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Title: BA105: Organizational Behavior


1
BA105 Organizational Behavior
  • Professor Jim Lincoln
  • Week 6 Discussion

2
  • The nature of culture
  • Fuzzy, ephemeral, intuitive
  • No one can define the HP way. If it werent
    fuzzy, it would be a rule (HP Vice President)
  • Emotional, charismatic, spiritual
  • Takes emotional intelligence to navigate
  • Holistic and enveloping

3
The Berkeley Way
  • It's invisible but omnipresent. Most know it
    exists but few can actually define it. Newcomers
    are perplexed by it. Confronting it head on can
    be dangerous.
  • The name of this nebulous creature? It's known
    on campus as "The Berkeley Way" -- an unwritten
    code of conduct that governs how people go about
    their business.
  • The Berkeleyan, February 16, 2000

4
Where did the concept of organization culture
come from?
  • Discovery of Japanese management in 80s
  • William Ouchi Theory Z.
  • Peters and Waterman In Search of Excellence
  • Richard Pascale and Anthony Athos The Art of
    Japanese Management.
  • Ezra Vogel Japan as No. 1.
  • James Abegglen and George Stalk Kaisha

5
What is culture?
  • Shared values, norms, beliefs/understandings
  • Manifested in
  • Ritual, ceremony, tradition
  • Folklore, heroes, legends, stories
  • Channeled through
  • Informal networks
  • Logos, slogans, PR, advertising, annual reports,
    websites

6
Southwest Airlines Values
  • Value 1 Work should be funit can be playenjoy
    it
  • Value 2 Work is importantdont spoil it with
    seriousness
  • Value 3 People are importanteach one makes a
    difference.
  • It used to be a business conundrum Who comes
    first? The employees, customers, or
    shareholders? Thats never been an issue to me.
    The employees come first. If theyre happy,
    satisfied, dedicated, and energetic, theyll take
    real good care of the customers. When the
    customers are happy, they come back. And that
    make the shareholders happy.
  • Herb Kelleher

7
Ciscos core values
  • Dedication to customer success
  • Innovation and learning
  • Partnerships
  • Teamwork
  • Doing more with less

8
How the culture paradox worksstrong values
motivation
  • Most businesses focus all the time on profits,
    profits, profitsI have to say I think that is
    deeply boring. I want to create an electricity
    and passion that bonds people to the company.
    You can educate people by their passions,
    especially young people You have to find ways to
    grab their imagination. You want them to feel
    that they are doing something important.. Id
    never get that kind of motivation if we were just
    selling shampoo and body lotion.
  • Anita Roddick, founder of The Body Shop

9
KyoceraRespect the divine and respect people
  • Our goal is to strive toward both the
    material and spiritual fulfillment of all
    employees in the Company, and through this
    successful fulfillment, serve mankind in its
    progress and prosperity.
  • We are scientists constantly directing our
    efforts toward perfecting our technology. But we
    must not forget that complete process of living
    requires devotion to humanity as well as to
    science, to the emotional as with the rational,
    and to love equally with reason.
  • Just as a family unites in a common bond of
    support and affection, let us all unite in a bond
    of love and respect.

10
Is making money a value?
  • The culture paradox
  • An organization whose core values transcend
    making money will make the most money
  • Profits are to a corporation much like breathing
    is to life. Breathing is not the goal of life,
    but without breath, life ends. Similarly,
    without turning a profit, a corporation, too,
    will cease to exist.
  • Dennis Bakke, CEO, AES Corporation

11
Other core organizational values
  • Customer service (IBM, Nordstrom)
  • Innovation, creativity (3M, Intel, HP)
  • Competitiveness, aggressiveness (GE, Motorola,
    Pepsi)
  • Social responsibility (Ben and Jerrys Levis
    The Body Shop Working Assets)
  • Quality (Japanese companies Ford?)

12
Strong vs. weak cultures
  • Strong Consistent, persistent, intense, shared,
    crystallized, consensual, consequential
  • Weak Vague, fragmented, inconsistent,
    transitory, politicized, conflictual

13
Dimensions of culture strength
Intensity
Complacent country club culture Strong, organization-wide culture
Absence of culture (anomie) Subcultures
Sharing
14
Subcultures
  • Around departments, occupations, divisions,
    demographics
  • Source of in-group cohesion, out-group
    competition, conflict, and politics
  • Is the overall organization culture strong enough
    to subsume subcultures?

