Culture and Strategy P. Fitsilis fitsilis@teilar.gr.

Culture and Strategy P. Fitsilis

Learning Outcomes Identify organisations that have experienced strategic drift and the symptoms of strategic drift Analyse how history influences the strategic position of organisations Define what is culture and theories of culture Analyse the influence of an organisation’s culture on its strategy using the cultural web Recognise the importance of strategists questioning the taken-for-granted aspects of a culture

Strategy and culture

Strategic drift What is Culture Historical influences Cultural influences Cultural web Management implications

What is Strategic Drift?
5-5 What is Strategic Drift? Strategic drift is the tendency for strategies to develop incrementally on the basis of historical and cultural influences but fail to keep pace with a changing environment.

Exhibit 5.2 Strategic Drift

Reasons for Relative Continuity in Successful Businesses
Alignment with environmental change Success of the past Experimentation around a theme Use Marks and Spencer clip, start at 3:56 through 4:43 (on price architecture and what worked before)

Reasons for strategic drift
5-8 Reasons for strategic drift Financial performance Relationships with suppliers and customers Core company capabilities Building on the familiar Steady as you go

Why History is Important
Managers’ organisational experience Avoiding recency bias Misattribution of success What if questions Detecting and avoiding strategic drift

What is Path Dependency?
Path dependency is where early events and decisions establish policy paths that have lasting effects on subsequent events and decisions.

Exhibit 5.3 Path Dependency and Lock-In

Methods of Historical Analysis
Chronological analysis Cyclical influence Anchor points Historical narratives Use Marks and Spencer, start at 5:16 through 6:07 on benchmarking and analysis of profitability.

5-13 Culture

We do not see things as they are; we see things as we are.
Opening question: How would you describe your own cultural background to a stranger so he or she could better understand how you think and work? We do not see things as they are; we see things as we are. Talmud Bavli Ancient book of wisdom, Babylonia

Why is this so difficult to do?
Water is the last thing a fish notices. -- Lao Tzu

Grasshopper Dilemma Pet ? Pest ? Food?

Consider: Anna Anna has been assigned to travel from Sweden to Jordan to negotiate a partnership with Jordan Investment Bank. What are the cultural differences?

Cultural differences : Sweden and Jordan

Cultural trends: Sweden and Jordan Following Hofstede’s model
Low power distance High individualism Low “masculinity” Medium uncertainty avoidance Jordan High power distance Medium individualism High “masculinity” High uncertainty avoidance

Project Management: Chinese and UK perspective
5-20 Project Management: Chinese and UK perspective Chinese 1) Low individualism 2) Family, personal relationships and teams 3) Strong personal relations with customers, part of family (parents) 4) Friendly relationship 5) Negotiation 6) Avoidance to uncertainty UK 1) High individualism 2) Professionalism, Respect and trust 3) Stakeholders, contractual relationships, funding the project 4) Contractual relationship 5) Claims on contracts 6) Low avoidance to uncertainty

Some definitions: What is culture?
The collective programming of the mind that distinguishes the members of one human group from another. (Geert Hofstede) The collection of beliefs, values, behaviors, customs, and attitudes that distinguish the people of one society from another. (Clyde Kluckholm) Shared motives, values, beliefs, identities, and interpretations or meanings of significant events that result from common experiences of members of collectives that are transmitted across generations. (Robert House and GLOBE associates) A toolkit of symbols, stories, rituals, and worldviews that help the people of a culture survive and succeed. (Ann Swidler)

Levels of mental programming
Human nature (inherited; universal to most people) Culture (learned; specific to group) Personality (inherited and learned; specific to individual)

Characteristics of culture
Culture is shared by members of a group and sometimes define the membership of the group itself. Culture is learned though membership in a group or community. Culture influences the attitudes and behaviors of group members (e.g., normative behavior).

Example: Culture and normative behavior Western vs
Example: Culture and normative behavior Western vs. Islamic banking and investments In the West, bank customers expect to receive interest on their deposits. In Islamic banking, the Qur’an prohibits paying or receiving interest; this is seen as taking advantage of others who are less fortunate. Instead, bank customers entrust funds to banks in exchange for profit-sharing (mudaraba). In the West, stock market transactions are open to investments and speculation in almost anything. Under Islamic law, only investments in economic activities that are consistent with the values of Islam are acceptable (halal). Consider: What is the impact of such differences when doing business across borders?

