Table of Contents |
Businesses and organizations bring people together, and every time we bring people together under a common roof, a common cause, a common goal, or for a similar reason, we will experience culture. Like any culture, business culture involves beliefs, attitudes, values, and traditions that are shared by a group of people. For example, a business or organization may have a founder, a mission statement, a history, and traditions, including awards for service and celebrated heroes.
Culture also involves the psychological aspects of our expectations of the communication context, or what is expected of us and what we expect from others. The business may have expectations for you on what to wear, what to say, and when to say it. Businesses often have a code of ethics which provides principles and guidance for those professional expectations, and employees, like community members, are expected to adhere to those norms, customs, rules, and traditions.
Organizations and industries are again at a crossroads when confronting new and challenging external environmental demands that can impact, and change, their business culture. Powerful companies such as Amazon, Apple, Netflix, and Google/Alphabet Inc. exemplify evolving business models that combine strategic innovation, technological prowess, and organizational cultural agility that not only meet external environmental demands, but also shape them. As the world is changed by how they do business, they too change and transform to meet new challenges.
Many businesses with traditional business models, however, have failed or are not succeeding strategically, operationally, and organizationally by not realizing and/or adapting to changing external environments. Such firms that were once successful but did not anticipate and then adapt to such changes include Blockbuster, Toys “R” Us, Borders, Sun Microsystems, Motorola, Digital Equipment Corporation, Polaroid, and Kodak, to name only a few. A sample of contemporary external environmental trends and forces that currently challenge organizations’ survival and effectiveness includes:
| This small sample of powerful external forces illustrates the continuing pressure companies encounter to innovate in their industries. | |
|---|---|
|
Digital technologies and artificial intelligence (AI). Extensions of AI help automate a firm’s value chain, thus speeding up and increasing efficient operations and service to customers—as Amazon exemplifies. A survey showed that 59% of organizations are collecting information to develop AI strategies, while others are moving forward in piloting and/or adopting AI solutions to compete faster and at less cost. However, there are also risks that accompany firms that incorporate new digital and online technologies without adequate security measures. For example, some newer online technologies can expose operational systems to cyberattacks and large-scale manipulation. Hacking is now both an illegal and ongoing “profession” for those who are able to paralyze organizations from accessing their data unless they pay a ransom. While hacking is not new, it is more widespread and lethal, to the point of even threatening national security. Evidence from the U.S. presidential election between Donald Trump and Hillary Clinton indicates that international hackers affected online U.S. election processes. In 2020, a major cyberattack penetrated multiple portions of the U.S. federal government, including the Departments of Homeland Security, Justice, Treasury, Energy, and Defense. Still, the future of most businesses is using some type of digital and AI technologies. |
|
The advent of blockchain technologies that are disrupting industry practices. Blockchain is not a single technology; it is “an architecture that allows disparate users to make transactions and then creates an unchangeable record of those transactions.” It is “a public electronic ledger—similar to a relational database—that can be openly shared among disparate users and that creates an unchangeable record of their transactions, each one time-stamped and linked to the previous one.” These technological inventions will continue to affect almost every business process from procurement to legal management. The banking industry is already using it. It increases speed, security, and accuracy of transactions. |
|
Sharing-economy cultural and economic value-added business models that use information technologies to gain competitive advantage. Companies such as Airbnb and Uber have ushered in new business models that have already disrupted real estate, hotel, taxi, and other industries. Taking out the middle layer of management in transactions to increase efficiencies and customer satisfaction while cutting costs through the use of information and social media technologies will continue. This trend has already had both positive and disruptive effects on companies. Many customers are likely benefitted; businesses with outdated and ineffective business models have either failed or struggle to adapt. |
|
Shifts in learning and learning credentials. Identifying, recruiting, and retaining talent is crucial to organizations. An evolving crisis for the current generation—future talent—is the continued rise in higher educational institutions’ tuitions, student debt, and the changing nature of jobs. With the advent of online resources, prospective students’ inability to pay creates both a crisis and opportunity for traditional higher educational institutions. While bachelor’s degrees remain a requirement for many companies hiring needed higher-level talent, online resources such as Khan Academy, Udacity, and Coursera are gaining recognition and legitimacy toward providing financially challenged students opportunities for entry-level jobs. While many higher-skilled students and professionals may not presently be included in this trend, companies seeking to pay lower wages while offering flexible working conditions are attracting students. Again, how higher educational private, not-for-profit, and even for-profit educational institutions adapt, innovate, and manage their external environments is yet to be seen. |
|
Ethics, social responsibility, and sustainability. Corruption, lying, and fraud have been and continue to be part of the landscape of governments and public- and private-sector corporations. However, public awareness through social and online media has awakened consumers and corporations to the impending dangers and drawbacks of illegal and unethical activities of certain large corporations. And external environmental problems, such as pollution and climate change, pressure companies to be responsible for their share of the costs associated with these problems. |
|
The post-pandemic workplace. The need to shutter offices and go remote during the COVID-19 pandemic found some companies well-prepared and responding nimbly, not just by supporting collaborative work in virtual spaces but providing their goods and services in new ways. Other companies struggled to adapt, and some industries were ill-suited for online service and instead had to consider how best to keep workers and customers safe. As the pandemic subsided, workplaces were permanently transformed, with millions of jobs going partially or entirely remote. Meanwhile, service-level jobs with low pay, low job security, and often no benefits found a workforce reluctant to continue. |
Peter Drucker, an influential management guru, once stated, “Culture eats strategy for breakfast.” He meant that business culture is more influential than strategy in terms of motivating employees’ beliefs, behaviors, relationships, and ways they work since culture is based on values. Strategy and other internal dimensions of an organization are also very important, but organizational culture serves two crucial purposes: first, culture helps an organization adapt to and integrate with its external environment by adopting the right values to respond to external threats and opportunities; and secondly, culture creates internal unity by bringing members together, so they work more cohesively to achieve common goals. Culture is both the personality and glue that binds an organization. It is also important to note that organizational cultures are generally framed and influenced by the top-level leader or founder. This individual’s vision, values, and mission set the “tone at the top,” which influences both the ethics and legal foundations, modeling how other officers and employees work and behave. A framework used to study how an organization and its culture fit with the environment is offered in the Competing Values Framework.
