Analyzing Corporate Culture
Sociability refers primarily to affective relations between individuals who are likely to see one another as friends. As such, they tend to share certain ideas, attitudes, interests, and values and to be inclined to associate on equal terms. In essence, sociability represents a type of social interaction that is valued for its own sake. It is typically maintained through ongoing, face-to-face relations characterized by high levels of implicit reciprocity; there are no “deals” prearranged. Individuals help each other “with no strings attached.”
Solidarity, by contrast, describes task-focused cooperation between individuals and groups. It does not necessarily depend upon close friendship or even personal acquaintance, nor is it necessarily sustained by continuous social relations. Solidarity is displayed instrumentally and discontinuously—as when a perceived need arises. In contrast to sociability, then, its expression is both intermittent and contingent.
To cooperate in the instrumental pursuit of common goals it is not necessary for individuals to like one another. In fact, solidarity may often be exhibited among those who strongly dislike each other. Equally, intimate forms of sociability may actually be less likely among those who feel constrained to act solidaristically as work colleagues.
The intensity of sociability may vary directly, independently, or inversely with the intensity of solidarity. We have found it useful to distinguish organizations as exhibiting high or low levels of sociability and solidarity. This suggests four distinctive corporate forms: networked, mercenary, fragmented, and communal.[4] We have also distinguished, as shown in Figure 17-1, between positive and negative aspects of each form.
Figure 17-1. The Double S Cube: solidarity versus sociability.
Networked Cultures
Networked organizations exhibit high levels of sociability but relatively low levels of solidarity. They are often characterized by loyalty, a “family” ethos, and important work-related social events and rituals of one kind or another. These serve to sustain a strong sense of intimacy and friendship. Patterns of sociability within the workplace often extend beyond it, via leisure and sporting clubs and informal social contacts among families.
Levels of solidarity, however, are low. In fact, although social networks are characterized by well-established friendships, the culture of networked organizations can become gossipy and political. Members of network cultures sometimes make the mistake of assuming that well-established patterns of sociability will form the basis for solidaristic cooperation. In fact, the reverse may be true. Close friendships, for example, may constrain open expression of difference. This, in turn, may be a necessary condition for developing and maintaining a shared sense of purpose.
Networked cultures tend to emerge in organizations where
Knowledge of local markets is a critical success factor.
Corporate success is an aggregate of local success (interdependencies are minimal).
There are few opportunities for transfer of learning between divisions or units.
Strategies are long-term (sociability maintains strategic intent when short-term calculations of interest would not).
Business organizations with networked cultures often benefit from informal social relations that, in turn, facilitate flexible responses to problems, fast communication between members, and a preparedness to help. Those drawn to such cultures report satisfaction with the friendship and empathy of work colleagues and the relaxed, easygoing atmosphere.
But, as we have suggested, networked cultures can also suffer from negative politics. To some extent, this may be inevitable—at least in large-scale organizations. Networks can degenerate into cliques. Similarly, informal information exchange can easily become malicious gossip; meetings between friendly people may produce much talk but little action. More than other cultures, it is the informality of the networked culture that sanctions political game playing: for example, manipulation of communication, high rates of job mobility to avoid performance measures, and advanced impression management—particularly in senior managers. The defining characteristics of this type, both positive and negative, are summarized in Table 17-1, along with some suggestions for preventing slippage into the negative form, as shown in Table 17-2.
| Positive Networked | Negative Networked |
|---|---|
| Informality | Gossip, rumor |
| Flexibility | Negative politics |
| Rapid exchange of information | Endless debate about measures |
| Willingness to help | Long meetings with no action |
| High trust | Manipulation of communication (e.g., copying e-mails) |
| Ease of communication—no hidden agendas | CYA management style |
| Fun, laughter | Risk aversion—Keep your head down |
| Loyalty | Change jobs in the organization frequently (this builds networks and minimizes performance measurement) |
| Empathy | Concentrate more on managing upward than managing outcomes |
| Caring for others | |
| Compatible people | |
| Less defensiveness | |
| Relaxed |
| Symptom | Solution |
|---|---|
| Extensive gossip, rumor, and intrigue | Control it by confronting rumor mongers, getting to the grapevine first, making more information public |
| Exclusive cliques | Move people around—change their jobs, move their location |
| Long meetings without commitment to action | Introduce more structure to meetings; limit time, conclude with action points and clear accountabilities |
| Cynicism about the products | Celebrate quality, invite employees to use products and make constructive suggestions for improvement |
Mercenary Cultures
In mercenary organizations, a heightened sense of competition and a strong desire to win—or at least survive—is often a central feature of corporate culture. Values are often built around competitive individualism and personal achievement but these do not preclude cooperative activity where this appears to produce measurable benefits. Solidarity, then, does not depend upon close friendships or ties of affection. Good teamwork may be described by members of such cultures as “eagles flying in formation.” Day-to-day relationships in such organizations are rarely characterized by high levels of collective cooperation—quite the reverse may be true. As we have pointed out, solidarity may be both intermittent and contingent.