Culture provides its members with . . .
Self identity:

Belongingness and social support:

Guidelines for behavior:

Sense of purpose:

Predictability and security:

In total: Culture provides its members with . . .
Self identity: Who am I? Belongingness and social support: Where do I belong? Guidelines for behavior: What should I do or not do? Sense of purpose: Why am I here? Predictability and security: What will happen to me?

Members vs. non-members: The place of foreigners
Definition: “A foreigner is a person born in another country; an alien; a person regarded as an outsider or stranger.” Xenophobia: A fear or dislike of strangers or foreigners. All cultures differentiate between members and non-members or foreigners, and all countries have some people who are xenophobic.

5-32 Consider Consider: In your world, does “foreigner” have a good or bad connotation? Are foreigners threats or opportunities? How can foreigners become members of your particular culture or society?

The dilemma: The culture theory jungle
Which is most useful for managers? Hofstede Hall Trompenaars GLOBE (pp )

Cultural dimensions: Hofstede

Cultural dimensions: Hall

Cultural dimensions: Trompenaars

Cultural dimensions: GLOBE -1 http://www. tlu

Cultural dimensions: GLOBE -2 http://www. tlu

Seeking convergence for managers: Core cultural dimensions
Core cultural dimensions (a managerial perspective) Hofstede Hall Trompenaars GLOBE (pp )

Core cultural dimensions (aggregated)
Hierarchical Egalitarian Power Distribution Individualistic Collectivistic Social Relationships Mastery Harmony Environment Relationships Monochronic Polychronic Time/work patterns Rule-based Relationship-based Uncertainty and social control

Power distribution Hierarchical Egalitarian Centralized.
Belief that power should be distributed hierarchically across society. Belief in ascribed or inherited power with ultimate authority residing in institutions. Emphasis on organizing vertically and autocratic or centralized decision- making. Emphasis on who is in charge. Acceptance of authority; reluctance to question authority. Decentralized. Belief that power should be distributed relatively equally across society. Belief in shared or elected power with ultimate authority residing in the people. Emphasis on organizing horizontally and participatory or decentralized decision-making. Emphasis on who is best qualified. Rejection or skepticism of authority; willingness to question authority.

Social relationships Individualistic Collectivistic Person-centered.
Belief that people achieve self-identity through individual accomplishment. Focus on accomplishing individual goals. Sanctions reinforce independence and personal responsibility. Contract-based agreements. Tendency toward low-context (direct, frank) communication and individual decision-making. Group-centered. Belief that people achieve self-identity through group membership. Preference for preserving social harmony over individual rights. Focus on accomplishing group goals. Sanctions reinforce conformity to group norms. Relationship-based agreements. Tendency toward high-context (subtle, indirect) communication and group or participative decision-making.

Environmental relationships
Mastery-oriented Harmony-oriented Dominance over nature. Focus on changing or controlling one’s natural and social environment. Achievement valued over relationships. Emphasis on competition in the pursuit of personal or group goals. Embraces change and unquestioned innovation. Emphasis on material possessions as symbols of achievement. Emphasis on assertive, proactive, “masculine” approach. Preference for performance-based extrinsic rewards. Accommodation with nature. Focus on living in harmony with nature and adjusting to the natural and social environment. Relationships valued over achievement. Emphasis on social progress, quality of life, and the welfare of others. Defends traditions; skepticism towards change. Emphasis on economy, harmony, and modesty. Emphasis on passive, reactive, “feminine” approach. Preference for seniority-based intrinsic rewards.

Time and work patterns Monochronic Polychronic Linear.
Sequential attention to individual tasks. Single-minded approach to work, planning, and implementation. Precise concept of time; punctual. Job-centered; commitment to the job and often to the organization. Separation of work and personal life. Approach to work is focused and impatient. Non-linear. Simultaneous attention to multiple tasks. Interactive approach to work, planning, and implementation. Flexible concept of time; often late. People-centered; commitment to people and human relationships. Integration of work and personal life. Approach to work is at times unfocused and patient.

Uncertainty and social control
Rule-based Relationship-based Individual behavior should be largely regulated by rules, laws, formal policies, standard operating procedures, and social norms that are widely supported by societal members and applied uniformly to everyone. Emphasis on legal contracts and meticulous record keeping. Low tolerance for rule breaking. Decisions based largely on objective criteria (e.g., legal constraints, data, policies). While rules and laws are important, they often require flexibility in their application or enforcement by influential people (e.g., parents, peers, superiors, government officials) or unique circumstances. Emphasis on interpersonal relationships and trust; less emphasis on record keeping. Moderate tolerance for rule breaking. Decisions often based on subjective criteria (e.g., hunches, personal connections).

