Leveraging Organizational Culture

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    • 00:11

      The term organizational culture means people's expectationsabout shared norms and patterns of behaviorwithin an organization.I think of culture as having two components.One is the substance of the culture.Are people focused on taking risk?

    • 00:32

      Or are they focused on being collaborative?And another way to think about cultureis a kind of strength dimension.Do people agree about what the priorities are in the culture?Or is there a high level of disagreement?You can actually think about agreement or consensus

    • 00:52

      without even thinking about the content of the culture.So both content and agreement areways of describing an organization's culture.Culture is vitally important for business success.I just completed a 3-year longitudinal study

    • 01:13

      that showed that organizations that develop a strong culture--one where people have high levels of agreementacross a variety of attributes, that also emphasizes adaptationand innovation-- are significantly more likely to befinancially successful.And to grow financially over time.

    • 01:36

      And that actually is true regardlessof the financial metrics that you look at.So it's a very robust effect.This is not a particularly new finding.The research in organizational culturehas long linked culture to financial performance.

    • 01:57

      What's been a little bit more difficult to determineis what attributes of the cultureactually affect financial performance.And that's what we've tried to uncover more recently.So the study of organizational culture

    • 02:20

      originated with anthropological views of culture.It was qualitative in nature and conducted usuallyby researchers who acted as participant observers.Over time some researchers-- likeme-- became interested in larger scale comparisons, and a more

    • 02:47

      standardized and quantitative approachto assessing organizational culture.And so I'd say, slightly more recently, peoplehave taken this quantitative approachand tried to use it to understandculture looking across many organizations--across many industries.There's still a significant debate

    • 03:08

      about the legitimacy of assessing culturequantitatively, and that's still an active debateoccurring within this domain.The key debates in organizational cultureare, first, can you assess culture quantitatively?

    • 03:31

      Or are the elements of culture-- deep assumptions, and beliefs,and expectations-- are those so below the surfacethat it's impossible to assess them in quantitative terms,and researchers really need to besort of native to the organization

    • 03:52

      to understand the manifestations of the culture effectively.That's still an ongoing debate.I mean, I have an opinion about thatand I believe that both qualitativeand quantitative approaches to cultureare important and generative.A second debate, which I think is-- or should be concluded,

    • 04:15

      but perhaps hasn't concluded yet--is the culture versus climate debate.Researchers have had trouble differentiatingbetween these constructs.From my perspective, climate representsmore of an attitudinal construct that is individually based.

    • 04:37

      And climate is just like you would go and think about what'sthe temperature outside.It's like taking the temperature within an organization.Typically, however, the study of climatehas been closer related to almost a satisfaction survey.

    • 04:58

      How do you view the supervisory effectivenesswithin your organization?What do you think about the level of collaboration here?In contrast, from my perspective cultureis more of an assessment of the sharedunderstandings across members of an organization.

    • 05:19

      And so when you tap individual members to comment on,or to assess an organization's culture,you don't tap them as respondent's,you tap them as informants of the organization.And you ask questions like, how do you thinkpeople behave around here?

    • 05:39

      Rather than, what do you think this organization is like?So you really ask people to take the perspective of the broadersort of shared understandings of the organization.And I think that's an important distinction.I believe that the culture-climate distinction hasgone as far as it can, and at this pointit's getting in our way, rather than generative.

    • 06:00

      So those are really the two core debatesin the area of organizational culture.I define leadership perhaps a littledifferently than true leadership scholars.The way I define leadership is that leadersset the context for others.

    • 06:22

      And in that sense, I think leadership isall about setting the culture.If you define culture as normative expectations--to the extent that leaders have discretion over thingslike reward systems and how engaged and committed peopleare with the vision of the organization,

    • 06:44

      to the extent that leaders are very visible in termsof signaling and modeling behaviorthat is important within the organization.I think really what leaders do is set that culture,so that other people-- members of the organization,followers-- know how to make important judgmentcalls, decisions, and trade-offs on a moment to moment basis.

    • 07:13

      Culture and leadership interact as topics in the sensethat there is a growing appreciation for the leadersroll in setting and cultivating cultural norms.And I think scholars are becomingmore cognizant and sensitive to that connection.

    • 07:36

      I don't think that the leadership literaturehas always been attentive to the connection to culture.And historically the leadership researchhas been much more focused on howan individual leader-- or supervisor-- affectsan individual follower.What I like about this newer focus on leaders

    • 08:00

      as setting the context is you reallycan track how much impact leaders have on broaderswaths of the organization.So I think it's a very fertile development.

    • 08:21

      So are there cases that show leadership effectivenessin terms of leveraging culture?It's a great question and I have just writtena case on this very topic.This is a case of a senior leaderat an organization called Genentech, which is

    • 08:44

      a pharmaceutical organization.And this leader brought together a coupleof different franchises from the organizationwho previously had not been part of the same division.And her challenge was to figure outhow to gain some advantages from these separate franchises being

    • 09:09

      grouped together structurally.And she believed-- because she's a former student of mine--she believed that developing a shared culturewould be one way of creating a kind of glueamong these franchises, and enable themto perform more effectively.

