GS MGT 439 CH 12 Corporate Culture and Leadership

What does managing by walking around give leaders a chance to do? (Choose every correct answer.)

Make a face-to-face connection with workers Stay updated on progress and problems

What do managers need to do when correcting strategy execution in response to a crisis?

Act quickly but also take the time to assess the situation, review data, and evaluate options

What does making corrections during the strategy execution process depend on? (Choose every correct answer.)

Analyzing the situation Determining the necessary course of action Effective implementation of corrective measures

What do managers need to do when leading the process of strategy execution? (Choose every correct answer.)

Apply appropriate pressure to achieve operational excellence Address mistakes and shortcomings to ensure that targets are met Monitor programs closely

Executives at companies with greed-driven cultures are likely to exhibit which of the following negative traits?

Arrogance

What must managers do to have employees produce innovative ideas?

Create a culture in which innovation can flourish

How can top-level executives engage the workforce? (Choose every correct answer.)

Encouraging employees to act on their initiative and contribute ideas Delegating authority to managers below them

Which of the following statements about the duration of the culture change process is true?

It often takes less time to build a new culture from scratch than to change an entrenched culture.

Which of the following people-management practices are most likely to energize a workforce? (Choose every correct answer.)

Promoting team work and collaboration Giving employees reason to take pride in their work

What measures can a company take to stress the importance of employee contributions? (Choose every correct answer.)

Referring to employees in complimentary symbolic terms, such as "partners" or "associates" Nurturing a results-oriented work climate, where performance standards are high

Which of the following are appropriate criteria to determine whether a company has good strategic leadership? (Check all that apply.)

The company is meeting or beating targets. The company's strategy is being executed competently. The company has a good strategy and business model.

Which of the following statements is true concerning the process of strategy execution?

The process of strategy execution is continuous and requires regular looping back to fine-tune procedures and make adjustments.

How do most managers act when they have time to correct mistakes?

They broaden their understanding of the problem, strive for consensus, and pursue an agreed-upon course of action.

Which of the following are reasons that symbolic actions are an important part of the process of creating culture? (Choose every correct answer.)

They help establish the connection between culture and strategy. They demonstrate that management is prepared to "walk the talk." They are effective ways for top executives to lead by example.

Who is responsible for taking the lead in driving the pace of progress throughout the strategy execution process?

Top executives

True or False: Honoring people who exhibit important culture-building behaviors at company ceremonies is an effective way to create a productive work culture.

True

What is the basis for leading the strategy execution process successfully?

Understanding the requirements of good strategy execution

What does the leadership technique known as managing by walking around involve?

Visiting various company facilities and talking with company personnel at different organizational levels

Which of the following statements about correcting flawed company strategy are accurate? (Choose every correct answer.)

When a strategy is failing, it is the leader's responsibility to begin the process of correcting the problems. Sometimes poor performance is the result of flawed strategy rather than weak strategy execution.

When are employees more likely to produce new ideas? (Choose every correct answer.)

When they receive large and visible rewards for ideas that contribute to the company's success. When they are given time to brainstorm. When they have the autonomy to offer contributions.

In order to drive the strategy execution process, top executives need to ______.

apply constructive but unrelenting pressure on all organizational units to execute strategy

Average performers in a company need to be ______.

encouraged to deliver better results

Many companies formally document core values and ethical standards because of the belief that dedication to core values and ethics ______.

is the foundation of a work culture that will help the company achieve its goals

Nurturing a result-oriented work climate can prompt employees to _____.

maximize their efforts and produce results that were thought to be beyond the company's capacity

In order to mobilize the effort for excellence in strategy execution, managers who consistently fail to deliver results should be ______.

replaced with a more effective manager

By attending company ceremonies and events, top executives can _____.

take advantage of an opportunity to instill new values and praise culture-building behaviors

In large corporations, fixing a problem culture and instilling new attitudes and behaviors can be expected to take ______.

two to five years

An effective long-term method for motivating employees to make productive contributions to the strategy execution process is ______.

to take measures to establish a strong culture in the company

3 of 5 : Unhealthy Cultures That Impede Good Strategy Execution : Insular thinking Insular, Inwardly Focused Cultures Sometimes a company reigns as an industry leader or enjoys great market success for so long that its personnel start to believe they have all the answers or can develop them on their own. There is a strong tendency to neglect Insular thinking, internally driven solutions, and a must-be-invented-here mindset come to permeate the corporate culture. An inwardly focused corporate culture gives rise to managerial inbreeding and a failure to recruit people who can offer fresh thinking and outside perspectives.

what customers are saying and how their needs and expectations are changing. Such confidence in the correctness of how the company does things and an unflinching belief in its competitive superiority breed arrogance, prompting company personnel to discount the merits of what outsiders are doing and to see little payoff from studying best-in-class performers. ○ The big risk of insular cultural thinking is that the company can underestimate the capabilities of rival companies while overestimating its own—all of which diminishes a company's competitiveness over time.

Company culture is important because it ______.

helps determines an organization's approach to business

Core value statements and codes of ethics can contribute to a positive and productive company culture if the company ______.

undertakes a sustained effort to put its values and ethics into practice

Which of the following statements about high-performance cultures is true?

All employees are expected to maintain focus on and demonstrate passion for what needs to be done.

Which of the following organizations would be especially vulnerable to insular thinking?

An industry leader that has become accustomed to its success

What are ways in which incompatible subcultures can undermine strategy execution? (Choose every correct answer.)

By blocking collaboration and teamwork among departments By creating disparate approaches to strategy execution

For adaptive cultures to thrive in the face of ongoing change, it is crucial that organization members view proposed changes as which of the following? (Choose every correct answer.)

Legitimate In the interests of stakeholders Consistent with core values

Which of the following statements is correct regarding successful culture change?

Middle managers and frontline supervisors play a key role in generating support for new behaviors.

Which of the following cultural traits are considered unhealthy?

Politicized decision making Hostility to change Incompatible, clashing subcultures

How can value statements and codes of ethics contribute to culture-building? (Choose every correct answer.)

