Grand Canyon University Social Science Apple Company Power Structure Paper

Assignment: Organizational Reflection/Power Structures

For this Assignment, further reflect upon the organization you chose in Week 1. In Part 1 of your paper, describe the power structure(s) within the organization. In Part 2 of your paper, analyze the power structures and uses of power within the organization by answering the following question: Are the power structures/uses of power demonstrated by the leaders within the organization (e.g., hard power or soft power) effective or ineffective? Defend your position by including your own experiences as well as references from personal experience, required readings and related academic research.

To prepare for this Assignment, pay particular attention to the following Learning Resources:

Helgesen, S. (2008). New sources of power. Leadership Excellence Essentials, 25(5 ), 6.Nye, J. S., Jr. (2008). Soft power. Leadership Excellence Essentials, 25(4), 10.Gallagher, O. (1991). Responsible power. Manage, 43(1), 28–30.Pinchot, E. S. (1992). Balance the power. Executive Excellence, 9(9), 3–5.Reingold, J., & Yang, J. L. (2007). What’s your OQ? Fortune, 156(2), 98–106.

To complete the Organizational Reflection/Power Structures Assignment, compose a cohesive document that addresses the following:

  • Summarize the two or three main “takeaways” you gained from this week’s Discussion and why you think they are important.
  • Describe the power structure(s) within the organization you selected in Week 1.
  • Analyze the power structures and uses of power within the organization by answering the following questions:Are the power structures/uses of power demonstrated by the leaders within the organization (e.g., hard power or soft power) effective or ineffective? Why?
  • How do power structures affect your effectiveness as a leader? Do the power structures found in the organization you chose promote positive social change? Why or why not?

Be sure to support your Organizational Reflection/Power Structures using this week’s readings or other credible and relevant resources and adhere to APA format. You may also include quotes from the weekly Discussion that you think support your Reflection entry

General Guidance: This week’s Organizational Reflection/Power Structures submission should be about 3–4 pages in length. Refer to the Week 3 Organizational Reflection/Power Structures Rubric for grading elements and criteria. Your Instructor will use this rubric to assess your work.

Note: Questions about this assignment? Post them in the Contact the Instructor area. That way, everyone in the class will see, and benefit from, the Instructor’s response.

By Day 7

Submit your Organizational Reflection/Power Structures. In order to receive credit, all assignments are due by the deadline. Should you encounter an unanticipated and uncontrollable life event that may prevent you from meeting an assignment deadline, contact the Instructor immediately to request an extension. Your Instructor’s contact information is in the Instructor area. For a full description of the late policy, please refer to the “Policies on Late Assignments” section of your Syllabus.

ahead leadership. Recently, these skills
have moved front and center.
Women tend fo evince a healfhy
skepticism about the perks and privileges that define high position, in part
W e n e e d a n e wm o d e l o f l e a d e r s h i p .
because they have long been excluded
from traditional hierarchies. But this
skepticism is also the result of fhe fact
by Sally Helgesen
thaf women, as the Harvard psycholocommand, have a distinct advantage.
This has two primary implications: gist Carol Gilligan argued in A
First, technology distributes informa- Different Voice, are comfortable being at
years, three forces tion more broadly. Information and powerthe center of things rather than at the
are being pushed down to those on fhe top, and making moral judgments on a
have transformed the
nature of organizations, rendering tra- front lines, no longer isolated at the top. contextual rather than abstract basis.
Such attitudes undermine fhe preditional models of leadership obsolete. This undermines hierarchies and the
sumptions and disciplines by which
By examining these forces, we can bet- status of those at the top, as they rely
hierarchies have been maintained
ter see what leadership we need.
deFirst, the nature of our economy has
Diversity is the order of fhe day. In
shifted. In this knowledge era, primary coupled from fhe power of position; if every organization, people of divermust be constantly earned, not assumed. gent backgrounds are working side-byvalue is vested in the knowledge and
expertise of those who comprise and
Second, using the technologies of work side. This is the result of greater
serve if. Human knowledge—not land, to manage private lives breaks down barriers movement across borders; direct immicapital, or machines—has become the
betioeen public and private, work and home. gration to non-gafeway cities; the
essential asset, shifting the balance of
assimilation of African-Americans into
As technology becomes ubiquitous,
power azvay from organizations and
zones of privacy erode. Public and pri- the mainstream of American life; and
toward individuals.
vate concerns can no longer be separat- fhe fact thaf members of subcultures
ed. Private issues are resolved in public; no longer necessarily find value in subThe shift to a knowledge economy
privafe behaviors fhaf were in the past merging efhnic, nafional and religious
has three implications for leaders:
identify in order to adjust to notions of
tolerated have become fhe subject of
3. Individuals noiv own tbe primary
a fasf-fragmenting “mainstream/’
means of all production. The knowledge
economy offers more freedom, choices,
Thus leaders must show nimbleness
and scope for acfion to those whose
and sensitivity to cultural difference to
skills and talents have real value. In a
balance the needs of their diverse conknowledge economy, talent can’t be
stifuency. They must also see that divercompelled, but must be encouraged
sity is not simply openness to race or
and coaxed. Leaders must attract and
gender, buf to different values as well.
inspire people to use their best talents.
Power and Influence
2. Knowledge must be broadly z>ested.
In the industrial world, knowledge was
The economic, technological and
often prized only at the top of the pyrademographic changes work together,
mid or chain of command. Dedsioas
resulting in a rapidly shifting landscape
were made by “heads” at the top;
public debate; public and political mat- in which the power and influence of
implementation was done by “hands” ters are increasingly viewed as matters those in the ranks becomes integral fo
in the ranks. By contrast, in a knowlof privafe concern; and private and work- how organizations function. This turns
edge economy, knowledge musf be
traditional notions of leadership upside
ing hours encroach upon each other.
distributed broadly fo be effectively
down. For if people in the ranks are
Leaders must negotiate the frontier
leveraged. Leaders must build colleempowered, if their knowledge constibetween public and privafe, aligning
giality and spread decision-making.
tutes a primary value, if they can comtheir private actions wifh their public
municate directly, and if they prize
3. Since a great idea has greater worth
face and respecting privacy that their
diversity, they will not be led by mythan costly machines or even access to cap- stakeholders value. Failure to do so
way-or-fhe-highway autocrats.
ital, competition can come from anyiohere. brings rapid and severe public
A 100-year investment can be trumped response, even for fhose whose position
To the extent that leadership is equatovernight by a smarter vision of how
made them unassailable in the past.
ed with and derived from posifion, if
to offer a product or perform a service.
The third change is demographic. This will be less potent. New concepts of
This puts a premium on innovation,
is manifest in fhe inclusion of women
leadership will be vesfed less in posicontinually adapt to changing condiinfo positions of aufhority and inflution than in the power of connections,
tions. Since new ideas are paramount,
ence. Women bring witb them many of relationships, individual expertise, perleaders must be skilled in creating a
fhe talents, atfifudes, and presumpsonal qualities, aspirations, and earned
culture in which innovation flourishes. tions that were formerly honored in fhe personal authority. Leaders need to
domestic sphere info the public realm. make the mental shift away from tradiSecond, a new architecture of techThis has had a profound impact upon
tional models and sources of pwwer and
nology is reshaping organizations.
whaf is required of leaders. Relationexercise flexibility and sensitivity to
Today’s networked systems are fast,
flexible, interactive, and non-hierarchi- ship skills, intuifiveness, inclusiveness, meef the challenge of the new model, LE
coaching, fhe capacity fo listen—these
cal in shape and structure, facilitating
Sally Helgesen is a leadership devetopmeni consultant and
direct communication. Those who are were considered “soft” skills, antitheti- coadi. Visit or call 51S-392-1998.
cal fo heroic conceptions of chargecomfortable communicating directly.
ACTION: Tap into new sources of power.
New Sources of Power
Copyright of Leadership Excellence Essentials is the property of, Inc. and its content
may not be copied or emailed to multiple sites or posted to a listserv without the copyright
holder’s express written permission. However, users may print, download, or email articles for
individual use.
ing a clear understanding of the nitty gritty of
culture dynamics, this essential resource is filled
with new illustrative case studies that clearly
show what successful change looks like and
demonstrates how to dismantle an ineffective or
dysfunctional culture.
“Why [read this] now? It should come as no surprise that
[culture] is a major underlying cause for the success or
failure of many corporate mergers and acquisitions. What
Schein says will no doubt keep heads nodding throughout
his text.”
“Schein’s methodologies and models should be welcome
tools in helping companies reevaluate and reform their
—Library Journal
The Author
Edgar H. Schein, a world-renowned expert on
organizational culture, is the Sloan Fellows Professor of Management Emeritus at the MIT Sloan
School of Management. He is the author of nu-
“Schein makes the process of assessing and managing
organizational culture more accessible to leaders and
—Personnel Psychology
merous books including Organizational Culture
and Leadership and Career Anchors Facilitator’s
Guide Package, both in their third editions.