    • 09:30

      So what she did was she brought in some consultants,as well as an academic-- me-- to assess the initial cultureof this organization.And we did that in 2011, and saw that therewere some fragmentation in the culture.We compared the existing culture to the ideal culture

    • 09:55

      for the division, if it were fullyexecuting on its strategy over the next 3, 4 years.And we identified a couple of key gapsbetween the current culture and the ideal culture.And the essence of the gap was that peoplein the division we're concerned that short-term financial

    • 10:19

      performance was dominating all other considerations.Which was difficult for them, because most peoplehad joined this pharmaceutical organization because theyhad developed very, very effective drugs thatwere prolonging or saving patients' lives.

    • 10:41

      And that part of their role was really important to them,and they felt that that was being slightly diminishedby an overwhelming focus on short-term commercial success.So this leader-- her name is Jennifer Cook-- embarkedon a leadership change process.

    • 11:02

      And in the case we describe the various stepsthat she took with her leadership teamto roll out the culture initiative.And it was very, very comprehensive.She began by developing a culture ambassador

    • 11:22

      team that oversaw the broader set of initiatives.And all of this work was based on voluntary effortsby members of the division.By the end of the first year therewere a set of specific cultural committees,including a committee that was focused

    • 11:43

      on selection criteria for new membersin the organization, that were culturally based.There was a logo committee, to createa logo that was more conducive to the culture theywere trying to create.There was a committee on leadership development.How can we train leaders to ensurethat they are cultivating the culture that we desire?

    • 12:05

      They were a set of 10, 12 initiatives-- specificinitiatives-- that were geared toward closingthis gap between the financial pressureand the patient orientation.Now let me just clarify, that it's notas if Jennifer Cook went to people and said,

    • 12:27

      OK, you don't need to worry about our short-term financialsuccess anymore, all we're going to worry aboutis longer-term innovation in search of patient outcomes.She couldn't say that.This is a publicly traded company.Instead what she said is much more accurate with regard

    • 12:50

      to culture.She said, we want to back off slightlyon our intense focus on short-term commercial results,in order to make room for greater innovation in serviceof better patient outcomes.

    • 13:11

      And that's really what culture change is about.It's usually not wholesale change.Gee, we used to be really detail orientedand now we're not going to care about details anymore.Culture change is usually fairly nuanced.It's a shifting of priorities, rather thana dropping out of one thing and an adding on of another thing.So this nuanced version of culture change, I think,

    • 13:34

      is quite sophisticated and valuable.Here's what happened in this case.The organization had set 5-year goals, from 2010 to 2015.The culture change effort started in 2011, by 2012

    • 13:56

      they had hit every single goal for 2015.And Jennifer Cook went back to the divisionand said, we've hit all our goals,what do you all want to do now?And they said, push 'em up.So this case actually dovetails very nicely with my broaderempirical work that shows-- across dozens of organizations

    • 14:20

      simultaneously-- cultural effectiveness correspondswith financial effectiveness.And really, this kind of case studygives us a deeper understanding of exactly what steps arerequired to develop a culture that is strategically relevant,one that is strong, and one that is adaptive over time.

    • 14:42

      Which are the three criteria for using cultureas a business tool.So the new directions in organizational culture,I think, are both conceptual and methodological.

    • 15:03

      Let me start with the methodological opportunities,as I see them.In a world of big data-- which everyoneis talking about-- a cultural researcher-- likeme-- thinks about the possibilityof looking at very fine-grained culture change over time.

    • 15:26

      And by fine-grained I mean week to week.In other words, can we actually track cultural changeat a very distinctive level?I was talking with Facebook a while back,and they actually send out to their employees a culture

    • 15:49

      survey to randomly identified employees every Saturday.And this is really interesting, because you could actuallytrack the beginnings of major cultural shifts.What we know about culture is that there's a portion of itwhich is leader-driven.

    • 16:10

      And senior leaders often can have more impactthan any other single individuals in affectingan organization's culture.That said, culture is also a collective enterprise,such that changes in broad groups of employees

    • 16:30

      within an organization can be emergent and actuallylead to broader organizational change--whether or not leaders are on board.So I think it would be very exciting to trackthe origination of culture changeby looking at much more punctuated moments,

    • 16:50

      to see the origination of that change.

Leveraging Organizational Culture

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Prof. Jennifer A. Chatman examines organizational culture research, particularly highlighting two key debates in the field. Can culture be assessed quantitatively and qualitatively? What is the difference between organizational culture and climate?

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Leveraging Organizational Culture

Prof. Jennifer A. Chatman examines organizational culture research, particularly highlighting two key debates in the field. Can culture be assessed quantitatively and qualitatively? What is the difference between organizational culture and climate?

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