Providing guidance and communicating which behaviors are acceptable and which behaviors are unacceptable Creating a work environment in which personnel share strongly held convictions about how the company should conduct business

Which of the following practices demonstrate a sincere commitment to culture change? (Choose every correct answer.)

Replacing managers who have resisted necessary cultural changes Providing financial incentives for employees who demonstrate desired new behaviors Making new hires based in part on the extent to which candidates exhibit culturally desirable traits

Which of the following could be considered an effective and positive symbolic action for management of a company that makes environmentally green products?

Replacing the older company car with a hybrid vehicle

Which of the following shifting internal conditions could provoke a change in company culture? (Choose every correct answer.)

Top-executive turnover Influx of new employees

What is the last step in changing an unhealthy company culture?

Undertaking forceful actions that demonstrate a commitment to changing the culture

Management by walking around (MBWA) is

a communication practice in which executives get out of their offices and learn from others in the organization through face-to-face dialogue one of the techniques that effective leaders use to stay informed about how well the strategy execution process is progressing.

The hallmark of a strong-culture company is _____.

a company-wide emphasis on firmly established values, practices, and employee behaviors that moderate the workplace climate

When are company personnel most likely to be receptive to new assignments?

When impending changes do not threaten their job security

When are company personnel most likely to embrace new work practices?

When they understand how they will benefit from those changes

The chief characteristic of an adaptive business culture is a willingness to ______.

accept the challenge of implementing new strategies

A company that is plagued by insular thinking is likely to ______.

become overly reliant on in-house personnel to drive all facets of innovation

The corporate culture of Apple Electric is largely centered on ______.

being high protective of company-developed technology

True or false: Company culture has minimal impact on strategy execution and is unrelated to business performance.

False

True or false: When attempting to change a problem culture, top executives should move slowly and use a light touch when introducing new behaviors.

False

Which of the following scenarios would be the most closely associated with a company having a politicized corporate culture?

Strategy execution stalls because organizational units fail to collaborate effectively.

What is a manager in a company with an adaptive culture likely to do? (Choose every correct answer.)

Take prudent risks and fund new initiatives Encourage new ideas and suggestions

Healthy Cultures That Aid Good Strategy Execution A strong culture, provided it fits the chosen strategy and embraces execution-supportive attitudes, behaviors, and work practices, is definitely a healthy culture

Two other types of cultures exist that tend to be healthy and largely supportive of good strategy execution: 1. high-performance cultures and 2. adaptive cultures.

Standout traits at a company with a high-performance culture include which of the following? (Choose every correct answer.)

A "can-do" spirit a results-oriented work climate

What should managers consider doing in order to create and maintain a high-performance culture?

Reinforcing constructive behaviors

It is in management's best interest to dedicate

considerable effort to establishing a corporate culture that encourages behaviors and work practices conducive to good strategy execution.

The two best things top-level executives can do to create a fully engaged organization are

1. delegate authority to middle and lower-level managers to get the strategy execution process moving and 2. empower rank-and-file employees to act on their own initiative. Operating excellence requires that everybody contribute ideas, exercise initiative and creativity in performing his or her work, and have a desire to do things in the best possible manner.

Embedding Behavioral Norms in the Organization and Perpetuating the Culture Once values and ethical standards have been formally adopted, they must be institutionalized in the company's policies and practices and embedded in the conduct of company personnel. This can be advanced in a number of different ways. 1. Screening applicants and hiring those who will mesh well with the culture. 2. Incorporating discussions of the company's culture and behavioral norms into orientation programs for new employees and training courses for managers and employees. 3. Having senior executives frequently reiterate the importance and role of company values and ethical principles at company events and in internal communications to employees. 4. Expecting managers at all levels to be cultural role models and exhibit the advocated cultural norms in their own behavior.

5. Making the display of cultural norms a factor in evaluating each person's job performance, granting compensation increases, and offering promotions. 6. Stressing that line managers all the way down to first- level supervisors give ongoing attention to explaining the desired cultural traits and behaviors in their areas and clarifying why they are important 7. Encouraging company personnel to exert strong peer pressure on co-workers to conform to expected cultural norms. 8. Holding periodic ceremonies to honor people who excel in displaying the company values and ethical principles. To deeply ingrain the stated core values and high ethical standards, companies must turn them into strictly enforced cultural norms. They must make it unequivocally clear that living up to the company's values and ethical standards has to be "a way of life" at the company and that there will be little toleration for errant behavior.

Which of the following are examples of how company culture can contribute to the successful implementation of strategy? (Choose every correct answer.)

A culture that celebrates sustainable environmental practices is conducive to a strategy promoting the use of energy-saving technologies. A culture that prides itself on customer service is conducive to the execution of a strategy to improve customer satisfaction.

How Long Does It Take to Change a Problem Culture? Planting the seeds of a new culture and helping the culture grow strong roots require a determined, sustained effort by the chief executive and other senior managers. In large companies, fixing a problem culture and instilling a new set of attitudes and behaviors can take two to five years. In fact, it is usually tougher to reform an entrenched problematic culture than it is to instill a strategy-supportive culture from scratch in a brand-new organization.

Changing a problem culture is never a short-term exercise; it takes time for a new culture to emerge and take root. And it takes even longer for a new culture to become deeply embedded. The bigger the organization and the greater the cultural shift needed to produce an execution-supportive fit, the longer it takes.

Which of the following statements about the corporate culture of a company is true?

Corporate culture involves both the unwritten rules in a company and company documents that set guidelines for behaviors.

Instilling a Corporate Culture Conducive to Good Strategy Execution In a very real sense, the culture is the company's automatic, self replicating "operating system" that defines "how we do things around here". It can be thought of as the company's psyche or organizational DNA. ○ A company's culture is important because it influences the organization's actions and approaches to conducting business. As such, it plays an important role in strategy execution and may have an appreciable effect on business performance as well.

Corporate culture refers to the shared values, ingrained attitudes, core beliefs, and company traditions that determine norms of behavior, accepted work practices, and styles of operating.

