EXAM 3 - MGT 4150 - CH. 12 - Corporate Culture and Leadership: Keys to Good Strategy Execution

What 2 factors contribute to the development of strong cultures?

1. A founder or strong leader who established core values, principles, and practices that are views as having contributed to the success of the company 2. A sincere, long-standing company commitment to operating the business according to these established traditions and values. Continuity of leadership, low workforce turnover, geographic concentration, and considerable organizational success all contribute to the emergence and sustainability of a strong culture.

5 unhealthy culture that impede good strategy execution Unhealthy cultures are problematic because they can be difficult to change

1. Change-resistant cultures - can inhibit growth and be weak adapters to needed change 2. Politicized cultures - can create negative atmospheres : people fighting over resources, conflicting views 3. Unethical and greed-drive cultures - companies focused on the bottom line and short term performance metrics can spread to unethical decision making (ch. 9) 4. Insular, inwardly focused cultures 5. Incompatible subcultures All will lead to poor strategy execution and therefore poor performance

How long does it take to change a problem culture? (4)

1. Changing a problem culture is never a short-term exercise. 2. A sustained and persistent effort to reinforce the culture at every opportunity through word and deed is required. 3. It takes time for a new culture to emerge and prevail; it takes even longer for it to become deeply embedded. 4. Fixing a problem culture and instilling a new set of attitudes and behaviors can take two to five years. -- sometimes longer

8 forces that cause a firm's culture to evolve/causes of cultural change Ex: what would cause Amazon's culture to shift (or any culture for that matter) the more important thing is when the company is shifting/changing is the company and executives PERPETUATING the culture or is it becoming weaker

1. New challenges in the marketplace - new competition 2. Shifting internal conditions - top management leaving 3. Merger or acquisition of another firm - 80% of these fail because of the culture misalignment 4. Rapid growth of the firm - the firm is changing in order to keep up 5. Diversification into new businesses 6. New or revolutionary technologies 7. An incoming CEO that decides to shake up the business 8. Expansion in foreign countries

8 actions to counteract unhealthy cultures - ie. Substantive Culture-Changing Actions

1. Replace high-profile executives and managers who are stonewalling needed organizational and cultural changes. 2. Promote individuals who advocate for cultural shifts and can serve as a role model for the cultural behavior. 3. Appoint outsiders with the desired cultural attributes to high-profile positions. 4. Screening candidates for positions carefully, hiring only those who appear to fit in with the new culture. 5. Mandate that all personnel attend culture-training. 6. Design compensation incentives that boost the pay of teams and individuals. - honor and exemplify those that are doing well and being a good representative of an ideal employee who represents the culture well 7. Revising policies and procedures in a way that will help drive cultural change 8. Letting work leak out that generous pay raises have been awarded to leading employees who lead desired work practices, display new-style behaviors, and achieve pace-setting results

What 6 factors perpetuate (sustain) the culture? If you have a strong culture how do you keep it this way? or make it even stronger?

1. Systematic indoctrination of new members - emphasis on the informal part of indoctrination with current employees telling them how best to act along with the formal indoctrination of HR onboarding - "word-of-mouth" indoctrination 2. Screening and selecting new employees - screening for cultural fit 3. Telling and retelling of firm's legends - people informal telling newcomers about the "heroes" and "villain's" of the company so the newbies know how they should perform and who's steps to follow - the ideal and bad employees ; ex: telling stories of employees who were fired/promoted and telling new employees what they did or did not do well and using the prior employees as examples for those needing to understand the culture - what the "norms" are so new employees know how to fit in 4. Ceremonies honoring employees - Honor employees with dinners, events, cocktail hours to regard employees, note that they're doing a good job, and motivate them to continue doing well - these ceremonies re-emphasize the core values of the culture and recognize when the culture is exemplified 5. Rewarding those who display cultural norms 6. Vocal support by senior managers Closely aligning corporate culture with the requirements for proficient strategy execution merits the full attention of senior executives.

What are 8 key features of a corporate culture?

