Iii) Not Understanding Organisational Culture (Including Behaviour Of Complex Systems)

Not understanding the culture of the organisation that you are working with and/or trying to impose your views of what should be done.

"...corporate culture is manifest in distinctive patterns of human behaviour based on core values, beliefs and traditions. Culture is tangible by corporate lore, ceremonies, celebrations of achievement and institutional comportment, as well as through a company's goals, strategies, management processes, structure and methods of allocating resources..."

Lawerence Fisher, 2005

"...once members of the organisation begins to adopt ways of working and criteria for making decisions by assumptions, rather than by conscious decision, then those processes and values come to constitute the organisation's culture......culture is a powerful management tool......culture enables employees to act autonomously and causes them to act consistently..."

Clayton Christensen et al, 2003

To handle new problems, challenges, etc it is easy if the organisation's capabilities reside primarily in the people; if the capabilities reside more in processes and values, to the extent they have become embedded in the culture, change can be very difficult to achieve.


"...The power of a belief system......is extremely deep-rooted and respected, sometimes above all other considerations. It shows us that culture has the capacity to transform or entirely dominate our biologically ingrained instincts, and that we should never underestimate its power..."

Robert Winston, 2003

"...culture is perhaps the hardest area to influence but fundamental to long-term success..."

Sam Palmisano (IBM) as quoted by Rosabeth Moss Kanter, 2008

Not understanding the 5 main functions of culture (Marcella Bremer, 2012), ie

i) it provides collective security or reduces collective insecurity, ie "it's the way we do things around here and what we believe in" or 'this is how things are'

ii) it determines social hierarchy, ie it gives people a position; it determines the leaders and is a stabilising factor

iii) it provides continuity, ie share common language, values, beliefs, behaviours and standards; we copy them and encourage others to adopt them. At the behavioural level it is passing on 'the way we do things around here'

iv) it provides a shared identity and familiarity, ie provides a sense of belonging and being appreciated which is a very basic human need

v) provides a vision of the future, ie staff know where heading

Not appreciating the elasticity of culture, ie

"...you can liken the culture of an organisation to an elastic band - you can stretch the culture to a different shape...... it will spring back to what it used to be, just like an elastic band......cultural change isn't something that will happen overnight, you've got to put the effort in and keep on putting the effort in for a long time for the cultural elasticity to wane..."

Paul Hampton, 2009

A healthy corporate culture is important for organisational performance. To improve performance it is easier to adapt and modify the positive elements of the current culture rather than trying to create a new or different culture. This can be linked to asking the following questions

- what kind of organisation do you want to be?

- what is the organisation's aspiration?

- what would the improved culture look like?


"...culture is deep, pervasive, complex, patterned, and morally neutral..."

Edgar Schein, 2004


"...culture is multidimensional, multifaceted phenomena, not easily reduced to a few major dimensions. Culture ultimately reflects the group's effort to cope and learn; it is the residual of a learning process. Culture......not only fulfils a function of providing stability, meaning, and predictability in the present but is a result of functionally effective decisions in the group's past..."

Edgar Schein, 2004

Most times you have to overcome your own cultural prejudices about the "right" and "wrong" way to do things.

Culture is essential for understanding the inter-group conflicts within the organisation, leadership within the organisation, how the organisation functions in relation to internal and external factors, its behavioural and attitudinal consequences, etc. The elements of culture revolve around what in the group is shared or held in common, such as the norms, values, behavioural patterns, rituals, traditions, assumptions, beliefs, communications, language, etc.

For any manager, especially a new one, the prerequisite for survival and success is to understand both the culture and the politics of the organisation.

Several critical elements to the concept of a shared culture are structural stability, breadth, and patterning or integration

i) structural stability (once a group has a sense of group identity, it is the major stabilising force that is not easily changed or given up, ie

"...culture is hard to change because group members value stability in that it provides meaning and predictability.........culture is a set of learned solutions that produce success, comfort, and identity, but they may try to change the very things they value and need..."

Edgar Schein, 2004

ii) depth

"...culture is the deepest, often unconscious part of a group and is, therefore, less tangible and less visible than other parts......when something is more deeply embedded it also gains stability..."

Edgar Schein, 2004

iii) breadth (once culture has developed, it covers all the group's functions)

"...culture is pervasive; it influences all the aspects of how one organisation deals with its primary task, its various environments and its internal operations..."

Edgar Schein, 2004

iv) patterning or integration

"...culture somehow implies that rituals, climate, values, and behaviours are tied together into a coherent whole; this patterning or integration is the essence of what we mean by culture. Such patterning or integration ultimately derives from the human need to make an environment as sensible and orderly as we can.......to reduce the anxiety by developing a more consistent and predictable view of how things are and how they should be..."

Edgar Schein, 2004

In summary

"...organisational cultures, like other cultures, develop as a group of people struggle to make sense of and cope with their worlds..."