The mercenary culture occurs where
Capacity to act swiftly in a highly coordinated way is a critical source of competitive advantage.
Economies of scale and competitive advantage can be gained from creating corporate centers of excellence that can impose processes and procedures on operating units.
The nature of the competition is clear—external enemies help to build internal solidarity.
Corporate goals are clear and measurable and there is little need for consensus building.
Organizations that have a predominantly mercenary culture often benefit from a clear understanding of purpose and the ability to mobilize resources swiftly to achieve ends. Members of these cultures are attracted by their intolerance of poor performance, the preparedness to openly address conflict, and the relentless drive to measurably improve standards.
The benefits of a mercenary culture for business organizations operating within competitive market economies are clear.[5] But there can be a dark side to the mercenary culture. The tendency to focus upon measurable performance may ignore the unmeasurable. Because cooperative behavior is not always easily assessed, these cultures can easily become internally competitive. The predominance of means–ends relationships also implies that the management of uncertain and ambiguous circumstances is often difficult. Finally, low levels of sociability can reduce emotional involvement and result in a relatively brittle psychological contract. Even a brief perceived misalignment of individual and organizational interests can be enough to result in the loss of organizational members. In knowledge-based businesses, in particular, this can prove extremely expensive. Positive and negative features are summarized in Table 17-3, along with guidelines for managerial actions to prevent the drift to negative characteristics, as shown in Table 17-4.
| Positive Mercenary | Negative Mercenary |
|---|---|
| Focused | Internally competitive—no time for cooperation |
| High energy, task oriented | Only does what is measured |
| Energy | Poor at alliance management (because alliances always require the management of ambiguity and mercenary cultures are bad at this) |
| High levels of competition awareness | Fails to explore synergy opportunities (good at exploiting them once they are clear) |
| Recognition of shared interests | Fragile psychological contract (this is a real problem in business where knowledge management is critical; e.g., pharmaceutical industry) |
| Quick response rate | “Quick suicide”; will march over the cliff in step—intolerance of dissent |
| Intolerance of poor performance | |
| Conflicts openly addressed | |
| Relentless pursuit of improving measured outcomes and standards |
| Symptom | Solution |
|---|---|
| Factions fighting (unit A vs. unit B, business against corporate, etc.) | Repeat collective purpose and common enemies through company videos, newsletters, speeches, etc.; create opportunities to link activities; publicly reward common purpose goals |
| No time to think—always diving straight into action | Initiate strategic review focused on the future; use “away days” to help people step back and gain perspective |
| Important things don't get done because they are not measured | Refocus measurement systems, include some items that require cooperation |
| Ego clashes and people seeking revenge | Train people in conflict resolution skills |
Fragmented Cultures
But what of cultures that exhibit low levels of both sociability and solidarity? Can these fragmented organizations survive or succeed? Although it seems at first unlikely, there is evidence that, at least in some contexts, these “disintegrated” corporate cultures can survive and grow. For example, organizations that rely heavily on outsourcing or home-based work or those dependent upon the contribution of individual, noninterdependent experts and professionals may be predominantly fragmented.
Thus, fragmented cultures are typical where:
Innovation is produced mainly by individuals.
Standards are achieved primarily through input (e.g., professional qualifications) rather than process controls.
There are few learning opportunities between individuals.
There are low levels of work interdependence.
Organizations with predominantly fragmented cultures can derive substantial benefits from the autonomy and freedom granted to its members. University professors or partners in a law firm, for example, possess considerable discretion to set their own work agendas and develop their professional talents without external “interference.” Under such conditions individual creativity can flourish and resources are distributed to those with proven track records.