“The Corporate Culture Survival Guide is well worth
reading over and over until you have it memorized.”
—Knowledge Management
Cover image by Peter Dazeley | Getty
Cover design by Adrian Morgan
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the issues of corporate culture and subculture
tional performance. Leadership not only creates
culture but is the central force in managing culture evolution and change. This new and revised
edition of Schein’s groundbreaking book shows
how the management of cultural issues now involves the alignment of national, corporate, and
occupational cultures. Effective organizations
not only need to decide how strongly they want
their corporate culture to be based on the rate of
technological change, but should also be concerned about the management of the multiple
subcultures that arise with increasing technological complexity. More than ever, leaders must
have a clear understanding of how to manage in
a multicultural environment.
Written for practitioners, Schein reinforces the
emphasis on understanding the nature of culture
before one leaps into culture change programs,
especially in an age where mergers, acquisitions,
joint ventures, and foreign subsidiaries make culture management more difficult. This well-timed
revision of The Corporate Culture Survival Guide
is the ideal resource for leaders looking to figure
out how their corporate culture can aid or hinder
current performance and future effectiveness.
Reflecting the myriad changes in the field, this
new and revised edition contains new examples
that target the international, nonprofit and public
administration sectors; highlights the effects
how each level affects change initiatives. Provid-
are more relevant to leadership and organiza-
values, and shared assumptions—and shows
of corporate culture on three levels—behaviors,
nization. The book also contains an appraisal
Praise for
as well as the details and dynamics of an orga-
(Continued from front flap)
of globalization, mergers, and technology on
organizations; and features a new chapter on the
competencies managers need to foster in order
to cultivate an effective corporate culture.
The Corporate Culture Survival Guide retains
Schein’s hands-on methods of observation, interview, and intervention to uncover the nuances
(Continues on back flap)
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The Corporate Culture
Survival Guide
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The Corporate Culture
Survival Guide
New and Revised Edition
Edgar H. Schein
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Copyright © 1999, 2009 by John Wiley & Sons, Inc. All Rights Reserved.
Published by Jossey-Bass
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Library of Congress Cataloging-in-Publication Data
Schein, Edgar H.
The corporate culture survival guide / Edgar H. Schein.—New and rev. ed.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-470-29371-3 (cloth)
1. Corporate culture. 2. Culture. 3. Organizational behavior. I. Title.
HD58.7.S3217 2009
Printed in the United States of America
new and revised edition
HB Printing
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Books in the Warren Bennis Signature Series
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Self-Esteem at Work
Mitroff, Denton
A Spiritual Audit of Corporate America
The Corporate Culture Survival Guide
The Contrarians Guide to Leadership
Lawrence, Nohria
Cloke, Goldsmith
The End of Management and the Rise of
Organizational Democracy
Leading Geeks
Cloke, Goldsmith
The Art of Waking People Up
Authentic Leadership
Hostage at the Table
Moral Leadership
True North
Up the Organization
Kellerman, Rhode
Women and Leadership
The Art of Followership
Gergen, Vanourek
Life Entrepreneurs
Frohman, Howard
Leadership the Hard Way
George, McLean, Craig
Finding Your True North: A Personal Guide
The Age of Heretics
Nobody in Charge
Career imprints
Burke, Lake, Paine
Organization Change
Zaffran, Logan
The Three Laws of Performance
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Preface to the New and Revised Edition
The Author
Part One: The Structure and
Content of Culture
Why Bother?
What Is Culture Anyway?
What Are the Elements and
Dimensions of Organizational Culture?
Deeper Assumptions
When and How to Assess Your Culture
Part Two: The Dynamics of Culture
Formation, Evolution, and Change
Cultural Learning, Unlearning, and
Transformative Change
Culture Creation, Evolution, and Change in
Start-Up Companies
Culture Dynamics in the Mature Company
Mid-Life Crisis and Potential Decline
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Part Three: The Realities of Multiculturalism 187
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When Cultures Meet: Acquisitions,
Mergers, Joint Ventures, and Other Multicultural
Cultural Realities for the Serious
Culture Leader
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Preface to the New and
Revised Edition
The field of organizational culture has evolved along several
dimensions in the ten years since the first edition of this book.
This new and revised edition attempts to capture this evolution
while retaining the fundamental model of culture that continues
to prove to be a useful tool. My basic model of organizational
culture has not changed, but the application of the model has
certainly changed both research and practice around culture formation, evolution, and managed change. I am still addressing
the practicing leader and manager who wants to understand and
work with culture. To that end the basic structure of the book
will look similar to the first edition.
Culture as a concept in organizational life has come to be
accepted, but there is still a strong divide between (1) those
who want very abstract universal dimensions of culture that can
be measured with surveys and questionnaires and (2) those who
want to study the nuances, details, and dynamics of particular
cultures by observation, interview, and intervention. The first
approach looks for general traits; the second approach looks for
general cultural processes.
Both groups are interested in how cultural forces impact
organizational performance, but whereas the first group is looking for cultural traits that will correlate with performance
across all kinds of companies and industries, the second group
is looking for direct linkages between particular cultural events
and performance outcomes. The first approach lends itself to
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a quantitative cross-sectional analysis, the second requires a
more clinical longitudinal analysis. The first approach of necessity develops variables that are quite abstract and removed from
here-and-now organizational events that the manager or consultant encounters in a particular company. The second approach
looks for proximate variables that enable the manager or consultant to deal with the immediate situation. The first approach
tries to develop broad theoretical principles that apply to large
numbers of organizations. The second approach looks for middlelevel theories that illuminate local situations.
I have chosen to highlight this difference at the outset in
order to make it very clear to the reader what my own position
is on this dimension. While I gain some insight from the work
of colleagues who work on the first approach, I have found that
my own insights are far greater if I am clinically involved as an
active change agent. I have come to believe that at this stage of
the development of our field we still need the detailed clinical
studies of cultural events because we do not yet know what the
crucial dimensions and variables will ultimately turn out to be.
There is also a more pressing argument for the second
approach. One cannot really build, evolve, or change culture
without getting into the messy details of particular cultures. The
broad dimensions are valid, but they are so distant from the dayto-day phenomena that leaders and managers are wrestling with
that they do not inform you on what should be done.
So this book, especially this new and revised edition, is
written to the leader and manager who needs to get something
done and, therefore, needs to understand the nitty gritty of
culture dynamics. As it turns out, this nitty gritty has become
much more complex because of the evolution of technological
complexity, leading to more occupational subcultures, and the
growth of globalism, leading to more groups and organizations
that mix both occupational and national cultures. A merger of
two companies in one country is a far different set of issues than
a joint venture of two different companies from two different
countries trying to put together a project in yet another country.
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Leaders and managers of organizations (and societies) are
creators, products, and victims of culture. And it is one of the
unique functions of leadership not only to create cultures in
new groups but also to manage cultural issues in mature organizations. For all of this, they need concepts and a toolkit. This
book is written from that point of view. It is intended to explain
what culture is, when and how one assesses it, and when and
how one changes it.
The basic structure is similar to the previous edition. In Part
One we examine basic definitions, why culture is important in the
first place, and what range of dimensions can be explored in probing the content of culture. Part Two begins with an important
chapter on general change theory and how it applies to culture.
In the next three chapters I explain how to work with culture at
different stages of organizational evolution. Finally, we end with
the very new issue of multicultural groups that more or less start
from scratch to blend together to the extent possible the different
assumptions that are brought to a new project by members from
different cultures. This is as yet uncharted territory but some principles of how to blend cultures are beginning to emerge.
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My main debt is once again to my clients, who not only provided endlessly interesting and challenging culture puzzles but
whose efforts to evolve and change culture revealed many of the
crucial dynamics that have informed the content of this book.
Whenever possible I have named these clients, but in some projects confidentially was requested so I gave them pseudonyms.
I am very appreciative of the thoughtful and detailed reviews
of my first edition that were provided by the Jossey-Bass editorial staff and want to express a special thank you to Joan Gallos,
who was helpful as a reviewer and, more importantly, as a guide
through the complexity of the reviews themselves.
Ed Schein
Cambridge, MA
January 2009
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The Author
Ed Schein is the Sloan Fellows Professor of Management
Emeritus at the MIT Sloan School of Management. He received
his Ph.D. in social psychology from Harvard in 1952, worked at
the Walter Reed Institute of Research for four years, and then
joined MIT, where he taught until 2005. He has published extensively in organizational psychology (Organizational Psychology, 3rd
ed., 1980), process consultation (Process Consultation Revisited,
1999), career dynamics (Career Anchors, 3rd ed., 2006), organizational culture texts (Organizational Culture and Leadership, 3rd
ed., 2004), analyses of Singapore’s economic miracle (Strategic
Pragmatism, 1996), and Digital Equipment Corp.’s rise and fall
(DEC Is Dead; Long Live DEC, 2003). He continues to consult
and recently published a book on the general theory and practice
of giving and receiving help (Helping, 2009).