Edgar Schein, 2004

Remember: continual reinforcement elements of the culture, such as beliefs, values, etc become less obvious to the group and evolve into being non-negotiable elements; they gradually go out of awareness and come to be taken for granted as part of the identity of the group (they become assumptions that are non-negotiable).

Definition of group culture is

"...a pattern of shared basic assumptions that was learned by a group 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 these problems..."

Edgar Schein, 2004

As claimed by Loizos Heracleous et al (2006), play is an important way to develop shared language, identity and social practices. Furthermore, play can provide a safe environment for introducing new ideas about market opportunities, generating debate about important strategic issues, challenging widely-held assumptions and building a sense of common purpose.

There are 3 levels at which culture can express itself: artefacts, espoused beliefs and values, and underlying assumptions (see Volume 3 for a technique that expands on this).

v) artefacts include the visible organisational structures and processes;

vi) espoused beliefs and values include strategies, goals and philosophies (espoused justifications) which are expressed in various plans (strategic, corporate, business, etc);

vii) underlying assumptions include unconscious, taken-for-granted beliefs, perceptions, thoughts and feelings (ultimate source of values and action). The basic underlying assumptions (theories-in-use) are the most important and can be the hardest to understand, ie

"...the implicit assumptions that actually guide behaviour, that tell group members how to perceive, think about, and feel about things. Basic assumptions......tend to be non-confrontable and non-debatable, and hence are extremely difficult to change. To learn something new in this realm requires us to resurrect, re-examine and possibly change some of the more stable portions of our cognitive structure......such learning is intrinsically difficult because the re-examination of basic assumptions temporarily destabilises our cognitive and interpersonal world, releasing large quantities of basic anxiety..."

Edgar Schein, 2004


"...it is in the psychological process that culture has its ultimate power. Culture as a set of basic assumptions defines for us what to pay attention to, what things mean, how to react emotionally to what is going on, and what actions to take in various kinds of situations. Once we have developed an integrated set of such assumptions - a thought world or mental map - we will be maximally comfortable with others who share the same set of assumptions and very uncomfortable and vulnerable in situations where different assumptions operate, because either we will not understand what is going on, or, worse, we will misperceive and misinterpret the actions of others......we can also think of culture at this level as the group's DNA, so if new learning or growth is required, the genes have to be there to make such growth possible and the autoimmune system has to be neutralised to sustain the growth. In any case, the two keys to successful cultural change are (1) the management of the large amounts of anxiety that accompany any relearning at this level and (2) the assessment of whether the genetic potential for the new learning is even present..."

Edgar Schein, 2004

Some other elements of culture that need to be addressed include defining

- a common language for communications and common conceptual categories that permit interpretation of what is going on (remember: people cannot tolerate too much uncertainty or stimulus overload)

- group boundaries and identity (What are the criteria for deciding who is in and who is out, ie inclusion and exclusion from the group? How is position and identity within the group determined?)

- power and status (how are influence, power and authority allocated?)

- allocation of rewards and punishment (what is the system of sanctions for obeying or disobeying group norms and rules, etc?)

- how unmanageable events are handled and explaining the inexplicable events (how is the organisation's history - written or oral - used to handle unpredictable and uncontrollable events that will impact on the group's survival?)

- internal integration and external adaptation (what are the external environmental limitations on the group? How does the group handle these external environmental limitations?)

NB Underlying all these elements is leadership (what role does leadership play in determining how the group handles things, such as determining the norms, rules, languages, reward systems, etc and unexpected events?)


Linked with understanding the culture is a limitation on using organisational typologies such as coercive, utilitarian, normative, hierarchical, autocratic, paternalistic, consultative, participative, delegated, etc., models, ie

"...typologies can be useful if we are trying to compare many organisations but are quite useless if we are trying to understand one particular organisation......the difficulty is that within any organisational type one may see variations.......The problem is that in many organisations the subcultures conflict with each other..."

Edgar Schein, 2004

Within an organisation's culture, sub-cultures can develop; it is useful to consider 5 criteria for the differentiation of sub-cultures:

i) functional/occupational differences (different occupations have different shared assumptions because of the differing core technology used in each occupation, eg professionals such as engineers, doctors, lawyers, accountants, etc will differ from each other in their basic beliefs, values and underlying basic assumptions because they are doing fundamentally different things, have been trained differently, and have acquired a certain identity in practising their occupation. Another example is sales staff dealing in daily face-to-face contact with customers, whereas the marketing staff deal with the data, long-term strategy, broad concepts and sales tools such as advertising and promotional programs; this has often resulted in marketing seeing themselves as being of higher status than sales. To achieve marketing and sales co-operation requires the appropriate recognition system plus a common language and common shared experiences)

ii) geographical decentralisation (geographically dispersed customer base that needs close contact and often requires different goods and services; local cost advantages including labour, raw materials; located near suppliers; preference for locally-produced products and services)

iii) differentiation by product, market or technology (this is linked with different kinds of people with different educational levels and occupational experience being attracted to different businesses, and the interaction with the customer requires a different mindset and leads to different kinds of shared experiences)

iv) divisionalisation (this is linked with decentralising functions based on products, markets or geographical units)

v) differentiation by hierarchical level (this is based on tasks, rank, occupation and position within the hierarchy of the organisation)


"...one of the quickest ways of diagnosing the direction in which an organisation's culture is heading is to track the occupational and subcultural origins of the people being promoted into senior positions..."

