Know Thyself - Culture in Strategic Management

By Thomas E. Ambler

Most of us recognize that the culture of our company is fundamental to everything we do. It should be that ingredient of success we know the most about. But is it? It is a rare company that can honestly say, "We can describe our culture and understand how it impacts our success even in major areas of our business." Our natural tendency when we are forced to confront such ignorance as this is to brush it aside and try to rationalize that it isn't that important anyway. We can all agree that company culture is "squishy" and difficult to deal with at the conscious level. In a dizzying world of struggling mergers from the mega-consolidations like Daimler Benz and Chrysler... through the intra-company silos or fiefdoms with their conflicting sub-cultures... and down to the personal world of troubled marriages and blended families, who would be foolish enough to suggest that culture isn't important?

In the arena of strategic planning we attempt to synthesize what we assume we know about our world today and in the future and arrive at our vision as to the direction in which we want to go to satisfy our concept of success. It attempts to be a rational process with everything out on the table and dealt with on a conscious level. This does not fit with our admission that culture is "squishy" and largely subconscious. Must we, therefore, consciously eliminate culture from our strategic equation? No way! Okay, then how should we deal with company culture in our strategic planning and management?

Perhaps we first need to step back and define what we mean by the term "culture." Let's borrow shamelessly from a recognized master in the field of corporate culture and Professor Emeritus at MIT's Sloan School of Management, Edgar H. Schein, and his book, The Corporate Culture Survival Guide. ¹ It is based on many years of corporate practice in organizational development and psychology. As a result, it provides excellent coverage of the broad sweep of corporate culture, from definitions and analytical frameworks to methods of dealing with specific cultural situations in a straightforward, clear manner supported by concrete examples.

What is Culture?

Culture is the sum total of all the shared, taken-for-granted, frequently subconscious assumptions that a group has learned throughout its history. Its evolution can be traced all the way back to the organization's original "reason for being" or raison d'etre and the individual culture of the founders. The cumulative formation of culture is a highly pragmatic, joint learning process over time where a certain approach was taken to overcome a problem, to deal with a type of relationship or to fit into the organization's environment and the result was successful. Historically successful approaches get grooved and become cultural assumptions that lose their origin and can be misapplied. Your bias should always be to view your culture as a strength, because it is a composite of the perceived causes to which past successes are attributed.

"What really drives the culture-its essence-are the learned, shared, taken-for-granted assumptions on which people base their daily behavior." Culture is the result of common experiences and backgrounds. It determines individual behavior, collective behavior, ways of perceiving, thought patterns and values.

Like an onion with 3 layers, corporate culture has 3 levels that typically have logical disconnects:

• Artifacts (the outer, visible layer with its organizational structures and processes and group behaviors such as dress codes, interpersonal practices, means of communicating etc.)-It's hard to decipher their meaning without understanding the underlying assumptions;
• Espoused values (the middle layer with its strategies, mission statements, corporate values, goals, philosophies)-These are the espoused justifications for the artifacts;
• Basic underlying assumptions (the hidden, heart layer with its unconscious, taken-for-granted beliefs, perceptions, thoughts and feelings)-Contains lots of potential emotional energy and is the ultimate source of values and action

Culture is deep - controls you more than you control it.
Culture is broad - impacts all areas and relationships.
Culture is stable - has great inertia; changing it hits at a gut level and won't occur unless the survival anxiety (cost of not changing) far outweighs the learning anxiety (the cost of changing).

"The tacit assumptions that make up the culture influence all aspects of organizational functioning. Mission; strategy; means used; measurement systems; correction systems; language; group norms of inclusion and exclusion; status and reward systems; and concepts of time, space, work and human nature are all reflected in the culture. Culture influences tasks and structure. It cannot be separated as an independent element." In short, culture is the "glue" of an organization.

There are no universal right or wrong cultures, only those better or worse suited to their environment. Culture is like other corporate Success Factors-strong characteristics can be leveraged and critically weak characteristics or hindrances are candidates for change/correction. In fact, it is often cultural strengths that are leveraged to overcome cultural hindrances. Typically, it is much easier to use the cultural strengths than it is to transform the critical cultural weaknesses because a change in culture meets with strong resistance and carries with it the pain associated with both the new learning associated with the change and the unlearning of a thought or behavioral habit.

Assessing Your Culture

According to Professor Schein, assessing your culture is best done through group interviews and can be accomplished in as little as 4 hours. Surveys are too difficult to structure to be of much value. The assessment needs to be particularly aimed at identifying the underlying, shared, tacit assumptions. Recognizing the assumptions permits you to explain the discrepancies that exist between the espoused values and the observable behavioral artifacts of culture. "A culture assessment is of little value unless it is tied to some organizational problem or issue."

