Aligning strategy, leadership, and culture for project success
CEO and Managing Partner, Palatine Group, Inc/Management Worlds, Inc.
Organization culture is a much-discussed topic and has emerged as a pivotal frame of reference for every leader and organization. Definitions abound. In this paper, we offer the definition: An organization's essential way to do things in order to succeed. Every organization formulates and implements its own essential way to succeed. It is imperative for projects managers to understand their internal organizational culture and that of their customer in order to be successful.
In the past 30- plus years, the concept of organizational culture has gained wide acceptance as a way to understand organizational systems. From an “open-systems” perspective, each aspect of organizational culture can be seen as an important environmental condition affecting the human system and its subsystems. Exploring organizational culture is also a valuable analytical tool for assisting project managers in implementing projects successfully.
Organizational culture is the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization. Organizational values are beliefs and ideas about what kinds of goals members of an organization should pursue and ideas about the appropriate kinds or standards of behavior organizational members should use to achieve these goals. From organizational values develop organizational norms, guidelines or expectations that prescribe appropriate kinds of behavior by employees in particular situations and control the behavior of organizational members towards one another.
The Concept of Organizational Culture
Organizations are quite similar to societies and communities in the sense that they are constituted by a group of people who distinguish themselves by clear boundaries from other work groups. Through working together, people gradually develop their own way—a habitual or sometimes taken-for-granted way—in achieving common objectives; and by adapting to, while being adapted by, other people in the organization.
Edgar Schein (2004), one of the most prominent theorists of organizational culture, gave the following very general definition:
The culture of a group can now be defined as: A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems. (p. 373-374)
As project teams evolve over time, they face two basic challenges: integrating individuals into an effective whole, and adapting effectively to the external environment in order to create project benefits. As project teams find solutions to these problems over time, they engage in a kind of collective learning that creates the set of shared assumptions and beliefs we call “culture.”
Like It or Not…Culture Matters
- How effective would your project team be in working with a sponsor in a completely different core culture?
- Do you know how to lead your project team effectively to work within a different core culture?
- How can you effectively prepare people for working within different organizational cultures?
Project leaders must learn to determine the issues that are most important, and need to realize that issues and human behaviours' can quickly transform into crises if they are not dealt with adequately. The longer an issue survives, the fewer choices are available and the more it costs—while early action allows for flexible, adaptive and creative thinking.
According to Schein (p. 375), cultural analysis is especially valuable for dealing with aspects of organizations that seem irrational, frustrating, and intractable. He writes, “The bottom line for leaders is that if they do not become conscious of the cultures in which they are embedded, those cultures will manage them.” It is significant that Schein uses the plural “cultures.” Using open-systems concepts, we know that members of a group culture may also belong to subcultures within an organization. Because organizations do have a shared history, there will normally be at least a few values or assumptions common to the system as a whole. But sometimes, as in many organizations, the subcultures have had different experiences over time, and their group learning has produced very different sets of basic assumptions.
Organization members interpret the behavior and language of others through their own cultural biases. Each member's (or subsystem's) set of beliefs, values, and assumptions becomes their unquestioned “reality”; they then perceive behavior inconsistent with their own biases as irrational, or even malevolent. The organizational culture model suggests reinterpreting such conflict as a product of different sets of experiences. Instead of looking at conflict as “right” versus “wrong,” this approach suggests that subsystems examine the assumptions underlying their behavior, honor the experiences and learning that led to those assumptions, and then investigate whether those assumptions still work well in the present.
Gareth Morgan (1998, p. 145) described culture as “an active living phenomenon through which people jointly create and recreate the worlds in which they live.” Morgan proposes four essential strengths of the knowing your organizational culture:
- It focuses attention on the human side of organizational life, and finds significance and learning in even its most mundane aspects (for example, the setup in an empty meeting room).
- It makes clear the importance of creating appropriate systems of shared meaning to help people work together toward desired outcomes.
- It requires members—especially leaders—to acknowledge the impact of their behavior on the organization's culture. Morgan proposed that people should ask themselves: “What impact am I having on the social construction of reality in my organization?” “What can I do to have a different and more positive impact?”
