Virtual Learning Resource Centre
The character of a corporation: How your company’s culture can make or break your business
by Rob Goffee and Gareth Jones, Profile Books, 2003.
Abstract
Company culture can add or subtract value. To help develop a positive culture, a set of analytical tools are encapsulated in a matrix called the “Double S Cube” which relates the two principles of solidarity and sociability in a variety of combinations.
A copy of this book can be ordered online via the Ashridge e-bookshop.
(Reviewed by Kevin Barham in June 2004)
(These book reviews offer a commentary on some aspects of the contribution the authors are making to management thinking. Neither Ashridge nor the reviewers necessarily agree with the authors’ views and the authors of the books are not responsible for any errors that may have crept in.
We aim to give enough information to enable readers to decide whether a book fits their particular concerns and, if so, to buy it. There is no substitute for reading the whole book and our reviews are no replacement for this. They can give only a broad indication of the value of a book and inevitably miss much of its richness and depth of argument. Nevertheless, we aim to open a window on to some of the benefits awaiting readers of management literature.)
Companies like Coca-Cola, Disney, Nike and Hewlett-Packard all have a positive corporate culture that powerfully affects their bottom line. However, say Rob Goffee and Gareth Jones, despite its ability to make or break a business, corporate culture is the most underutilised resource in business today.
The social architecture of success - or failure
The authors point out that corporate culture can be your tightest constraint or your greatest opportunity for success. Culture, as they point out, comes down to a common way of thinking which drives a common way of acting on the job or producing a product. Although these shared assumptions, beliefs and values are often unspoken and implicit, for the organisation they can make the difference between a company that wins or loses. For the individual, they can make the difference between commitment and joy on the job or drudgery and disaffection.
This thought-provoking and easily read book is one of the more useful publications on corporate culture to appear in recent times. Goffee and Jones, academics and consultants, explore why culture matters more than ever before and how it adds (or subtracts) value. The one element that matters most in successful companies is the nature of relationships within the organisation, the ‘social capital’ of the organisation. This is the element that makes the whole system hard to imitate, unlike products and processes which the competition can easily copy. Culture is more important as a competitive force today than in any period of business history because of the powerful forces (including globalisation, ‘virtual working’, downsizing, delayering, and mass customisation) that are combining to break up companies’ sense of community and are pushing them towards organisational disintegration, an organisational erosion that can lead to financial failure over time.
Companies used to be held together by rules and procedures, and hierarchies and careers, all of which are less appropriate in today’s fast-moving business environment. The new social contract which promises ‘employability’ rather than employment also dampens the loyalty and commitment that come from a long-term connection between employer and employee.
The ‘Double S Cube’
Managers need a set of analytical tools to help them understand corporate culture and to change it when necessary. The authors identify two major dimensions of culture - ‘solidarity’ and ‘sociability’ - both of which have positive and ‘dark’ sides. Sociability is the measure of friendliness and mutual support and caring among members of a community. On the positive side, it promotes high morale and esprit de corps but, on the negative side, it sometimes allows poor performance to be tolerated or can develop into cliques and hidden networks that undermine the organisation.
Solidarity, on the other hand, is based not so much in the heart as in the mind. It is based on common tasks, mutual interests and clearly understood goals that benefit all the involved parties whether they like each other or not. This is good for customers and shareholders and many people enjoy working in a high-clarity and performance-driven environment. In their negative aspect, however, high solidarity cultures can oppress or hurt individuals who get in their way.
The authors propose the ‘Double S Cube’ as a way of thinking about corporate culture. This is a three-dimensional matrix which identifies the four main cultures to be found in organisations according to whether they have high or low levels of solidarity and sociability. This reveals four main cultural forms: the networked culture, the mercenary culture, the fragmented culture, and the communal culture.
What’s my culture?
If you want to make the character of your corporation a source of competitive advantage, you need to start by accurately positioning your organisation, division or team within the Double S Cube. The authors offer four diagnostic tools for identifying which of the four cultures characterises your company or sub-unit:
- The Observational Checklist - this sorts the four main cultural types by how physical space is set up, how people communicate with each other, how time is used, and how people express their personal identities.
- The Corporate Character Questionnaire - this identifies your organisation’s cultural type by asking you to consider 23 statements about your organisation and mark how strongly you agree.