Dilemmas for management
Because cultures are shared, we would expect most members to have similar values, yet all cultures allow for non- conformists in varying degrees. How can managers discover what is allowed and what is not? All cultures contain defining elements that defy universal qualifications. How do managers discover these before it is too late? Because cultures are learned, they are also adaptive over time. How can managers sense cultural adaptations when they occur? Most cultures are amalgamations of various subcultures, each with subtle variations. To which of these cultures should a manager try to adapt to?

MANAGER’S NOTEBOOK: Comparing cultures
Core cultural dimensions can be a good place to start to understand cultural differences—but it is only a starting point. It is important to dig deeper and work to understand the complexities and contradictions that can often influence managerial and employee behaviors. It is also important to recognize the key role played by individual differences within a society or group.

MANAGER’S NOTEBOOK: Large vs
MANAGER’S NOTEBOOK: Large vs. small cultural differences in business relationships When comparing two or more cultures, recognize that: Small differences between cultures can be just as problematic for managers as large ones. Like other work endeavors, the devil can indeed be in the details. These small details are often overlooked by managers until damage to relationships has already occurred. Large cultural differences between groups can often be overcome by focusing on small similarities.

MANAGER’S NOTEBOOK: Seeing cultural differences in neutral terms
Cultural differences often influence how we think and see things, suggesting that different people may have different understandings of the same situation, and may act differently as a result. As groups interact with one another, however, new understanding and new behaviors can emerge. Over time, managers learn to negotiate new ways to relate to others. Cultural differences within a group can often lead to better decisions. Under what circumstances and why might this be the case? When managers from two or more cultures come in contact, the starting point for interaction is usually what they different groups bring to the table, but the end result will likely depend more on their interactions, the managers and their organizations, power differentials, and the exchanges that take place (cultural friction).

MANAGER’S NOTEBOOK: Avoiding cultural stereotypes
When describing another group, cultural descriptions: Should provide accurate descriptions of the beliefs, values, and social norms of a group. Should be limited to objective characteristics and avoid evaluative components (e.g., good or bad). Should be considered a first best guess about the behaviors of another group prior to developing more specific information about individual members of the group. Should recognize that they contain limited information that can mask other useful data about cultural diversity. Should be modified over time as new information about a group is discovered through observation and experience.

MANAGER’S NOTEBOOK: Preparing for the unexpected: Useful managerial skills
Self-awareness: Understand who you are and what you stand for. Empathy: Seek to understand the attitudes and behaviors of others. Information gathering and analysis: Seek to discover some of the less obvious cultural assumptions of others. Information integration and transformation: Work to make sense out of new information about others. Behavioral flexibility: Build a capacity to approach problems and situations in multiple ways, using different techniques. Mindfulness: Pay attention to what is happening around you, both with yourself and others.

Think about it: Your views on cultural differences
Do you personally have any stereotypes about people from other cultures? What concrete steps can you take to: Avoid cultural stereotyping? See cultural differences in neutral terms? Go beyond the superficial differences between people and understand the motivational bases of individuals and groups from different cultures?

What is Organisational Culture?
Organisational culture is the basic assumptions and beliefs that are shared by members of an organisation, that operate unconsciously and define in a basic taken-for-granted fashion an organisation’s view of itself and its environment.

Features of the Corporate Culture at Wal-Mart
Dedication to customer satisfaction Zealous pursuit of low costs Frugal operating practices Strong work ethic Ritualistic Saturday morning meetings Executive commitment to Visit stores Listen to customers Solicit employees’ suggestions

Features of the Corporate Culture at Nordstrom’s
Deliver exceptional customer service to customers Company motto “Respond to Unreasonable Customer Requests” Out-of-the-ordinary customer requests viewed as opportunities for “heroic” acts Promotions based on outstanding service Salaries based entirely on commission

Features of the Corporate Culture at General Electric
Hard-driving, results-oriented atmosphere prevails All businesses are held to a standard of being #1 or #2 in their industries as well as achieving good business results Cross-business sharing of ideas, best practices, and learning Reliance on “workout sessions” to identify, debate, and resolve “burning issues” Commitment to Six Sigma Quality Globalization of the company