15
(No Transcript)
16
Strong culture companies as cults, tribes,
cloisters, churches, the military
  • What do the Branch Davidians and Microsoft
    have in common? Give up? Both organizations are
    cults. No joke. The only difference is one is
    religious (Davidians), while the other
    (Microsoft) is corporate. So says David Arnott,
    author of Corporate Cults The Insidious Lure of
    the All-Consuming Organization (AMACOM).
  • Both are classified as cults because the
    members of these organizations are cut off from
    the real world and are obsessed with achieving
    the mission of their leaders. For the Davidians,
    it was the charismatic David Koresh for
    Microsoft, it's the world's richest man, Bill
    Gates.
  • Bob Weinstein, March 5, 2000

17
Apple as tribe
  • Apple is a lot like a tribe, with folklore
    handed down from generation to generation. The
    question is how can we channel it? We are trying
    to shift away from folk heroes and individualism
    in the organization, but we have selected people
    for this in the past, and we dont punish that
    kind of behavior. 
  • --Apple executive

18
The church of IBM
  • "IBM, more than any other big company, has
    institutionalized its beliefs the way a church
    does. They are expounded in numerous IBM
    internal publications to ensure that employees
    know what's expected of them. And they are
    reflected in codes of behavior(S)alespersons
    wear dark business suits and white shirts that's
    no longer a strict regulation but most IBM
    salesmen continue to dress that way
  • ....the result is a company filled with ardent
    believers..
  • The IBM culture is so pervasive that, as one
    nine-year former employee put it, 'leaving the
    company is like emigrating."
  • Secrecy is one of IBM's hallmarks. One IBM
    watcher told Tim, if you understand the Marines,
    you can understand IBM."

19
What does culture do? It provides
  • Motivation and commitment
  • Vision and direction
  • Coordination and alignment
  • Ease of communication

20
Culture may align and coordinate functional,
product, or regional divisions
General Manager
Engineer- ing
Manufac- turing
Marketing
Product A Culture
21
Can culture help the bottom line?
  • Lower cost
  • Fewer formal control systems
  • Better quality/productivity/customer service
  • Culture as branding
  • Apple, Southwest, Saturn, Japanese firms
  • Culture as sustainable competitive advantage
  • Hard-to-imitate capabilities

22
Culture as Hondas (Sonys) competitive advantage
and Toyotas (Matsushitas) competitive
disadvantage
  • Honda executives say Toyota's aggressive
    moves don't concern them, arguing that their
    giant rival will have difficulty emulating
    Honda's unique culture. "All Toyota is doing is
    aping us and letting their money talk," says Ken
    Hashimoto, a senior Honda RD executive.
  • Some of Honda's fears are already playing
    out. Toyota, in spite of its often-ridiculed
    "country boy" image, has been proving that it can
    successfully woo young car buyers, thanks to
    designers such as Takao Minai. Mr. Minai
    languished for a long time in Toyota's
    hierarchical culture but had a sudden leap in
    responsibilities two years ago. Under Mr. Okuda's
    guidance, the ponytailed 36-year-old amateur
    video jockey took charge of developing a dream
    car for male twentysomethings. Based on a sketch
    by another young designer, the 11-member team
    designed a small car shaped like a really clunky
    box. Toyota dubbed it "bB," short for black Box.

23
Are there downsides to strong culture?
  • Rigidity/inertia
  • Homogeneity
  • Overconformity
  • Narrowness/intolerance/xenophobia
  • Extremism/obsessiveness
  • Provincialism/insularity
  • Goal displacement ends-means inversion

24
SAS Institute
  • Some people say that SAS Institute reeks of
    paternalism or a plantation mentality in a world
    otherwise dominated by marketlike labor market
    transactions. For instance, an article in Forbes
    stated, More than one observer calls James
    Goodnights SAS Institute, Inc., the Stepford
    software company after the movie The Stepford
    Wives. In the movie people were almost robotlike
    in their behavior, apparently under the control
    of some outside force. Another article noted
    The place can come across as being a bit too
    perfect, as if working there might mean
    surrendering some of your personality.
  • OReilly and Pfeffer Hidden Value.