- The Positive/Negative Test - this takes the result of the questionnaire and tests to see if the culture identified is in the positive or negative form.
- Critical Incident Analysis – as a further confirmation of whether you have correctly identified your culture, this tool presents ten scenarios for each culture for which you must identify how people would react in your organisation.
The networked culture.
(High sociability, low solidarity.) This culture is highly appropriate for organisations where creativity and the free flow of information are important competitive weapons. The positive networked culture is a culture of kindness and friendship with a high value put on patience and tolerance. People make friends all over the organisation, even in a huge global company like Heineken whose highly sociable culture produces a strong sense of belonging and close identification with its product. People look around for ways to help their colleagues. Information and tacit knowledge move around fast and fluidly and process is king. Meetings can be fulcrums of intense learning as people learn from each other’s questions.
In the positive form of the culture, the rule of survival is: ‘make friends all over the organisation and help others when they need it’. However, in the negative form high sociability can become high politicking. Information is shared, but selectively. The rule of survival here is ‘keep your head down’ - risk avoidance is a critical career management skill.
Leaders in the networked culture need superb interpersonal skills and high emotional intelligence. They are liked rather than loved by people and are good at fixing things around the formal system. They welcome constructive criticism and people are encouraged to innovate without fear of failure. In the negative culture, however, leaders may use their interpersonal skills to more manipulative ends in pursuit of a personal agenda. They may also build a clique around them at the top. People will spend a lot of time and energy figuring out how to get into the in-group or undermine its members.
You will thrive in a networked organisation if you are an extrovert energised by relationships, if you have good social skills, are tolerant of ambiguity and have low needs for structure or certainty. To succeed, you need to use the informal hierarchies, build relationships, and make time to talk.
The mercenary (or ‘focused’) culture
(Low sociability, high solidarity.) This is a high energy, task-oriented, culture with a quick response rate. Internal conflicts are openly addressed and there is a relentless pursuit of improved outcomes and standards. With its focus on decisive movement and results, it is a very appropriate culture for situations in which critical sources of competitive advantage are under threat and the organisation needs to move quickly and in concert. Restless and ruthless, the goal is not just to win but to destroy the enemy (as in Pepsi-Cola’s war with Coca-Cola).
An ethos of fairness means that hierarchies in this culture tend to be flat. Performance is king and performance-related feedback is given openly and without malice. The organisation’s members work primarily for money. Work is about work. The authors cite the example of Mars where senior executives gathered for dinner at a top restaurant and worked on formulating a new advertising slogan for a candy bar. (A networked company, they say, would have treated the dinner purely as a social event.)
In the negative form, the mercenary culture is internally highly competitive with little time for co-operation. It is poor at managing alliances and synergies and intolerant of dissent. The culture may not allow time for complex learning and creativity may find it hard to flourish. People may be inclined to make quick, decisive plans when the organisation would benefit from a slower, more considered process. The most dangerous aspect is the fragile nature of its social contract. People only stay with the firm until a better offer comes along. The absence of meaningful human contact within the firm can also wear people down.
Mercenary leaders are tough, fervent for performance and results and have very simple models for human behaviour (like Harold Geneen of ITT). To thrive in the mercenary culture, you must be goal-oriented, see the world in black and white, and possess a strong ego. A mercenary culture can boost firms to positions of indomitable competitive advantage but in time the organisation can become heartless.
The fragmented culture
(Low sociability, low solidarity.) This culture is typical of professional firms (such as accountants and lawyers), consultancies, hospitals, and academic institutions. People are not particularly friendly with each other, nor do they particularly support the institution or its goals. The focus is on individual excellence so there is a lot of scope for individual creativity. Resources follow ‘stars’. Employees are judged purely on their productivity and the quality of their work. All that matters is their output. The fragmented culture hires smart ideas and intelligence, rather than sociability.
Fragmented organisations are often little more than a loose amalgam of individuals who happen to work for the same employer. Negatively fragmented organisations are characterised by pervasive cynicism, closed doors and excessive critiquing of others. The ethic of the individual is so strong that selfishness and arrogance reign. Hence the rule: ‘wear a bullet-proof vest to work’. It also means that the kind of shared learning and collective creativity which is so important today may be seriously impeded.