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Part One
In order to manage culture, you must understand what culture is,
what content culture covers, and how to assess it. It is dangerous
to oversimplify this concept because of the illusion that one is
managing culture when one is, in fact, managing only a manifestation of culture and, therefore, not achieving one’s change goals.
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Why is it important to understand culture? In this chapter I will
provide an overview of the many ways in which culture matters.
First, culture and leadership are two sides of the same coin and
one cannot understand one without the other. Next, we have to
understand that organizations are cultural units that have within
them powerful subcultures based on occupations and common
histories. We have to recognize that organizations exist within
broader cultural units that matter in today’s global world because
mergers, acquisitions, joint ventures and special projects are often
multicultural entities who must have the ability to work across
cultures. Finally, we have to understand that the culture issues are
different in young, mid-life, and older organizations.
Leadership and Culture Are Intertwined
Not only does culture reside within us as individuals, but it is also
the hidden force that drives most of our behavior both inside and
outside organizations. We are members of a country, an occupation, an organization, a community, a family, and a social group.
Each of these cultures is part of us and impacts us. In every new
social situation, whether we are aware of it or not, we function as
“leaders” in that we not only reinforce and act as a part of the present culture, but often begin to create new cultural elements. This
interplay of culture creation, reenactment, and reinforcement creates an interdependency between culture and leadership.
Much of the confusion about what culture and leadership
mean derives from a failure to consider this interaction between
them and our failure to define what stage of an organization’s life we
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are talking about. If the leader is an entrepreneur who is founding
an organization, he or she will have the opportunity to begin the
culture creation process by imposing beliefs, values, and assumptions onto new employees. If the new organization succeeds, then
its cultural elements become shared and constitute the emerging
culture of that organization. What is considered “leadership” then
reflects what the founder imposed and will become the definition of what is considered appropriate leadership in that organization. A successful organization founded by a compulsive autocrat
will consider that style of leadership as the “correct” way to run
a company, just as another successful organization founded by a
participative democrat will consider that style to be “correct.” One
reason why it is so hard to define leadership is that there are so
many “correct” versions, each reflecting one of the many kinds of
successful organizations that exist in the world, each with its own
When new leaders take over existing organizations, they find
that the existing culture defines what kind of leadership style is
expected and accepted, based on past history and the beliefs, values, and assumptions of earlier leaders. This is true whether we
are talking about a new political appointee taking over a government department, a new CEO taking over a business, or a new
minister taking over a congregation. If the new leader has been
promoted from within, he or she will have some sense of the
cultural issues that need to be dealt with. However, if the new
leader comes from outside the organization, he or she will have
to choose among several options:
1. Destroy the existing culture by getting rid of the key culture
carriers, usually the top two or three echelons of executives,
and attempt to implement his or her own beliefs, values, and
assumptions by arbitrarily imposing new behavioral rules on
the remaining employees. The risk of using this alternative is
that essential knowledge, skills, and “know-how” will be lost
as well and the performance of the organization will decline.
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2. Fight the existing culture by attempting to impose his or her
own beliefs, values, and assumptions on the existing
members of the organization. The risk of this alternative is
that the organization will adapt only on the surface and
“wait it out” until the leader is eventually replaced—the old
culture usually will “win” in this scenario unless the new
leader has extraordinary charisma.
3. Give in to the existing culture by abandoning his or her
own beliefs, values, and assumptions. The risk of this
alternative is that all of the elements of the old culture
will be perpetuated when in fact some of these elements
are obsolete and dysfunctional and should, therefore,
be changed.
4. Evolve the culture by initially adapting enough to figure out
how to get things done and then gradually imposing new
rules and behaviors that rest on different beliefs, values, and
assumptions. For many leaders and for many organizations,
this is the desirable alternative in terms of improving
effectiveness and it is the essence of what is meant by
“culture change.” For old and well-established organizations
such as government departments or old industries, cultural
evolution is the only possible alternative. The cultural
dynamics underlying such evolution are the essence of what
leaders as culture managers must learn, and these dynamics
are the central theme of this book.
The leader’s role in evolving the culture is complicated by the
fact that, as organizations grow and mature, they not only develop
their own overall cultures, but they also differentiate themselves
into many subcultures based on occupations, product lines, functions, geographies, and echelons in the hierarchy. In some organizations the subcultures are as strong as or stronger than the overall
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organizational culture. Leaders thus must not only understand the
cultural consequences of the many ways in which growing organizations differentiate themselves but, more importantly, must align
the various subcultures that have been created toward a common
corporate purpose.
Managing the alignment of many subcultures has become
especially important in the 21st century because of:
• Mergers, acquisitions, and joint ventures in which the
subcultures are actually entire organizational cultures that
need to be blended or at least aligned
• Globalization, which produces many diverse multicultural
organizational units based on nationality, language, and
• Technological complexity, which produces many more
“mature” occupational subcultures that have to be taken
into account in designing the flow of work (Technological
complexity implies that every functional unit such as
finance, marketing, or R & D is now more specialized and
is attracting members of occupations that are themselves
more specialized.)
• Information technology, which has created many more
structural options of when, where, and by whom work is to
be done (Cultures tend to grow from the interaction of
co-located employees, so the question arises of what kinds
of subcultures can and will form in networks of employees
who are electronically connected but may never have met
each other.)
These cultural and subcultural issues influence all aspects of how
an organization functions, so the task of leadership is to understand the dynamic forces that arise and to manage these forces to
ensure that they are congruent with the organization’s mission and
goals. As subculture dynamics become more important, the role
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of leadership broadens. It is not enough for the CEO and the top
executive group to be concerned about and manage the “corporate
culture.” Leaders at every level of the organization must recognize
that they have a role in creating, managing, and evolving the subcultures in their parts of the organization. One obvious example
is that union leadership must not only understand, manage, and
evolve the union’s culture, but must also ensure that the union, as
a subculture, is aligned with the corporate culture of a unionized
In summary, leadership cannot really be understood without
consideration of cultural origins, evolution, and change. In the
same way, organizational culture and subcultures cannot really
be understood without considering how leaders at every level
and in every function of an organization behave and influence
how the total system functions. Organizational functioning is
heavily dependent on how existing subcultures align with each
other, which means that it is critical for leaders to understand
and manage subculture dynamics.
Samples of How the Leadership/
Culture Interaction Matters
Many years ago, when Atari was preeminent in designing computerized games, they brought in a new CEO whose background was
in marketing. His cultural background told him that the way to
run a company was to get a good individual incentive and career
system going. Imagine his chagrin when he discovered a loosely
organized bunch of engineers and programmers whose work was
so seemingly disorganized that you could not even tell whom to
reward for what. The CEO was sure he knew how to clean up that
kind of mess! He instituted clear personal accountabilities and an
individualistic, competitive reward system symbolized by identifying the “engineer of the month”—only to discover that the organization became demoralized and some of the best engineers left
the company.
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This well-meaning CEO had not realized that in its evolution
the company had learned that the essence of the creative process
in designing good games was the unstructured collaborative climate that enabled designers to trigger each other’s creativity. The
successful game was a group product. The individual engineers
shared an assumption that only through extensive informal interaction could an idea come to fruition. No one could recall who
had actually contributed what. The new individualized reward system gave too much credit to the “engineer of the month” named
by the CEO, and the competitive climate reduced the fun and
creativity. This leader did not understand a crucial element of the
culture he was entering, so he made some decisions that changed
a key element of the culture in a dysfunctional way.
The story of Digital Equipment Corporation (DEC) will be
told throughout this book, but for purposes of understanding how
much culture matters it needs to be said at the outset that the
very culture that made DEC a great company in a remarkably
short period of time became dysfunctional as size, market conditions, and technology changed.1 Ken Olsen as a leader created a
remarkable culture in which all employees felt fully responsible
and committed to the growth and success of the organization
through innovating a whole new style of computing. One could
interact with DEC computers online—the first time that this was
Olsen’s leadership created what became in the mid-1980s the
second-largest computer company in the industry. It was a model
of how to “empower” people and build a company through product innovation. But as technology and market forces changed in
the 1980s toward the computer as a commodity, the DEC culture
of innovation failed to adapt to changing technological and economic circumstances, leading to its sale to Compaq and eventual
absorption into Hewlett-Packard (HP). Was this a failure of leadership, or was the culture now powerful enough to dictate what
kind of leadership would be acceptable, even if it was economically dysfunctional?
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The next story illustrates how long it takes to make substantial
changes in part of the culture of a large organization—the conversion of Procter & Gamble’s manufacturing system in the 1950s to
become a low-cost producer. A far-sighted manager of manufacturing empowered a staff group to examine how one might reorganize
plants to increase both productivity and worker satisfaction.2 With
the help of organization development (OD) consultants such as
Douglas McGregor and Richard Beckhard, this staff group evolved
a concept of a factory that depended much more on worker
involvement and a reward system that emphasized multiple skills
and job trading, rather than job specialization, hierarchical position, or number of people supervised. The essence of the idea was
to have a plant view itself as a business with suppliers and customers, and to run that business responsibly. To achieve that would
require not only changing some elements of the corporate culture
but, more importantly, to change key elements of the union culture. Workers would become multi-skilled and supportive of each
other throughout the operation, instead of having rigid rules about
who does what.