Which of the following statements about the evolution of company culture is true?

Diversification into new businesses can bring about change in company culture.

What is the most important factor in bringing about a change in company culture?

Effective leadership at the top of the organization

Managers seeking to develop high-performance cultures are likely to try to get the best out of employees by doing which of the following? (Choose every correct answer.)

Emphasizing the value of learning from mistakes and moving forward Attempting to match workers with the tasks they do best

What is a culture aligned with company strategy more likely to accomplish? (Choose every correct answer.)

Enhance productivity and increase the likelihood of hitting targets Guide the decision making of employees Energize employees and promote buy-in

True or False: In a weak-culture company, employees are likely to identify strongly with their company and be committed emotionally to their work.

F

Unhealthy Cultures That Impede Good Strategy Execution The distinctive characteristic of an unhealthy corporate culture is the presence of counterproductive cultural traits that adversely impact the work climate and company performance.

Five (5) particularly unhealthy cultural traits are 1. hostility to change, 2. heavily politicized decision making, 3. insular thinking, 4. unethical and greed-driven behaviors, and the 5. presence of incompatible, clashing subcultures.

The corporate culture at Walmart is centered on which of the following? (Choose every correct answer.)

Frugal operating practices A strong work ethic among employees

Which of the following techniques are generally agreed to be effective ways of embedding and perpetuating cultural norms in a company? (Choose every correct answer.)

Honoring employees who have a proven track record of demonstrating company values Having leaders in the organization stress the importance of adhering to company norms Evaluating personnel, in part, on how they display cultural norms in their approach to work

What is the first step in changing an unhealthy company culture?

Identifying the aspects of the unhealthy culture that impede strategy execution

2 of 5 : Unhealthy Cultures That Impede Good Strategy Execution : Heavily politicized decision making Politicized Cultures What makes a politicized internal environment so unhealthy is that political infighting consumes a great deal of organizational energy, often with the result that what's best for the company takes a backseat to political maneuvering. All this political maneuvering takes away from efforts to execute strategy with real proficiency and frustrates company personnel who are less political and more inclined to do what is in the company's best interests.

In companies where internal politics pervades the work climate, • empire-building managers pursue their own agendas and operate the work units under their supervision as autonomous "fiefdoms." • The positions they take on issues are usually aimed at protecting or expanding their own turf. • Collaboration with other organizational units is viewed with suspicion, and cross-unit cooperation occurs grudgingly. • The support or opposition of politically influential executives and/or coalitions among departments with vested interests in a particular outcome tends to shape what actions the company takes.

In the previous two chapters, we examined eight of the managerial tasks that drive good strategy execution: 1. staffing the organization, 2. acquiring the needed resources and capabilities, 3. designing the organizational structure, 4. allocating resources, 5. establishing policies and procedures, 6. employing process management tools, 7. installing operating systems, and 8. providing the right incentives.

In this chapter, we explore the two remaining managerial tasks that contribute to good strategy execution: 9. creating a supportive corporate culture and 10. leading the strategy execution process.

Effective culture change leaders tend to be good at which of the following?

Telling stories that connect new values to everyday practices

Which of the following strongly influence a company's culture? (Choose every correct answer.)

The company's traditions and the stories that get repeated The "personality" that permeates the work environment The core values and beliefs that executives espouse

Which of the following situations would be associated with a company that expects personnel to abide by company norms? (Choose every correct answer.)

There is steady peer pressure to follow norms. Company values are widely shared by nearly all employees.

What typically occurs in a company with a weak culture? (Choose every correct answer.)

There may be less emotional commitment to achieving company objectives. There is little compulsion to abide by company norms.

Managers in companies with change-resistant cultures ______.

are often motivated by a desire to avoid mistakes

The Role of Stories Frequently, a significant part of a company's culture is captured in the stories that get told over and over again to illustrate to newcomers the importance of certain values and the depth of commitment that various company personnel have displayed.

example Specialty food market Trader Joe's is similarly known for its culture of going beyond the call of duty for its customers. When a World War II veteran was snowed in without any food for meals, his daughter called several supermarkets to see if they offered grocery delivery Although Trader Joe's technically doesn't offer delivery, it graciously helped the veteran, even recommending items for his sodium diet When the store delivered the groceries, the wasn't charged for either the groceries or the delivery.

Many executives believe that abiding by core values and ethical standards creates a culture that ______.

improves strategy execution

In order for a company culture to assist with the strategy execution process, the culture should be ______.

in sync with the chosen strategy

Companies with a rich tradition ______.

may find that they can rely heavily on word of mouth to embed cultural norms in the workplace

4 of 5 : Unhealthy Cultures That Impede Good Strategy Execution : Unethical and greed-driven behaviors Companies that have little regard for ethical standards or are run by executives driven by greed and ego gratification are

scandals waiting to happen. • Executives exude the negatives of arrogance, ego, greed, and an "ends-justify-the-means" mentality in pursuing overambitious revenue and profitability targets. • Senior managers wink at unethical behavior and may cross over the line to unethical (and sometimes criminal) behavior themselves. • They are prone to adopt accounting principles that make financial performance look better than it really is.

Adaptive cultures work to the advantage of all companies, not just

those in rapid-change environments. Every company operates in a market and business climate that is changing to one degree or another and that, in turn, requires internal operating responses and new behaviors on the part of organization members.

After reading this chapter, you should be able to: • Understand the key features of a company's corporate culture and the role of a company's core values and ethical standards in building corporate culture. • Explain how and why a company's culture can aid the drive for proficient strategy execution.

• Identity the kinds of actions management can take to change a problem corporate culture • Recognize what constitutes effective managerial leadership in achieving superior strategy execution.

Which of the following statements about company culture in relation to support strategy execution is true?

A culture that is in sync with a company's strategy focuses employee attention in a way that improves strategy execution.

Which of the following are key features of a company's corporate culture? (Choose every correct answer.)

A generally understood idea of "how we do things are around here" The impact that peer pressure has on employee behavior The way that the company treats external stakeholders

Which of the following best describes corporate culture?

