Business Culture Types

There are many views on how to classify the cultures present in businesses. In technology-oriented companies, the businesses are sometimes described as “start-up,” “newly public,” “mature,” or “legacy.” In government, the departments and agencies are sometimes described by their focus on research, setting policies, or providing operations and control of necessary services.

Research facilities and start-ups must be highly innovative since their mission is to solve previously unsolved problems and focus on deploying these solutions and bringing them to market. Sometimes, gaining significant early market and mind share through rapid incremental development is the primary goal. Monetary rewards for employees at such companies often include stock options, with the promise of possible substantial personal wealth in the future when the investment in innovation yields return on investment.

When start-up companies transition to being newly public entities, shareholders begin to drive an increase in focus toward the profitability of the company. This will often decrease the amount of risk-taking that the company is willing to take and the financial rewards to workers that the company provides. Less flexible management structures are put into place (and the founding CEO, who was the chief innovator, is often replaced). There tends to be growing focus on incremental solution improvements and support for existing customer needs at the expense of exploring highly innovative ideas.

Mature technology companies made the transition from providing and supporting a single innovative and successful product. They have become an engine of ongoing innovation, continually introducing new products by establishing effective processes and teams while keeping their eyes on competition. A balance of innovation and risk management makes these companies safer bets for long-term employment. However, they can also have less potential upside for career advancement and personal wealth.

Most government agencies function similarly to mature companies. Innovation is possible but usually is intended for incremental improvement. New initiatives and their upside are balanced with their potential risk since excessive risk is to be avoided.

When mature companies become overly fixated on margins and managing the business for maximum profitability, they run the risk of becoming less relevant to market needs and can miss fundamental changes. They are then often described as legacy companies.

The four culture types can be characterized as either inward- or outward-focused and by whether they provide stability or flexibility in the organization.

Process-driven cultures rely on structure and control, usually in the form of organizational hierarchies. They often rely on strong top-down management. They tend to be inward-focused and stable. Coordination and efficiency are extremely important, and so these organizations are commonly driven by metrics focused on optimizing their internal processes. When trying to start a new initiative within this culture, detailed planning and selling of projects to management is required prior to their execution.

Collaboration-driven cultures are also inward-focused but are more flexible than process-driven cultures. They feature highly collaborative teams and organizations, valuing participation and cohesion and operating much like social networks. Since these relationships are valued, individual work efforts are less recognized than those of the team. Authority is situational rather than defined by job titles. Modern software development scrum teams focused on rapid delivery of incremental improvements often function this way.

The solutions-driven culture usually exhibits stability but is more outward-facing since there is commonly a focus on competitive threats. A company where this culture rules tends to be customer-driven, and it often measures its success in market share gains. Members are motivated by competition and are frequently quite intense. Tangible goals and metrics measuring success of individuals drives behavior. The solutions-driven culture often provides a bridge to any other cultures present in a company while taking a win-at-all-costs approach.

The innovation-driven culture is the most dynamic and entrepreneurial type of culture. It is both flexible and outward-facing. Organizations with this culture value people who are visionary, who are willing to take risks, and who revel in a culture that thrives on change. Success is measured by delivery of highly innovative solutions that sometimes create new markets. The structure of the organization chart in this type of culture is typically quite flat.

It should come as little surprise that successful start-up companies and research organizations have cultures that align most closely with the innovation-driven culture. Mature companies evolve to become legacy companies that are synonymous with process-driven cultures when they become mostly inward-focused.

Most companies and organizations also exhibit collaboration- and solutions-driven cultures during their lifetimes, depending on whether they are inward- or outward-focused and whether their structure is stable or adapting to change. As the culture present can change over time, these changes can lead you to reassess whether working at the company or in a specific organization is ideal for you.

Figure 2-1 illustrates the four cultures as well as where the four types of companies we described fit among these quadrants. We also illustrate that multiple cultures are commonly present in companies providing some cultural balance, especially in companies that are newly public or mature.

Since these cultures often co-exist within the same company, it is possible to provide a diagram of their typical interrelationships. As noted earlier, the presence of a solutions-driven culture within a company can serve as the bridge between teams operating in an innovation culture and the rest of the company. These interrelationships are represented by Figure 2-2.

As companies evolve from start-ups to newly public, organizations are reformed to respond to new needs in running the business. These organizations tend to assume their own unique cultures as the company grows and matures.

Figure 2-3 illustrates the previously defined cultures but also illustrates their alignment with the company’s organizations. The interrelationships shown are useful in understanding how various organizations work together in this company. Product management, marketing, and sales are shown as having relationships with all parts of the business.

Leadership Behavior

Leaders often behave in alignment to the dominant cultures within their company or the organizations that they manage. Most often, they are chosen based on their alignment to the culture present. However, in some situations, they are chosen to change the culture present. This is especially true when senior leadership or a board of directors feels a need to respond to new business threats and opportunities or there exists dissatisfaction with the direction of the company or organization under previous leadership.