The staff group also realized that there was no chance of selling such a concept either to the union or to more traditional management types. They had to start with a new plant, hire their own
plant manager, and teach him the new concept of a plant as a
self-managing business. A leader was found who embodied these
new beliefs and the “Augusta” plant was born. It was highly successful, but to proliferate this success the staff group decided that
potential managers of other new plants (and of the old, unionized plants) would have to learn the new system in an apprenticeship capacity to ensure that they really understood it. New kinds
of leaders with different kinds of management attitudes had to
be trained if the new management system was to be embedded in
the new and old plants.
Over the next several years, a number of new plants started up,
in each case with a manager who had apprenticed in the Augusta
plant. The new operations worked well and built new cultures
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based on productivity and involvement, but the unionized plants
remained problematic because of well-established cultures based
on years of conflict-full labor/management interaction. Some
of the older-and-wiser ex-Augusta managers were then placed
into those plants to begin the process of “changing the culture,”
although that was not the terminology used at the time. Each
plant also had an “organization development” (OD) manager who
reported directly to the plant manager. These OD managers had
been recruited from the employee ranks before being trained in
organization development on the theory that they would understand the union culture better and, therefore, have more credibility as change agents.
My work with one of these managers highlighted the problem. Until the union began to trust management, there was no
chance of even discussing the new kinds of production systems
that would allow for job trading and multi-skilling—notions that
violated some of the most sacred cows of trade unionism. In one
plant, it took about five years for the union to decide that the
manager could be trusted and to open discussion of a new kind of
contract. After several more years, the union accepted the new
system and saw that it was of benefit to all. In the mid-1990s,
I attended a celebration marking the conversion of the last of
P&G’s unionized plants to the new system. The event occurred
fifteen years after the launch of the Augusta plant, but a real
culture change had been achieved in the manufacturing division through a carefully designed and managed process of culture
“Acme Insurance” (a pseudonym) illustrates the consequences of changing technology without analyzing the constraints of culture and the interaction of subcultures. Acme
decided to increase its competitiveness by rapidly evolving to the
paperless office with all major transactions to be done by computer in the very near future.3 To accomplish this change, they
hired a talented manager of information technology (IT) who
had a proven track record in implementing new systems. She was
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given a tough target of converting the clerical staff to the new
paperless system within one year. Training modules were created to teach employees how to use the new system effectively.
But the IT manager was not aware that the company was, at the
same time, launching intensive productivity efforts that signaled
to the employees that they had to get their normal work done in
addition to whatever training they could squeeze in. The subculture of production was not aligned with the subculture of IT.
The result was that the training was done in off hours and halfheartedly and, worse, the IT manager was not told this because
the employees feared senior management reprisal. At the end
of the year, the IT manager announced that the paperless transaction system had been successfully installed, but she did not know
that the employees were so poorly trained that it was taking them
much longer to use the computers than it had taken to use paper.
Productivity actually dropped. Failure to recognize some of the
deep realities of their own corporate culture and its subcultures
caused this organization to waste tremendous amounts of money
and effort for very little gain.
I observed a similar scenario in the back room of a large
bank that installed computerized recordkeeping to reduce paper
flow. Employees had data on their computer screens, but when a
customer called with an inquiry, there was never enough of the
case history on a single screen for the employee to rely on. So
the employees kept extensive backup folders, which they pulled
out and spread out on their desks as needed. Whenever the IToriented manager came around, the folders disappeared and the
employees pretended to be using only the computers. This was
not a technology failure. It was a managerial failure to understand
the subculture operating in the clerical group.
Subculture issues in another kind of organizational context are
illustrated when large “accidents” occur. For example, the shooting down of the UN helicopters in Iraq’s no-fly zone in 1994 with
the loss of twenty-six UN peacekeepers can best be explained by
multiple communication failures between the Army helicopters,
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the Air Force fighters who guarded the no-fly zone, and the high
flying Air Force AWACS, who were supposed to monitor all traffic
in the area.4 These communication failures resulted primarily
because the cultures of these organizations had different priorities,
which led to gradual drifting apart of the communication systems
they used. A similar argument has been made in explaining the
failure of NASA to cancel the ill-fated Challenger launch, even
though several members of the engineering subculture argued
strongly that the O-rings would fail in cold weather.5
Subculture issues become important in mergers, acquisitions,
and joint ventures. When organizations that have developed their
own cultures acquire each other, attempt to merge, or engage in
various kinds of partnerships and joint ventures, the culture issue is
more blatant and visible. However, surprisingly little attention
is paid to culture before the new organization is created, and it is
often a surprise to the parent company that it now has to deal with
powerful subcultures that may not blend together very well. As the
new organization begins to function, people hear the rhetoric that
“we will take the best from both cultures,” but that is usually not
possible because each subculture will continue to support its own
way of doing things.
I recently spoke to a senior executive from Novartis, which
is the merger of Sandoz and Ciba-Geigy, two Swiss chemical/
pharmaceutical companies. I had worked with Ciba-Geigy in
the 1970s and was surprised to learn of this merger because at
that time the companies were actively competing with each
other. When I asked the Novartis executive how the merger was
working, he pointed out that it was going fine between the parent companies, but that there were still Ciba people and Geigy
people who did not get along. This may well reflect the fact
that when Ciba and Geigy merged in 1971 they had to blend
together several different technologies reflecting different occupational subcultures, whereas the Novartis merger reflected
more the blending of what had become two pharmaceutical
companies with similar technologies.
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In these cases it is most important to recognize that different
occupations reflect different cultures based on the education and
training of the people in those occupations. These differences have
always been acknowledged in the way that companies tend to
protect and isolate their research and development departments,
often physically moving them to remote locations. What is just
recently being recognized is that finance, marketing, engineering,
manufacturing, and the other major business functions develop
different subcultures because the members of these functions
have different occupational backgrounds. The best way to understand subcultures is, therefore, to examine the backgrounds of the
people who make up the groups that are at issue.
Merger Options
In cases in which cultures have to be combined, four possible patterns may evolve: separation, domination, blending, or conflict.6
Separation. The first possible option is that the cultures
remain separate, as happens when conglomerates allow subsidiary
companies to retain their separate identities. I was asked some
years ago by the Swedish government to run a workshop for the
senior executives of the government-owned Swedish industries to
decide whether they should launch an effort to create a “common
culture” across their various industries. After lengthy discussion of
the disparate elements of ship building, mining, bottled water, and
so on, it was clear that a common culture was not only a bad idea
but probably impossible to implement. The attendees did agree
that the senior executives in each industry should be viewed as
“corporate property” and be made available in whatever industry
needed them. But even there, they decided it would be dangerous
to remove these executives from the companies in which they had
achieved success.
Separation can work if the cultures are “aligned” in the sense
of not working at cross-purposes with each other. This is easy if
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the owners manage through limited financial linkages. It becomes
more difficult in partnerships or joint ventures in which the parents have different cultures.
Domination. The second possibility is that one culture
dominates the other. In some cases this is explicit, as when one
company openly acquires another. When Intel bought a semiconductor plant from DEC in the early 1990s, the new management announced that the plant would now operate by the Intel
method—and that was that! When Hewlett-Packard bought
Apollo, it coercively trained Apollo employees to adopt “the HP
way.” I learned from a group of engineers in Palo Alto that the
HP way required people to be nice to each other and reach consensus in group meetings. If you resisted too vigorously, they said
the boss would pull you aside later and tell you that you were “not
a team player.” Some months later, I was sitting next to a young
woman who had gone to work for Apollo in Massachusetts; I asked
her how she liked it. She said it was OK, but she worried that one
could not really be outspoken or get one’s point of view across.
I asked her what would happen if she persisted in arguing for her
view, and she said—literally—“The boss will pull you aside and
tell you that you are not a team player!!!”
Does one see less domination in so-called mergers of equals?
Or is every merger an acquisition—no matter what the rhetoric
is about taking the best from each culture? In my own experience,
one culture is always dominant, but this reality may not be visible
for some time—precisely because of the rhetoric.
Blending. Can cultures blend or integrate? Blending, taking the
best of each culture, is usually claimed to be the desirable outcome.
What happens in practice is generally more complex and questionable. One level of blending is to create a new, superimposed set of
values and sell them to the various cultural units. As we will see in
later chapters, this only works under certain conditions. At another
level, the new organization attempts to benchmark its various sys-
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tems and procedures against each other and against externally perceived “best practices” to create and standardize new procedures
across the resultant organization. One often hears that the new
organization takes the accounting system from one parent, the
human resource system from the other parent, and so on.
