What is Corporate Culture?

Successful movies jump right into the action rather than telling the whole story how they got there up front. They postpone this necessary explanation to a later stage in the film.

I think after two posts we have to come up with some definition work here too. - So, what is corporate culture about? Corporate culture first and foremost is a culture. It is a culture which expresses the values of a corporation.

But, what is a culture, anyway? To put it simple it is “The way we do things around here.” Or to cite one of the more renowned sources: “It consists of a set of symbols, ceremonies, and myths that communicate the underlying values and beliefs of that organization to its employees.” (Dr. William G. Ouchi)

This is the very core: the common values of a group of people, a collective, make up the driving forces of a corporation. These values are typically communicated via symbols, ceremonies and myths – and rituals I would like to add.

Well that’s fine. But that’s not all. Besides the fact, that a plethora of different definitions, there is something missing: the link to the organization itself. So following Andrew van de Ven, we should add: “Culture can be viewed as a form of control in that it sets the premises of decision and action.” It means, that cc determines the way of leadership within a corporation, the interaction of peers on the same organizational level and its behaviour directed to the outside world, customers, suppliers, shareholders and other stakeholders.

On the other hand a corporation’s culture can be assessed by analysing the nature of individuals’ vertical and horizontal relationships within that corporation and to its environment.
Here we have found a starting point for further investigation and we should follow it. Corporate culture is not just an odd folkloristic add-on. If it is “the way we do things around here” those way can be broken down to elementary actions and examined one by one.
My claim here is: “Corporate culture can be measured.”

Is corporate culture necessary?

What a silly question. As cc can’t be avoided, how can one ask this question? You can’t have “no culture”. Culture just happens. Remember one of its definitions: “It’s the way things are done around here”. So you can do things this way or another. But as long as you do anything – and you don’t do them alone - there will be a resulting culture.


So, cc just happens. It is there if you like it or not. The question is more about: is it your friend or your enemy? As the grand old man of cc, Geert Hofstede, Emeritus Professor, Maastricht University puts it: "Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster." Geert is certainly right. We can feel it in our daily life. And if you are the member of an international corporation - consider yourself as lucky or not - you may even cite several examples form your company’s folklore.

This statement marks the downside and hints at the possible pitfalls. But where there is a shadow, there must be light. If others suffer from it, why can’t we build a culture which we can thrive on? There are some encouraging sign on the wall. If your were lucky to read Werner Simons book on the “hidden champions” (I will comment on it in a later contribution), or even go back as far as to “In search of excellence” by Tom Peters and Bob Waterman you may derive the idea from the reading, that corporate culture may be the distinguishing factor for the very successful corporations worldwide.

Recent and not so recent research on the advantage of collective organised species over those facing their challenges as a sole individual shows that the roots of a “successful” corporate culture are laid out by our heir from evolution - the behaviour of a successful group, like a horde of Stone Age hunters (next reminder for me to write about it later). Modern globally acting high tech companies draw from the same sources as the wolf pack? You cannot be serious! - This could be your reaction.

Yes, I think it is true: The driving forces within any collective are still the same as we inherited from our ancestors at the dawn of mankind - or even from earlier times. Anyway, I think made it clear now that I started this posting with the wrong question. Perhaps I may come up with the right answer though. A corporation’s success has many causes. We learned about it all in our lessons about management practice. But in modern organisations it’s the culture which directs the people to do things not the orders from the top.

Hmmm, you might think. What is a modern organisation? And does cc affect some corporations more than others? Is the influence of cc depending on how you view a corporation - as a predefined machine or as an evolving community? Well it’s evident, we have to drill a bit deeper. I will do it in one of my following contributions. So please stay tuned.

Why should we care about corporate culture?

Isn’t it rather academic to delve into the depths of corporate culture and its root causes? Don’t we have some more urgent questions to answer? Isn’t there some real work to be done? 

Maybe - maybe not. Perhaps indications advance more indirectly and from a different corner.

McKinsey - like them or not - delivered some valuable insight. They conducted a survey of executives on leadership and innovation in September 2007, receiving responses from 722 executives at the senior vice president level and above and from 736 lower-level executives around the world.

And here’s the outcome:

More than 70 % of the senior executives in a survey say that innovation will be at least one of the top three drivers of growth for their companies in the next three to five years. Well, they got it, that’s fine.

But most executives are generally disappointed in their ability to stimulate innovation: some 65 % of the senior executives McK surveyed were less confident about the decisions they make in this area.

They go on claiming that there are no best-practice solutions to seed and cultivate innovation. And that the structures and processes that they reflexively use to encourage it are not sufficient. Nevertheless most of them (94 %) knew, that “people and corporate culture are the most important drivers of innovation”.

Isn’t that interesting? Our top economic decision makers feel that they have to compete through innovations. They recognise that culture is the major driving force for success. But they are not very confident, that they have the right tools at hand to direct this force to their corporations benefit.

There clearly is a gap - at least a perceived one. And this should be sufficient to state, that it is of major importance to shed some more light on this topic. There is reason to the opinion, that corporate culture is one of the major forces that make the difference between success and failure. 

And that’s the reason, why we started the corporate culture institute last week in Vienna / Austria. We want to draw a clear and understandable picture of how corporate culture works. And we can’t do it alone. We need volunteers from all over the world, out of all kinds of corporations and from all corporate levels. And we need you. If you feel that you can contribute at least something - please join the forces of the cci.

And finally here are some useful links:

• The cci-Homepage: http://www.corporate-culture-institute.org/
• The cci-Blog: http://corporate-culture-institute2.blogspot.com/
• The cci-Calendar: http://www.google.com/calendar/embed?src=cqjlbnefhoje76rb0iqqmc682s%40group.calendar.google.com&ctz=Europe/Paris
• The cci Discussion group: http://groups.google.com/group/corporate-culture-institute