1. Screen graphics created by:
Chapter 12: Corporate Culture and Leadership: Keys to Good Strategy Execution
Screen graphics created by:
Jana F. Kuzmicki, Ph.D.
Troy University 1

2. Chapter Learning Objectives
Be able to identify the key features of a company’s corporate culture.
Understand how and why a company’s culture can aid the drive for proficient strategy execution and operating excellence.
Learn the kinds of actions management can take to change a problem corporate culture.
Learn why corporate cultures tend to be grounded in core values and ethical principles and help establish a corporate conscience.
Understand what constitutes effective managerial leadership in achieving superior strategy execution and operating excellence. 2

3. Chapter Roadmap
Instilling a Corporate Culture that Promotes Good Strategy Execution
Identifying the Key Features of a Company’s Corporate Culture
Strong versus Weak Cultures
Unhealthy Cultures
High-Performance Cultures
Adaptive Cultures
Culture: Ally or Obstacle to Strategy Execution?
Changing a Problem Culture
Grounding the Culture in Core Values and Ethics
Establishing a Strategy-Culture Fit in Multinational Companies
Leading the Strategy Execution Process
Making Corrective Adjustments in Timely Fashion
A Final Word on Managing the Process of Crafting and Executing Strategy

4. INSTILLING A STRATEGY-SUPPORTIVE CORPORATE CULTURE
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5. Defining Characteristics of Corporate Culture
Core values, beliefs, and business principles
Ethical standards
Operating practices and behaviors defining “how we do things around here”
Approach to people management
“Chemistry” and “personality” permeating work environment
Oft-told stories illustrating
Company’s values
Business practices
Traditions

6. Identifying the Key Features of Corporate Culture
A company’s culture is manifested in . . .
Values, business principles, and ethical standards preached and practiced by management
Approaches to people management and problem solving
Official policies and procedures
Spirit and character permeating work environment
Interactions and relationships among managers and employees
Peer pressures that exist to display core values
Its revered traditions and oft-repeated stories
Its relationships with external stakeholders

7. Where Does Corporate Culture Come From?
Founder or early leader
Influential individual or work group
Policies, vision, or strategies
Operating approaches
Company’s approach to people management
Traditions, supervisory practices, employee attitudes
Organizational politics
Relationships with stakeholders

8. How Is a Company’s Culture Perpetuated?
Selecting new employees who will “fit” in
Systematic indoctrination of new employees
Senior management efforts to reinforce core values, beliefs, principles, key operating practices
Story-telling of company legends
Ceremonies honoring employees who display cultural ideals
Visibly rewarding those who follow cultural norms

9. Forces Causing Culture to Evolve
New challenges in marketplace
Revolutionary technologies
Shifting internal conditions
Internal crisis
Turnover of top executives
A new CEO who opts to change things
Diversification into new businesses
Expansion into foreign countries
Rapid growth that involves adding many new employees
Merger with or acquisition of another company

10. Company Subcultures: Problems Posed by New Acquisitions and Multinational Operations
Values, beliefs, and practices within a company can vary by
Department
Geographic location
Business unit
Subcultures can clash if
They embrace conflicting business philosophies
Key executives use different approaches to people management
Differences between a company’s culture and recent acquisitions have not been ironed out
Existence of subcultures does not preclude important areas of commonality and compatibility being established in different countries

11. Types of Corporate Cultures
Strong vs. Weak Cultures
Unhealthy Cultures
High-Performance Cultures
Adaptive Cultures
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12. 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”

13. 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

14. 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 to company’s vision and strategy

15. 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
Disregard for high ethical standards and overzealous pursuit of wealth by key executives

16. Characteristics of High-Performance Cultures
Standout cultural traits include
A can-do spirit
Pride in doing things right
No-excuses accountability
A results-oriented work climate in which people go the extra mile to achieve performance targets
Strong sense of involvement by all employees
Emphasis on individual initiative and creativity
Performance expectations are clearly identified for all organizational members
Strong bias for being proactive, not reactive
Respect for the contributions of all employees

17. 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

18. Culture: Ally or Obstacle to Strategy Execution?
A company’s culture can contribute to – or hinder – successful strategy execution
A culture that promotes attitudes and behaviors that are well-suited to first-rate strategy execution is a valuable ally in the strategy execution process
A culture where attitudes and behaviors impede good strategy execution is a huge obstacle to be overcome

19. Why Culture Matters: Benefits of a Tight Culture-Strategy Fit
A culture that encourages actions and behaviors supportive of good strategy execution
Provides employees with clear guidance regarding what behaviors and results constitute good job performance
Creates significant peer pressure among co-workers to conform to culturally acceptable norms
A deeply embedded culture tightly matched to the strategy
Aids the cause of competent strategy execution by top management to culturally approved behaviors, thus
Making it far simpler for management to root out operating practices that are a misfit
A culture imbedded with values and behaviors that facilitate strategy execution promotes strong employee commitment to the company’s
Vision
Performance targets
Strategy

20. Optimal Outcome of a Tight Culture-Strategy Fit
A good job of culture-building by managers
Promotes can-do attitudes
Encourages acceptance of change
Instills strong peer pressure for strategy-supportive behaviors
Enlists enthusiasm and dedicated effort to achieve company objectives
Closely aligning corporate culture with the requirements for proficient strategy execution merits the full attention of senior executives!

