Corporate culture refers to the character of a company's internal work climate and personality as shaped by its core values,

beliefs, business principles, traditions, ingrained behaviors, work practices, and styles of operating. In a strong-culture company, culturally-approved behaviors and ways of doing things are nurtured while culturally disapproved behaviors and work practices get squashed. In a strong-culture company, values and behavioral norms are like crabgrass: deeply rooted and hard to weed out. In adaptive cultures, there is a spirit of doing what's necessary to ensure long-term organi ational success provided the new behaviors and operating practices that management is calling for are seen as legitimate and consistent with the core values and business principles underpinning the culture. !daptive cultures are e"ceptionally well suited to companies with fast-changing strategies and market environments. #he tighter the culture$strategy fit, the more that the culture steers company personnel into displaying behaviors and adopting operating practices that promote good strategy e"ecution. It is in management's best interest to dedicate considerable effort to embedding a corporate culture that encourages behaviors and work practices conducive to good strategy e"ecutiona tight strategy$culture fit automatically nurtures culturally approved behaviors and squashes culturally disapproved behaviors. %nce a culture is established, it is difficult to change. ! company's culture is grounded in and shaped by its core values and the bar it sets for ethical behavior. ! company's values statement and code of ethics communicate e"pectations of how employees should conduct themselves in the workplace. ! multinational company needs to build its corporate culture around values and operating practices that travel well across borders. Management by walking around (MBWA) is one of the techniques that effective leaders use to stay informed about how well the strategy e"ecution process is progressing. &'%s who are committed to a core value of corporate social responsibility move beyond the rhetorical flourishes and enlist the full support of company personnel behind the e"ecution of social responsibility initiatives.

Chapter 13
Core Concepts

Key Points

#he character of a company's culture is a product of the core values and business principles that e"ecutives espouse, the standards of what is ethically acceptable and what is not, the work practices and behaviors that define (how we do things around here,( its approach to people management and style of operating, the (chemistry( and the (personality( that permeates its work environment, and the stories that get told over and over to illustrate and reinforce the company's values, business practices, and traditions. ! company's culture is important because it influences the organi ation's actions and approaches to conducting business$in a very real sense, the culture is the company's (operating system( or organi ational )*!. #he psyche of corporate cultures varies widely. +oreover, company cultures vary widely in strength and influence. ,ome are strongly embedded and have a big impact on a company's practices and behavioral norms. %thers are weak and have comparatively little influence on company operations. #here are four types of unhealthy cultures: -./ those that are highly political and characteri ed by empire building, -0/ those that are change resistant, -1/ those that are insular and inwardly focused, and -2/ those that are ethically unprincipled and are driven by greed. 3igh-performance cultures and adaptive cultures both have positive features that are conducive to good strategy e"ecution. ! culture grounded in values, practices, and behavioral norms that match what is needed for good strategy e"ecution helps energi e people throughout the company to do their 4obs in a strategy-supportive manner, adding significantly to the power of a company's strategy e"ecution effort and the chances of achieving the targeted results. 5ut when the culture is in conflict with some aspect of the company's direction, performance targets, or strategy, the culture becomes a stumbling block. #hus, an important part of the managing the strategy e"ecution process is establishing and nurturing a good fit between culture and strategy. ! company's present culture and work climate may or may not be compatible with what is needed for effective implementation and e"ecution of the chosen strategy. When a company's present work climate promotes attitudes and behaviors that are well suited to first-rate strategy execution, its culture functions as a valuable ally in the strategy execution process. 6hen the culture is in conflict with some aspect of the company's direction, performance targets, or strategy, the culture becomes a stumbling block. &hanging a company's culture, especially a strong one with traits that don't fit a new strategy's requirements, is a tough and often time-consuming challenge. &hanging a culture requires competent leadership at the top. It requires symbolic actions and substantive actions that unmistakably indicate serious commitment on the part of top management. #he more that culture-driven actions and behaviors fit what's needed for good strategy e"ecution, the less managers have to depend on policies, rules, procedures, and supervision to enforce what people should and should not do. #he taproot of a company's corporate culture nearly always is its dedication to certain core values and the bar it sets for ethical behavior. %f course, sometimes a company's stated core values and codes of ethics are cosmetic, e"isting mainly to impress outsiders and help create a positive company image. 5ut more usually they have been developed to shape the culture. If management practices what it preaches, a company's core values and ethical standards nurture the corporate culture in three highly positive ways: -./ #hey communicate the company's good intentions and validate the integrity and above-board character of its business principles and operating methods7 -0/ they steer company personnel toward both doing the right thing and doing things right7 and -1/ they establish a corporate conscience that gauges the appropriateness of particular actions, decisions, and policies. &ompanies that really care about how they conduct their business put a stake in the ground, making it unequivocally clear that company personnel are e"pected to live up to the company's values and ethical standards$how well individuals display core values and adhere to ethical standards is often part of the 4ob performance evaluations. 8eer pressures to conform to cultural norms are quite strong, acting as an important deterrent to outside-the-lines behavior. 9eading the drive for good strategy e"ecution and operating e"cellence calls for five actions on the part of the manager-in-charge: 1. ,taying on top of what is happening, closely monitoring progress, ferreting out issues, and learning what obstacles lie in the path of good e"ecution. 2. 8utting constructive pressure on the organi ation to achieve good results and operating e"cellence. 3. 9eading the development of stronger core competencies and competitive capabilities. 4. )isplaying ethical integrity and leading social responsibility initiatives.