The Competing Values Framework (CVF) is one of the most cited and tested models for diagnosing an organization’s cultural effectiveness and examining its fit with its environment. The CVF has been tested for over 30 years; the effectiveness criteria offered in the framework were discovered to have made a difference in identifying organizational cultures that fit with particular characteristics of external environments.
| Competing Values Framework | ||
|---|---|---|
| ← Internal Focus | External Focus → | |
| ↑ Flexibility |
Clan Culture Mentoring Participation Nurturing Collaborate |
Adhocracy Culture Dynamic Entrepreneurial Risk-Taking Create |
| Stability ↓ |
Hierarchy Culture Structure Coordination Control |
Market Culture Results-Oriented Achievement Gets the Job Done Compete |
The horizontal axis, external focus versus internal focus, indicates whether or not the organization’s culture is externally or internally oriented. The vertical axis, flexibility versus stability and control, determines whether a culture functions better in a stable, controlled environment or a flexible, fast-paced environment. Combining the axes offers four cultural types: (1) the dynamic, entrepreneurial adhocracy culture—an external focus with a flexibility orientation; (2) the people-oriented, friendly clan culture—an internal focus with a flexibility orientation; (3) the process-oriented, structured hierarchy culture—an internal focus with a stability/control orientation; and (4) the results-oriented, competitive market culture—an external focus with a stability/control orientation.
The orientation of each of these cultural types is summarized as follows. The adhocracy culture profile of an organization emphasizes creating, innovating, visioning the future, managing change, risk-taking, rule-breaking, experimentation, entrepreneurship, and uncertainty. This profile culture is often found in such fast-paced industries as filming, consulting, space flight, and software development. Facebook and Google’s cultures also match these characteristics. It should be noted, however, that larger organizations may have different cultures for different groupings of professionals, even though the larger culture is still dominant. For example, a different subculture may evolve for hourly workers as compared to PhD research scientists in an organization.
The clan culture type focuses on relationships, team building, commitment, empowering human development, engagement, mentoring, and coaching. Organizations that focus on human development, human resources, team building, and mentoring would fit this profile. This type of culture fits Tom’s of Maine, which has strived to form respectful relationships with employees, customers, suppliers, and the physical environment.
The hierarchy culture emphasizes efficiency, process and cost control, organizational improvement, technical expertise, precision, problem solving, elimination of errors, logical, cautious and conservative, management and operational analysis, and careful decision making. This profile would suit a company that is bureaucratic and structured, such as the U.S. Postal Service, the military, and other similar types of government agencies.
The market culture focuses on delivering value, competing, delivering shareholder value, goal achievement, driving and delivering results, speedy decisions, hard driving through barriers, directive, commanding, and getting things done. This profile suits a marketing-and-sales-oriented company that works on planning and forecasting but also getting products and services to market and sold. Oracle under the dominating, hard-charging executive chairman Larry Ellison characterized this cultural fit.
IN CONTEXT
Amazon is a good example of a high-performance adhocracy culture with regard to its external expansion and Bezos’s leadership style. The company propelled its domain from an online bookstore “to selling everything online to being the pioneer in adopting cloud computing with Amazon Web Service (AWS) . . . to adopting the latest robotics in its warehouses to improve productivity . . . to thinking and testing disruptive technologies like drones and so on.” At the same time, Amazon resembles a hierarchy culture internally with regard to its tight control over employees at lower levels. It has been criticized for its “toxic cutthroat work environment,” asserting that Jeff Bezos is overly demanding and sets unrealistic expectations for warehouse workers (Nocera, 2015).
In contrast, a bookstore chain would most resemble a market culture, with a focus on delivering the books and products that people want to buy, a close eye on bestseller lists, and consulting with publishers on which books to promote and how to publicize them.
Meanwhile a local, independent bookseller would most likely have a clan culture, with a close-knit group of staff primarily serving their own community and developing strong relationships with customers.
Source: THIS TUTORIAL HAS BEEN ADAPTED FROM OPENSTAX "PRINCIPLES OF MANAGEMENT". ACCESS FOR FREE AT OPENSTAX.ORG/BOOKS/PRINCIPLES-MANAGEMENT/PAGES/1-INTRODUCTION. LICENSE: CREATIVE COMMONS ATTRIBUTION 4.0 INTERNATIONAL.
REFERENCES
Nocera, J. (2015, August 22). Jeff Bezos and The Amazon Way. The New York Times. www.nytimes.com/2015/08/22/opinion/joe-nocera-jeff-bezos-and-the-amazon-way.html