The fragmented culture, however, provides the widest possible scope for individual freedom and creativity and offers the most personal flexibility of any of the cultures (allowing people to work from home in many cases.) Effective leaders in this culture will continually need to remind members of their obligations to the collective and enforce this with a formal control system. Introverts do well in fragmented cultures. A high drive for autonomy drive and a strong sense of self are essential. To succeed, you must invest in yourself, adding constantly to your human capital and stay focused on outputs. The first rule of survival is ‘make yourself valuable’.
The fragmented culture would seem to be the one most suited to the competitive needs of the ‘virtual organisation’ (although, significantly, the authors say that low levels of both sociability and solidarity make it a difficult culture to sustain.)
The communal culture.
(High sociability, high solidarity.) The authors find this the most appealing of the cultures in its positive form and believe it is the culture that might contribute most to making an organisation unbeatable. It involves strong adherence to shared values - the rules of survival include ‘join the family, love the product, follow the leader’. It is prevalent in small start-up companies that are typically focused on one product and run by the founder. The latter hires friends who share his enthusiasm for the product and stand to reap significant rewards if it is successful. Employees are passionate about the product and hate competitive products with equal intensity. (Some large, established companies may also exhibit this culture as well: the authors suggest Johnson & Johnson and Hewlett-Packard, for example.)
Communal leaders set the tone and agenda for the company - they are inspirational, charismatic, high-profile models of the behaviours for both sociability and solidarity. They are sources of meaning for the company, giving moral authority to company practices and strategies. Employees are both followers of a person and a cause in one. These companies believe in ‘Fight the good fight’, a sense that something extraordinary, important and different is happening, which is why these firms are often full of story and history telling. They achieve high solidarity through a relentless focus on results, a clear strategic direction and by involving people from all the firm’s functions in projects right from the start. They encourage sociability by helping people to extend their social networks, even sometimes designing offices to compel interaction between people.
To thrive in this culture, you have to be a teamworker, passionate, an idealist with a strong need to identify with something bigger than yourself. You will succeed if you are prepared to put the organisation above all else and live the values.
Theses are formidable cultures because they engage the intellect and emotions of their employees so strongly. No other culture delivers employee commitment more intensely than the communal. On the other hand, in the negative form, they may generate a dangerous sense of invulnerability and an inability to see the strengths of competitors. People may be very reluctant to change their ways of doing things and excessive reliance on charismatic founder-figures may mean the firm ignores leadership development.
Changing culture.
Companies may sometimes need to take action to prevent their cultures slipping into the negative form. The authors indicate the symptoms to watch out for in each culture and suggest some solutions to prevent such slippage. It may also be necessary at some point y to change your corporate culture. So how do you move your organisation round the Double S Cube?
The authors suggest that culture can be changed and positioned for greater competitive advantage by using the levers of sociability and solidarity. In effect, this means increasing or decreasing sociability or solidarity. For example, if you want to increase sociability, you can do this by recruiting compatible people to promote sharing of ideas and emotions. You might seek to increase the opportunities for ‘authentic’ social interaction (rather than planned, imposed events). You might design a workplace more conducive to interaction.
To decrease or ‘unpick’ sociability, you might, for example, reassign team members to break up cliques. You might make a policy of challenging bad-mouthing and politicking when you see it. Or, you can set out to create a greater sense of common purpose and urgency by developing a keen awareness of the competition, linking actions to outcomes and demanding a commitment to action. Should you want to decrease solidarity, you might introduce measures of qualitative behaviour or break up ‘solidaristic cells’ (by, for example, swapping people between functions for a time).
The important thing with any such change process is to know where you are starting from. The authors remind us that when we use these levers, we are manipulating relationships and this involves moral-ethical considerations. Executives have to manage the tension between creating a culture that makes an organisation win and one that allows the expression of authentic individual values. The authors propose a number of overarching ethical questions that they suggest every manager should consider deeply. For example, what am I prepared to do in the name of the organisation? (And what am I willing to give up in its name?) How do we define the term ‘stakeholder’? (The answer will be different in each type of culture). How much am I willing to fit in?
To answer such questions, you must know who you are and what your culture will ask of you. Managers, say the authors, must think like anthropologists and develop a well-honed ability to recognise and understand the rules, norms, behaviours and belief systems of different ‘tribes’. Whether social architecture is nurtured or changed, as long as it is understood, it has enormous potential for competitive success.