25
Strong culture spells homogeneity at PG
  • Few corporate cultures are as dominant as the
    "Procter Way." "It's such a strong culture, they
    really want sameness," says Ms. Beck, who later
    worked as a brand manager for Dunkin Donuts and
    as a vice president for Burger King. "The way
    women think and the way we do business has some
    inherently different qualities to it," Ms. Beck
    says. "In retrospect, there was a gender aspect
    to PG's culture that was not intentional, but
    was very, very real.
  • WSJ, 9/9/98

26
  • at one point product features became the
    religion, not the vision. This drove prices up
    and closed out individuals (as customers).
  • --Apple executive

27
Enrons culture of corruption or the absence
of culture?
  • The report (by three Enron non-executive
    directors) into the collapse of Enron, once one
    of America's top ten public companies, confirmed
    outsiders' suspicions about how badly the firm
    was run. The managements aims, the directors
    concluded, were to minimise taxes, maximise
    apparent profits and, in some cases, to line
    their own pockets. The directors' report was
    described by Senator Byron Dorgan, who is leading
    another investigation into the companys
    collapse, as devastating, adding that this is
    almost a culture of corporate corruption.
  • --The Economist, 2/12/02

28
The critique of 1950s corporate culture
Overconformity and alienation
  • William H. Whytes The Organization Man
  • (Doubleday, 1956)
  • The Man in the Gray Flannel Suit
  • (20th Century Fox, 1956)

29
The Organization Man
  • (A)s more and more lives have been encompassed
    by the organization way of life, the pressures
    for an accompanying ideological shift have been
    mounting. The pressures of the group, the
    frustrations of individual creativity, the
    anonymity of achievement are these defects to
    struggle against--or are they virtues in
    disguise? The organization man seeks a redemption
    of his place on earth--a faith that will satisfy
    him that what he must endure has a deeper meaning
    than appears on the surface. He needs, in short,
    something that will do for him what the
    Protestant Ethic did once. And slowly, almost
    imperceptibly, a body of thought has been
    coalescing that does that.
  • (I)t could be called an organization ethic, or
    a bureaucratic ethic more than anything else it
    rationalizes the organization's demands for
    fealty and gives those who offer it
    wholeheartedly a sense of dedication in doing
    so--in extremis, you might say, it converts what
    would seem in other times a bill of no rights
    into a restatement of individualism.
  • But there is a real moral imperative behind it,
    and whether one inclines to its beliefs or not he
    must acknowledge that this moral basis, not mere
    expediency, is the source of its power. Nor is it
    simply an opiate for those who must work in big
    organizations. The search for a secular faith
    that it represents can be found throughout our
    society--and among those who swear they would
    never set foot in a corporation or a government
    bureau.

30
Class business exams next week
  • Essay (Tuesday, March 2)
  • Exam case People Express (in reader)
  • You will analyze a case (announced Thursday) that
    deals with structure, culture, and leadership
  • One or more exam questions will guide your
    analysis
  • Two example exams are now on the website
  • Bring bluebooks

31
  • Objective Thursday, March 4
  • 25-30 true-false, multiple-choice questions over
    required reading, lecture, and discussion
    material
  • I will hold extended office hours on Thursday
    (330-530) and Friday (12-3PM).

32
Class business Agenda
  • Team project proposal due
  • Lecture loose ends
  • Mary Kay video
  • Body Shop case
  • What is the culture of the Body Shop and where
    did it come from?
  • How (and how effectively) did TBS manage its
    culture?
  • Was the Body Shops penchant for modelling itself
    on the opposite of standard cosmetic industry
    practice a matter of core values or smart
    business strategy?
  • Is the story of the Body Shop chiefly one of
    culture or one of leadership?
  • Discuss upcoming exams

33
Evaluation
  • The essay exams will be evaluated approximately
    as follows
  • Grasp use of case issues and details 30
  • Analysis and creativity 30
  • Logic and coherence writing 10
  • Application of course materials 30

34
Preparing for essay exam
  • Use congruence model as problem-solving
    framework
  • Analyze problems. Examine
  • Immediate causes
  • Prior causes
  • Interactions of causes
  • Note a problem can be sustaining success
  • Solve problems by applying OB levers Structure,
    culture, leadership
  • Consider
  • Alignment/congruence issues. Fit to
  • Other levers (tasks, HR systems.)
  • Environment
  • Strategy
  • Note CHANGE may require temporary misalignment
  • Propose solutions that are

35
Organizational Design
Informal Organization (Culture, leadership,
networks, politics)
Input Environment (Competition,
change) Resources (munificence) History (age,
conditions at founding)
Formal Organization (job titles, departments,
reporting hierarchy, IT HR systems
Output Systems Unit Individual
Tasks (technologies, work flows)
Strategy (diversification
innovation)
People (ability, skills, motivation, biases)
36
Managing changing cultureStep I Study it
  • Be culturally savvy (vs. clueless) pay attention
  • Do a culture audit
  • Find key informants
  • oral histories with tribal elders
  • map genealogies
  • learn folklore
  • Be a fly on the wall
  • Ethnography participant observation
  • Study texts
  • Annual reports, websites, advertising
  • Do value surveys