But fragmented cultures can sometimes become so individualized that they fall apart. Freedoms are abused by selfish and secretive behavior, organizational commitment is nonexistent, and simple attempts at cooperation—meetings, for example—are disrupted or ignored. Contrasting negative and positive features are described in Table 17-5, and some tips for addressing negative symptoms are outlined in Table 17-6.
Communal Cultures
Despite the viability of the fragmented culture in some contexts, it is perhaps not surprising that the communal organization is sometimes seen as the ideal. Solidarity alone may produce an excessively instrumental organizational orientation; cooperation may be withdrawn the moment that it is not possible for members to identify shared advantage. By contrast, organizations that are characterized primarily by sociability may lose their sense of purpose. Critics claim that such organizations tend to be overly tolerant of poor performance and possibly complacent.
| Positive Fragmented | Negative Fragmented |
|---|---|
| Freedom from organizational interference | Selfish |
| Focus on individual excellence | No knowledge sharing (secretive) |
| Set out own agenda | Low identification with organization |
| Define your own goals | Very fragile psychological contract |
| Scope for individual creativity | Cannot manage meetings or any collective events |
| Work with whom you choose (either inside or outside; therefore good opportunities to network) | Bad-mouth colleagues (excessive critique can degenerate into inaction) |
| Can steal ideas and practices from anywhere | All ideas get savaged |
| Resources follow stars (i.e., those who can deliver get what they need) | |
| Space to explore ideas without either sociability or solidarity getting in the way |
| Symptom | Solution |
|---|---|
| Good people leaving | Tie in your stars; rewards must be highly competitive and relate to their desires for self-fulfilment |
| Lying about outputs or exaggerating their significance | Repeated market testing to check that you have stars. Use search consultants to find out who wants your people. Collect objective data about the reputations of your stars from clients and respected authorities |
| Immediately savaging all ideas that are not your own | Create contexts that reduce risk—brainstorming, train in feedback skills, recognize good work |
| Failure to see interdependencies where they exist | Light-touch leadership that makes connections between people (too heavy and it will be resisted) |
Certainly, the communal organization has much appeal. Indeed, this form shapes much of the literature on innovative, high-performance business organizations.[6] However, it may be an inappropriate and unattainable ideal in many corporate contexts. Those businesses that are able to achieve the communal form frequently find it difficult to sustain. There are a number of possible explanations. High levels of sociability and solidarity are often formed around owner-founders or leaders whose departure may weaken either or both forms of social relationship. Similarly, the communal culture may be difficult to sustain in the context of growth, diversification, and internationalization. More profoundly, there may be a basic tension between relationships of sociability and solidarity that makes the communal corporation inherently unstable. In effect, friendships can undermine collective interests or vice versa.
The communal form is often seen where
Innovation requires extensive and complex teamworking across functions and locations.
There are measurable synergies and opportunities for teamworking across organizational sub-units.
Strategies are long-term and emergent rather than the sum of measurable stages.
The business environment is dynamic and complex, requiring multiple interfaces with the environment and an advanced capacity for internal organizational information processing.
Organizations with communal cultures can become “cult-like.” Members are often passionate about the “cause” and so are able to expend high levels of energy in the pursuit of their case—or “converting” others. Communal cultures can often sustain complex teams apparently divided by geography, nationality, and function, for example, but united in a common purpose and close ties between espoused values and embedded practices.
As we discuss next, many successful business start-ups and fast-growth enterprises have been built around a communal culture. But such cultures can be prone to what has become known as the “paradox of success”; the tendency to persist with behaviors even when they have ceased to be appropriate to context.[7] Successful communal cultures often develop an inappropriate sense of invulnerability. Competitors may be too easily dismissed and customers seen to be in need of education. New ideas are rejected because of an uncritical adherence to values or principles that may have ceased to serve their purpose. Look at, for example, the way in which IBM—a communal culture—was undermined by new entrant Apple, who then paradoxically were undermined by the same collective sense of invulnerability as their original target. Differences between the positive and negative characteristics are summarized in Table 17-7 and in Figures 17-2 to 17-5, along with possible solutions to prevent the drift to the negative form, as shown in Table 17-8.
Figure 17-2. Preventing return to networked culture.
