Ch.7 Culture and Strategy Flashcards
What is organisational culture?
The taken-for-granted assumptions and behaviours of an organisation’s members.
Ex. Huawei - Wolf Culture?
What can be culture’s role in strategy?
Organisational culture encompasses the implicit assumptions and behaviours that are ingrained in an organisation’s members. This can profoundly impact strategy.
Culture can serve as a strategic
asset, potentially offering a competitive advantage. Culture should be seen as a part of the strategy.
Culture can provide orgs with hard-to-imitate knowledge about how to do things distinctively, potentially a basis for competitive advantage.
Name 3 cultural influences
- Historical background
- Geographical origin
- Operating fields or sectors
Key Takeaways: Organisational culture is shaped by its historical roots, geographical influences, and the field or sector it operates in. A deep understanding of these factors is vital for strategic decision-making, as they provide
context, set norms, and influence stakeholders’ perceptions. Recognizing these influences helps organizations strike
a balance between maintaining their identity and adapting to changing circumstances.
- Historical influences in strategy?
- Name 4 relationships between past and present organisational cultures.
Organisations often highlight their history to anchor their values.
EX: Tata Group’s values are traced back to its founder, Jamsetji Tata.
EX: Start-ups, like Spanx, have cultures shaped by their founders’ personal histories.
HOWEVER, history does not simply determine the Culture; it’s often something that is actively curated or even consciously manipulated → History is a resource to be managed.
- Historical Continuity:
Culture stays consistent over time, adapting slightly to changing environment, but
change is steady and small.
EX: Example: Tata Group’s evolving patriotism. Can use history to strengthen bond to
customers and employees.
EX: Piaggio (Vespa) sees its historical continuity as a distinctive strength: “Our competitors do not have a
history they can use as we do”. - Historical Selection:
Some historical aspects are retained, while others are discarded or updated. Deliberate
selectivity of the past. Past is only partially incorporated in the strategy. Result can be relatively
extensive change.
EX: Gekkeikan Brewery’s modernized principles. - Historical Rupture:
A complete break from the past, emphasizing a new direction.
EX: Chesapeake Energy’s shift after bankruptcy. - Historical Rediscovery:
Returning to traditional values after straying.
EX: Benetton’s revival of classic
designs.
Historical analysis can provide insight into an organisation’s
current and future strategy. 2 key forms of historical analysis: 1.Chronological analysis: identify key events that are seen as turning points.
2.Historical storytelling: Ex IKEA story of flat pack promotes practical improvisation and adaptiveness in strategy.
Geographical influences in strategy? What does Hofstede and SpencerStuart acknowledge?
Cultural nuances differ across regions, influenced by historical events, religion, and environment.
Germanic cultures lean towards Individualism, while Latin cultures are more Collectivist.
Hofstede emphasizes Future Orientation in cultures like Chinese and Japanese, which value long-term strategies.
SpencerStuart’s survey identified cultural patterns worldwide, differentiating between attitudes towards people and change.
- Attitude towards people: independence or interdependence: independence implies individualism rather than
group orientation
- Attitude towards change: flexibility or stability: flexibility implies a preference for adaptability over
consistency.
While geographic cultural traits are significant, they shouldn’t be over-generalized. Differences within regions and
individual variations are notable.
Elements of Organisational Culture (Edgar Schein)
- Values:
These are explicit beliefs, often formally stated. However, the actual strategic values might differ from the
stated ones. E.g., BlackRock’s apparent contradictory stance on the coal industry. - Beliefs:
More specific than values, evident in discussions about organizational issues. E.g., Oxfam’s commitment
to empowering individuals to effect change. - Behaviours:
Daily operational habits and routines. While they can foster unique strategic capabilities, they can also hinder change. E.g., the collaboration between design and marketing managers in product creation. - Taken-for-granted Assumptions (Organisational Paradigm):
Deep-seated, shared beliefs that guide
organizational responses to various situations. They can support successful strategies by providing common understanding but can hinder drastic strategic changes. The core of an organisation’s culture = the Paradigm: the
set of assumptions held in common and taken for granted in an organisation.
Field influences? 3 concepts to understand them?
Shared beliefs and assumptions in organisational fields set institutional rules or logics, influencing managerial
perspectives.
Where such shared assumptions and beliefs are powerful, these organisational fields help set the institutional ‘rules of the game’ or ‘institutional logics’. Through these rules or logics, fields influence the ways managers
see their activities, define strategic options and decide strategic options and decide what is appropriate.
3 Concepts to understand field influences:
1. Categorisation:
Defining and labelling shapes the strategic direction. How mobile phones are categorized can
determine their marketing and development.
- Recipes:
Standardized approaches within a field. Example: English Premier League’s talent-based approach
versus Germany’s long-term skill development.
a. Recipe: is a set of assumptions, norms and routines held in common within an organisational field about the appropriate purposes and strategies of field members. - Legitimacy:
Conforming to established norms within a field for stakeholder approval. It explains why firms in
the same sector often mimic each other’s strategies. Orgs seek optimal distinctiveness trading odd competitive differentiation for the benefits of legitimacy.
Where categories and recipes have become strongly institutionalised over time, they become the only legitimate way of seeing and behaving. Legitimacy: concerned with meeting the expectations within and organisational field in terms of assumptions, behaviours and strategies.