Features of the Corporate Culture at Microsoft
Long work hours of programmers Emotional peaks and valleys in encountering and overcoming coding problems Exhilaration of completing a complex program on schedule Satisfaction of working on cutting-edge projects Rewards of being part of a team responsible for a popular new software program Tradition of competing aggressively

Google’s Culture Expectations Empowerment Innovation Employee centered
By Khongchanok Paepipatmongkol Spencer Hayashi

Expectations Free work schedule Relaxed, team-based atmosphere
High expectations s

Empowerment “Flat” structure- high middle management
collaborative culture High Tech environment c

Innovation Adhocracy culture- focus on flexibility and creativity,
leaders are entrepreneurial Effectiveness measured in creativity and innovation Vibrant workplace, but high risk taking s Adhocracy - strong value placed on flexibility and discretion with a focus outside the organization. Leaders tend to be entrepreneurial and innovative, perhaps even visionary. Effectiveness is evaluated in terms of creativity and leading-edge innovation in the marketplace. The organization tends to be a vibrant place to work, with significant risk taking.

Employee Centered Young work place Facilities Hiring methods
Fortune magazine “Best Companies to Work For” Attracts the best applicants Applicant tracking system (ATS) c When a new applicant is considered, information collected about where they went to school or worked previously is parsed and stored in the ATS. The system matches that information to data about existing Google employees-say, an applicant who graduated from Temple University is matched to an employee who graduated from there. A prospective employee applies for a job. The company uses its applicant tracking system (ATS) to ask workers to weigh in on applicants who have submitted their resumes online.

Exhibit 5.4 Cultural Frames of Reference
National Organisational field The Individual Functional/ divisional Organisational

What is an Organisational Field?
An organisational field is a community of organisations that interact more frequently with one another than with those outside the field and that have developed a shared meaning system.

Exhibit 5.5 Culture in Four Layers

Exhibit 5.6 Culture’s Influence on Strategy Development
5-66 Exhibit 5.6 Culture’s Influence on Strategy Development

Exhibit 5.7 The Cultural Web of an Organisation
5-67 Exhibit 5.7 The Cultural Web of an Organisation Symbols Stories Power structures Paradigm Rituals/ routines Structures Control systems

Exhibit 5.8 Assessing Stories
5-68 Exhibit 5.8 Assessing Stories What core beliefs do the stories reflect? How pervasive are the beliefs? Do stories relate to corporate success or failures? Who are the heroes and villains?

Exhibit 5.8 Assessing Symbols
5-69 Exhibit 5.8 Assessing Symbols Are there particular symbols of the organisation? What status symbols exist? What does the language and jargon signify? What aspects of strategy are highlighted publicly?

Exhibit 5.8 Assessing Structures
5-70 Exhibit 5.8 Assessing Structures How mechanical/organic are the structures? How flat/hierarchical are structures? How formal/informal? Do structures encourage collaboration? What types of power structures do they support?

Exhibit 5.8 Assessing Control Systems
5-71 Exhibit 5.8 Assessing Control Systems What is most closely monitored? Is emphasis on reward or punishment? Are controls related to history or current strategies? Are there many/few controls?

Exhibit 5.8 Assessing Routines and Rituals
5-72 Exhibit 5.8 Assessing Routines and Rituals Which routines are emphasised? Which are embedded in history? What behaviour do routines encourage? What are the key rituals? What do core beliefs reflect? What do training programmes emphasise?

Types of Corporate Cultures
Strong vs. Weak Cultures Unhealthy Cultures Adaptive Cultures

Characteristics of Strong Culture Companies
Conduct business according to a clear, widely-understood philosophy Considerable time spent by management communicating and reinforcing values Values are widely shared and deeply rooted Have a well-defined corporate character, reinforced by a creed or values statement Careful screening/selection of new employees to be sure they will “fit in”

How Does a Culture Come to Be Strong?
Leader who establishes values and behaviors consistent with Customer needs Competitive conditions Strategic requirements A deep, abiding commitment to espoused values, beliefs, and business philosophy Practicing what is preached! Genuine concern for well-being of Customers Employees Shareholders Values Customers Employees Shareholders

Characteristics of Weak Culture Companies
Lack of a widely-shared core set of values Few behavioral norms evident in operating practices Few strong traditions No strong sense of company identity Little cohesion among departments Weak employee allegiance (dedication) to company’s vision and strategy