A set of attitudes, priorities, essential beliefs, and customs shared among those within a company that shape workplace behaviors

Which of the following is an example of a story that could potentially help foster a positive corporate culture?

A story about an employee who kept the store open after hours so a customer could find a birthday present for a chronically ill parent

Which of the following statements depict scenarios that are likely to occur in a company with a change-resistant culture? (Choose every correct answer.)

An employee worries that the internal changes required by a new strategy threaten her job security. An employee with an idea thinks better of sharing the concept because she feels it will be met with skepticism.

Forces That Cause a Company's Culture to Evolve New challenges in the marketplace, revolutionary technologies, and shifting internal conditions—especially an internal crisis, a change in company direction, or top-executive turnover—tend to breed new ways of doing things and, in turn, drive cultural evolution.

An incoming CEO who decides to shake up the existing business and take it in new directions often triggers a cultural shift, perhaps one of major proportions. Likewise, diversification into new businesses, expansion into foreign countries, rapid growth that brings an influx of new employees, and the merger with or acquisition of another company can all precipitate significant cultural change.

Strong versus Weak Cultures Strong Culture Company cultures vary widely in strength and influence. Some are strongly embedded and have a big influence on a company's operating practices and the behavior of company personnel. Others are weakly ingrained and have little effect on behaviors and how company activities are conducted. In a strong-culture company deeply rooted values and norms of behavior are widely shared and regulate the conduct of the company's business. • Senior managers make a point of explaining and reiterating why these values, principles, norms, and operating approaches need to govern how the company conducts its business and how they ultimately lead to better business performance • They make a conscious effort to display these values, principles, and behavioral norms in their own actions— they walk the talk. Continuity of leadership, low workforce turnover, geographic concentration, and considerable organizational success all contribute to the emergence and sustainability of a strong culture.

An unequivocal expectation that company personnel will act and behave in accordance with the adopted values and ways of doing business leads to two important outcomes: 1. Over time, the professed values come to be widely shared by rank-and-file employees—people who dislike the culture tend to leave—and 2. Individuals encounter strong peer pressure from co- workers to observe the culturally approved norms and behaviors. Strong cultures emerge only after a period of deliberate and rather intensive culture building that generally takes years (sometimes decades). Two factors contribute to the development of strong cultures: 1. A founder or strong leader who established core values, principles, and practices that are viewed 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.

How can management make a compelling case for culture change? (Choose every correct answer.)

By demonstrating why certain embedded practices impede strategy By convincing workers and managers that certain new behaviors will improve company performance

How should managers motivate employees to do their part in executing strategy in a weak-culture company? (Choose every correct answer.)

Strengthen systems of monitoring employee activity to ensure that their behavior is aligned with company strategy Offer financial incentives for reaching company goals

What commonly occurs when company culture is in conflict with company strategy?

Employees may resist performing the actions that will enhance strategy execution.

Which of the following statements about corporate subcultures are accurate? (Choose every correct answer.)

Subcultures are common in companies, especially in large organizations with numerous divisions and departments. Subcultures are likely to undermine company success when they promote different approaches to people management.

When discussing the need to change company culture with managers and frontline supervisors, top executives should be certain to point out which of the following and why?

The connection between adopting new behaviors and achieving future success in order to stress the benefits of the changes

Leading the Strategy Execution Process For an enterprise to execute its strategy in truly proficient fashion, top executives must take the lead in the strategy implementation process and personally drive the pace of progress. ○ They have to be out in the field, seeing for themselves how well operations are going, gathering information firsthand, and gauging the progress being made. ○ Proficient strategy execution requires company managers to be • diligent and adept in spotting problems, • learning what obstacles lay in the path of good execution, and then clearing the way for progress— • the goal must be to produce better results speedily and productively. The specifics of how to implement a strategy and deliver the intended results must start with • Understanding the requirements for good strategy execution. • Afterward comes a diagnosis of the organization's preparedness to execute the strategic initiatives and decisions on how to move forward and achieve the targeted results

In general, leading the drive for good strategy execution and operating excellence calls for three actions on the part of the managers in charge: • Staying on top of what is happening and closely monitoring progress • Putting constructive pressure on the organization to execute the strategy well and achieve operating excellence • Initiating corrective actions to improve strategy execution and achieve the targeted performance results There must be constructive, but unrelenting, pressure on organizational units to 1. demonstrate excellence in all dimensions of strategy execution and 2. do so on a consistent basis—ultimately, that's what will enable a well-crafted strategy to achieve the desired performance results.

Why Corporate Cultures Matter to the Strategy Execution Process When a company's present culture promotes attitudes, behaviors, and ways of doing things that are in sync with the chosen strategy and conducive to first rate strategy execution, the culture functions as a valuable ally in the strategy execution process. A culture that is grounded in actions, behaviors, and work practices that are conducive to good strategy implementation supports the strategy execution effort in three ways: 1. A culture that is well matched to the chosen strategy and the requirements of the strategy execution effort focuses the attention of employees on what is most important to this effort. ○ Moreover, it directs their behavior and serves as a guide to their decision making. In this manner, it can align the efforts and decisions of employees throughout the firm and minimize the need for direct supervision. 2. Culture-induced peer pressure further induces company personnel to do things in a manner that aids the cause of good strategy execution. ○ The stronger the culture (the more widely shared and deeply held the values), the more effective peer pressure is in shaping and supporting the strategy execution effort Research has shown that strong group norms can shape employee behavior even more powerfully than can financial incentives. 3. A company culture that is consistent with the requirements for good strategy execution can energize employees, deepen their commitment to execute the strategy flawlessly, and enhance worker productivity in the process. ○ When a company's culture is grounded in many of the needed strategy-executing behaviors, employees feel genuinely better about their jobs, the company they work for, and the merits of what the company is trying to accomplish.