In process-driven cultures where command and control are emphasized, leaders are chosen to provide direction and usually view their roles as coordinators, monitors, and organizers. They value efficiency, timeliness, consistency, and uniformity. This often comes at the expense of driving innovation.

In collaborative cultures , the leaders provide support as facilitators and team builders. They value commitment, communications, and development. The human resources organization often assumes a key role as a partner to leadership in building and supporting such efforts.

Leaders in solutions-driven cultures delegate key tasks but closely track business results and feel personally responsible for driving those results. The leaders are highly competitive, as are the people who work for them. Though top-line growth and market share gains are very important, these leaders also often focus on productivity and cost containment. They sometimes seek to improve their business results by establishing partnerships with others to improve market share.

In the innovation culture , the leaders provide vision. They like to be viewed as innovators and entrepreneurs. Some see themselves as operating start-ups, even if they lead an organization within a larger mature company. They try to anticipate the needs of customers and seek creative individuals to populate their organization, often coaching them to create the solutions that they envision. In such a role, it is important for the leader to provide consistent messaging about core values, break down any barriers among people, and facilitate a bottoms-up approach to development.

Figure 2-4 represents these leadership profiles aligned to these cultures.

In mature technology-oriented companies, since several of these cultures often co-exist, senior leadership must recognize roles played by the various cultures present. Outstanding senior leaders will often seem to move seamlessly among the various cultures, taking on the right leadership characteristics needed to drive innovation, respond to market pressures, and drive results in their legacy businesses.

Leaders vary in passion for their companies and organizations. They sometimes practice management styles that do not mesh with the cultures that they say that they desire. For example, I have seen some leaders feel that they must be the smartest person in the room and provide top-down direction even though their stated goal is to drive innovation. Where the leadership exhibits these characteristics, the company behaves in more process-driven ways and is frequently playing catchup to companies that possess innovation-driven cultural characteristics.

Companies that appear to reinvent themselves in response to new threats and opportunities usually have senior leaders who constantly monitor the world around them. The senior leadership continuously learns and adapts to changing conditions and surrounds themselves with the smartest people they can find to avoid blind spots. Contrary opinions are sought, and groupthink (where everyone must agree with senior leadership opinions) is frowned upon.

Leaders with the most loyal followers usually hold and promote values that entire teams can believe in and share. Leaders who show empathy for employees and who also understand their customers’ perspectives, are often the most adept at driving company growth and stability.

The metrics that drive the compensation of leadership can tell you a lot about the real values and culture being practiced at a company and within an organization. It is usually plainly evident to employees when business leaders have self-serving and misaligned values that drive their priorities.

Sometimes, senior leaders are driven by metrics tied to personal compensation at the expense of the long-term good of the company. They might try to hide their intentions in the public rhetoric they use and can succeed in fooling employees and investors for a period. However, their bad management practices usually eventually lead to equally bad financial results that sometimes become disastrous.

On the other hand, compensation that is tied to metrics that are consistent with the cultures being encouraged within its organizations can lead to positive business results. For example, companies that want to drive delivery of new revenue or solutions every quarter will often use zero-based tracking metrics and accounting methods. Those that want to drive growth of existing solutions as incremental product improvements are introduced might take a more cumulative approach. Leadership compensation metrics are aligned accordingly.

If you believe that the company culture and compensation model is inconsistent in driving the right behavior or that the metrics are being manipulated, you have choices you must make. You might enjoy your work, not feel that your employment is at risk, or hold out hope for changes for the better in the future. So, you might decide to continue in your current role.

However, if you see other employees that you highly respect voting with their feet by leaving the company or organization, you might rethink whether you should also seek a new job. In such situations, don’t assume that the leadership is smart enough to recognize the negative outcome that they are leading the company toward or that they recognize the value that you or your fellow employees provide to the organization.

Cultural Change and Growth Mindsets

When the business is not seen as performing optimally, senior leadership must assess whether the problem is due to bad strategy, middle management providing bad direction, quality and skills lacking in the employees executing the strategy, or more widespread issues caused by the culture that exists. Solving business performance challenges can be extremely complicated since there are often multiple problems that must be addressed and multiple reasons as to why those problems are present.

Choosing to change the culture of an organization should not be taken lightly by senior management. It is possibly the most difficult change that can be made. Existing cultures have a momentum of their own. Familiarity and comfort associated with the old culture among long-time middle management and employees must be overcome to enable the new culture to take hold. When this change proves to be too difficult for existing employees, company leaders will sometimes resort to replacing them with new ones who are more open to change and who will embrace the new culture.

Carol Dweck, a leading researcher in the fields of personality, social psychology, and developmental psychology, describes people who can change and grow through learning and experience as possessing a “growth mindset .” Such people seek to improve themselves by facing and overcoming challenges, learning from criticisms and mistakes, and developing their skills in diverse situations. These individuals will accept a pending cultural change as an opportunity to grow personally and master a new situation. Having leadership and employees who possess such a willingness to change is invaluable when modifying company and organizational strategies and linking those to changes in culture.