Edgar Schein, 2004


"...culture is a stabiliser, a conservative force, a way of making things meaningful and predictable. Many management consultants and theorists have asserted that "strong" cultures are desirable as the basis for effective and lasting performance. But strong cultures are by definition stable and hard to change. If the world is becoming more turbulent, requiring more flexibility and learning, does this not imply that strong cultures will increasingly become a liability? Does it not mean, then, that the process of culture creation itself is potentially dysfunctional because it stabilises things, whereas flexibility might be more appropriate? Or is it possible to imagine a culture that, by its very nature, is learning-oriented, adaptive, and flexible. Can one stabilise perpetual learning and change? What would a culture that favours perpetual learning and flexibility look like"......what is the direction in which the leaders of today should be pushing cultural evolutions so that there are other surprises of tomorrow? What sort of characteristics or skills should a leader have to perceive the needs of tomorrow and to implement the changes needed in order to survive..."

Edgar Schein, 2004

Not understanding

"...how deeply our own perceptions, thoughts, and feelings are culturally determined". Ultimately, we cannot achieve the cultural humility that is required to live in a turbulent culturally- diverse world unless we can see cultural assumptions within ourselves. In the end, cultural understanding and cultural learning starts with the self inside..."

Edgar Schein, 2004

In looking at culture, too much focus can be on the current cultural elements that hinder development of the desired change and not enough on the elements that will assist the change process. Furthermore,

"...considerable change can take place in an organisation's operations without the basic cultural paradigm changing at all" ... The constancy of a core set of deep beliefs, values, and assumptions is also one of the keys to longevity of organisations as shown in the Collins and Porras study of successful organisations..."

Edgar Schein, 2004

NB The Collins and Porras study is published under the title "Built to Last", (1994, HarperBusiness)

Some of the signs in organisational cultures that display dysfunctionality include

- culture of "no" - organisations dominated by cynics and critics who will always find a good reason not to do something, ie

"...piling on criticism is an easy way to avoid taking risk and claim false superiority. ... It is especially likely in organisations that are divided into large subunits or segments, led by local leaders with great power who are often unwilling to comply with directives from above..."

David Garvin et al, 2005

- too much concentration on process - this results in confusion of ends and means, form and content, ie

"...How you present a proposal becomes more important than what you propose......despite the appearance of progress there is little real headway..."

David Garvin et al, 2006

- diversification as a smoke screen - to avoid facing challenges/problems in their core business, staff will focus on diversification via new products and/or services, and/or new lines of business

- dysfunctional routines are hidden - often dysfunctional routines are hard to spot because so much is placed under cover, ie

"...politics triumphs over substance, staff meetings become empty rituals, and meddling becomes the norm..."

David Garvin et al, 2006

- paralysis by analysis - the organisation's inability to set a definitive course of action; there is continual fine-tuning of proposals and reports but no decision. This is most common in perfectionist cultures where mistakes are career threatening and people 'who rock the boat' drown

- head down, bunker mentality - management repeatedly proclaims a state of crisis but takes no action. As a result, staff are reluctant to respond to management directives, with most staff believing that the wisest course of action is to ignore new initiatives, or work around them, or 'sit on the fence' until they go away.