To balance power and maintain the image of merging, the
board chairman often comes from one company and the president from the other, or a succession system is announced that
draws senior people alternatively from each organization. These
moves preserve the public image of a merger, but it cannot
be inferred from the standardizing of systems that the cultures
actually blend. In fact, the often-seen resistance to changes in
the new organization is almost always based on the fact that
cultural issues have not been considered at all in making decisions about procedures. In one merger, it was found that a company paid very high salaries but aggressively resisted stock options
and other forms of golden handcuffs because of a deep belief that
one should neither provide promises of lifetime employment nor
expect loyalty from employees. The other company had grown
up with the belief that people needed to be developed as longrange resources and therefore had adopted a low-salary, highstock-option and high-bonus system. There was no way to blend
these two philosophies. One had to win out over the other.
Blending is most likely to occur when the separate subcultures
face a new common problem that can only be solved by collaboration. When members of the subcultures have to work together
in forced interaction, they begin to pay attention to each other,
develop understanding of their differences, and create new ways of
working that take advantage of both cultures.
Though blending is often a desired outcome, especially in joint
ventures or partnerships, in a study of fifty-fifty (ownership)
joint ventures with parents from different countries, very little evidence of initial blending was found. Only when the joint venture
faced a crisis that required real collaboration was there any evidence of blending.7
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Conflict Resistance and “Counter-Culture.” Not every
subculture is aligned with the corporate mission and the corporate culture. This phenomenon becomes most noticeable in the
destructive behavior of some unions whose goals are so out of
line with what corporate headquarters would consider that they
actually are willing to jeopardize their own jobs in trying to bring
the company down. However, to varying degrees one sees subcultures that oppose at least some elements of the corporate culture
in every organization. Sometimes these subcultures cause internally stimulated revolutions, as when a military group takes over
a government by force.
Conflicts are often viewed as “power plays” or “politics,” as
when engineering and manufacturing fight or when marketing and
finance get into conflict, but what is missed in that construction is
the important fact that it is subcultures with different views that
are in conflict with each other, not individual managers. Even if
the senior managers agreed, there is no guarantee that the members of the subcultures would understand each other enough to be
able to implement what was decided.
How Culture Matters at Different
Stages of Growth
Culture matters in different ways according to the stages of organizational evolution. A young and growing company attempts to
stabilize and proliferate the culture that it views as the basis of its
success. The culture is the main source of the organization’s identity and is therefore clung to with a vengeance, just as adolescents
cling to their budding identities. Young organizations are also typically still under the control of their founders, which means the
culture is more or less a reflection of the founder’s beliefs and values. Even if success leads to broader acceptance of those beliefs
and values across the whole population, one must recognize that
a challenge to any cultural element is tantamount to questioning
the founder or owners of the organization. Those cultural elements
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become sacred cows and are difficult to change. Culture “change”
is therefore more a matter of evolving and reinforcing cultural elements, as will be explained later.
A mid-life organization can be defined as an organization
that has had at least two generations of professional managers
appointed by outside boards whose members are usually beholden
to diverse stockholders. Most likely such an organization evolves
into multiple units based on functions, products, markets, or
geographies, and those units are likely to develop subcultures of
their own. Thus the culture issue in the mid-life organization is
1. How to maintain those elements of the culture that continue
to be adaptive and relate to the organization’s success;
2. How to integrate, blend, or at least align the various
subcultures; and
3. How to identify and change those cultural elements that
may be increasingly dysfunctional as external environmental
conditions change.
In such a mature organization, one will find a corporate culture
that reflects all the parts of the organization and many subcultures that
reflect functions, products, markets, and geographies. An overall
assessment of the culture could become very cumbersome, therefore, because the culture will have so many elements and facets.
However, as we will see, assessment of the culture’s strengths and
weaknesses becomes important when the organization is trying to
change strategy or business processes. Culture assessment can then
be geared to the business changes that are being proposed in order
to discover how the present culture and subcultures will aid or hinder the proposed changes.
As companies age, elements of the corporate culture or the
misalignment of subcultures can become serious survival problems for the organization, especially if the technology, market
conditions, and financial situation have changed. Key elements
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of the corporate culture can become a serious constraint on
learning and change. The organization clings to whatever made
it a success. The very culture that created the success makes it
difficult for members of the organization to perceive changes in
the environment that require new responses. Culture becomes a
constraint on strategy.
An aircraft company that nearly went bankrupt with one
of its commercial models subsequently became highly successful in the defense industry and evolved a corporate culture that
was well adapted to working with the government. New opportunities for commercial aircraft arose, but the board and senior
management were now unable even to contemplate going back
into the commercial business because of their strong memories of
the debacle several decades earlier and their comfort with their
present culture.
The culture issue in the older maladapted company is how
to engage in massive transformations, often under great time
pressure to avoid serious economic damage. The process of
transformation is basically the same as in the healthy mid-life
company, but the demands of time and the amount of change
needed often precipitate drastic measures (usually labeled “turnarounds”). Rapid unlearning and letting go of things that are
valued is for many employees too difficult; either they leave the
organization or they are let go because they “resist change” too
strongly. If the attempt to manage the change fails, the organization may go bankrupt—and start all over again, building a new
culture with new management, or be acquired and find a new culture imposed on it.
How cultural evolution and transformative change can be
managed will be discussed later in this book.
Where Does Culture Reside?
Culture is a property of a group. Whenever a group has enough
common experience, a culture begins to form. One finds cultures
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at the level of small teams, families, and work groups. Cultures
also arise at the level of departments, functional groups, and
other organizational units that have a common occupational
core and common experience. Cultures are found at every hierarchical level. Culture exists at the level of the whole organization if there is sufficient shared history. It is even found at the
level of a whole industry because of the shared occupational
backgrounds of the people industry-wide. Finally, culture exists
at the level of regions and nations because of common language,
ethnic background, religion, and shared experience.
You as an individual, therefore, are a multicultural entity
and are able to display different cultural behaviors depending
on what the situation elicits. But if you spend the bulk of your
life in a given occupation and organization, you not only take
on many of the cultural themes that others in the occupation
or organization share, but these become tacit assumptions and
drop out of your awareness. It is this unconscious quality of culture that makes it so powerful. You are not aware of your cultural
biases until someone challenges them or until you have offended
someone with a different cultural background.
The Bottom Line
Culture matters because it is a powerful, tacit, and often unconscious set of forces that determine both our individual and collective behavior, ways of perceiving, thought patterns, and values.
Organizational culture in particular matters because cultural elements determine strategy, goals, and modes of operating.
The values and thought patterns of leaders and senior managers are partially determined by their own cultural backgrounds and
their shared experiences. If we want to make organizations more
efficient and effective, then we must understand the role that culture plays in organizational life. If we want leadership to be more
effective, we have to make leaders aware of their unique role as
culture creators, evolvers, and managers.
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Having thought broadly about culture, it is now time to
think more precisely about how to define culture, how to assess
it, and how to begin to evolve it.
Questions for the Reader
As you begin to think about culture, think about it first in your
own personality:
• Review your family, ethnic, national, and educational background to identify the major influences on your current values and ways of doing things.
• Review your current formal and informal group affiliations to
identify what current norms and values matter to you.
• Think about your place of work, its history, and traditions
and see how that relates to your own values and ways of
doing things.
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Three Levels of Culture
The biggest danger in trying to understand culture is to oversimplify it. It is tempting to say that culture is just “the way we do
things around here,” “the rites and rituals of our company,” “the
company climate,” “the reward system,” “our basic values,” and
so on. These are all manifestations of the culture, but none is
the culture at the level where culture matters. A better way to
think about culture is to realize that it exists at several “levels,”
and that we must understand and manage the deeper levels, as
illustrated in Figure 2.1. The levels of culture go from the very
visible to the very tacit and invisible.
Figure 2.1. The Three Levels of Culture
Visible organizational
structures and processes
(hard to decipher)
Strategies, goals,
(espoused justifications)
Unconscious, taken for
granted beliefs, perceptions,
thoughts, and feelings…
(ultimate source of values
and action)
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Level One: Artifacts
The easiest level to observe when you go into an organization
is that of artifacts—what you see, hear, and feel as you hang
around. Think about restaurants, hotels, stores, banks, or automobile dealerships. Note your observations and emotional reactions to the architecture, the decor, and the climate, based on
how people behave toward you and toward each other.
You can sense immediately that different organizations do
things differently. For example, in Digital Equipment Corp.
(DEC) people were constantly in meetings with each other, there
were no walls or closed doors, they dressed informally, there was
an intensity of feeling all around, and you got a sense of fastpaced action. In Ciba-Geigy, on the other hand, everything was
very formal. People were behind closed doors, conversations
were hushed, dress was formal, and you got a sense of careful
deliberation and slow movement.
As a customer or new employee, you may like or dislike one
or the other of these organizations; you may think to yourself
that DEC and Ciba-Geigy have different cultures. But you have
to be careful. All you know for sure is that they have different ways of presenting themselves and different norms of how
to deal with each other. What you don’t know is what this all
In other words, at the level of artifacts, culture is very clear
and has immediate emotional impact. But you don’t really know
why the members of the organization are behaving as they do
and why each organization is constructed as it is. Just by hanging
around and observing, you cannot really decipher what is going
on. Even when you see very similar things, you don’t know
whether they mean the same thing, as in the case of pyramids in
Egypt and pyramids in Mayan Central America. You have to be
able to talk to insiders and ask them questions about the things
you observe and feel. That takes you to the next deeper level
of culture.
