No shortcuts to corporate culture

By Rahayu Ratnaningsih

This is the second of two articles on corporate culture.

JAKARTA (JP): Corporate culture develops gradually. A committed leader can introduce and reinforce a new vision until it becomes intrinsic to an organization. There is no "quick fix". Over time, an interactive management team can allow a performance-driven culture to take shape for the benefit of the whole organization.

Fundamental shifts are required from the executive leadership. It is not enough to be well disciplined and capable managers: top executives must consistently prove their leadership abilities. Leaders stand out: they personify the organization's vision and instill confidence in workers, investors and customers.

The economic and monetary crisis in Indonesia has forced many companies to except corporate change as a survival measure. Downsizing within organizations is one form of these changes, mergers are another. A merger leads to the combination of two separate corporate cultures; it inevitably forces massive changes within an organization.

A workplace that is responsive to change is the ideal setting for organizational growth. Inability to anticipate economic crises often leads to drastic changes in the leadership, structure and systems of a company.

To stay on top, a corporate culture must not only embrace change, it must thrive on it. Many businesses collapse because change is not an integral part of their culture. When external forces compel changes, many organizations are inadequately prepared to modify existing structures.

The crux of corporate change involves nothing less than a radical deviation from established beliefs, values, commitments and behavior. The modifications required can be threatening to both employees and management. It is common knowledge that creating a performance-driven culture is the most challenging assignment for a senior manager.

Very few top executives acknowledge the critical link between corporate culture and the long-term success of a business. Overwhelmed by the day-to-day work load, a corporate vision is often low on their list of priorities.

Assessing an organization's corporate culture is an idea yet to be embraced by many in the business community. It certainly doesn't sound like an urgent task. Many managers undervalue the significance of its impact on an organization.

Rather than addressing the fundamental issue of developing a corporate culture, an easier option is to resort to downsizing, cost reductions, a more aggressive marketing strategy, business engineering or any one of the other "hip" management tools.

The International Business Machine (IBM) provides an interesting case study. Lawrence J. Bolick and Rouja Brzozowski's The Information - Technology Industry: A Revolution in Progress analyzed the "mystery" behind its decline.

For a long time IBM was the biggest and the best in the IT industry. Massive and financially successful, the organization was known for its arrogance and complacency. Certain critical qualities were closely associated with IBM's culture. Corporate characteristics that contributed to its demise were:

* Focus. For years, IBM was internally focused. The universe of computers was centered at Armonk, New York. IBM saw no need to develop an external focus because it then controlled the industry. When necessities dictated it look outside its own backyard, the organization found it couldn't. As it became nearsighted, IBM lost the ability to focus on changing business conditions.

* Decision making. Like many large, complex organizations, decision making was top-down and heavily influenced by internal politics. Dispersion of ideas, experimentation and feedback at the local site was not encouraged or rewarded by the organization.

Fact-based decision making was too often ignored, along with proactive thinking and assertive actions. "If it wasn't invented here, it doesn't exist" aptly applied to the IBM management style.

* Rigid structure. IBM's rigid organizational structure was legendary. Highly bureaucratic and centralized, it inhibited crossfunctional communication, collaboration and easy interaction. As a result, centralized governance prevailed. IBM's business perspective was defensive and reactionary.

Interestingly, IBM's PC business was originally created as a separate strategic business unit at Boca Raton, but as it gained market share and importance, it was placed under central IBM control. Innovation within the company structure to accommodate new ideas and market challenges was frowned upon: "We're the best. We have done this for twenty years. Why change?"

When we apply Jerry Want's hierarchy of corporate culture, IBM exhibits three of his seven major corporate categories: political (balkanized), chaotic (fragmented and unfocused) and frozen (grid-locked, engaged in denial). The frozen characteristic contributed significantly to IBM's decline.

It became apparent that the company needed a brand new direction. IBM's mission had failed -- or more accurately, had been lost along the way. IBM's management had neglected to maintain a vision, been unable to foresee changing forces in the industry and failed to reposition the organization to respond to changing forces. All these factors contributed to a culture of inertia, a factor worse than arrogance in an intensely competitive climate. A change of leadership was fundamental before it could establish a reinvigorated corporate culture.

The writer is a human resources and personal development consultant based in Jakarta.