- It encourages the view that the perceived relationship between an organization and its environment is also affected by the organization's basic assumptions. Morgan says: “We choose and operate in environmental domains according to how we construct conceptions of who we are and what we are trying to do.... And we act in relation to those domains through the definitions we impose on them.... The beliefs and ideas that organizations hold about who they are, what they are trying to do, and what their environment is like have a much greater tendency to realize themselves than is usually believed.” (p. 149)
Culture impacts and produces organization's internal integration, but does it have an impact on the firms' economic performance? Is there any convincing evidence? The answer is a definitely yes, based for example, on the results from large-scale surveys conducted among a broad range of companies. In Kotter and Heskett's (1992) 11-year research into 207 firms, they come up with exciting results: companies with cultures that emphasize all the key managerial constituencies (customers, stockholders, employees) outperform by a huge margin firms that do not have those cultural traits. During this 11-year period, the former group achieved an increase of 682% in revenue while the latter had only a 166% increase. Considering workforces, the former expanded 282% compared to 36% for the latter. The contrast is even more conspicuous in stock prices: 901% increase versus 74% increase; and for the growth in net income, 756% versus 1%.
Rosabeth Kanter-Moss (2008) research finding states how giant organizations such as IBM, Proctor & Gamble, Omron, CEMEX, Cisco and Banco Real are moving as rapidly and creatively as smaller enterprises. She states: “Over the course of a career studying the organization of large corporations, I have learned how they typically direct activity in and maintain control over their far-flung operations. What I have seen in recent years is a model different from what has prevailed in the past. In the most influential corporations today, a foundation of values and standards provides a well-understood, widely communicated guidance system that ensures effective operations while enabling people to make decisions appropriate to local situations. This, rather than any traditional control system, is what enables IBM or CEMEX to operate as one enterprise in projects that span many countries and to share a culture that makes people inside and external partners connect as an extended family.” (p. 43-52)
Strong and Weak Cultures
Strong culture is said to exist where staff respond to stimulus because of their alignment to organizational values. Conversely, there is Weak Culture where there is little alignment with organizational values and control must be exercised through extensive procedures and bureaucracy. Where culture is strong—people do things because they believe it is the right thing to do.
Think about organizations that are the leaders in your business or industry sector. What is it that is giving them competitive advantage? Cost? Quality? Technology? Product and process innovation? Customer service? Logistics chain? Talent? Or brand? Each of these may be a key factor that helps organizations differentiate themselves. However, there is a much less obvious and less tangible factor that also can be a determining source of competitive advantage. That factor is to have a strong and effective organizational culture; you will want to be asking questions like these: Do all employees in my organization have a common understanding of our purpose, strategy, and goals? What are the core values in our organization and do all have a common understanding of these values? Do we have a team spirit in our organization? Is everybody highly involved and committed? How do we define success? How do we handle agreement and disagreement? What behaviors are regarded as deviant in your company? How adaptive and innovative are we as an organization? The feelings of every member towards every aspect of corporate life, when counted together, constitute your organizational culture. At the surface level, culture can present itself as visible symbols, slogans, languages, behaviors, histories and stories, dress codes, heroes, legends, rituals, and ceremonies. But underlying these visible signs of culture, are the core values, beliefs and shared assumptions of each employee that help define the organization's culture. Do not expect your organization's culture to be easily changed by offering new logos or slogans, rearranging the layout of your office space, or repeating some heroic stories to your employees. They may work to a certain degree but are definitely far from adequate to win your employees' hearts and their minds, as well as the market. What you need is some deeper analysis and reflection of your people's collective beliefs and assumptions. Only when you understand these in more depth will you be able to define appropriate steps to strengthen your organization's culture and effectiveness.
Organizational performance requires the alignment of business strategy, culture, and leadership practices. Once an organization has defined a business mission, a supporting culture must be established which most appropriately reinforces business objectives and this filters down to the project level. It is the requirement of leadership within the organization to build a unifying culture that supports the achievement of business goals.
Exhibit 1 – Alignment
Culture, “how we do things around here in order to succeed” is an organization's way, identity, pattern of dynamic relationships, “reality.” It has everything to do with implementation and how success is actually achieved. No management idea, no matter how good, will work in practice (implementation) if it does not fit the culture (Schneider, 1994). An organization can have the most superb strategy, but if its culture is not aligned with and supportive of that strategy, the strategy will either stall or fail. Culture establishes and underpins: order, structure, membership criteria, conditions for judging effective performance, communication patterns, expectations and priorities, the nature of reward and punishment, the nature and use of power, decision-making practices, and management practices.