In sharp contrast, when a culture is in conflict with the chosen strategy or what is required to execute the company's strategy well, the culture becomes a stumbling block. ○ Some of the very behaviors needed to execute the strategy successfully run contrary to the attitudes, behaviors, and operating practices embedded in the prevailing culture. ○ Culture-bred resistance to the actions and behaviors needed for good strategy execution, particularly if strong and widespread, poses a formidable hurdle that must be cleared for a strategy's execution to be successful. The consequences of having—or not having—an execution-supportive corporate culture says something important about the task page of managing the strategy execution process: Closely aligning corporate with the requirements for proficient strategy execution merits the full attention of senior executives ○ The culture-building objective is to create a work climate and style of operating that mobilize the energy of company personnel squarely behind efforts to execute strategy competently ○ management can rely on the culture to automatically steer company personnel toward behaviors and work practices that aid good strategy execution and veer from doing things that impede it ○ promotes strong employee identification with, and commitment to, the company's vision, performance targets, and strategy.

Which of the following is likely to send the clearest signal that management is serious about changing company culture?

Introducing a series of actions that are unmistakably intended to initiate culture change

Changing a Problem Culture When a culture is unhealthy or otherwise out of sync with the actions and behaviors needed to execute the strategy successfully, the culture must be changed as rapidly as can be managed This means eliminating any unhealthy or dysfunctional cultural traits as fast as possible and aggressively striving to ingrain new behaviors and work practices that will enable first-rate strategy execution. Changing a problem culture is among the toughest management tasks because of the heavy anchor of ingrained behaviors and attitudes. It is natural for company personnel to cling to familiar practices and to be wary of change, if not hostile to new approaches concerning how things are to be done. Consequently, it takes concerted management action over a period of time to root out unwanted behaviors and replace an unsupportive culture with more effective ways of doing things.

STEP 1: Identify facets of the present culture that are dysfunctional and impede good strategy execution STEP 2: Specify clearly what new actions, behaviors, and work practices should characterize the new culture STEP 3: Talk openly about problems with the current culture and make a persuasive case for cultural reform STEP 4: Follow with visible, forceful actions--both substantive and symbolic--to ingrain a new set of behaviors, practices, and norms ○ The single most visible factor that distinguishes successful culture change efforts from failed attempts is competent leadership at the top. While top management must lead the change effort, the tasks of marshaling support for a new culture and instilling the desired cultural behaviors must involve a company's whole management team. • Middle managers and frontline supervisors play a key role in implementing the new work practices and operating approaches, helping win rank-and-file acceptance of and support for changes, and instilling the desired behavioral norms.

Leading the Process of Making Corrective Adjustments Clearly, when a company's strategy execution effort is not delivering good results, it is the leader's responsibility to step forward and initiate corrective actions, although sometimes it must be recognized that unsatisfactory performance may be due as much or more to flawed strategy as to weak strategy execution. The process of making corrective adjustments in strategy execution varies according to the situation. In a crisis, taking remedial action quickly is of the essence. But it still takes time to review the situation, examine the available data, identify and evaluate options (crunching whatever numbers may be appropriate to determine which options are likely to generate the best outcomes), and decide what to do. When the situation allows managers to proceed more deliberately in deciding when to make changes and what changes to make, most managers seem to prefer • a process of incrementally solidifying commitment to a particular course of action The process that managers go through in deciding on corrective adjustments is essentially the same for both proactive and reactive changes: • They sense needs, • gather information, • broaden and deepen their understanding of the situation, • develop options and explore their pros and cons, • put forth action proposals, • strive for a consensus, and • finally formally adopt an agreed-on course of action. The time frame for deciding what corrective changes to initiate can be a few hours, a few days, a few weeks, or even a few months if the situation is particularly complicated.

Success in making corrective adjustments hinges on 1. a thorough analysis of the situation, 2. the exercise of good business judgment in deciding what actions to take, and 3. good implementation of the corrective actions that are initiated. Successful managers are skilled in getting an organization back on track rather quickly. They (and their staffs) are good at discerning what adjustments to make and in bringing them to a successful conclusion. Managers who struggle to show measurable progress in implementing corrective actions in a timely fashion are candidates for being replaced. There's no generic, by-the-books procedure to follow Because each instance of executing strategy occurs under different organizational circumstances, the managerial agenda for executing strategy always needs to be situation-specific.

Strong versus Weak Cultures Strong Culture (continued) In strong-culture companies, values and behavioral norms are so ingrained that they can endure leadership changes at the top—although their strength can erode over time if new CEOs cease to nurture them or move aggressively to institute cultural adjustments.

The cultural norms in a strong-culture company typically do not change much as strategy evolves, either because • the culture constrains the choice of new strategies or • because the dominant traits of the culture are somewhat strategy neutral and compatible with evolving versions of the company's strategy As a consequence, strongly implanted cultures provide a huge assist in executing strategy because company managers can use the traditions, beliefs, values, common bonds, or behavioral norms as levers to mobilize commitment to executing the chosen strategy

Role of Core Values and Ethics A company's value statement and code of ethics communicate expectations of how employees should conduct themselves in the workplace. ○ The culture-shaping significance of core values and ethical behaviors accounts for why so many companies have developed a formal value statement and a code of ethics. • adherence to such principles will promote better strategy execution, • make the company a better performer, and • positively impact its reputation • reduce the likelihood of lapses in ethical behavior that mar a company's public image and put its financial performance and market standing at risk.

The foundation of a company's corporate culture nearly always resides in its dedication to certain core values and the bar it sets for ethical behavior. As depicted in Figure 12.1, a company's stated core values and ethical principles two roles in the culture-building process. First, they can foster a work climate in which company personnel share strongly held convictions about how the company's business is to be conducted. Second, they provide company personnel with guidance about the manner in which they are to do their jobs—which behaviors and ways of doing things are approved (and expected) and which are out-of-bounds. ○ These value-based and ethics-based cultural norms serve as yardsticks for gauging the appropriateness of particular actions, decisions, and behaviors, thus helping steer company personnel toward both doing things right and doing the right thing.