37
Step II understand its causes
  • Leader/founder
  • Family ownership
  • Long history
  • PG
  • Society
  • Asia/Europe
  • Region
  • Northern California/Manhattan/South
  • community
  • Small town vs. big city
  • Amana, Cummins, Corning, Chase, Citibank
  • Product
  • Apple, Coke
  • Industry
  • High tech/railroads/advertising
  • Structure
  • Functional/divisional mechanistic/organic

38
Step III Align/realign the organization
  • People
  • Formal organization
  • Structure
  • Information/incentive systems
  • Strategy

39
Apples product-driven culture
  • Heres the most interesting thing about our
    culture-- we are what we make. Ive never seen
    an organization where the personality of the
    organization is so intertwined with the
    personality of the product--individualistic,
    pure, uncompromised, ahead of everyone else, so
    elegant it cant fail. We are the Macintosh
    here.
  • Apple Marketing Manager

40
Aligning people
  • Selection and socialization (buy or make)
  • First, selection
  • Select for fit or misfit to the culture
  • Intensive screening

41
Selection at Microsoft
  • In 1999, the average age of the more than
    31,000 Microsoft employees was only 34, and raw
    intelligence matters more than judgment or
    experience in determining who gets hired. Craig
    Mundie, senior vice president for consumer
    strategy, described Microsoft "as a company full
    of a lot of high IQ people who have relatively no
    experience."

42
Selection at Apple
  • Sculley came to a company renowned for its
    exciting and countercultural work environment,
    where employees often wore T-shirts that
    proclaimed working 90 hours a week and loving
    it. Sculley described apple as the Ellis
    Island of American business because it
    intentionally attracted the dissidents who
    wouldnt fit into corporate America.
  • Harvard Business School Press

43
Selecting for bad fit at HP(Wall Street
Journal interview with former CEO Lew Platt)
  • WSJ Did you feel constrained running a company
    that had legendary founders and a culture
    enshrined in a book?
  • Platt A little bit. There were certain
    constraints. There were certain traditions they
    wanted upheld.
  • WSJ Give me an example.
  • Platt They were very conservative -- heavy
    investment in RD, little debt. I was asked not
    to question those things.
  • WSJ Ms. Fiorina is a woman, a nonengineer and an
    outsider -- all firsts for H-P. What should we
    read into that?
  • Platt They wanted someone who could bring
    change, someone with a higher visibility. Most
    H-P people are pretty low-key. David Packard
    and Bill Hewlett were that way. I'm that way.
    Carly comes in without some of those constraints.
    She will question some of the thinking that I, as
    a 33-year employee, couldn't.

44
Aligning people
  • Socialization
  • Focus on firm-specific values and tacit skills
  • Invest heavily in training, including OJT
  • Mentoring
  • Participation
  • Rites of passage
  • Humiliating-inducing experiences

45
Selection and socialization at PG
  • Job candidates must pass a battery of tests
    measuring aptitude and leadership skills. Once
    hired, employees are schooled in all things
    Procter, even attending training seminars known
    as PG College. Memos, written in a distinct PG
    style, are valued over meetings. Employees are
    expected to have facts and data at their
    fingertips -- opinions and intuition are frowned
    upon.
  • Juelene Beck, who worked as PG beverage
    brand assistant from 1984 to 1986, says
    supervisors once questioned whether a trendy
    haircut and suit were "appropriate" for PG.
    During performance reviews, she says, she was
    asked why she preferred sailing to socializing
    with co-workers.

46
Cultural integration of acquisitions through
mentoring at Cisco
  • Ciscos acquisition identification process
    emphasizes cultural compatibilityCultural
    integration includes the use of integration teams
    who explain and model Ciscos values, the holding
    of orientation sessions, and the assignment of
    buddies. The buddy system involves pairing
    each new employee with a seasoned Cisco veteran
    of equal stature and similar job responsibility.
    The buddy offers personalized attention better
    suited to conveying the Cisco values and
    culture.
  • OReilly and Pfeffer, Hidden Value

47
Hell Camp Extreme resocialization
  • Founded nine years ago in the foothills of
    Mt. Fuji, Hell Camp claims to have subjected some
    100,000 Japanese salarymen to 13 days of speed
    drills, speechifying and hazing rituals. Its
    main message-- 100 liters of sweat 100 liters
    of tears was designed to counteract a growing
    fear among Japans corporate and government elite
    that the nations workers are becoming too
    Americanized, too soft. The schools solution,
    for nearly 3000 a pop to crush the individual
    ego with mindless and humiliating exercises and
    then rebuild it with a modern version of the
    Samurai code of selfless servitude called
    bushido.
  • Japanese-style camp for managers is lost in
    translation in U. S. Hazing rituals and
    obeisance dont make it in Malibu even among
    freeloaders. WSJ, March 1, 1988.

