A framework for understanding culture
Culture helps corporate performance in higher-performing firms and hurts it in lower-performing firms, according to James Heskett in his book The Culture Cycle: How to Shape the Unseen Force That Transforms Performance. The culture cycle referred to in the book’s title is a conceptual framework which enables the identification and analysis of elements of corporate culture and how they evolve and impact economic performance.
An organization’s culture consists of the assumptions, values, beliefs, behaviours, artefacts, measurements and actions that determine how things get done in the organization. It influences both the way in which an organization’s strategy is created and the way in which it is implemented. Strong cultures have a significant influence on performance, but not necessarily positive; culture has a positive influence on performance over the long term only if it is an adaptive culture.
The book considers the cultures of numerous companies and analyses their positive and negative aspects. Walmart and Southwest Airlines have strong cultures which have positively influenced their economic performance. Goldman Sachs has had a strong culture but its core values were not held strongly enough to keep it out of trouble in recent years. Service Master, IBM, General Motors, ING Direct, and Illinois Toolworks are amongst the other companies discussed.
In addition to describing in detail the author’s culture cycle framework, the book considers the relationship between culture and innovation, how culture may or may not assist in handling adversity, organizational culture in a multinational context, special culture considerations for non-profit organizations, and the relationship between leadership and culture. One of the appendices contains an interesting survey for measuring the health and strength of a culture.
Given the substantial influence of leadership style on organizational culture, I was a little surprised to see leadership being treated as something separate from culture. Further, the small sample size used by the author in attempting to quantify aspects of culture made the results appear less rigorous although the reasoning behind them appeared sound.
Although organizational culture is very important to the success of any enterprise, it is often poorly understood and therefore limited to a consideration of core values during strategic planning. In my opinion this book remedies this problem by providing a language with which leaders can analyse and rectify some of the key aspects of culture.