While no one organization has a pure culture throughout, every successful organization has a core culture. The core culture is central to the functioning of the organization, forming the nuclear core for how that organization operates in order to succeed. It is critical that this core or lead culture is aligned with the organization's strategy and core leadership practices. This alignment is central to any organization's effectiveness. Without it, focus is lost and energy wasted, as people, systems and processes work at cross-purposes with one another.
William Schneider's (1994) research indicates that there are four core cultures: control, collaboration, competence and cultivation. Leaders create one of these four core cultures, consciously and/or unconsciously, from their own personal history, nature, socialization experiences, and perception of what it takes to succeed in their marketplace. Each of the four core cultures emerges from the following social organization archetypes:
- Control: Military system; power motive
- Collaboration: Family and/or athletic team system; affiliation motive
- Competence: University system; achievement motive
- Cultivation: Religious system(s); growth, or self actualization, motive
There is a strong connection between strategy, culture, and leadership. The fundamental connections are shown in Exhibit 2. The four “epistemologies” that correspond to each of the four core cultures are also listed. By “epistemology” I mean the primary or central way that each core culture knows and understands. This notion of epistemology for each core culture is particularly important for any kind of intervention or practice. The more that an intervention adapts to the epistemology appropriate to the core culture in question, the more probable that intervention will take hold and significantly impact the organization.
The four core epistemologies mean the following:
Control: This culture is all about certainty. It fundamentally exists to ensure certainty, predictability, safety, accuracy, and dependability. Organizational systematism means that the fundamental issue in a control culture is to preserve, grow, and ensure the well-being and success of the organization. The organization as a system comes first. Accordingly, the design and framework for information and knowledge in the control culture is built essentially around the goals of the organization, and the extent to which those goals are met. This culture is centered on organizational goal attainment.
Collaboration: This culture is all about synergy. It fundamentally exists to ensure unity, close connection with the customer, intense dedication to the customer. Experiential knowing means that the fundamental issue in a collaboration culture is the connection between people's experience and reality. The organization moves ahead through the diverse collective experience of people from inside and outside the organization. Collaboration culture people know something when diverse collective experience has been fully utilized. This culture is centered on unique customer goal attainment.
Competence: This culture is all about distinction. It fundamentally exists to ensure the accomplishment of unparalleled, unmatched products or services. This is the culture of uniqueness per se, of one-of-a-kind products or services. Conceptual systematism means that the fundamental issue in a competence culture is the realization of conceptual goals, particularly superior, distinctive conceptual goals. The framework for information and knowledge is built essentially around the conceptual system goals of the organization and the extent to which those goals are met. This culture is centered on conceptual goal attainment.
Cultivation: This culture is all about enrichment. It fundamentally exists to ensure the fullest growth of the customer, fulfillment of the customer's potential, the raising up of the customer. This culture is all about the further realization of ideals, values, and higher order purposes. Evaluational knowing means that the fundamental issue in the cultivation culture is the connection between the values and ideals of the organization and the extent to which those values and ideals are being operationalized. The key emphasis in this culture is the connection between what is espoused and what is put into operation. This culture is focused on value-centered goal attainment.
Exhibit 2 – Strategy, Culture, and Leadership Connections
Kanter-Moss, R. (2008, January). Transforming giants. Harvard Business Review, Special HBS Centennial Issue (pp. 43-52).
Kotter, J. P., & Haskett, J. L. (1992). Corporate culture and performance. New York: Free Press.
Morgan, G. (1998). Images of organization (p. 145). San Francisco: Berrett-Koehler.
Morgan, G. (1998). Images of organization (p. 149). San Francisco: Berrett-Koehler.
Schein, E. H. (2004). Organizational culture and leadership, 3rd ed. (p. 375). New York: Jossey-Bass.
Schein, E. H. (2004). Organizational culture and leadership, 3rd ed. (pp. 373-374). New York: Jossey-Bass.
Schneider, W. E. (1994). The reengineering alternative: A plan for making your current culture work. Burr Ridge, IL: Professional Publishing, Inc.
© 2008, Lawrence V. Suda
Originally published as a part of 2008 PMI Global Congress Proceedings – St. Julians, Malta