Concept of culture and subcultures
The concept of culture implies coherence, “corporate culture”. But Subcultures exist within organizations. For
instance, geographical influences can cause multinational corporations to have varying cultures in different regions.
Functional departments, like finance and marketing, can also have distinct subcultures (the importance of
professional fields may create differences between various functions in an org). In strategic decision making:
therefore, important to recognise different subcultures that managers might bring to the process, even withing the
same org. Should not assume all colleagues have the same values and beliefs as you.
Analysing culture: The Cultural Web’s Elements
The Cultural Web FW: To understand and assess culture and its effects. Portrays
the behavioural, physical, and symbolic manifestations of culture - that inform and are
informed by the taken-for-granted assumptions, or paradigm of an organisation.
- Paradigm:
Core set of shared assumptions in an organization. Set of assumptions held in common and taken for granted in an organisation. - Rituals and Routines:
Repetitive behaviours and special events emphasizing cultural priorities.
a. Routines: “the way we do things here” on a day-to-day basis.
Ex Costumer-
facing sales engineers, routinely tall customers what they need instead of listening to their needs.
b. Rituals: particular activities or special events that emphasise/reinforce what is important in the culture. - Stories:
Narratives about organizational milestones, heroes, and lessons. - Symbols:
Objects, events, or people that signify meaning beyond their functional role. - Power Structures:
Distribution of power to groups of people in an org. reflecting established norms. The most
powerful individuals or groups are likely to be closely associated with the paradigm and long-establishes ways of doing things. - Organisational Structures: Roles, responsibilities, and reporting relationships. These likely to reflect power
structures and how thet manifest themselves. - Control Systems:
Methods of monitoring and supporting individuals in the organization.
What is and what are the Deliberate and emergent cultural impacts?
Deliberate (e.g., designing organizational identities)
Emergent (e.g., gradual processes of strategic drift).
- Organisational identity
- Strategic drift
What is organisational identity?
Organizational identity is about how organizations portray their essence, “who we are”, often highlighted on official materials ex identity claims often prominent on websites.
Identity reflects how insiders perceive their organization, while image is the outsiders’ perspective.
Organizational identity is more explicit than culture but often ties back to cultural elements, at least as perceived by managers. - In that sense, organisational culture is distinct from identity, but can provide initial building blocks
for the deliberate construction of organisational identity.
Organizational identity is crucial for recruiting, interacting with customers, and guiding strategy.
What is strategic drift? What are the 4 phases?
Strategic drift refers to strategies evolving incrementally due to cultural influences, often not keeping pace with
external changes.
With strategic drift , strategy emerges from the unconscious biases of the organisation’s existing culture, reinforcing inertia.
Ex: Kodak
experienced strategic drift. Despite its dominance in the film camera industry, it failed to adapt to the rise of digital cameras, leading to its bankruptcy in 2012.
What are the 4 phases of Strategic drift?
4 Phases:
1. Incremental strategic change:
Small adjustments over time. Where the environment is changing slowly - no
need for more radical change.
- Strategic drift emerges:
The organization’s change pace doesn’t match the environment’s change. It’s getting
outpaced by environmental change, acceleration but orgs change is still incremental → growing gap with the
accumulated environmental change. - Flux:
Triggered by the downturn performance caused by growing gap. Strategies change without clear direction due to the increasing gap between the organization and its environment. Changes may even be reversed so strategies loop back themselves. - Transformation or death:
The organization either undergoes significant transformation or faces demise. Die through bankruptcy or by takeover by another org, or may go through a period of transformational change, which brings it back to the level of cumulated environmental
change.
4 Reasons for strategic drift?
- Uncertainty:
in recognizing the need for change. Strategic drift is not easy to see at the time. Some changes
temporary. Easier to see major irreversible changes with hindsight, cant see until thet are happening. - Path dependency and lock-in:
where historical decisions limit future choices. - Cultural entrenchment:
where deep-rooted culture impacts strategy decisions. The paradigmatic set of taken-
for-granted assumptions may prevent managers from seeing certain issues: organisational identities can shape views of environmental opportunities and threats.
4: Resistance from powerful individuals:
aligned with old strategies. Their skills and power bases relate to old strategy.
Why important to understand balance between deliberate and emergent culture impacts?
Vital for effective strategy
development and implementation.
Key Takeaways
It’s important to recognise the many ways in which culture can affect strategy, for ex, as a source of differentiation, as
a cohesive force for organisations, as an inspiration for new strategies and as a barrier to change. So, important
implications are:
- Be explicit about how far your orgs strategic choices are unconsciously shaped (or trapped) by cultural influences
drawn from its history, geography, or field. - Use history proactively to inspire or legitimise your organisation’s strategy, drawing on historical continuity,
selection, rupture or rediscovery approaches. - Analyse your orgs corporate culture and identify whether subcultures matter for strategy, as resistance or of
renewal. - Identify the cultural paradigm of the organisation and assess how far it is reinforced by 7 elements of the cultural
web. - Consider how the organisation presents itself in terms of its identity and how closely its identity claims fit with reality.
- Assess hoe ell the organisation’s culture is keeping pace with the environment in order to identify any danger of
strategic drift.
