Surprising roots of terrible organisational culture

by Miroslav Šebek

May 2013

Do you checkmate your own culture by mistake ?

(shortened version)

Organisational culture is equal superposion of two 'subcultures' described below:

First part - formed by general situation of an organization. Let's imagine – a company just won big tender, jobs are secured for years, wages are expected to rise, people are not overloaded. It's easy to expect that in such company this part of culture would be 'smiling' (=happy people, willing to collaborate, share information, help each other etc). On opposite, in a company which is overburdened with debt, loses customers and prepares layoffs, this part of culture would be 'gloomy' (=frustrated people, secretiveness, lack of mutual confidence, plots everywhere). You can’t change it by a teambuilding or 'Keep smiling!' posters everywhere. In fact, such attempts even worse further the gloomy situation, because they highlight top management’s loss of common-sense.

This first part is obviously direct result of strategy - either good or bad. And nothing else but strategy can alter it! Basically, you can't develop Sunday school atmosphere in a refugee camp, where is lack of everything...

1.

Second part - it's about individuals or departments or diverse ways how to achieve same goal. It’s just about habits and setting of rules of conduct in an organisation.

This second part of organisational culture is amenable to improvements by means of psychology, aesthetics, team building, dress code, approach to smoking, organization of work etc. It's also broadly open to imitation from one organization to another.

2.

The two parts of culture above are mutually independent, because change of one part doesn’t affect second part.

The rest of this presentation concerns the first (strategy related) part of organisational culture.

Table at the next slide shows fundamental differencies between Project and Strategy approaches to a problem and problem solving

The BIG Mistake : Many people (and especially organisational leaders) believe that process of building of an organisation is very similar to process of building of a complex piece of technology and can be made by similar tools, e.g. Budgeting, Planning, Change management, Problem analysis or Responsibility delegation...

In reality, building of an (even complex) piece of technology is always issue of Project Management, while building of an organisation is an issue of Strategy Development and Implementation.

Project Strategy

Clear and static goal (e.g. to build 500m skyscraper in HongKong till 2015)

Unclear and moving goal (to build succesful company, beat competion)

Sufficient resources for achievement of the goal (e.g. $5bn budget for the skyscraper)

Inherent scarcity of resources (you can’t invade all markets and defend against all your competitors at the same time)

Nobody tries to undermine your effort Active competion tries to overshadow you

Other projects (even of the same kind) are irrelevant for you (e.g. other skyscraper construction next block)

Nothing is more important for you than strategies of your competitors

Components of a project can be changed with zero or minimal effect on other components or on the whole

Every single change in a component of a strategy requires at least review of the strategy (usually its total reworking), because all is tightly interconnected.

Manageable complexity of the project Overwhelming complexity of environment

Repeatedly usable tools (e.g. planning) of project management are at hand

At best, some laundry lists of ‘Avoid xyz’ and ‘Don’t forget abc’ are available

Leader of a project has to be well organised BOSS of his/her subordinates

Strategic leader must be DECISION MAKER able to bear responsibility for his/her decisions

Now, what happens when ‘Project people’ face strategic challenges :

Strategic challenge ‘Strategic’ response ‘Project approach’ response

Overwhelming complexity

Simplification; finding of an outline of the situation

Analysis – paralysis or looking for a tool (or consultant), which should give the response

Uncertain future Building of base of broadly usable advantages, taking initiative

Incremental planning (based on previous experience, now-available data and crystal ball)

Inherent scarcity of resources

Strategic decision on focus (=decide what NOT to do)

Try best with available resources (=overstretch your resources and people too); improve (=made more complex) organisational sctructure; use a team-building mantra (like 1+1>2)

They (project people) are not stupid, they just do in strategic management what they had been doing successufully before they were promoted to strategic management.