Your company culture cannot itself be an issue just as, on a personal level, your personality per se cannot be an issue. It can, nevertheless, result in an issue. An issue will be some aspect of organizational effectiveness or behavior. Attempting a comprehensive analysis to understand your entire culture is not recommended because it is a gargantuan task and is seen as highly academic by those involved. Use instead the following cultural assessment process, which is a much quicker and efficient means of understanding your culture.

Benefits of a "Known Culture"

Once you have identified the underlying assumptions of your culture (and ideally subcultures as well), you have taken a quantum step toward "knowing thyself" - understanding who you are as an organization. The insight this gives you will inevitably open up all kinds of opportunities for you as to how you structure and position yourself at the Artifact cultural level. This is where you interface with external forces like your markets, competitors, technology and suppliers as well as your existing internal processes.

The quantum step of raising culture from a subconscious to a conscious level and being able to understand and describe your culture has the same kind of strategic benefit as identifying a Strategic Competency. The concept of "fit" is fundamental to your strategy. It guides your choice of markets and specific customers within a market, your choice of strategic partners, your competitive strategy, your opportunities, your succession plans, your recruiting practices, your marketing approach, your resource allocation, etc. It applies to Strategic Competencies. It applies to your Known Culture as well.

In your strategic planning process you can treat your Known Culture as another Competency. The same 3 criteria used for determining if a competency rises to the level of a Strategic Competency (a primary source of sustainable competitive advantage) can be applied to your Known Culture. These criteria are:

• Does it provide high value to customers?
• Does it clearly differentiate us from our competition?
• Is it difficult to copy?

Preserving and enhancing the beneficial assumptions of culture can be addressed by the same process outlined in my article entitled "Building and Sustaining Intellectual Assets." ³

Known Culture can be useful in dealing with other elements of your strategic planning process like Strategic Issues and Action Plans. For example, your Strategic Issues discussion may result in a proposed strategic initiative believed to be an absolute stroke of genius. However, your culture could be a "fly in the ointment" that will cause you to shoot yourself in the foot. Therefore, you would be well-advised to step back and view your strategic intentions through the lens of your Known Culture before committing to major initiatives. Like your Strategic Focus, your Known Culture should become a "gate" or filter through which new opportunities and proposed initiatives must pass in order to receive serious consideration and resources.

Mergers and other forms of strategic alliances are special cases of dealing with cultures addressed by Professor Schein. Ideally, the two organizations are able to blend the best of both. That presumes that they are able to decipher the two cultures, which is rarely the case until long after the merger. Even then, it is unlikely to happen automatically and will likely require (a) intentional reflective dialogue groups using a culture assessment process like that outlined above and (b) joint tasks that promote the new learning accompanied by success necessary to create new assumptions that evolve the combined culture. (This supports the conventional wisdom that says to keep the two entities of a merger separate for a period of time until the deciphering can take place.) Two frequent problems arise in a corporate marriage--there is an erroneous, wishful thinking assumption that the two parties are more similar than they truly are and there is inevitable defensiveness on the part of both. Again, raising culture to the level of consciousness is a major step necessary to optimize the potential of any strategic alliance.

As you are aware, in an article such as this there is no way to cover all of the ground related to dealing with culture in a winning way. One of the really important topics we have not touched on is "how to transform your culture once a poor fit is determined." Fortunately, Professor Schein does an outstanding job of covering this. (Get the book. ¹ )

You know, when Socrates said, "Know thyself!" he had it right. Knowing yourself is a tremendous source of power.

So..., what will you do about dealing with culture in your organization? Will you be like the majority of companies and sweep it under the table? Or will you invest in the process of gaining a working understanding of your culture, incorporate it into all aspects of your strategic management and reap the rewards?

References1. Edgar H. Schein, The Corporate Culture Survival Guide, (San Francisco: Jossey-Bass, 1999)
2. Robert W. Bradford and J. Peter Duncan with Brian Tarcy, Simplified Strategic Planning: A No-Nonsense Guide For Busy People Who Want Results Fast, (Worcester, MA: Chandler House Press, 2000)
3. T. E. Ambler, "Building and Sustaining Intellectual Assets," "Course and Direction" (CSSP E-zine) (available free from the Article Archives of www.cssp.com)

Tom Ambler is a Senior Consultant with Center for Simplified Strategic Planning, Inc. He can be reached via e-mail at ");