What is organizational culture?
How do you understand an organizational
culture?
What is innovation and why is it so important?
How to manage organizational culture and
innovation?
Copyright © 2010 John Wiley & Sons, Inc.
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Organizational culture
 The system of shared actions, values, and
beliefs that develops within an organization
and guides the behavior of its members.
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Observed
Shared Values
Common Assumptions
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External adaptation
 Knowing the mission and goals.
 Knowing the tasks and methods to achieve
them.
 Methods of coping with success and failure.
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Important aspects of external adaptation
 Separating, or prioritizing, eternal forces
based on their importance.
 Developing ways to measure
accomplishments.
 Creating explanations for not meeting goals.
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External adaptation questions:
 What is the real mission and what are our goals?
 How can we contribute to reaching those goals?
 What external forces are important?
 How do we measure results?
 What do we do if specific targets are not met?
 How do we tell others how good we are?
 How will we know when to quit?
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Internal integration
 The creation of a collective identity.
 Finding ways of matching methods of
working and living together.
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
Recall the

Was it formal or informal?
orientation you

Were the rules described or
received during your
written in a manual?

first day or week with
a new organization
What were you told about
your department?

How did you meet your
team mates? (individually,
collectively, during lunch)
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Important aspects of working together:
 Deciding who is a member and who is not.
 Developing an informal, common
understanding of what is acceptable or
unacceptable behavior.
 Separating friends from enemies.
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Internal integration questions:
 What is our unique identity?
 How do we view the world?
 Who is a member?
 How do we allocate power, status, and authority?
 How do we communicate?
 What is the basis for friendship?
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Subculture
 A group of individuals with a unique pattern
of values and philosophy that are not
inconsistent with the organization’s dominant
values and philosophy .
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Counterculture
 Groups where the pattern of values and
philosophies outwardly reject those of the
larger organization or social system.
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Problems associated with importing societal
subgroups from the larger society
 Subgroups may naturally form into a counterculture.
 The firm may encounter extreme difficulty in coping
with broader cultural changes.
 Embracing natural divisions from the larger culture
may lead to difficulty in international operations.
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Layers of cultural analysis
 Observable culture.
 Shared values.
 Common cultural assumptions.
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Sagas
 Heroic accounts of organizational
accomplishments.
Rites
 Standardized and recurring
activities that are used at special
times to influence organizational
members .
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Cultural symbols
 Any object, act, or event that serves to
transmit cultural meaning (i.e. the color
brown and the nickname “Big Brown” is
associated with UPS).
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Shared values
 Help turn routine activities into valuable and
important actions.
 Tie the organization to the important values
of society.
 May provide a very distinctive source of
competitive advantage.
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Shared Values
Reinforce Corporate Identity
Enhance Collective Commitment
Provide a Stable Social System
Reduce Bureaucratic Control
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Organizational myths
 Unproven and often unstated beliefs that
are accepted uncritically.
 Enable managers to redefine impossible
problems.
 Facilitate creativity.
 Allow managers to govern.
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Characteristics of strong cultures
 A belief that ritual and ceremony are important to
members and to building a common identity.
 A well-understood sense of the informal rules and
expectations so that employees and managers know
what is expected of them.
 A belief that what employees and managers do is
important and that it is essential to share information
and ideas.
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Innovation
 The process of creating new ideas and putting
them into practice.
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Product innovations
 Introduce new goods or services to better
meet customer needs.
Process innovations
 Introduce of new and better methods and
operations.
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Innovation is a continual process of:
 Exploration
 An emphasis on freedom and radical thinking
provides an opening for big changes.
 Exploitation
 A focus on refinement and reuse of existing
products and processes.
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Management philosophy
 Links key goal-related strategic issues with
key collaboration issues to determine a series
of general ways by which the firm will
manage its affairs.
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A well-developed management philosophy :
 Establishes generally understood boundaries
for all members of the firm.
 Provides a consistent way for approaching
new and novel situations.
 Helps hold individuals together by assuring
them a known path to success.
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Strategies for managing organizational culture
 Managers help modify observable culture,
shared values, and common assumptions
directly.
 Through reward systems
 Steady state (hierarchical, ‘clan’ cultures)
 Evolution and change (growth, market culture)
 By setting the tone of the organization.
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Common mistakes in changing culture
 Trying to change people’s values from the
top down without also changing how the
organization operates.
 Attempting to revitalize an organization by
dictating major changes and ignoring
shared values.
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Organizational lag
 The dominant cultural patterns are
inconsistent with emerging innovations.
 Cultural change is hampered by a legacy of
established behaviors, with an over-reliance
on rule-following and reinforcement of old
patterns of behavior.
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Techniques for overcoming ‘cultural lag’ and
promoting innovation:
 Demonstrate how current behaviors can be
applied to new innovations.
 Balance rule changing with rule following.
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