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Level Two: Espoused Values
Imagine yourself to be a new employee or manager, offered jobs
at two companies that differ as much as DEC and Ciba-Geigy
did. Should you go to work for the one whose entry lobby and
security procedures make you feel most comfortable? Do you
know enough about either culture from experiencing the artifacts and behavior patterns, or should you dig more deeply? To
dig deeper means to start asking questions about the things the
organization values. Why do they do what they do? Why did
DEC create open office areas while Ciba-Geigy put everyone
behind closed doors? These questions have to be asked, especially about those observed artifacts that puzzle you or that seem
somehow inconsistent with what you would expect. For this
purpose, you need to find insiders who can explain their
organization to you. Anthropologists call them “informants”
and depend heavily on such conversations to decipher what is
going on.
The first things you learn when you start asking questions is
that the organization has certain values that are supposed to create an image of the organization. In Figure 2.1, these are shown
as the organization’s “espoused values.” In DEC, you were told
that they believe in teamwork, that you cannot get good decisions without arguing out what everyone’s point of view is and
obtaining buy-in from those who have to implement decisions.
Therefore they had to make it easy for people to communicate
with each other. You may even have been told that these values
came directly from Ken Olsen, the founder of the company and
that at one time in the company’s history he had even forbidden
having doors on offices. In this company, when they had meetings they tended to be free-for-alls and highly emotional. You
may also have been given some documents, pamphlets, or short
papers that described the company’s values, principles, ethics,
and visions and been told that these documents reflected their
basic values: integrity, teamwork, customer orientation, product
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quality, and so on. In Hewlett-Packard new employees were
given a little book that describes the “HP Way.”
In Ciba-Geigy, you were told that good decisions cannot be
made without careful thought and that they value privacy and
the opportunity for employees to really think things through before
going into action. You would have heard that this approach was necessary because the nature of their technology was such that careful
individual research and thought was the only way to reach a good
decision. In this company, meetings were formal and consisted
mainly of senior people announcing the decisions made and what
now had to be implemented by junior people.
In Ciba-Geigy, you would also have been given various documents that purported to describe the company’s values and
principles. But to your surprise, many of the points on the list
of values would be almost identical to the ones that DEC gave
you. Ciba-Geigy was also customer-oriented, cared about teamwork, product quality, integrity, and so on. How could two
organizations that espoused so many of the same values have
completely different physical layouts and working styles? You
also may have noticed that some of the values mentioned did
not seem to fit the observed behavior. For example, both organizations espoused teamwork as a value, but both were highly
individualistic, encouraged competitive behavior among their
employees, and had reward systems that were geared entirely to
the individual.
Having read a lot about culture in the popular press, you are
now tempted to guess that these two organizations can be fitted into a “typology.” Clearly, Ciba-Geigy seemed to have been a
“command-and-control” kind of organization, while DEC seemed
to have been a flatter, network kind of organization in which
people felt personally empowered. You may also have had
emotional reactions to these labels, based on your own past
experience and values. So now you have to dig still deeper to
reconcile the inconsistencies that you have observed and been
told about.
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The longer you hang around and the more questions you ask,
the more you see obvious inconsistencies between some of the
espoused values and the visible behavior. For example, both companies espoused customer orientation, yet neither was producing
products that were particularly easy to understand or use, and
neither had people who seemed very polite or service-oriented.
What these inconsistencies tell you is that a deeper level
of thought and perception is driving the overt behavior. The
deeper level may or may not be consistent with the values and
principles that are espoused by the organization. If you are to
understand the culture, you must decipher what is going on at
this deeper level.
Level Three: Shared Tacit Assumptions
To understand this deeper level, you have to think historically about these organizations. Throughout the history of the
company, what were the values, beliefs, and assumptions of
the founders and key leaders that made it successful? Recall that
organizations are started by individuals or small teams who initially impose their own beliefs, values, and assumptions on the
people whom they hire. If the founders’ values and assumptions
are out of line with what the environment of the organization
allows or affords, the organization fails and never develops a culture in the first place. But suppose, for example, that Ken Olsen,
the founder of DEC, believed that to obtain good decisions and
implementation of those decisions, people must argue things
out and get buy-in on all decisions, and that the imposition of
this way of working created a set of products that were successful. He then could attract and retain others who believed the
same thing (that one must always argue things out). If by this
means they continued to be successful in creating products and
services that the market liked, these beliefs and values would
gradually come to be shared and taken for granted. They become tacit
assumptions about the nature of the world and how to succeed in it.
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And as DEC continued to succeed and grow, these assumptions
grew stronger.
In analyzing DEC’s culture you would observe two other factors. Ken Olsen was an American and an electrical engineer
who grew up in the academic environment of MIT’s Lincoln
Labs. Many of the values and assumptions he brought to the
table reflected U.S. values, academic norms of open debate, and
the technological realities of electrical engineering and computer design. No one knew what was possible in interactive
computing, so strong debate was a far better problem-solving
method than arbitrary authority. Experimentation and internal competition were appropriate to the development of a new
In Ciba-Geigy, the founders were Swiss-German chemists
working on dyestuffs and agricultural chemicals. Unlike electrical engineering, chemistry is a much more hierarchical science
in which experiments have to be very carefully done because
of the dangers of mistakes. Individual creative thought was as
or more relevant than group debates, and researchers with
more knowledge and experience were more valued and trusted.
A highly disciplined organization that could efficiently implement
solutions would attract people who liked discipline and order, and as
they succeeded, they also came to take it for granted that hierarchy, discipline, and order were the only way to run an effective
organization based on chemistry and basic research. In either
case, then, one could “explain” the essence of the culture if one
understood national background, core technology underlying
the business, and the personalities of the founders.
The essence of culture is then the jointly learned values and
beliefs that work so well that they become taken for granted
and non-negotiable. At this point they come to function more
as tacit assumptions that become shared and taken for granted as
the organization continues to be successful. It is important to
remember that these assumptions resulted from a joint learning process. Originally, they were just in the heads of founders
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and leaders. They became shared and taken for granted only as
the new members of the organization realized that the beliefs,
values, and assumptions of their founders led to organizational
success and so must be “right.”
Recall the stories from Chapter One. The new CEO of Atari
did not understand the tacit assumption that products (computers and video games) result from a group effort. The IT manager introducing the paperless office at Acme Insurance did
not understand the tacit assumption that getting one’s normal
work finished always had priority over training and that shortrun productivity goals were always more important than longrange productivity improvements. The P&G change team did
understand that the unionized plants would not adopt a new
method until they had developed trust in management and that
the culture of these plants had been built up over decades on the
tacit assumption that management could not be trusted; they would
first have to evolve to a new assumption and show that the new production system would actually benefit the unionized workers.
So, How Do We Define Culture?
Culture is a pattern of shared tacit assumptions that was learned by a
group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to
be taught to new members as the correct way to perceive, think, and feel
in relation to those problems.
What really drives daily behavior is the learned, shared,
tacit assumptions on which people base their view of reality—as
it is and as it should be. It results in what is popularly thought of
as “the way we do things around here,” but even the employees
in the organization cannot, without help, reconstruct the
underlying assumptions on which their daily behavior rests.
They know only that this is the way, and they count on it.
Life becomes predictable and meaningful. If you understand those
assumptions, it is easy to see how they lead to the kind of behavioral
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artifacts that you observe. But doing the reverse is very difficult;
you cannot infer the assumptions just from observing the behavior. If you really want to understand the culture, you must have a
process involving systematic observation and talking to insiders
to help make the tacit assumptions explicit (see Chapter Four).
Implications of This Definition
The implications of this way of thinking about culture are profound. For one thing, you begin to realize that culture is so stable and difficult to change because it represents the accumulated
learning of a group—the ways of thinking, feeling, and perceiving the world that have made the group successful. For another
thing, you realize that the important parts of culture are essentially invisible. Members of the organization cannot readily tell
you what their culture is, any more than fish, if they could talk,
could tell you what water is. And this point is crucial to our
understanding of why cultures cannot be “measured” and “quantified” through surveys or other techniques that only ask about
behavior and espoused values.
Furthermore, you begin to realize that there is no right or
wrong culture, no better or worse culture, except in relation
to what the organization is trying to do and what the environment in which it is operating allows. General arguments of
the sort you read in popular literature—about becoming more
team-based, or creating a learning organization, or empowering employees—are all invalid unless they show how the tacit
assumptions on which these “new values” are based are adaptive to the environment in which the organization has to function. In some markets and with some technologies, teamwork
and employee empowerment are essential and the only way the
organization can continue to succeed. In other market environments or with other technologies, tight discipline and highly
structured relationships are the prerequisites to success. There is
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no best or right culture, as the evolution and ultimate demise of
DEC illustrated.
