Organizational Culture and Leadership

1. Organizational culture is a complex system of shared assumptions

Culture is an abstraction, yet the forces that are created in social and organizational situations deriving from culture are powerful.

Culture is multifaceted. It encompasses observable artifacts, espoused values, and deep-seated assumptions that guide behavior within an organization. These elements form a cohesive system that provides meaning, stability, and predictability to group members.

Culture has several key characteristics:

• Structural stability: It persists even when group members change
• Depth: It operates largely outside of conscious awareness
• Breadth: It influences all aspects of group functioning
• Patterning: It integrates various elements into a coherent whole

Culture is learned through shared experiences as groups solve problems of external adaptation and internal integration. It represents the accumulated learning of a group, reflecting what has worked well enough to be considered valid and taught to new members.

2. Leaders shape culture through primary embedding mechanisms

The most powerful mechanisms that founders, leaders, managers, and parents have available for communicating what they believe in or care about is what they systematically pay attention to.

Leaders embed culture through behavior. Their actions, rather than their words, communicate the most important values and assumptions to organization members. Six primary embedding mechanisms are particularly influential:

• What leaders pay attention to, measure, and control
• How leaders react to critical incidents and crises
• How leaders allocate resources
• Deliberate role modeling, teaching, and coaching
• How leaders allocate rewards and status
• How leaders recruit, select, promote, and excommunicate

These mechanisms work together to reinforce cultural values and assumptions. For example, a leader who consistently asks about safety issues in meetings, reacts strongly to safety violations, allocates resources to safety programs, and rewards safe behavior is likely to create a strong safety culture.

3. Secondary articulation mechanisms reinforce cultural values

In a young organization, design, structure, architecture, rituals, stories, and formal statements are cultural reinforcers, not culture creators.

Formal structures support culture. While less powerful than primary embedding mechanisms, secondary articulation mechanisms can reinforce cultural messages if they are consistent with leader behavior. These include:

• Organizational design and structure
• Systems and procedures
• Rites and rituals
• Design of physical space and buildings
• Stories about important events and people
• Formal statements of philosophy or values

These mechanisms become more important as an organization matures, often outlasting the founders and becoming constraints on future leaders. For example, a company's annual rituals, office layout, or standard operating procedures can continue to reinforce cultural values long after they were first established.

4. Culture emerges through group formation and shared experiences

The strength and stability of culture derives from the fact that it is group based—that the individual will hold on to certain basic assumptions to ratify his or her membership in the group.

Groups develop culture through shared learning. As new groups form, they must solve basic problems of survival and integration. This process involves:

• Developing a shared language and conceptual categories
• Defining group boundaries and criteria for inclusion
• Establishing norms for intimacy, friendship, and love
• Defining and allocating power and status
• Developing rules for rewards and punishments
• Creating explanations for the unexplainable

Through these experiences, group members develop shared assumptions about how to perceive, think, and feel in relation to problems they face. These assumptions become the core of the group's culture, providing stability and meaning to members.

5. Founders' beliefs and values are the initial source of organizational culture

Founders not only choose the basic mission and the environmental context in which the new group will operate, but they choose the group members and thereby shape the kinds of responses that the group will make in its efforts to succeed in its environment and to integrate itself.

Founders imprint their assumptions. The initial culture of an organization is largely shaped by the founders' beliefs, values, and assumptions. Founders typically have strong ideas about:

• The organization's mission and strategy
• Appropriate means to achieve goals
• Criteria for measuring success
• How to structure the organization
• What kind of people to hire

These assumptions are tested as the organization faces challenges. If they lead to success, they become deeply embedded in the culture. For example, Sam Steinberg's assumptions about customer service and visible management shaped Steinbergs' culture for decades.

6. Culture evolves as organizations face external and internal challenges

As organizations grow and evolve, so do their cultures.

Adaptation drives cultural change. While founders' assumptions provide the initial basis for culture, organizations must continue to adapt to survive. Cultural evolution occurs through:

• Learning from success and failure in solving problems
• Integrating new members with different perspectives
• Responding to changes in the external environment
• Dealing with internal growth and differentiation

As organizations mature, subcultures often emerge in different functional areas or levels of the hierarchy. Managing the interplay between these subcultures becomes a key leadership challenge. For instance, DEC's engineering-driven culture became problematic as the company grew and faced increasing market pressures.

7. Deciphering culture requires understanding artifacts, values, and assumptions

If you do not decipher the pattern of basic assumptions that may be operating, you will not know how to interpret the artifacts correctly or how much credence to give to the espoused values.

Culture operates at multiple levels. To truly understand an organization's culture, one must examine:

• Artifacts: Visible structures and processes
• Espoused values: Ideals, goals, and aspirations
• Basic underlying assumptions: Unconscious, taken-for-granted beliefs

Deciphering culture involves:

1. Observing artifacts and behaviors
2. Identifying espoused values through interviews and documents
3. Inferring underlying assumptions by looking for patterns and inconsistencies

This process requires careful observation, questioning, and analysis. It's particularly important to look for areas where espoused values and observable behavior don't align, as these often reveal deeper cultural assumptions.

8. Cultural alignment is crucial for organizational effectiveness

When we examine the formation of groups that are initially multinational, such as cross-national mergers like that of British Petroleum and Amoco or joint ventures between companies from different countries, we see how disagreement on this higher level of abstraction can make group formation and performance extremely difficult.

Misalignment causes problems. When subcultures or national cultures clash within an organization, it can lead to:

• Communication breakdowns
• Conflict and mistrust
• Inefficiency and poor performance
• Difficulty in implementing change initiatives

Leaders must work to align:

• The cultures of different functional areas (e.g., marketing vs. engineering)
• The cultures of different hierarchical levels
• The organization's culture with its strategy and environment

Achieving alignment often requires creating "cultural islands" where members can explore differences and develop shared understanding. This is particularly important in multinational or cross-cultural organizations.

9. Leadership and culture are two sides of the same coin

Culture creation and management are the essence of leadership and make you realize that leadership and culture are two sides of the same coin.

Leaders shape and are shaped by culture. The relationship between leadership and culture is dynamic and reciprocal:

• Leaders create cultures when they create groups and organizations
• Once cultures exist, they determine the criteria for leadership and influence who will or will not be a leader
• If cultures become dysfunctional, leadership is required to perceive the functional and dysfunctional elements of the existing culture and to manage cultural evolution

Effective leaders must:

1. Understand the existing culture
2. Align the culture with the organization's goals and environment
3. Embed and reinforce cultural values through their actions
4. Manage cultural change when necessary

This requires a deep understanding of cultural dynamics and the ability to work with culture as both a tool and a constraint.

Last updated: January 25, 2025