Corporate culture is invisible and intangible, but it has a real impact on organizations—both positive and negative. Unfortunately, many organizations fail to recognize this powerful influence and therefore do not manage their culture effectively.
The “zero-sum culture” syndrome
One of the most serious dysfunctions that can appear in organizational culture is the belief that individual success is a zero-sum game. A “zero-sum game” is any situation in which one person’s gain necessarily means another person’s loss. A dysfunctional corporate culture in which success is viewed in this way can seriously damage an otherwise successful company and, ultimately, contribute to business failure.
Some games are clearly zero-sum: games of skill such as chess, games of chance such as a coin toss, and mixed games such as poker. Organizations also create situations in which two or more people compete for one position, so one person’s promotion may represent a loss for the others. Yet many benefits received by one person cost others nothing. When people nevertheless interpret someone else’s success as a threat or loss to themselves—even when it is not—the organization has developed a zero-sum culture.
Sometimes the zero-sum culture syndrome is obvious; at other times, it appears in more subtle ways. Years ago, for example, UCLA’s basketball team was playing a close game when one player scored in the final seconds and won the match. The entire team and hundreds of fans celebrated—except for two people: one of the players and his father. The player was upset because, as the team’s star, he had not scored the winning basket. This was a striking example of the zero-sum culture syndrome in action.
The zero-sum culture syndrome in business
Sometimes a new division or business unit achieves impressive results that are not celebrated by the rest of the organization. At IBM, for example, the success of the personal-computer division was not regarded as a success by the mainframe business; it was perceived as an existential threat. Just as the human body mobilizes defenses against an invading pathogen, the zero-sum culture syndrome often leads an organization to weaken or destroy the “threatening” business unit. In the end, however, the entire organism is harmed.
Overcoming the zero-sum culture syndrome
The solution is to introduce a culture-management process. Over the past thirty years, Management Systems has developed a systematic methodology for managing corporate culture, addressing dysfunctional cultures, and creating positive cultures like those found in companies such as Starbucks, Amgen, and Johnson & Johnson.
The approach consists of six steps:
Step 1: Identify the existing corporate culture.
The culture-management process begins by identifying the organization’s existing culture—its actual current values across key dimensions such as its approach to customers.
Step 2: Formulate the ideal or desired culture.
This describes everything the organization wants its culture to be or become. The desired culture can also be understood as the organization’s “strategic culture,” because it is intended to support the enterprise’s overall strategic development. It may be defined by the organization’s leader or developed collaboratively by the full senior-management team. A facilitator is usually necessary—or at least highly valuable—to support the process.
Steps 1 and 2 can also be reversed: the desired culture can be defined first, followed by the current culture. This may be appropriate when the organization does not yet have a strong established culture measurement.
Step 3: Identify culture gaps—to what extent do the current and desired cultures align?
Are there meaningful differences between them? The central question is the extent to which the desired, or strategic, culture is actually reflected in everyday behavior.
This step requires a survey that measures both the culture and the gaps between the current and desired states. More information is available in Corporate Culture: The Ultimate Strategic Asset (Stanford University Press, 2011).
Unfortunately, many companies mistakenly treat an employee-attitude or engagement survey as a survey of cultural values.
Step 4: Develop a corporate culture management plan, including the required cultural changes.
This plan is based on a set of corporate culture management tools. In brief, these include articulating the culture; recruiting and retaining people who fit it; training and involving employees; and using recognition and rewards to reinforce important aspects of the culture, such as customer orientation or innovation. Many companies develop a specific statement of their corporate culture or core values.
Step 5: Implement the culture management plan.
This includes communicating the cultural changes.
Step 6: Monitor cultural change to assess the effectiveness of the culture management program and determine the initiatives required in the future.
This leads back to the first step in the process.
Culture management as a way of life in the organization
As the cycle returning from Step 6 to Step 1 suggests, the process is continuous and iterative. It should become a way of life in the organization. Culture generally changes slowly, except during major events such as mergers and acquisitions, but it must evolve as an organization grows in size, complexity, and geographic dispersion.
When this level of culture management is achieved, it is often expressed in phrases such as “the way we do things here.”
About the author
Eric Flamholtz was Professor Emeritus at UCLA’s Anderson School of Management and the founder and President of Management Systems Consulting Corporation. He has taught accounting at Columbia University, the University of Michigan, and UCLA. His latest book, co-authored with Yvonne Randle, is The Crisis Leadership Playbook, published by Vandeplas Publishing. See also: www.Mgtsystems.com.