1. Values, principles, and ethical standards in actual use - How do employees talk about the culture? - Is there a language of the culture? (think Proctor and Gamble's acronyms) Key terms or phrases specific to the culture? -- core values of the company are the backbone to the company culture 2. Management practices and organizational polices - How does top mgt talk about the corporation, what are their values,how do they display their values --also how do managers interact and relate to one another -- how do they interact with other employees -----do they have an open door or closed door 3. Atmosphere and spirit embodied in the firm's work climate - How do employees interact with each other - Are doors opened? closed? 4. How managers and employees interact and relate to one another - open / closed door policy? - how influential are managers to their employees 5. Strength of peer pressure to conform and observe norms - Theory of in-group (popular), out-group and strong cultures are mainly in-group but sometimes when people divert from the norm of the comp culture, the in-group will pressure them to conform back to they shared ways and this can help management bc they have peers monitoring other peer keeping consistency among members 6. Actions and behaviors encourages and rewarded -Do companies celebrate their employees? are there heroes = Employee of the month/year an become cultural icons that other employees look up to to determine how to replicate their actions to want to be just as successful - Just as there are heroes there are villans --- employees that get fired than other people will talk about what that person did to go against the company culture 7. Traditions and stories and "how we do things around here" 8. How the firm treats its stakeholders

Quiz Q5. What contributes to the emergence and sustainability of a strong culture?

A sincere, long-standing company commitment to operating the business according to established traditions, thereby creating an internal environment that supports decision making and strategies based on cultural norms.

Amazon Culture and Reputation Cons (4)

Cons: 1. Culture considered brutal 2. Median tenure -1.0 years = high turnover 3. White male dominated -- lack diversity 4. Growth slowing

Corporate culture

Culture = the organization's personality - refers to the shared values, ingrained attitudes, core beliefs and company traditions -- > the way people are dresses, their behavior, attitudes, etc. - establishes norms of behavior, accepted work practices, and styles of operating --- should establish strong boundaries for how individuals should behave in the organization -- define what is and is not accepted - Equivalent to the identity and personality of the organization -- culture is similar to a person's personality -- can be compared as being the company's personality and therefore will influence actions and decisions ---> Is important because it influences the firm's actions and approaches to conducting business.

Invodo culture example (video production agency) on how Invodo drives and promotes culture for new employee onboarding (3)

Drives and promotes culture with new employees 1. Indoctrination-Scavenger hunt employees have 30 days to complete (example items-how company got started, first employee of company, memorize company code etc..). Have to discuss and recite at quarterly meeting. - go around and find items that represent the company's mission and their code and recite them at the quarterly meetings 2. Celebrates, Rewards and Support by TMT -by gives two high performing employees with Samurai Sword and Warrior Spear - to say these are the ideal employees you want to mimic in this corporation 3. "Fun Committee"-plan fun events

Example World Class Strategy Execution- "Amazon Flywheel" Culture of a Startup -20 years later (picture) What are the principle values that guide Amazon's culture

Example: Amazon's leadership principles-values ♦ Customer Obsession ♦ Ownership ♦ Invent and Simplify ♦ Are Right, A lot ♦ Learn and be Curious ♦ Hire and Develop the Best ♦ Insist on Highest Standards ♦ Think Big ♦ Bias For Action ♦ Frugality --> low-cost , generic strategy ♦ Earn Trust ♦ Have Backbone-Disagree and Commit ♦ Deliver Results

What are 5 things cultures do?

How to tell how company A is different from company B The culture will be in line with the company's generic strategy bc if the company is a low cost provider, the mindset of the company's members will be how to best utilize their time and the company's resources for the lowest cost of production 1. Defines boundary between firms --cultures reinforce the differences btwn firms bc of their difference in "personality" 2. Conveys identity for members 3. Fosters commitment beyond self-interest -- bc people are dedicated to the company's mission 4. Enhances stability of social system 5. Aids hiring/retention (self-selection) -- when hiring thery are screening for individuals that match the company culture bc their performance will be better and those that fit within a company have a higher possibility of enjoying their job and wanting to remain at the company -- when companies are hiring, they screen the interviewees to determine best fit with company culture because this will lead to better performance and stronger retention