Another important implication of this definition is that
culture is a “pattern” of assumptions that are interconnected
to varying degrees. It is very tempting to look for one or two
key assumptions and then to label the culture on that basis,
as one could do by calling DEC a “networked culture” and
Ciba-Geigy a “command-and-control culture.” As we will see
below, the label makes it easy to miss other dimensions that are
just as important to understanding the culture; hence a culture description should always be a multi-dimensional diagram.
The multi-dimensionality becomes especially important when
assessing the strengths and “weaknesses” of a culture. When a
dimension is identified that has become dysfunctional and needs
to be changed, one also has to understand how the functional
elements must be preserved and how they can actually aid the
change process.
The Complexity of Culture: Digital
Equipment Corporation
The DEC culture can be represented by two diagrams that
illustrate not only the number of dimensions that have to
be taken into account but also their interconnection (see
Figures 2.2 and 2.3). The purpose of showing these diagrams
and analyzing the DEC culture in some detail is to illustrate
the complexity of a culture. In practice, it would take a long
period of living in the organization to be able to depict the
tacit assumptions in this level of detail. I was able to create
these diagrams because I had consulted with DEC for over
twenty-five years. For most purposes, this level of detail is
not necessary, as we will see.
When DEC started, it was, in effect, helping to create the
computer market. No one knew for sure what the right products
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Figure 2.2. DEC’s Cultural Paradigm: Part I
• Rugged
• Truth Through
• Entrepreneurial
• Push Back and
Get Buy-In
• Technical
• Work Is Fun
• Do the Right Thing
• Paternalistic Family
• He Who Proposes,
• Individual
• Job Security
© Schein, E.H. DEC Is Dead, Long Live DEC: The Lasting Legacy of Digital Equipment
Corporation. Berrett-Koehler, 2003.
were and what customers would want in the long run. The ten
deep assumptions on which DEC was built were that:
• Rugged individualism and an entrepreneurial spirit in the
employees are the only way to succeed.
• Employees are willing and able to take responsibility.
• Smart entrepreneurial people who are creating innovations
must debate things out to arrive at “truth.”
• Work must be fun.
• Everyone is a member of the family and, therefore, has job
• Customers must be treated with total respect, must always
be told the truth.
• Responsible people with goodwill can solve any problem.
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Figure 2.3. DEC’s Cultural Paradigm: Part II
• Moral
Commitment to
Solving the
• Internal
• Let the Market
• Engineering
• We Know What Is
• Idealism
• Responsible People
of Good Will Can
Solve the Problem
• Keep Central
© Schein, E.H. DEC Is Dead, Long Live DEC: The Lasting Legacy of Digital Equipment
Corporation. Berrett-Koehler, 2003.
• Engineers know best (especially when most early customers
are also engineers and techies).
• Internal competition among projects and letting the market
decide what wins is the best way to define priorities.
• Maintaining centralized paternalistic control is essential.
In describing and analyzing a culture, it is important to recognize that some of these assumptions interact directly with others. One cannot have strong debates without responsible people
and one cannot sustain the emotionally draining emphasis on
debate and pushback without the security of the paternalistic
climate. Failure only meant that the person was in the wrong
job and could move to another job and succeed. It is also possible for assumptions to conflict with each other, in which case one
must identify which assumption has priority in cases of conflict.
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For example, the assumption that people can be given and can
exercise responsibility is potentially in conflict with the assumption that one must maintain centralized control. When DEC
was young and small, these two assumptions could co-exist, but
when DEC was older, larger, and had developed strong autonomous engineering managers, these managers overrode many of
Ken Olsen’s efforts to maintain centralized control.
These assumptions working in concert with each other created an incredible sense of empowerment at all levels of the
organization and an atmosphere of involvement and commitment that created a highly successful company. With success, the
assumptions became taken for granted as “the way we do things.”
But reaching consensus by this means was a slow and often painful process. Successful negotiation and buy-in depended very
much on the trust that developed in the “family,” which was
based on the members’ being familiar with one another’s styles. If
the hardware developer asked a software counterpart whether the
software would be ready in six months and received an affirmative
answer, he would know whether this meant literally six months,
or maybe nine months, or maybe not at all unless he kept pressuring his associate. Engineers and managers were “functionally
familiar” with each other. They knew how to calibrate each other
from working closely together over some period of time.
If a decision was made and down the road someone questioned it, it was his or her obligation to “push back” and “do
the right thing” (as the deep assumptions put it). This process often unraveled decisions and improved them, but it took
much longer and only worked if the functional familiarity
among the players was high and they could trust each other
not to bring up trivial issues. This model of how to work with
each other was enormously successful and catapulted DEC into
the Fortune 50.
But success brought growth, and as the organization grew,
the debate was increasingly with strangers rather than trusted
colleagues. Functional familiarity became rare and was replaced
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with formal contracts, checking on each other, and playing
power games to make things happen. At the same time, the
technology itself became more complex; this required a shift
from an environment in which individual engineers designed
complete products to one of large teams of engineers having to
coordinate their efforts to build the complex products that were
becoming possible and desirable. The highly individualistic,
competitive, creative engineers found themselves increasingly
having to coordinate their part of the design with others whose
ideas they did not necessarily respect. The sense of involvement
and commitment that characterized small projects was hard to
sustain on large projects with multiple parts that had to be coordinated in a disciplined fashion. Whereas early in its history DEC
engineers were kings and dominated decisions, as the business
matured other functions such as finance and marketing became
more powerful; the result was growing conflicts among functional
groups that had created their own subcultures over time.
DEC’s success attracted competitors, and as computers increasingly became a commodity, time-to-market and the cost of
development and production became major factors. These
external forces made the original assumptions about individual
autonomy and empowerment increasingly dysfunctional. The
empowered engineering managers became powerful. Not only
could they not agree among themselves, but they also ignored
or overruled Ken Olsen’s efforts to focus because they now felt
more powerful than their founder. DEC leadership recognized
these new forces and talked about shifting to smaller units in
which the original assumptions that people believed in could
be implemented, and would allow focusing on a smaller number of products, more discipline and hierarchy. But leadership
could not give up the tacit assumptions of individual empowerment and debate because that was the basis of their success as
innovators. As they grew, they became increasingly victim to a
political process in which baronies grew and mistrust replaced
the functional familiarity on which the culture had depended.
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Central control became ever more difficult. Excessive costs,
slow time-to-market, and inability to develop a coherent strategy in an increasingly complex market caused serious financial
problems, until finally in the 1990s DEC had a major change
in leadership and embraced a more hierarchical structure that
would allow the discipline and efficiency the market now
needed. As this happened, DEC old-timers lamented what they
regarded as a loss of the DEC culture and many of them left voluntarily to build organizations of their own on the DEC cultural
model. Paradoxically, even as DEC the economic entity disappeared, the DEC culture survived in its alumni.
The lesson is that a good or right culture is a function of
the degree to which shared tacit assumptions create the kind
of strategy that is functional in the organization’s environment.
If you were the kind of person who preferred the open, confrontational type of organization that DEC represented and went
to work there in the 1970s, you would have had a blast. If you
were there with the same mind-set in the 1990s, you might have
found yourself bored by all the rules or out of a job.
The Bottom Line
It is clear that culture is a complex concept that must be analyzed at every level before it can be understood. The biggest risk
in working with culture is to oversimplify it and miss several
basic facets that matter:
1. Culture is deep. If you treat it as a superficial phenomenon,
if you assume that you can manipulate it and change it at will,
you are sure to fail. Furthermore, culture controls you more
than you control culture. You want it that way, because culture gives meaning and predictability to your daily life. As
you learn what works, you develop beliefs and assumptions
that eventually drop out of awareness and become tacit
rules of how to do things, how to think about things, and
how to feel.
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2. Culture is broad. As a group learns to survive in its environment, it learns about all aspects of its external and internal
relationships. Beliefs and assumptions form about daily life,
how to get along with the boss, what kind of attitude one
should have toward customers, the nature of one’s career in
the organization, what it takes to get ahead, what the sacred
cows are, and so on. Deciphering culture can therefore be an
endless task. If you do not have a specific focus or reason for
wanting to understand your organizational culture, you will
find it boundless and frustrating.
3. Culture is stable. The members of a group want to hold on to
their cultural assumptions because culture provides meaning and makes life predictable. Humans do not like chaotic,
unpredictable situations and work hard to stabilize and
“normalize” them. Any prospective culture change therefore launches massive amounts of anxiety and resistance to
change. If you want to change some elements of your culture, you must recognize that you are tackling some of the
most stable parts of your organization.
Questions for the Reader
So what should you do differently tomorrow?
• Take some time to reflect on your own concept of culture and to
integrate into it some of the insights from this chapter.
• Think about the organization in which you work, and see
whether you can come up with some of its espoused values. Does
the organization live its espoused values? If not, what are the
deeper, shared tacit assumptions that explain daily behavior.
• Start by thinking about the artifacts around you and the behavior you observe. Locate things that puzzle you; ask an old-timer
why they are that way. Try to see the culture as an outsider might
(but for now, try not to evaluate it or think about changing it).
