in product innovation and
continuous improvement.
2 Politicized Cultures
a. What makes a politicized internal environment so unhealthy is that political infighting con
sumes a great deal of organizational energy.
b. Often with the result that political maneuvering takes precedence over what is best for the
company.
3. Insular, Inwardly Focused Cultures
a. The not-invented-here mind-set
b. Tends to develop when a company reigns as an industry leader or enjoys great market success
for so long that its personnel start to believe they have all the answers or can develop them on
their own.
4. Unethical and Greed-Driven Cultures: Companies that have little regard for ethical standards or that
are run by executives driven by greed and ego gratification are scandals waiting to happen.
5. Incompatible Subcultures
a. Values, beliefs, and practices within a company sometimes vary significantly by department,
geographic location, division, or business unit.
b. Incompatible subcultures arise most commonly because of important cultural differences
between a companys culture and that of a recently acquired company or because of a merger
between companies with cultural differences.
F. Changing a Problem Culture
1. Changing a problem culture is one of the toughest tasks because of the heavy anchor of ingrained
behaviors and ways of doing things.
2. The single most visible factor that distinguishes successful culture-change efforts from failed
attempts is competent leadership at the top. Great power is needed to force major cultural change
and overcome the springback resistance of entrenched cultures.
a. The first step in fixing the problem culture, as shown in Figure 12.2, is for top management to
identify those facets of the present culture that are dysfunctional and pose obstacles to executing
new strategic initiatives and meeting or beating company performance targets.
b. Second, managers have to clearly define the desire new behaviors and features of the culture
they want to create.
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c. Third, managers have to convince company personnel why the present culture poses
problems and why and how new behaviors and operating approaches will improve company
performancethe case for cultural reform has to be persuasive.
d. Finally, and most important, all the talk about remodeling the present culture has to be followed
swiftly by visible, forceful actions to promote the desired new behaviors and work practices.
3. Making a Compelling Case for Culture Change: Management must sell company personnel
on the need for new-style behaviors and work practices by making a compelling case for why
the companys new strategic direction and culture-remodeling efforts are in the organization best
interest. This can be done by:
a. Explaining why and how certain behavioral norms and work practices in the current culture
pose obstacles to good execution of new strategic initiatives.
b. Explaining how new behavior and work practices that are to have important roles in the new
culture will be more advantageous and produce better results.
c. Citing reasons why the current strategy has to be modified and why new strategic initiatives that
are being undertaken will bolster the companys competitiveness and performance.
4. Figure 12.2, Steps to Take in Changing a Problem Culture, illustrates this essential leadership
process.
5. Arguments for new ways of doing things and new work practices tend to be embraced more readily
if employees understand how they will benefit company stakeholders.
6. Substantive Culture-Changing Actions: Company executives have to give the culture-change
effort some teeth by initiating a series of actions that company personnel will see as credible and
unmistakably indicative of managements commitment.
a. Replacing key executives who are strongly associated with the old culture and are stonewalling
needed organizational and cultural changes.
b. Promoting individuals who are known to possess the desired cultural traits and can serve as role
models for the desired cultural behavior.
c. Appointing outsider with the desired cultural attributes to high-profile positions.
d. Screening all candidates for new positions carefully, hiring only those who appear to fit in with
the new culture.
e. Mandating that all company personnel attend culture training programs.
f. Designing compensation incentives that boost the pay of teams and individuals who display the
desired cultural behaviors and hit change-resisters in the pocketbook.
g. Revising policies and procedures in ways that will help drive cultural change.
7. Symbolic Culture-Changing Actions to alter a problem culture and tighten the strategyculture
fit:
a. Lead by example.
b. Hold ceremonial events to single out and honor people whose actions and performance
exemplify what is called for in the new culture.
c. Use symbols in culture-building (such as employee of the month award).
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CORE CONCEPT
Management by walking around (MBWA) is one of the techniques that effective
leaders use to stay informed about how well the strategy execution process is
progressing.
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5. Mobilizing the Effort for Excellence in Strategy Execution: Putting constructive pressure on
the organization to execute the strategy well and achieve operating excellence. Managers have to
be out front in mobilizing organizational energy behind the drive for good strategy execution and
operating excellence. This can include actions such as:
a. Treating employees as valued partners in the drive for operating excellence and good business
performance.
b. Fostering an esprit de corps that energizes organization members.
c. Using empowerment to help create a fully engaged workforce.
e. Setting stretch objectives and clearly communicating an expectation that company personnel
are to give their best in achieving performance targets.
f. Using the tools of benchmarking best practices, business process reengineering, TQM, and Six
Sigma to focus attention on continuous improvement.
g. Using the full range of motivational techniques and compensation incentives to inspire company
personnel, nurture a results-oriented work climate, and enforce high-performance standards.
h. Celebrating individual, group, and company successes.
6. Leading the Process of Making Corrective Adjustments
a. Here comes a time at every company when managers have to fine-tune or overhaul the
approaches to strategy execution since no action plan for executing strategy can foresee all the
problems that will arise.
b. Success in making corrective actions hinges on three things:
1) A thorough analysis of the situation
2) The exercise of good business judgment in deciding what actions to take
3) Good implementation of the corrective actions that are initiated.
III. A Final Word on Managing the Process
1. In practice it is hard to separate the leadership requirements of executing strategy from the other
pieces of the strategy process. The process is continuous and the conceptually separate acts of
crafting and executing strategy blur together in real-world situations.
2. The best tests of good strategic leadership are whether the company has a good strategy and whether
the strategy execution effort is delivering the hoped-for results.
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