A Final Word on Leading the Process of Crafting and Executing Strategy In practice, it is hard to separate leading the process of executing strategy from leading the other pieces of the strategy process. The process is continuous, and the conceptually separate acts of crafting and executing strategy blur together in real-world situations.

The job of crafting and executing strategy consists of five interrelated and linked stages, with much looping and recycling to fine-tune and adjust the • strategic vision, • objectives, • strategy, and • implementation approaches to fit one another and to fit changing circumstances The best tests of good strategic leadership are 1. whether the company has a good strategy (given its internal and external situation), 2. whether the strategy is being competently executed, 3. whether the enterprise is meeting or beating its performance targets

A company with a tradition of executing environmentally sustainable strategies decides to expand operations into a country with lenient emissions standards. Which of the following are likely outcomes? (Choose every correct answer.)

The management faces significant challenges in overcoming resistance to strategy execution. The company morale drops because employees may be reluctant to adopt behaviors that run counter to embedded company practices.

Which of the following statements about problem cultures are accurate? (Choose every correct answer.)

The more entrenched a problem culture is the more likely that culture is to disrupt strategy execution. The undesirable traits of a problem culture should be eliminated as quickly as possible.

Symbolic Culture-Changing Actions For instance, if the organization's strategy involves a drive to become the industry's low-cost producer, senior managers must display frugality in their own actions and decisions. Examples include inexpensive decorations in the executive suite, conservative expense accounts and entertainment allowances, a lean staff in the corporate office, scrutiny of budget requests, few executive perks, and so on.

The most important are those that top executives take to lead by example. Another category of symbolic actions includes holding ceremonial events to single out and honor people whose actions and performance exemplify what is called for in the new culture. Such events also provide an opportunity to celebrate each culture-change success. • make a habit of appearing at ceremonial functions to praise individuals and groups that exemplify the desired behaviors • show up at employee training programs to stress strategic priorities, values, ethical principles, and cultural norms • used to drive home the commitment to changing culture ○ The use of symbols in culture building is widespread. Numerous businesses have employee-of-the-month awards.

What are the effects of oft-repeated stories that develop company culture? (Choose every correct answer.)

They demonstrate to new employees the extent of the company's commitment to its core values. They encourage other employees to act in a way that continues company traditions.

Which of the following are true about companies that are afflicted by politicized cultures? (Choose every correct answer.)

They have managers who pursue goals that may run counter to company goals. They experience regular infighting.

What is typically true of companies with greed-driven cultures?

They may pursue overly ambitious financial targets.

In general, what is true concerning unhealthy cultural traits?

They negatively influence company performance.

Making a Compelling Case for Culture Change The way for management to begin a major remodeling of the corporate culture is by selling company personnel on the need for new-style behaviors and work practices. It is essential for the CEO and other top executives to talk personally to personnel all across the company about the reasons for modifying work practices and culture-related behaviors. For the culture-change effort to be successful, frontline supervisors and employee opinion leaders must be won over to the cause, which means convincing them of the merits of practicing and enforcing cultural norms at every level of the organization, from the highest to the lowest. ○ Arguments for new ways of doing things and new work practices tend to be embraced more readily if employees understand how they will benefit company stakeholders (particularly customers, employees, and shareholders). ○ Until a large majority of employees accept the need for a new culture and agree that different work practices and behaviors are called for, there's more work to be done in selling company personnel on the whys and wherefores of culture change. Building widespread organizational support requires taking every opportunity to repeat the message of why the new work practices, operating approaches, and behaviors are good for company stakeholders and essential for the company's future success.

This can be done by • Explaining why and how certain behaviors and work practices in the current culture pose obstacles to good strategy execution. • Explaining how new behaviors and work practices will be more advantageous and produce better results. Effective culture-change leaders are good at telling stories to describe the new values and desired behaviors and connect them to everyday practices. • Citing reasons why the current strategy has to be modified, if the need for cultural change is due to a change in strategy. This includes explaining why the new strategic initiatives will bolster the company's competitiveness and performance and how a change in culture can help in executing the new strategy.

The Presence of Company Subcultures Although it is common to speak about corporate culture in the singular, it is not unusual for companies to have multiple cultures (or subcultures). ○ The problem with subcultures is that they can clash, or at least not mesh well, particularly if they embrace conflicting business philosophies or operating approaches, if key executives employ different approaches to people management, or if important differences between a company's culture and those of recently acquired companies have not yet been ironed out

Values, beliefs, and practices within a company sometimes vary significantly by department, geographic location, division, or business unit. Subcultures can exist because a company has recently acquired other companies. Global and multinational companies tend to be at least partly multicultural because cross-country organization units have different operating histories and work climates, as well as members who speak different languages, have grown up under different social customs and traditions, and have different sets of values and beliefs. ○ Indeed, cultural due diligence is often as important as financial due diligence in deciding whether to go forward on an acquisition or merger ○ In today's globalizing world, multinational companies are learning how to make strategy-critical cultural traits travel across country boundaries and create a workable uniform culture worldwide.

2 of 2 : Healthy Cultures That Aid Good Strategy Execution : Adaptive Cultures The hallmark of adaptive corporate cultures is willingness on the part of organization members to ○ But why is change so willingly embraced in an adaptive culture? ○ Why does an adaptive culture not break down from the force of ongoing changes in strategy, operating practices, and behavioral norms? The answers lie in two distinctive and dominant traits of an adaptive culture: 1. Changes in operating practices and behaviors must not compromise core values and long-standing business principles (since they are at the root of the culture); and 2. Changes that are instituted must satisfy the legitimate interests of key constituencies—customers, employees, shareholders, suppliers, and the communities where the company operates. What sustains an adaptive culture is that • organization members perceive the changes that management is trying to institute as legitimate, in keeping with the core values, and • in the overall best interests of stakeholders. Not surprisingly, company personnel are usually more receptive to change when their employment security is not threatened and when they view new duties or job assignments as part of the process of adapting to new conditions. Should workforce downsizing be necessary, it is important that layoffs be handled humanely and employee departures be made as painless as possible

accept change and take on the challenge of introducing and executing new strategies. • Company personnel share a feeling of confidence that the organization can deal with whatever threats and opportunities arise; • they are receptive to risk taking, experimentation, innovation, and changing strategies and practices. • The work climate is supportive of managers and employees who propose or initiate useful change. Internal entrepreneurship (often called intrapreneurship) on the part of individuals and groups is encouraged and rewarded. • Senior executives seek out, support, and promote individuals who exercise initiative, spot opportunities for improvement, and display the skills to implement them. • Managers openly evaluate ideas and suggestions, fund initiatives to develop new or better products, and take prudent risks to pursue emerging market opportunities. As in high-performance cultures, the company exhibits a proactive approach to identifying issues, evaluating the implications and options, and moving ahead quickly with workable solutions. Strategies and traditional operating practices are modified as needed to adjust to, or take advantage of, changes in the business environment.