If your mindset is “fixed,” you are in danger of being left behind. You are more likely to criticize the cultural change in progress and become withdrawn and defensive. If your company or organization can be described as having a fixed mindset, it is in danger of becoming irrelevant.

Satya Nadella, CEO of Microsoft, is credited with reinvigorating Microsoft by leading cultural change. He notes that those with a growth mindset tend to be listeners rather than talkers. The culture he describes is one of dynamic learning, resulting in an organization where knowledge and wisdom is respected. His expectation is that upon learning, leaders and employees will feel empowered to make things happen. Changing the culture depends on buy-in and execution by nearly everyone for it to be successful.

Projects chosen for prioritization within companies are frequently ranked in ways that align with the culture present. Legacy companies often avoid any projects seen as risky, whereas start-ups often seek out such projects where they believe the result will provide differentiated innovation. Mature and newly public companies will take on projects to gain competitive parity or advantage, especially where they believe that there will be a positive return on investment.

Successful projects aligned to specific cultural norms can drive the organization toward further adoption of that culture. Similarly, project failures can drive a company away from the culture associated with it. For example, the success or failure of software scrum teams in delivering solutions will impact a company’s view on promoting a collaboration-driven culture.

Mergers and acquisitions frequently occur among companies to address deficiencies in organic growth or to widen product offerings and geographic coverage. However, another reason for this activity can be an attempt by management to jumpstart cultural change. The company acquired might be viewed as possessing an innovation-driven culture that is believed to be lacking at the company making the acquisition.

Many large companies have discovered that the assimilation of an innovative company can destroy the underlying culture within the company that was acquired. Some large companies have determined that it is better to operate the acquired company as an independent and separate organization so that it can still take the risks needed to innovate, thus avoiding the destruction of the culture that made it so valuable in the first place.

Picking the Right Business Culture

In the right culture, you can feel at home, be highly productive, feel recognized for your work, and have the freedom to solve problems that you see in the business. In a culture that is a mismatch with your own values, you can feel stifled, frustrated, and spend too much time in what you consider to be useless activities.

Cultural norms impact how you will perform your job. When you evaluate moving to another company or organization, you should evaluate its culture by asking many questions.

For example, if you are a software developer, does the company use agile methodologies where experimentation is part of the process or a waterfall approach where project plans are laid out and strictly followed? Are you encouraged to work at home, or is in-office collaboration encouraged? Are best practices shared among the group and rewards group-oriented, or do individuals hide their best practices and seek personal rewards?

If the passion that co-workers feel toward their workplace is important to you and in-office collaboration and sharing is a must, then you might want to observe the number of cars in the parking lot throughout the day when you visit the location of the organization. Do workers in the organization show up early for work, or do they arrive after 10 A.M.? Do they stay late at work, or is the parking lot half empty by 4:30 P.M.? If most of the organization arrives late and leaves early, chances are that most of the workers have lost passion for their job and do not see value in face-to-face collaboration to solve problems.

Methods and adoption of formal and informal communications among co-workers are also often culture-driven. Is the company overly reliant on meetings (either in-person or online) to make decisions? How quickly are decisions made? Is e-mail the primary means of communication or are chat and collaboration and teaming tools also used? How is knowledge captured, managed, and shared?

Prior to interviewing with a prospective company in which you are seeking a job, you should always research the company. If the company is a publicly traded company, you can get a view of what senior leadership thinks is important in annual reports and other financial statements. You can also review what current employees and past employees think of the company by exploring social job sites where their views are posted.

You should use the interview process when seeking a new job to reverse the process a bit and interview your prospective management and co-workers. Use this opportunity to gain an understanding of the culture of the organization by asking about how work is delegated, accomplished, and rewarded. Is it a team effort or an individual pursuit? Observe whether potential co-workers appear to be enthusiastic or bored. You can also use the interview as an opportunity to share with prospective management the type of work environment and culture that you feel most comfortable taking part in.

If you have passion for your work, you will spend a significant amount of your life focused on it. You will find more satisfaction in being part of a work culture that aligns with your values. You might think that you can change a culture by becoming part of it. However, unless you enter the company in a leadership position or are being brought in by leadership to affect change, your chances of changing the culture are remote.

Summary

Cultural alignment with values directly impacts the job satisfaction you will feel as well as the satisfaction of your co-workers. When alignment occurs, the organization will execute with higher efficiency. Your chances for continued success within the company or organization will grow as well.

You must first understand your own values and the passion you have for your work. This understanding will lead you to consider whether there is alignment with the culture in your current company or organization and whether a job change could be necessary.

Your evaluation of the situation is an ongoing process. Your organization’s culture might shift and change when new leadership assumes control or in reaction to unexpected emerging business threats. Your values and views about the culture that you are seeking might also change over time. It is up to you to be on the lookout for these changes.

An organization’s culture can sometimes lead to political cliques and limit the diversity present. This will impact the quality of decision making and ultimately could impact your job and opportunities.

Understanding the culture present in the organization is a prerequisite for understanding the politics present. Political considerations are the subject of our next chapter.