Figure 17-5. The reversed zed form.
| Positive Communal | Negative Communal |
|---|---|
| Passionate | Sense of invulnerability |
| Committed | Inability to see strengths of competitors |
| High energy | No leadership development, only disciples |
| Creative | Excessive reliance on charismatic founder figures |
| Able to sustain teams over long periods | Willingness to “carry” underachieving colleagues, as long as they continue to believe in the values (i.e., confusing beliefs with performance) |
| Loyal | Unwillingness to change (e.g., IBM) |
| Equitable, fair, just | |
| Close tie between espoused values and embedded practices | |
| Stimulating (rather more than fun—almost obsessive) |
| Symptom | Solution |
|---|---|
| Complacency—undervaluing the competition | Regularly benchmark; compare yourself with radically different kinds of organizations |
| Believing your own propaganda | Build opportunities to discuss and critique credo |
| Talking the values but not practicing them | Ensure values and associated behaviors are built into appraisals and reward systems |
| Not learning from other organizations | Exposure to others (alliances; consultants bring in new people) |
Figure 17-3. Preventing descent into fragmentation.
Figure 17-4. Preventing dive into mercenary.
Culture and Change
How, then, can this framework be used to map patterns of organizational change? Clearly, there is a need to distinguish planned, programmatic change interventions from more evolutionary patterns that may reflect, for example, stages of firm growth or industry sector patterns. It is equally important to distinguish changes across the front of the Double S Cube from those involving a shift from negative to positive cultural types. Bringing these two distinctions together it would appear that although it is possible, for example, for a positive networked or mercenary culture to evolve gradually into a more negative form, the reverse process of change is almost certainly impossible. In other words, we know of no cases where negative cultures (networked, mercenary, communal, or fragmented) have been able to recapture positive attributes without planned, consciously managed interventions. Organizations can slide into the negative form of the culture but can only climb out of it.
But what of movements that may be mapped across the front of the Double S Cube? In much of our consulting work over recent years we have seen many companies launch change initiatives designed to shift the culture from networked to mercenary. This is a move we should expect during periods of intensified market competition where swift, coordinated action and a piercing focus on goal achievement is at a premium—even if this is at the expense of carefully built and longstanding social relationships. It is perhaps no surprise that the “strategic intent” model that gained popular currency during the 1990s—largely through the work of Hamel and Prahalad—is, in many respects, a celebration of the positive mercenary culture.
But the journey from networked to mercenary culture is hazardous. Although the failure rate of planned organizational change is typically high in most circumstances, we suspect that the success rate of this particular move may be extremely limited. Why is this? To some extent, it may result from a failure by those involved in such projects to grasp the fundamental shift in cultural assumptions that such a journey involves. These are summarized in Table 17-9.
| Networked | Mercenary |
|---|---|
| Implicit goals | Explicit goals |
| Acceptance of ambiguity | Need for clarity |
| Obsession with analysis | Bias to action |
| Comfortable with complexity | Drive for simplicity |
| Personal agendas | Corporate goals |
Even if the scale of the change is appreciated, there remains the problem of the unintended consequences created by planned interventions. Three patterns are common. First, there is the tendency for networked cultures to “pull back” change efforts.
Here is a familiar story. Executives at negatively networked companies respond to market threats by attempting to be more mercenary. They realize that to become more ruthless toward competitors, employees need to be less friendly with each other. Thus executives will specify clearer goals, identify competitors with greater exactitude, and install processes that measure performance and milestones on the way to results. As the organization approaches the mercenary form and people realize the implications of the change, they rebel against the loss of social ties, and the organization returns “home,” as it were. In other cases, the sociability of networked organizations hijacks the effort to become more mercenary and undermines the attempt at change. Employees may look as if they understand and embrace the calls for more solidaristic behaviors, but once they are out of earshot of the change proponents, they criticize their efforts, accusing them of oversimplifying market challenges and organizational dynamics. In still other cases, organizations in the N–M–N migration simply run out of steam. It situations like these, the train of change has returned to the station before some of the last cars have even left.
So, what can be done to prevent it?
Keep up the pressure for change using external events and internal change champions. This is a push factor.
Paint a vivid and attractive picture of your destination. This is a pull factor.
Make change appear practical by focusing on clear and prioritized action items.
Redesign your reward system to encourage the new behaviors.
Celebrate achievements along the way.
Act swiftly to correct those who falter. Help them with the new behaviors.
A second pattern sees the drive to more mercenary behaviors undermining long-established ties of sociability in such a way that there is a rapid descent to the fragmented form. In a sense, the social ties that held the networked culture together fall apart. Typical symptoms include increased turnover, often of the best people; lower levels of trust; and reduced patterns of social interaction as individuals become increasingly concerned with “looking after themselves.”