21. The Perils of Strategy-Culture Conflict
Conflicts between culturally-approved behaviors and behaviors needed for good strategy execution send mixed signals
Should employees by loyal to the culture and company traditions and resist actions and behaviors promoting better strategy execution?
Or should they support the strategy by engaging in behaviors that run counter to the culture?
When a company’s culture is out of sync with what is needed for strategic success, the culture has to be changed as rapidly as can be managed!

22. 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
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23. Figure 12.1: Changing a Problem Culture
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24. 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
Cite why and how certain behavioral norms and work practices in current culture pose obstacles to good execution of new strategic initiatives
Explain how new behaviors and work practices to be introduced will be more advantageous and produce better results

25. Substantive Culture-Changing Actions
Replace key executives strongly associated with old culture
Promote individuals who have desired cultural traits and can serve as role models
Appoint outsiders who have desired cultural attributes to high-profile positions
Screen all candidates for new positions carefully, hiring only those who fit in with the new culture
Mandate all company personnel attend culture-training programs to learn more about new work practices, operating approaches, and behaviors

26. Substantive Culture- Changing Actions (continued)
Push hard to implement new-style work practices and operating procedures
Design compensation incentives to reward teams and individuals who display the desired cultural behaviors
Grant generous pay raises to individuals who lead the way in adopting desired work practices, displaying new-style behaviors, and achieving pace-setting results
Revise policies and procedures in ways to drive cultural change

27. Symbolic Culture-Changing Actions
Lead by example – Walk the talk
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

28. Grounding the Culture in Core Values and Ethics
A culture based on ethical principles is vital to long-term strategic success
Ethics programs help make ethical conduct a way of life
Executives must provide genuine support of personnel displaying ethical standards in conducting the company’s business
Value statements serve as a cornerstone for culture-building

29. Figure 12.2: The Two Culture-Building Roles of a Company’s Core Values and Ethical Standards
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30. Techniques to Transform Core Values and Ethical Standards into Cultural Norms
Screen out applicants who do not exhibit compatible character traits
Incorporate values statement and ethics code in employee training programs
Strong endorsement by senior executives of the importance of core values and ethical principles at company events and in internal communications
Use values statements and codes of ethics as benchmarks to judge appropriateness of company policies and operating practices
Make the display of core values and ethical principles a big factor in evaluating employee performance

31. Techniques to Transform Core Values and Ethical Standards into Cultural Norms (continued)
Make sure managers at all levels are diligent in stressing the importance of ethical conduct and observance of core values
Encourage everyone to use their influence in helping enforce observance of core values and ethical standards
Hold periodic ceremonies to recognize individuals and groups who display the values
Institute ethics enforcement procedures

32. Figure 12.3: The Benefits of Cultural Norms Strongly Grounded in Core Values and Ethical Principles
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33. Establishing a Strategy-Culture Fit in Multinational and Global Companies
Institute training programs to
Communicate the meaning of core values and
Explain the case for common operating principles and practices
Create a cultural climate where the norm is to
Adopt best practices
Use common work procedures
Pursue operating excellence
Give local managers
Flexibility to modify people management approaches or operating styles
Discretion to use different motivational and compensation incentives to induce personnel to practice desired behaviors

34. Leading the Strategy-Execution Process
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35. Leading the Strategy-Execution Process
Top executives must be out front personally
Leading the process and
Driving the pace of progress
Entire management team must work diligently to engage all employees by
Delegating authority to middle and lower-level managers to move the implementation process forward with all due speed
Empowering all employees to exercise initiative, get things done in a timely, efficient, and effective manner

36. Key Roles in Leading the Strategy-Execution Process
Be out in the field, seeing how well operations are going
Gather information firsthand
Gauge the progress being made
Be diligent and adept in spotting gridlock
Ferret out problems and issues
Learn the obstacles in the path of good execution and clear the way for progress
Exert constructive, unrelenting pressure on organizational units to
Demonstrate growing consistency in strategy execution
Achieve performance targets

37. Making Corrective Adjustments
Requires deciding
When adjustments are needed
What adjustments to make
Involves
Adjusting long-term direction, objectives, and strategy on an as-needed basis in response to unfolding events and changing circumstances
Promoting fresh initiatives to bring internal activities and behavior into better alignment with strategy
Making changes to pick up the pace when results fall short of performance targets

38. Process of Making Corrective Adjustments
Varies according to the situation
Crisis situation – Take remedial action quickly
Non-crisis situation – Incrementally solidify commitment to a specific course of action
Deciding on specific corrective adjustments is the same for both proactive and reactive situations
Success in initiating corrective actions hinges on
Thorough analysis of the situation
Exercise of good business judgment in deciding on specific actions
Good implementation of the corrective actions