Transforms Uncertainty, Complexity and Scarcity into

Role of strategic management in an organisation:

Strategic management

Uncertain future

Overwhelming complexity of environmnent

Inherent scarcity of resources

The rest of the organisation

Clear, Unambiguous, Attainable and Fully funded tasks for

By Strategic decision on Focus (=what NOT to do) By building base of

advantages, taking initiative

By Simplification and Outlining

If strategic management plays the role:

THEN

Strategic management can sometimes make a mistake, still enjoying support of the rest of the organisation. Very few mistakes are inevitably fatal...

BECAUSE Middle managers and rank and file realize that crafting strategy is hard work including many uncertainties. So they are happy it is not their job.

AND Even bad strategic decision gives them Clear, Unambiguous, Attainable and Fully funded instructions what to do. So people are normally carrying out feasible tasks, maybe giving feedback.

Isn’t the above essence of admired Japanese business culture ? ...

If strategic management doesn’t play the role: (& avoids Strategic decisions on Focus in particular)

THEN

Isn’t the above essence of business culture in typical western corporation ? ...

1. Strategic management is indistinguishable from the rest of the organisation in the sense of its mission.

2. Complexity, Uncertainty and Scarcity are invited into the organisation and everybody must face the demons. It creates the typical atmosphere of nonsensicality, hopelessness, futility and hostility. Battle for scarce resources is pernamently under way. Homo homini lupus est – called it in ancient Rome.

3. Everybody in such organisation can be strategic manager making strategic decisions – in fact the responsibility is pressed down to rank and file (nobody in hierarchy wants to decide anything). Such strategic decisions made at the bottom of hierarchy are usually nicknamed as ‘analysis’ or ‘decision basis’, suplied with initials and sent to responsibility avoiders in top management.

„Things are never so bad they can't be made worse“ Humphrey Bogart

Top managent avoiding responsibility for strategic decisions rarely does NOTHING. It usually tries to substitute missing decisions for: 1. Organisational measures (= making organisation more complex, introducing new

artificial borders into organisational structure etc.) 2. Improved communication (= more reports, memos, guidelines etc.) 3. Teambuilding & motivational magic (like 1+1>2; I wonder what equals 0+0 in this algebra...)

Scarcity of resources + Artificial borders,

doesn’t it sound familiar to you? See next slide for the answer

By the way : Do you think that word ‘compromise’ has positive meaning ?

Yes, that’s it ! Middle East and North Africa

Region famous for its prosperity, tolerance and peaceful growth

No wonder that so many business owners want to imitate it in their businesses !

Underline notes

1) Even ordinary (e.g. building) project becomes strategic game if active opposition has risen against it.

2) High tech projects of large scale (far space missions, advanced nuclear power plants etc.) are always strategic because all resources for them are not clear or at hand when the ‘projects’ are kicked off.

3) Project Manhattan and Project Apollo were (contrary to their names) well conducted pieces of strategy

4) Sun Tzu’s famous The art of war says to the topic: VI.17 For should the enemy strengthen his van, he will weaken his rear; should he strengthen his rear, he will weaken his van; should he strengthen his left, he will weaken his right; should he strengthen his right, he will weaken his left. If he sends reinforcements everywhere, he will everywhere be weak. X.18 When the general is weak and without authority; when his orders are not clear and distinct; when there are no fixed duties assigned to officers and men, and the ranks are formed in a slovenly haphazard manner, the result is utter disorganization.

All my presentations on strategy and corporate culture

Personal planning of strategist http://www.slideshare.net/kerimek/personnal-planning-of-strategist

My glosses to famous Sun Tzu’s The Art of War http://www.slideshare.net/kerimek/the-art-of-war-glosses

Surprising roots of bad organizational culture http://www.slideshare.net/kerimek/roots-of-badculture

Surprising roots of bad organizational culture – shortened version

http://www.slideshare.net/kerimek/roots-of-bad-culture-shortened-version

Strategic management as group of human beings http://www.slideshare.net/kerimek/strategic-management-as-group-of-human-beings

Enlargement of a small power plant http://www.slideshare.net/kerimek/enlargement-of-a-small-power-plant-project-and-strategy

Thank you for your attention!

Looking forward to your feedback, you can use my e-mail

miroslav.sebek@seznam.cz

or send me message at LinkedIn