48
(Re)Align the organization
  • Structure

49
Ford Changing culture by restructuring
  • Since the hard-charging 51-year-old
    executive took over in January (1999), he has
    picked up the whole organization by the lapels
    and shaken it. His goal? To reinvent the
    96-year-old industrial giant as a nimble,
    growth-oriented consumer powerhouse for the 21st
    century, when a handful of auto giants will
    battle across the globe.That's why Nasser has
    declared war on Ford's stodgy, overly analytic
    culture. In its place, he envisions a company in
    which executives run independent units--cut loose
    from a stifling bureaucracy and held far more
    accountable for success and failure. And with a
    consumer focus at the heart of his retooled Ford,
    he's banking on a future in which designers,
    engineers, and marketers someday will do a far
    better job of anticipating the wants and needs of
    car buyers.

50
HP Too much culture structure alignment
  • David Packard and his co-founder Bill Hewlett
    gave their company a strong corporate culture,
    the HP waybased on how they had done business
    from the one-car garage where the company was
    born in 1939. In order not to lose the
    entrepreneurial spirit of a small firm, they
    created a new product group whenever an
    existing one grew too big.
  • By the 1990s, this philosophy and structure had
    become drawbacks. The HP way had become a recipe
    for inward focus and bureaucratic paralysis. The
    company had become a collection of 130
    independent product groups that tried harder to
    meet their own financial targets than to find any
    common thread. It was no surprise, then, that HP
    was late to the Internet partyeven though it had
    the technology in its labs. While Sun
    Microsystems and IBM were busy marketing
    themselves as dot.com revolutionaries, HP was
    still focusing on hardware. Worse, it
    underinvested in the Unix operating system, which
    has become an e-commerce workhorse, focusing
    instead on Windows NT.

51
Carly Fiorinas culture-structure realignment at
HP
  • Most dramatically, she launched a plan to
    consolidate H-P's 83 businesses into only 12. She
    also aligned the reduced number of divisions into
    two "front-end" groups that would focus on
    customer activities, such as marketing and sales,
    and two "back-end" organizations devoted strictly
    to designing and making computer and printer
    products.
  • Old-time H-P executives were shocked. "I was a
    deer caught in the headlights when she described
    the front and back end," says Carolyn Ticknor,
    who now presides over the merged printer unit.
    Several of these executives protested that
    employees weren't ready for a major
    reorganization.
  • Some executives fretted that managers wouldn't
    wield "real" authority if they couldn't control
    both product development and marketing. "It took
    some of the glory, if you wish, out of the job,"
    says Mr. Perez, the departed executive.
  • Consternation rippled through the ranks. Managers
    who had long aspired to run their own autonomous
    units, known as PLs, short for profit loss,
    suddenly saw most of those jobs disappear.
  • WSJ, 8/22/2000

52
Changing the symbolism of structure
  • Southwest
  • People Department
  • Culture Committee
  • Executive ranks at Chumbo Corp.
  • Grand Pooh-Bah
  • Web Goddess
  • Director of Something

53
(Re)align the organization
  • HR systems
  • Career design
  • Long-term employment
  • Job rotation
  • Compensation design
  • Reward group long-term performance
  • Reward conformity with core values
  • Innovators head new product divisions at 3M and
    HP
  • Maintain equity, keep inequality low

54
Aligning rewards at Cisco
  • Chambers is adamant about rewards being tied
    to customer satisfaction. He ties the
    compensation of all managers to measures of
    customer satisfaction really listening to the
    customer. We are the only company of anywhere
    near this size that does it.
  • OReilly and Pfeffer Hidden Value

55
Excessive culture-HR alignment at Penneys
  • To alter such deep-bred customer perceptions
    (that Penneys clothes are unfashionable) would
    require a feat of Herculean proportions, but
    Penney's, with a notoriously insular corporate
    culture, is averse to itinerant, superhero types.
    Of the company's top managers above the senior
    vice president level, only two have not spent
    their entire careers there.
  • "The norm is to be there your whole career,
    several are even second generation," said Lucille
    Klein, who left as fashion director of Penney's
    women's division three years ago, but still
    consults with the company. "It leads to tunnel
    vision, like the Penney's way of doing things is
    the only way."

56
Culture takeaways
  • Culture is an extremely powerful force in every
    organization
  • It can lead to either success or to failure
  • Culture may be soft but it can be managed and
    changed
  • It does take time, commitment, and consistency
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