Shaping Corporate Culture for Innovation Responses

Research conducted by a Stanford University professor indicates that the one factor that increases a company’s value the most is people and how they are treated. In addition a business magazine survey found that CEOs cite organizational culture as their most important mechanism for attracting motivating and retaining talented employees a capability they consider the single best predictor of overall organizational excellence. Corporate culture plays a key role in creating an organizational climate that enables learning and innovative responses to threats from the external environment, challenging new opportunities or organizational crises. However, managers can’t focus all their attention on values; they also need a commitment to solid business.

Managing the high performance culture:

Companies that succeed in a turbulent world are those that pay attention both to cultural values and to business performance. Cultural values can energize and motivate employees by appealing to higher ideals and unifying people around shared goals. In addition, values boost performance by shaping and guiding employee behavior so that everyone’s action is aligned with strategic priorities. Exhibit illustrates four organizational outcomes based on the relative attention managers pay to cultural values and business performance. A company in Quadrant A pays little attention in Quadrant B as organizations are highly focused on creating a strong culture but they don’t tie organizational values directly to goals and desired business results. A strong, cohesive culture can be positive for a company especially in terms of employee’s morale and satisfaction. However, if the culture isn’t connected to business performance, it isn’t likely to benefit the organizations during hard times. For example, Levi Strauss has always been highly focused on values, even trying a  part of manager’s pay to how well they toe the values line. The problem is that top executives lost sight of the business performance side of the issues that is they stopped thinking about what it took to make blue Jeans profitably.

Quadrant C represents organizations that are focused primarily on bottom line results and pay little attention to organizational values. This may be profitable in the short run, but the success is difficult to sustain over the long term because the glue that holds the organization together – that is, shared values – is missing. Think about the numerous get rich goals of entrepreneurs. Thousands of companies sprang up in the 1990s that were aimed primarily at fast growth and quick profits, with little effort to build a solid organization based on long term mission and values. When the crash came these companies failed. Those that survived were typically companies that had instilled cultural values that helped them weather the storm. Giants eBay and Amazon have both paid careful attention to organizational values, as have smaller e-commerce companies like Canada’s Mediagrif Interactive Technologies an online B2B brokerage that allows businesses to meet online and trade their goods.

Finally companies in Quadrant D put high emphasis on both culture and solid business performance as drivers of organizational success. Managers in these organizations align values with the company’s day to day operations – hiring practices, performance management budgeting criteria for promotions and rewards and so forth. Quadrant D represents the high performance culture a culture that: (1) is based on a solid organizational mission or purpose (2) embodies shared adaptive values that guide decisions and business practices and (3) encourages individuals employee ownership of both bottom line results and the organization’s cultural backbone.

One of the most important things managers do is create an influence organization culture to meet strategic goals because culture has a significant impact on performance.
Source: New Era Management