5 of 5 : Unhealthy Cultures That Impede Good Strategy Execution : Presence of incompatible, clashing subcultures. Company subcultures are unhealthy when they embrace

conflicting business philosophies, support inconsistent approaches to strategy execution, and encourage incompatible methods of people management • Clashing subcultures can prevent a company from coordinating its efforts to craft and execute strategy and can distract company personnel from the business of business. • Internal jockeying among the subcultures for cultural dominance impedes teamwork among the company's various organizational units and blocks the emergence of a collaborative approach to strategy execution. Such a lack of consensus about how to proceed is likely to result in fragmented or inconsistent approaches to implementing new strategic initiatives and in limited success in executing the company's overall strategy

Strong versus Weak Cultures Weak Culture Company cultures vary widely in strength and influence. Some are strongly embedded and have a big influence on a company's operating practices and the behavior of company personnel. Weak-culture companies lack widely shared and strongly held values, principles, and behavioral norms. As a result, they also lack As a consequence, weak cultures provide little or no assistance in executing strategy because there are no traditions, beliefs, values, common bonds, or behavioral norms that management can use as levers to mobilize commitment to executing the chosen strategy. Without a work climate that channels organizational energy in the direction of good strategy execution, managers are left with the options of • either using compensation incentives and other motivational devices to mobilize employee commitment, • supervising and monitoring employee actions more closely, or • trying to establish cultural roots that will in time start to nurture the strategy execution

cultural mechanisms for aligning, constraining, and regulating the actions, decisions, and behaviors of company personnel. In the absence of any lone-standing top management commitment to particular values, beliefs, operating practices, and behavioral norms, individuals encounter little pressure to do things in particular ways. ○ produces a climate where there is no strong employee allegiance to what the company stands for or to operating the business in well-defined ways ○ individual employees may well have some bonds of identification with and loyalty toward their department, their colleagues, their union, or their immediate boss, there's neither passion about the company nor emotional commitment to what it is trying to accomplish • a condition that often results in many employees' viewing their company as just a place to work and their job as just a way to make a living.

1 of 2 : Healthy Cultures That Aid Good Strategy Execution : High-Performance Cultures Some companies have so-called high-performance cultures where the standout traits are a "can-do" spirit, pride in doing things right, no excuses accountability, and a pervasive results-oriented work climate in which people go all out to meet or beat stretch objectives. In high-performance cultures, there's a strong sense of The challenge in creating a high-performance culture is to inspire high loyalty and dedication on the part of employees, such that they are energized to put forth their very best efforts. • Managers have to take pains to reinforce constructive behavior, reward top performers, and purge habits and behaviors that stand in the way of high productivity and good results. • They must work at knowing the strengths and weaknesses of their subordinates to better match talent with task and enable people to make meaningful contributions by doing what they do best. • They have to stress learning from mistakes and must put an unrelenting emphasis on moving forward and making good progress—in effect, there has to be a disciplined, performance- focused approach to managing the organization.

involvement on the part of company personnel and emphasis on individual initiative and effort. • Performance expectations are clearly delineated for the company as a whole, for each organizational unit, and for each individual. • Issues and problems are promptly addressed; there's a razor-sharp focus on what needs to be done. • The clear and unyielding expectation is that all company personnel, from senior executives to frontline employees, will display high-performance behaviors and a passion for making the company successful. Such a culture—permeated by a spirit of achievement and constructive pressure to achieve good results—is a valuable contributor to good strategy execution and operating excellence

1 of 5 : Unhealthy Cultures That Impede Good Strategy Execution : Hostility to change Change-resistant cultures—where fear of change and skepticism about the importance of new developments are the norm—place a premium on When such companies encounter business environments with accelerating change, going slow on altering traditional ways of doing things can be a serious liability In change-resistant cultures, proposals to do things differently face an uphill battle and people who champion them may be seen as something of a nuisance or a troublemaker. ○ Instead, a lot of energy goes into justifying what the company is presently doing, with little discussion of what it should consider doing differently—there is strong aversion to bold action.

on not making mistakes, prompting managers to lean toward safe, conservative options intended to maintain the status quo, protect their power base, and guard their immediate interests. Under these conditions, change-resistant cultures encourage a number of unhealthy behaviors— • avoiding risks, • not capitalizing on emerging opportunities, • taking a lax approach to both product innovation and continuous improvement in performing value chain activities, and • responding more than is warranted to market change. Hostility to change is most often found in companies with stodgy bureaucracies that have enjoyed considerable market success in years past and that are wedded to the "We have done it this way for years" syndrome.

Substantive Culture-Changing Actions No culture-change effort can get very far when leaders merely talk about the need for different actions, behaviors, and work practices. Company executives must give the culture change effort some teeth by initiating a series of actions that company personnel will see as unmistakably indicative of the seriousness of management's commitment to cultural change. The strongest signs that management is truly committed to instilling a new culture include • Replacing high-profile executives and managers who are allied with the old culture and either openly or covertly oppose needed organizational and cultural changes. • Promoting individuals who have stepped forward to spearhead the shift to a different culture and who can serve as role models for the desired cultural behavior. • Appointing outsiders with the desired cultural attributes to influential positions—bringing in new-breed managers sends an unambiguous message that a new era is dawning. • Screening all candidates for new positions carefully, hiring only those who appear to fit in with the new culture. For example, a company that stresses operating with integrity and fairness must hire people who themselves have integrity and place a high value on fair play. A company whose culture revolves around creativity, product innovation, and leading change must screen new hires for their ability to think outside the box, generate new ideas, and thrive in a climate of rapid change and ambiguity.