Benefits of strong culture

Many benefits to having a strong culture as it is one of the drivers for a sustainable competitive advantage as far as a resource --bc since it's like to organization's personality it's VERY hard to imitate A strong culture that encourages actions, behaviors, and work practices that are in sync with the chosen strategy and conducive to good strategy execution is - A valuable aspect in the strategy execution process A strong culture can drive sustainable competitive advantage as a resource --- culture is incredibly hard to imitate When a culture's considered strong: people dress and behavior in similar ways, act in similar ways, there is a harmony in the workplace; core values are displayed through employees actions Weak : not strong cohesion among members of the organizations and people do not act in similar ways, not dressing similarly

Amazon Culture and Reputation Pros (6)

Pros: 1. CEO - one of the 10 best 2. Brilliant strategy execution 3. Amazing historical growth 4. ecommerce spending 5x WM 5. AWS -Amazon Web Services 6. they've been able to successfully support their generic strategy

Quiz Q2. Which of the following is a substantive culture-changing action that a company's managers can undertake to alter a problem culture?

Revising policies and procedures in ways that will help drive cultural change and replacing senior executives who are resisting and obstructing needed organizational and cultural changes.

Why is culture so important and how to we mobilize and perpetuate it? 10 ways to mobilize the effort for excellence in strategy execution

The way company's employ strong culture is by: 1. Treat employees as valued partners - employees need to feel like they are needed and wanted in the organization to keep them motivated 2. Foster an esprit de corps that energizes members --> a feeling of loyalty and pride that is shared by the members of a group who consider themselves to be different from other people in some special way 3. Use empowerment to create a fully engaged workforce 4. Make champions out of the people who spearheaded new ideas and/or turn in winning performances 5. Set stretch objectives so people can give their best - (ch. 10) motivate people and challenge them 6. Use continuous improvement tools (benchmarking, reengineering, TQM, Six Sigma, stretch objectives) 7. Nurture a results-oriented work climate, and enforce high standards 8. Celebrate individual, group, company successes

Quiz Q1. The hallmarks of high performance corporate culture include:

a "can-do" spirit, pride in doing things right, no-excuses accountability, and a pervasive results-oriented work climate where people go the extra mile to meet or beat stretch objectives

Why does corporate culture matter? 3 reasons why corporate culture matter to the strategy execution process.

because if culture follows and supports the generic strategy then it'll be a high performing company 1. A culture aligned with the strategy focuses the attention of employees on what is most important to this effort. 2. Culture-induced peer pressure encourages the team to do things that support good strategy execution. - in-grou .. out-group pressuring to show others what the norm is at the company 3. Culture aligned to Strategy can energize employees, deepen their commitment to execute the strategy, and enhance worker productivity.

Culture defined by CEOS

culture should be so ingrained that people know how to instinctively react to situations * "Culture is simply a shared way of doing something with passion." Brian Chesky, CEO Airbnb * "Determine what behaviors and beliefs you value as a company and have everyone live true to them. These behaviors and beliefs should be so essential to your core, that you don't even think of it as culture." Brittany Forsyth, Shopify culture should be such ingrained actions that people automatically respond and behave a certain way - culture should be built upon the core values (chapter 2)

Quiz Q4. Once established, company cultures can be perpetuated by:

relying on word-of mouth indoctrination and the power of tradition to instill the culture's fundamentals, as well as frequent reiteration of core values by senior managers and group members, and regular ceremonies honoring members who displayed desired cultural behaviors

Quiz Q3. To deeply ingrain core values and ethical standards, a company must:

turn the espoused core values and ethical standards into strictly enforced cultural norms

Bezo's View of an ideal employee

♦ Be stubborn and flexible-"stubborn on vision and flexible on details." - fight for an ideal you have but be flexible to support it with the generic strategy ---> stubborn on generic strategy but flexible in the way you support it ♦ Stick with "Two Pizzas"-small autonomous groups. - have small groups -- size wize, small enough you could feed with 2 pizzas ♦ Be willing to invent ♦ Think long term