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The Popular View: Inventories and Typologies
When you think about culture, chances are you identify some
aspect of how the people in your organization relate to each other
and how they do their jobs—“the way we do things around here.”
The most common view is that culture is about human relations
in the organization. Culture is often confused with “climate,” how
the organization feels, what the employee morale is, how well
people are getting along. There is a strong temptation to look for
broad categories such as “command and control” or “autocratic
versus democratic.” Culture typologies built on these popular
views talk about levels of “sociability” and “solidarity” or about
“internal versus external focus” and “flexibility versus stability
and control.”1 Almost all of these typologies and the questionnaires designed to measure the underlying dimensions are based
on some aspect of the human relations inside the organization
or in connection with the environment. When culture change
is proposed it is almost always in relation to more teamwork,
employee involvement, reducing the layers of supervision in
the organization, creating lateral communication, building
loyalty and commitment in the organization, empowering employees, and becoming more customer oriented. Most questionnaires
that purport to assess culture deal with these same issues.
These views of culture are correct but dangerously narrow.
Cultural assumptions in organizations do grow around how people
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in the organization relate to each other, but that is only a fraction of what culture covers. Culture-change programs that focus
narrowly on how employees currently perceive their organization
versus how they would like the organization to be are unlikely to
work because they ignore other elements of culture that are more
deeply embedded and may not even be noticed.
For example, a large insurance company hired a new CEO who
concluded that among the company’s main problems was a lack of
innovation. He launched multiple programs to increase innovation, all of which failed. Why? A number of employee focus groups
were launched to analyze the problem. In reviewing the company’s history it was revealed that past success was based on a tightly
structured system of figuring out the best solution to any given
problem, documenting the solution, putting all of the solutions
into large manuals organized by every conceivable kind of problem
that could arise, and systematically rewarding employees for using
the rules written out in the manuals.
Over the years, employees had learned that the road to success
was to apply the rules. The number of manuals grew to cover every
new situation that arose. Employees who did not like to work in
this kind of rule-bound, structured environment were encouraged
to leave the organization, leading to a workforce that was comfortable in the structured environment. Previous CEOs had glorified
this system of working, and indeed it had been highly successful
in building the company. It came to be taken for granted that the
best way to work was to follow the rules in the manuals.
The new CEO saw that the company was in a changing
environment and realized that many of the new situations the
company would face could not be preprogrammed. Employees
would have to learn to think for themselves as they faced a turbulent environment. He launched various campaigns to reward
innovation (suggestion boxes, prizes for new ideas) yet received
little response. He did not realize that the entire organization was
built on the assumption that the correct way to do things was to
follow the rules, and that over the years this assumption had
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become deeply embedded in all the layers of management and
employees because it was successful. It was in the very fabric
of how the organization operated, built into how the company
recruited, rewarded, and promoted people. For this organization
to change its way of working would require a complete assessment of all aspects of its culture. Ironically, if this CEO became
aware of these deep cultural elements, perhaps he could have
succeeded by imposing a new rule. Every month every department had to invent three new ways of doing things and write up
a manual to that effect!!!
If a cultural assessment is to be done, what content areas
would such an assessment have to cover If we look back at the
culture diagrams of DEC, we see that many of the tacit assumptions are about people relationships, but what would be missed if
we had not looked more deeply into the DEC culture would be
the assumption that truth can only be derived by full and open
debate and that the mission of the organization was innovation based on good creative engineering. The human relations
assumptions were derivative from the assumptions about the
mission of the organization and how to best accomplish it.
To give you a more realistic view of what culture covers, look
at Exhibit 3.1. It outlines the areas in which cultural assumptions make a difference. The first thing to notice is that cultural
assumptions involve not only the internal workings of the organization but, more important, how the organization views itself
in relation to its various environments.
Exhibit 3.1. What Is Culture About?
External Survival Issues
• Mission, strategy, goals
• Means: structure, systems, processes
• Measurement: error-detection and correction systems
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Internal Integration Issues
• Common language and concepts
• Group boundaries and identity
• The nature of authority and relationships
• Allocation of rewards and status
Deeper Underlying Assumptions
• Human relationships to nature
• The nature of reality and truth
• The nature of human nature
• The nature of human relationships
• The nature of time and space
• The unknowable and uncontrollable
Culture Content, Part One: Surviving in the
External Environment
Mission, Strategy, Goals
To survive and grow, every organization must develop viable
assumptions about what to do and how to do it. For an organization to succeed in the sense of accomplishing its mission, surviving,
and growing, it must fulfill what its various environments demand
and afford. Most organizations evolve assumptions about their
basic mission and identity, about their strategic intent, financial
policies, fundamental way of organizing themselves and their work,
way of measuring themselves, and means for correcting themselves
when they are perceived to be off target.
When the organization was first created, its founders and early
leaders had a strong sense of mission and identity—what they were
trying to be, what product or market they were trying to develop,
who they were and what justified them. To raise money, they had
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to develop a credible story around these questions, and the first
set of employees needed to buy into and believe the story, even
if they knew initially that it was a risk and might not work out.
But if it did work out and the organization succeeded, the founders
and the employees would begin to form shared assumptions around
those initial beliefs—and over time come to take them for granted.
The deep sense of mission and identity may become so taken for
granted that it surfaces only if some event violates it and thereby
brings it to consciousness.
An example from the Swiss company Ciba-Geigy illustrates
the point. In the mid-1970s, C-G consisted of four major product
divisions (dyestuffs, industrial chemicals, agricultural chemicals,
and pharmaceuticals) and many country units. Historically the
company traced its roots to the dyestuffs business and the important discoveries made in the R&D labs that led to new products
in the agricultural and pharmaceutical domains. The company
recognized that its strength was in R&D and that it had remained
profitable largely because of patent protection. Leadership recognized that, as patents expired and competition in each market
grew, C-G needed to improve marketing and reduce costs.
Thus far, this story may seem like fairly traditional evolution; so where does culture come in? To improve marketing skills,
C-G empowered its U.S. subsidiary to purchase a consumer goods
company because organizations of that kind learn how to do
sophisticated marketing. They purchased Airwick, a maker of air
fresheners, carpet cleaners, and other products to remove unpleasant odors. For a number of years, Airwick struggled along but
gradually became profitable, not only in the United States but in
various European countries where it developed subsidiaries.
At that time, I was working with the C-G corporate executive
committee in running an annual meeting of its top fifty functional,
divisional, and country managers. In one of these meetings, the
president of the U.S. subsidiary was reporting on the progress of
Airwick and showing videotape of a particularly successful advertising campaign that introduced a new product, Carpet Fresh.
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The ads showed a housewife sprinkling Carpet Fresh powder on
her rugs and a minute or so later vacuuming it up, to illustrate how
easy the product was to use.
I was sitting next to a member of the executive committee, a
man who had developed several of C-G’s major chemical products
and who saw himself as an important strategist in the company.
Watching the videotape, he began to squirm in his seat, showed
signs of great tension, and finally leaned over to me and said in a
loud whisper, “You know, Schein, those aren’t even products.”
In that moment, I glimpsed his image of what C-G was all
about. He saw it as a company producing “important products”
that combated starvation (industrial pesticides enabled thirdworld countries to grow crops) and saved lives (pharmaceutical
products were geared to curing major diseases). In that context,
and with that sense of mission, how could one possibly view an
air or carpet freshener as worthy of being called a “product”?
How could one possibly want to associate with such a trivial
matter? This man’s self-image was violated by C-G’s association
with Airwick—never mind that the whole idea was to learn
something about marketing and that Airwick was beginning to
show good financial results. Airwick just did not fit.
Some months later, I learned of another way in which this
aspect of the corporate culture impacted their daily functioning. The European division of Airwick was based in Paris, and
that office hired a very talented woman to be chief financial officer. They reported with pride that they were beginning to break
the gender barrier in their promotional policies, and she was a
prime example. However, she left some months later and related
the following incident. In organizing Airwick’s European operation, she needed a more efficient and speedier accounting
system than what C-G was using. She went to the corporate
head of accounting in the Basel headquarters and requested permission and funds to institute the new system, only to be told,
“Mrs. Smith, I think you will find that our accounting system
has been quite adequate to the task for one hundred years or so,
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and it should certainly be adequate, therefore, to your tasks.”
Needless to say, she left and Airwick managers were forced to
bootleg systems in secrecy that would meet their needs.
The cultural moral of this story is that an acquisition strategy has to fit the existing culture. Even though the purpose of
the acquisition was to learn marketing from a consumer-goods
company, this particular set of products was giving C-G cultural
indigestion. C-G’s sense of mission and self-image were violated
by these “non-products,” even though Airwick was beginning
to show profit in many countries. To deal with their discomfort,
the executive committee appointed a senior Swiss manager to
evaluate the future of Airwick over a period of several years and
recommend what C-G should do with it. From a cultural perspective, it was obvious that he would eventually recommend
that they sell Airwick—which is what they did. At the same
time they reaffirmed their self-image of only making acquisitions
of companies that were based on sophisticated technology. At

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