What can be done to prevent this?
Keep talking to people. This will help you detect the warning signs of an uncontrolled descent into fragmentation (e.g., increased absenteeism, poor attendance at meetings, antisocial behaviors).
If you must release people, let them exit humanely, generously, and with their dignity intact.
Make sure you keep your stars.
A third pattern involves a change program that inadvertently produces an exaggerated dive into mainly negative aspects of the mercenary culture.
Under these circumstances, executives may be so anxious to move rapidly to more solidaristic behaviors—and to resist the “pull back” effect—that they overcompensate and effectively drive the culture into an exaggerated mercenary form. Worried about insufficient pressure on the accelerator, they press too hard. As a result, the positive aspects of both networked and mercenary cultures may be simultaneously lost. Behaviors may change, but largely through reluctant compliance rather then commitment. Pressure to perform produces a fear of mistakes that, in turn, drives out creativity and innovation. Work ceases to be fun. Insofar as solidarity emerges, it is patchy and destructively competitive between different parts of the organization (e.g., functions, business units, or territories).
There are several steps that can be taken to limit the dangers of this particular syndrome.
Explain change
Agree on new measures
Keep a longer term vision
Watch out for silos—measure cooperation, repeat collective purpose
Tolerate mistakes, but not poor performance
Don't grind down—retain fun
The shift from networked to mercenary is one that we expect to continue in the near future—particularly within larger, well-established businesses. But which other patterns may become particularly pronounced in the 21st century? Given the resilience—and, in some cases, powerful resurgence—of smaller and medium-sized enterprises in various industries, it is worth exploring two further patterns of organizational change.
Both patterns begin in the communal quadrant. This is because many start-ups and small- and medium-sized enterprises (SMEs) develop a tightly knit family-like culture where bonds of sociability and solidarity are simultaneously high. Such cultures are often strongly shaped by powerful founder-owners who have a clear sense of purpose (which builds solidarity) and who are able—because of their relatively small scale—to maintain the “little and often” face-to-face contacts with colleagues that are the lifeblood of sociability.
We refer to the first pattern as the “reversed zed form” because organizations move across the face of the Double S Cube in a backward letter Z.
Communal cultures can become networked for different reasons. At a fundamental level it is the case that the behaviors of sociability tend to undermine the relations of sociability. Another reason is that as communal companies do well, they can get somewhat lazy. They lose their focus on the external enemy—Goliath has been slain—which had been the source of their solidarity. Time passes, and eventually management comes to realize that the now-networked company has lost the energizing and productive competitive spirit it once had in its more communal form. They begin, often quite fervently, to encourage and compensate behaviors that move the organization toward the mercenary, such as explicit targets and financial objectives. They may be trying to move back to the communal, but their zealousness about solidaristic behaviors undermines the effort. In the process, social ties have come undone. Feelings get hurt. Mistrust often develops. The initiatives toward solidaristic behaviors fail to take hold, and bit by bit, the culture slips into the fragmented.
We suspect that the history of many smaller scale companies can be described in these terms, and the bursting of the dotcom bubble should not deflect our interest in small, dynamic companies. So what can be done to prevent the slide to fragmentation? We have already discussed the pitfalls in managing changes from networked to mercenary and fragmented cultures. The key initial challenge for smaller organizations in the reversed zed move is to retain the spirit of the communal culture and to prevent the drift to networked cultures. From our consulting experience, useful advice includes the following.
Resist the temptation to let friendship get in the way of business decisions.
Make sure your appraisal system focuses on objective measures.
Fight complacency by reminding everyone of the power of existing and potential competition.
Make the mission live; don't let it become a tablet of stone that can't be revisited.
But there is a second pattern of change associated with smaller businesses that develop communal cultures. This is where the communal culture—often with unexpected speed—fragments. As we have already suggested, the communal form is enormously fragile because of the inherent incompatibility between high sociability and high solidarity. And so, when the charismatic leader leaves, or the company is purchased, or any disruptive event occurs, the culture implodes, or in many cases, collapses. Indeed, this is where many promising entrepreneurial start-ups meet their end.
We must recognize that this change path is hard to resist, so what can be done?
Develop successors. Entrepreneurs, in particular, are guilty of never having enough time for this. The urgent drives out the important.
Use consultants. They will help you to objectively assess your needs (in the excitement of the communal culture you are the least well-equipped to know).