Characteristics of Unhealthy Cultures
Highly politicized internal environment Issues resolved on basis of political clout Hostility to change Avoid risks and don’t screw up Experimentation and efforts to alter status quo discouraged “Not-invented-here” mindset – company personnel discount need to look outside for Best practices New or better managerial approaches Innovative ideas

Hallmarks of Adaptive Cultures
Willingness to accept change and embrace challenge of introducing new strategies Risk-taking, experimentation, and innovation to satisfy stakeholders Entrepreneurship is encouraged and rewarded Funds provided for new products New ideas openly evaluated Genuine interest in well-being of all key constituencies Proactive approaches to implement workable solutions

Dominant Traits of Adaptive Cultures
Any changes in operating practices and behaviors Must not compromise core values and long-standing business principles Must satisfy legitimate interests of key stakeholders Customers Employees Shareholders Suppliers Communities

Creating a Strong Fit Between Strategy and Culture
Responsibility of Strategy Maker – Select a strategy compatible with the sacred or unchangeable parts of organization’s prevailing corporate culture Responsibility of Strategy Implementer – Once strategy is chosen, change whatever facets of the corporate culture hinder effective execution

Changing a Problem Culture

Menu of Culture-Changing Actions
Make a compelling case why a new cultural atmosphere is in best interests of both company and employees Challenge status quo Create events where employees must listen to angry key stakeholders Continuously repeat messages of why cultural change is good for stakeholders Visibly praise and reward people who display new cultural norms

Menu of Culture-Changing Actions (continued)
Alter incentive compensation to reward desired cultural behavior Hire new managers and employees who have desired cultural traits and can serve as role models Replace key executives strongly associated with old culture Revise policies and procedures to help drive cultural change

Symbolic Culture-Changing Actions
Emphasize frugality Eliminate executive perks Require executives to spend time talking with customers Ceremonial events to praise people and teams who “get with the program” Alter practices identified as cultural hindrances Visible awards to honor heroes

Substantive Culture-Changing Actions
Engineer quick successes to highlight benefits of proposed cultural changes Bring in new blood, replacing traditional managers Change dysfunctional policies Change reward structure Reallocate budget, downsizing and upsizing Reinforce culture through both word and deed (action) Enlist support of cultural norms from frontline supervisors and employee opinion leaders

The Strategy Lenses Strategy as design Strategy as experience
Logical analytical process Planned implementation Top manager driven Strategy as experience Adaptation of past strategies based on experience Influenced by taken for granted assumptions (culture) Bargaining and negotiation Strategy as ideas Importance of variety and diversity for innovation Emergent strategy from within and around the organisation Top managers create the conditions for this to take place Strategy as Discourse This lens sees strategy in terms of language, recognising that managers spend most of their time communicating – based on power, influence, making strategic proposals and debating issues.

Design Lens

Experience Lens

1-90 Innovation/Idea Lens

Discourse Lens

The Four strategy lenses: a summary
Considine BLB Text: Exploring (Corporate) Strategy, 2008 or 2011, © Pearson Education Ltd The Four strategy lenses: a summary Exhibit I.iv

Chapter Summary (1) The history and culture of an organisation may contribute to its strategic capabilities as well as strategic drift. Historical analyses can be conducted to uncover the influences driven by historical, path-dependent processes. Cultural and institutional influences inform and constrain the strategic development of an organisation.

Chapter Summary (2) Organisational culture operates unconsciously and defines the an organisation’s view of itself and its environment. The cultural web can be used to understand an organisation’s culture and its relationship to organisational strategy.

Key Debate: Is Path Dependency A Constraint on Managers?
Summarise the arguments in terms of the extent to which the authors believe that managers are locked into path-dependent histories. Drawing on your own experience, and the arguments in this chapter, summarise the path dependency, institutional, and cultural forces on managers. What are your views about the extent to which such forces are a powerful constraining influence or an excuse for management inertia?

Culture and Strategy P. Fitsilis fitsilis@teilar.gr.

Similar presentations

Presentation on theme: "Culture and Strategy P. Fitsilis fitsilis@teilar.gr."— Presentation transcript:

Similar presentations

About project

Feedback

Log in

Auth with social network:

Culture and Strategy P. Fitsilis fitsilis@teilar.gr.

Similar presentations

Presentation on theme: "Culture and Strategy P. Fitsilis fitsilis@teilar.gr."— Presentation transcript:

Similar presentations

About project

Feedback