4980 Strategic Management

Chapter Twelve
Corporate Culture and Leadership:
Keys to Good Strategy Execution
 Motivation

• “The role of a creative leader is not to have

all the ideas; it's to create a culture where
everyone can have ideas and feel that they're
valued.” Ken Robinson
• “I have a foundational belief that business
results start with culture and your people.”
Douglas Conant
 Motivation
• “When a culture is broken, the cracks show –
morale is weakened, but so is profit and
performance. That's why culture has to be at
the core of any business transformation.” Peggy
Johnson
• “A genuine leader is not a searcher for
consensus, but a molder of consensus.” Martin
Luther King, Jr.
 Motivation

Groups/sheets:
How does this quote relate to
culture?
Is leadership changing as described in
this quote? If so, why?
 Motivation
• Groups/sheets:
– In its introduction for chapter 12, our text
compares Walmart and Apple’s culture, which
are different, but strategically effective.
– Identify two companies with different cultures,
describe the two cultures, and explain why they
are, or are not, strategically effective.
 Motivation
• In chapter 12 we focus on this vital element
of strategic execution:

• Culture!
 Topics

• Company Culture – General Thoughts

• Culture’s Effect on Strategy Execution
• Management actions to address culture
 Company Culture
– General Thoughts
• Corporate culture:
– The meshing of shared values, beliefs, business principles,
and traditions that instills a firm’s operating style,
behavioral norms, ingrained attitudes, and work
atmosphere
– The complex set of ideologies, symbols and core values
shared through the firm
– Personality…chemistry…DNA
• Groups/sheets
– Do most upper-level business leaders consciously consider
their firm’s needed culture and proactively work to
develop that culture??
– Why, or why not?
 Values,
Management Atmosphere and How managers
principles, and
practices and spirit embodied and employees
ethical
organizational in the work interact and
standards
policies climate relate
in actual use

Elements of a Corporate Culture

Strength of peer Actions and Traditions and

How the firm
pressure to behaviors stories and
treats
conform to encouraged “that’s what we
stakeholders
norms and rewarded do”
 Topics

• Company Culture – General Thoughts

• Culture’s Effect on Strategy Execution
• Management actions to address culture
 Culture’s Effect on
Strategy Execution
• Strong-culture firm
– Has deeply rooted widely-shared values, behavioral
norms, and operating approaches
– Insists that its values and principles be reflected by
all company personnel’s decisions and actions
• Weak-culture firm
– Lacks consistently preached or widely shared values
and principles
– Has few or no traditions, beliefs, values, common
bonds, or behavioral norms
 Culture’s Effect on
Strategy Execution
• A strong culture that encourages actions,
behaviors, and work practices that are in sync
with the chosen strategy
– Focuses attention
– Culture induced peer pressure
– Energizes employees

• Groups/sheets
– Name a hypothetical small business, its strategy, and
cultural elements vital to implementing that strategy
 Performance

Good Strategy
Execution

High-Performance Adaptive
Cultures Cultures

Commitment to
Willingness to accept
achieving stretch
change and take on
objectives and
challenges
accountability
 Incompatible
Subcultures

Change-resistant Insular, inwardly

cultures focused cultures
Unhealthy
Cultures
Politicized Unethical and greed-
cultures driven cultures

Poor Strategy
Execution

Poor Performance
 General Thoughts
• Groups/sheets:
– Identify a business or organization, maybe a
place you worked for, that did not have a
strategically effective culture
– Why was the culture strategically ineffective?
– What prompted the strategically ineffective
culture?
– If you were the leader, what would you have
done to fix the culture?
 Topics

• Company Culture – General Thoughts

• Culture’s Effect on Strategy Execution
• Management actions to address culture
 Management actions to
address culture
• Groups/sheets: Epic Systems Corporation
– What strikes you as interesting in their 10
commandments and principles?
– Is stating these commandments and principles an
effective leadership action? Why, or why not?
Provide multiple reasons.
– What might prevent Epic from having a culture
that is consistent with these commandments and
principles? (how could leadership screw this up?)
Culture and Values

Groups/sheets
• Name a hypothetical
business that you
are leading
• Name three solid
values that you want
at the core of your
business’s culture
• Why?
 Management actions to
address culture
• Screen applicants and hire those who will mesh well
with the culture
• Incorporate discussions of the firm’s culture and its
behavioral norms into orientation programs and
training courses
• Have senior executives frequently reiterate the
importance and role of the firm’s values and ethical
principles at the firm’s events and in communications
to employees
• Expect managers at all levels to be cultural role
models and exhibit advocated cultural norms in their
own behavior
 Management actions to
address culture
• Make the display of cultural norms a factor in evaluating
each person’s job performance, granting compensation
increases, and deciding who to promote
• Stress that line managers all the way down to first-level
supervisors give ongoing attention to explaining the
desired cultural traits and behaviors and clarify why they
are important
• Encourage company personnel to exert strong peer
pressure on co-workers to conform to expected cultural
norms
• Hold periodic ceremonies to honor people who excel in
displaying the company values and ethical principles
 Management actions to
address culture
• Generally, how long does it take to change
most business cultures?
– 3 to 5 years
• Groups/sheets:
– Do you agree with this estimate?
– If so, why does it take 3 – 5 years?
– What would you do to speed the process?
 New or revolutionary
technologies

New challenges in Diversification into

the marketplace new businesses

Causes of
Cultural
Change
Shifting internal Rapid growth
conditions of the firm

Merger or acquisition
of another firm
Which of the following is NOT something to look
for in identifying a company's culture?
a) the company's revered traditions and oft-
repeated stories about "heroic acts" and "how
we do things around here“
b) the company's resource strengths, core
competencies, and competitive capabilities
c) the company's shared values, business
principles, and ethical standards that
management preaches and practices
d) the company's defined spirit and character that
pervades the work climate
e) the company's approach to people management
and the official policies, procedures, and
operating practices
Which of the following is NOT something to look
for in identifying a company's culture?
a) the company's revered traditions and oft-
repeated stories about "heroic acts" and "how
we do things around here“
b) the company's resource strengths, core
competencies, and competitive capabilities
c) the company's shared values, business
principles, and ethical standards that
management preaches and practices
d) the company's defined spirit and character that
pervades the work climate
e) the company's approach to people management
and the official policies, procedures, and
operating practices
 Closing Thoughts

• Yes, culture is vital in business!

• But culture is also vital in all types of

organizations
– Name some non-business organizations in which
culture is vital

• Hopefully, we’ve opened your eyes to this vital

organizational element, which you should
consider in multiple environments!