- passive-aggressive, ie

"...a place where more energy is put into thwarting things than starting them, but in the nicest way......organisation's quiet but tenacious resistance, in every way but openly, to corporate directives.......people pay those directives lip service, putting in only an effort to appear compliant. Employees feel free to do as they see fit because there are hardly ever unpleasant consequences, and the directives themselves are often misguided and now seem worthy of defiance. Making matters worse, senior management has left unclear where accountability actually lies, in effect absolving managers of final responsibility for anything they do. Those with initiative must wait interminably for a go-ahead, and actions when finally taken are accompanied by a chorus of second guessing, a poor but understandable substitute for the satisfaction of accomplishing the task at hand......when employees' healthy impulses - to learn, to share, to achieve - are not encouraged, and other harmful but adaptive contact gradually takes over. It is no wonder that action of any kind becomes scarce and the erstwhile doers find safety in resisting unpromising efforts.......such companies have generally more time than others to accumulate and institutionalise dysfunctions, and their people are most cynical about reform attempts...... employees of such companies bear a passing resemblance to the "organisational man" of 1950s sociology and literary fiction. In the post- war era, when US corporations dominated the domestic markets and enjoyed stable market shares, personal initiative and risk-taking were understandably seen as disruptive rather than opportunity seeking......problems develop gradually as a company grows, to a series of well intended but badly implemented organisational changes one upon another. Passive aggressive organisations are, therefore, most commonly large, complex enterprises whose seeds of resistance were often sown when they were much smaller......the additional layers make it difficult for people in the organisation to understand who bears responsibility for specific results. Some managers become reluctant to make decisions, and others won't own up to the ones they made, inviting colleagues to second-guess or overturn them. An already passive aggressive organisation grows increasingly so as its people become more certain of the acceptability of such conduct. Resistance becomes entrenched, and failure to deliver on commitments becomes chronic......failure to deliver on commitments becomes acceptable as long as one has a reasonable excuse......regardless of how they arrived where they are, passive aggressive organisations are usually the sum of a series of ad hoc decisions or events that makes sense in the moment, but has the effect of gradually blurring decision rights. Other times such shot gun arrangements outlive their individual rationales, and the organisation loses all messages of coherent overall plan ......unhealthy organisations, where dysfunction is rooted in a fundamental mis-alignment of four basic building blocks of the organisation: incentives or, more broadly speaking, motivators; decision rights; information; and organisational structure. In passive-aggressive organisations, the misalignment generally involves complicated indirection amongst all four, which together conspire to freeze initiatives. ... Ineffective motivators......Passive-aggressive organisations are exceptionally poor at providing evidence, often failing to judge and reward individuals according to their business value to the organisation - or even to distinguish better performance from worse......in some cases, the rewards given to certain job titles seem incommensurate with their functions' overall contribution to the firm. People who expect their efforts to be unrecognised or to be inadequately valued put in just enough effort to stay out of trouble, since they have no reason to believe that any extra effort or initiative will lead to additional rewards or superior results.......Incentive systems communicated to the organisation......is what really matters to upper management. Corporate may send out countless memos about strategy, mission and goals, but management values are embodied in what it is willing to pay or otherwise recognise, which is one reason that the annual e-mail describing how bonuses will be calculated is the one that everybody not only reads but remembers......the job of senior management is to remind everyone else of the reality behind those symbols by connecting each manager's standing within the firm - size of office, size of bonus, access to superiors - to the firm's standing within the marketplace......unclear decision rights.....vaguely defined role to give the occupants "plausible deniability" when things go bad. The problem can always be said to be the responsibility of the next person, who can likewise shift blame elsewhere.......As a consequence, authority becomes fragmented. Where everyone has a say in making a decision, everyone thinks he has the right to stymie or reverse it after it has been made......deadlines don't matter; neither do other units' internal guidelines, since each can be overridden by the other.......Wrong information......employees......are often more interested in learning about what goes on inside the company than about the competitive realities that affect the firm's long-term survival......when in possession of information or knowledge of genuine value, employees of passive-aggressive organisations are reluctant to share it, since doing so frequently benefits the recipient more than the sharer......an organisation already rife with meddling, where many managers find that providing information gives the recipients a pretext to interfere......Misleading structure. Because individuals in passive-aggressive companies often lack clear measures of how they add value, they must instead rely on the organisation chart as a map of relative status - focusing on how many direct reports they have, how many levels away from the CEO they are, or whether their immediate supervisor is a favourite......passive-aggressive organisations are, by definition, uniquely resistant to change and are therefore uniquely difficult to rehabilitate ......managers there have long had the attitude that "this too shall pass" when presented with a change program - and always they have been right..."

Gary L. Neilson et al, 2005

If there is an environment of suppression of dissent, it will work against the change process.

Linked with culture is understanding networks (formal and informal) within the organisation. The networks and the way they operate demonstrate how an organisation works (see network mapping in Volume 4).

According to Michael Mauboussin (2009), in handling complex systems like organisations, managers make 3 common mistakes:

i) incorrectly extrapolating individual behaviour to explain collective behaviour. You need to focus on the aggregate and not just the components.

ii) failing to recognize that changing one component of a complex system has unintended consequences. It is like throwing a pebble into a pond of water: there is a ripple effect.

iii) tending to focus on a few key individuals while ignoring their surrounding support systems. There are many instances of hiring a star performer who does not continue to perform when separated from the people, structures and norms that made them star performers in the first place.

We don't encourage learning from mistakes. There is a focus on punishment for mistakes and this often leads to CYA-type behaviours

Not understanding the importance of negative feedback. In the market place, people's behaviours readily swing from greed to fear; with greed creating "bubbles" that eventually burst and fear creating panic. Negative feedback is a way of keeping things in check; positive feedback, in contrast, builds on itself and can accentuate the swings


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