29-07-2021

Strategic Management - II
SESSION 10

Culture
“Culture isn’t just one aspect of the game—it is the game. In
the end, an organization is no more than the collective
capacity of its people to create value”… Lou Gerstner, the
former chairman of IBM
“It’s about the culture. I could leave our strategy on an
aeroplane seat and have a competitor read it and it would
not make any difference” …Former CEO of Wells Fargo, John
Stumpf

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Characteristics of high and low

performance cultures
High Performance Cultures Low Performance Cultures
Leaders are skilled, admired, and build Leaders provide minimal leadership, are
organizations that excel at results and not trusted and admired, and do little to
at taking excellent care of their people engage and involve their people
and their customers

Clear and compelling vision, mission, Vision, mission, goals, and strategy are
goals, and strategy not compelling, not used, or do not exist

Core values drive the culture and are Core values are unclear, not compelling,
used in decision making not used, or do not exist

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Characteristics of high and low

performance cultures
High Performance Cultures Low Performance Cultures
Committed to excellence, ethics, and Lack of commitment to excellence,
doing things right questionable ethics, and a reputation for
doing what is expedient rather than what
is right
Clear roles, responsibilities, and Unclear roles and responsibilities and
success criteria, and strong little interest in fully utilizing and
commitment to engaging, developing the capabilities and
empowering, and developing people potential of people
Positive, can-do work environment Negative, tense, and/or resistant work
environment

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Characteristics of high and low

performance cultures
High Performance Cultures
Open, candid, straightforward, and
transparent communication
Teamwork, collaboration, and involvement Top-down decision making with minimal
are the norm
Emphasis on constant improvement and
state-of-the-art knowledge and practices
Willingness to change, adapt, learn from
successes and mistakes, take reasonable
risk, and try new things
Low Performance Cultures
Guarded communication, reluctance to be
open and straightforward, and consequences
for saying things leaders do not want to hear
teamwork, collaboration, and involvement
Slow to make needed improvements and
behind times in knowledge and practices
Resistance to change, minimal
learning from successes and mistakes, and
either risk averse or risk foolish

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Shaping Culture Through

Participation and Commitment
Three characteristics of the participation process
lead people toward increasing commitment:
• Choice, or the opportunity to participate;
• Visibility, or making choices that are public and can be
witnessed by others who matter; and
• Irrevocability, or a sense that some line has been crossed

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Shaping Culture Through

Participation and Commitment
 Decisions made without strong external pressure –
• Increase feelings of personal responsibility,
• Reduce the ability to justify our actions by pointing to another
motive (such as money), or external pressure (such as a manager),
and
• Enhance positive feelings (if I chose to do this, it must be
worthwhile; otherwise, why would I do it?)
• Example – Hiring a team member. Employees designing their own
processes to deliver output

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Shaping Culture Through

Participation and Commitment
 Visibility makes it difficult to excuse nonperformance and motivates
one to do what one promised.
• Making public commitments in front of co-workers who are family and
friends requires a different degree of follow-through than promising
something to a stranger.

 As managers and researchers attempt to understand why TQM

efforts work or don’t work, two findings emerge that reflect the
psychology of commitment.
• Quality teams are more likely to succeed if
1.The team members feel that they have chosen to participate (and not been
told that they were ‘volunteering´) and
2.These teams and their efforts are highly visible to those who matter.

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Shaping Culture Through

Participation and Commitment
 Irrevocability discourages individuals from considering alternative
choices and focuses energy on the chosen course.

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Building and
sustaining organizational cultures
Make strategy and culture important leadership priorities
 Welch spent 70% of his time managing people issues
 Welch named a Cadre of Rising Executives to push for added-value
services
 Set up a services council for exchanging ideas
 $ 500 million spent to train 85000 professionals
Develop a clear understanding of the present culture
 “We don’t need questioners, checkers, nitpickers – who bog down the
process”

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Building and
sustaining organizational cultures
Identify, communicate, educate, and engage employees in the cultural
ideals
 Work out, Best Practices
 Spent $45 million improving Crotonville management facility
Role model desired behaviours
 Welch’s intense involvement in the company’s Management
Development Institute, travelled twice a month to the Cotonville
management facility
 Welch kept a tab on 3000 executives especially the top 500 himself

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Building and
sustaining organizational cultures
Recruit and develop for culture
 “I own the people”, the businesses just rent them
 Players with 4Es – excited by ideas, ability to energies, edge (ability to
make tough calls and execution
Align for consistency between strategy and culture
 To make the organization lean and agile
 Dismantling of the “Strategic Planning” function
 Reduction in number of hierarchical levels from 9 to 4

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Building and
sustaining organizational cultures
Recognize and reward desired behaviors and practices
 Stock options extended from 3000 executives to 30000 employees
 More aggressive bonuses for organizations current priorities –
globalization or best practices
Use symbols, ceremonies, socialization, and stories to reinforce culture
 Story of New Zealand appliance maker, Fisher & Paykel being repeated
by Welch to adopt flexible job-shop technique to improve productivity
 The In-Site story was shared in the services council to trigger a focus on
services in other divisions as well
 To promote quality culture through six sigma – “Green Belts”, “Black
Belts”, “Master Black Belts” for employees who got trained

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Building and
sustaining organizational cultures
Monitor and manage the culture
 360 degree feedback system
 Four categories of managers – eliminate the Type II and Type IV
managers

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Thank You………..

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