• Mandating that all company personnel attend culture- training programs to better understand the new culture-related actions and behaviors that are expected. • Designing compensation incentives that boost the pay of teams and individuals who display the desired cultural behaviors. Company personnel are much more inclined to exhibit the desired kinds of actions and behaviors when it is in their financial best interest to do • Letting word leak out that generous pay raises have been awarded to individuals who have stepped out front, led the adoption of the desired work practices, displayed the new-style behaviors, and achieved pace-setting results. • Revising policies and procedures in ways that will help drive cultural change. Executives must launch enough companywide culture-change actions at the outset to leave no room for doubt that management is dead serious about changing the present culture and that a cultural transformation is inevitable. The series of actions initiated by top management must command attention, get the change process off to a fast start, and be followed by unrelenting efforts to firmly establish the new work practices, desired behaviors, and style of operating as "standard."

Mobilizing the Effort for Excellence in Strategy Execution Part of the leadership task in mobilizing organizational energy behind the drive for good strategy execution entails nurturing a results oriented work climate, where performance standards are high and a spirit of achievement is pervasive. Successfully leading the effort is typically characterized by such leadership actions and managerial practices as • Treating employees as valued partners. Some companies symbolize the value of individual employees and the importance of their contributions by referring to them as cast members (Disney). ○ Very often, there is a strong company commitment to training each employee thoroughly, offering attractive compensation and benefits, emphasizing promotion from within and promising career opportunities, providing a high degree of job security, and otherwise making employees feel well treated and valued. • Fostering an esprit de corps that energizes organization members The task here is to skillfully use people-management practices calculated to • build morale, foster pride in working for the company, • promote teamwork and collaborative group effort, • win the emotional commitment of individuals and organizational units to what the company is trying to accomplish, and • inspire company personnel to do their best in achieving good results • Using empowerment to help create a fully energized workforce Top executives—and, to some degree, the enterprise's entire management team—must seek to engage the full organization in the strategy execution effort.

• Nurturing a results-oriented work climate and clearly communicating an expectation that company personnel are to give their best in achieving performance targets Managers must make it abundantly clear that they expect all company personnel to put forth every effort to meet performance targets. ○ foster a strong culture with high performance standards and where innovative ideas and experimentation with new ways of doing things can blossom and thrive. • Using the tools of benchmarking best practices, business process reengineering, TQM, and Six Sigma to focus attention on continuous improvement These are proven approaches to getting better operating results and facilitating better strategy execution. • Using the full range of motivational techniques and compensation incentives to inspire company personnel and reward high performance. ○ Individuals and groups should be strongly encouraged to brainstorm, let their imaginations fly in all directions, and come up with proposals for improving the way that things are done. ○ autonomy to stand out, excel, and contribute ○ the rewards for successful champions of new ideas and operating improvements should be large and visible It is particularly important that people who champion an unsuccessful idea are not punished or sidelined but, rather, encouraged to try again. Finding great ideas requires taking risks and recognizing that many ideas won't pan out • Celebrating individual, group, and company successes. Top management should miss no opportunity to express respect for individual employees and appreciation of extraordinary individual and group effort

Identifying the Key Features of a Company's Corporate Culture A company's corporate culture is mirrored in the character or "personality" of its work environment—the features that describe how the company goes about its business and the workplace behaviors that are held in high esteem. Some of these features are readily apparent, and others operate quite subtly. The chief things to look for include: • The values, business principles, and ethical standards that management preaches and practices—these are the key to a company's culture, but actions speak much louder than words here. • The company's approach to people management and the official policies, procedures, and operating practices that provide guidelines for the behavior of company personnel. • The atmosphere and spirit that pervades the work climate—whether the workplace is competitive or cooperative, innovative or resistant to change, collegial or politicized, all business or fun- loving, and the like. • How managers and employees interact and relate to one another —whether there is heavy or weak reliance on collaboration and teamwork, whether communications among employees are free- flowing or restrictive and infrequent, whether employees are empowered to exercise their initiative or whether actions are directed mostly by higher authority, whether co-workers spend little or lots of time together outside the workplace, and so on.

• The strength of peer pressure to do things in particular ways and conform to expected norms. • The actions and behaviors that management explicitly encourages and rewards and those that are frowned upon. • The company's revered traditions and oft-repeated stories about "heroic acts" and "how we do things around here." • The manner in which the company deals with external stakeholders—whether it treats suppliers as business partners or prefers hard-nosed, arm's-length business arrangements and whether its commitment to corporate citizenship and environmental sustainability is strong and genuine. The values, beliefs, and practices that undergird a company's culture can come from anywhere in the organizational hierarchy. Typically, key elements of the culture originate with a founder or certain strong leaders who articulated them as a set of business principles, company policies, operating approaches, and ways of dealing with employees, customers, vendors, shareholders, and local communities where the company has operations. A company's culture is grounded in and shaped by its core values and ethical standards.

Staying on Top of How Well Things Are Going To stay on top of well the strategy execution process is going, senior executives have to tap into information from a wide range of sources. Facilities tours and face-to-face contacts with operating-level employees give executives a good grasp of what progress is being made, what problems are being encountered, and whether additional resources or different approaches may be needed. Just as important, MBWA provides opportunities to give encouragement, lift spirits, focus attention on key priorities, and create some excitement—all of which generate positive energy and help boost strategy execution efforts.

• communicating regularly with key subordinates and • reviewing the latest operating results, • watching the competitive reactions of rival firms, and • visiting with key customers and suppliers to get their perspectives, • they usually visit various company facilities and talk with many different company personnel at many different organizational levels