Corporate culture: Component often overlooked

Bambang Witoyo, Consultant, Accenture

In March 2000, Nissan, the second-largest automotive manufacturer in Japan, recorded a loss of $5.7 billion, adding to its already huge debt of $5.3 billion. A year later, however, Nissan achieved one of the greatest turnarounds in Asia, raking in a profit of $2.9 billion that is still continuing.

Much of the credit was given to organizational culture-related improvements, e.g., building-in clearer profit-orientation, increasing focus on customers and less on chasing competitors, instilling a culture of working together across functions, borders, or hierarchical lines and nurturing a shared vision.

In another example, profit has been generated every year for 28 consecutive years by medium-sized Southwest Airlines. From the second year after its inception, the company never recorded a year of loss, for which Herb Kelleher, its cofounder and chairman, gives unquestionable credit to the company's unique corporate culture. Nissan and Southwest Airlines are just two examples of organizations that adopted strong, positive organizational culture, the essential ingredient to successful operations and for-the-long-term turnarounds in companies everywhere.

It is imperative that when an organization is at the low point of its life cycle, it needs to reconsider its foundations, corporate vision and culture. It is the solid ground, glue, and compass that more than ever supports, holds together and directs the modern organization. Nevertheless, these two basic elements tend to be overlooked, and instead, top management commonly focuses on the quality of management, organization restructuring, business process reengineering, the installation of new corporate systems, or the like.

Poorly performing organizations should look into realizing a change solution that is deeper and longer-lasting in its impact, a solution in which the organization sets itself up to prevent the possibility of "fire-fighting" in the future. As corporate vision has been much discussed, I would like to focus in this article on the solutions that derive from organizational culture change.

Organizational culture is the foundation of the organization on which it stands and from which it grows. Thus, the relevance of rethinking an organization's culture should not be overlooked.

Organizational culture and its process can be observed in real life cultural change just as the examples above have resulted in dramatic turnarounds in global business history.

So what is organizational culture? Culture is the powerful, invisible force that not only serves as "glue" for an "organic" organization, but also as the foundation or stimulant of the modern organization.

What should the appropriate culture be for your organization? Every organization of whatever type should have a culture. Culture is what allows the organization to function appropriately and according to certain rules or norms. The difference, however, is the degree of intensity of the culture; an organization's culture may be classified as either weak or strong. An organization's culture is weak when the values that it embodies are not clearly articulated.

Although a strong culture is important in driving the organization to success, it is, however, important to ensure that it is one that encourages healthy adaptation to its external environment. A strong culture that is unadaptable may be more damaging than a weak one.