Eight weeks of learning, 30 minutes to tell all (part 1)

As the main focus of this course was organizational behavior, it is appropriate to begin this series of essays with the topic of Organizational Culture. On the first evening of class, we dove into this subject directly by answering the question, “What is organizational culture?” Essentially, organizational culture is comprised of the value system, interactions, and social structure of a given organization. More eloquently put, as outlined in the prologue of The Ropes to Skip and the Ropes to Know (“The Ropes”) organizational culture provides a framework that explains what is going on within the organization as standard operating procedure, and an “interpretive system” that is complete with myths, rituals and symbols that are implicitly or tacitly understood and followed by those who choose to remain a part of that organization. In its simplest terms, organizational culture creates the blueprint for individuals to succeed (or not) and to fit in (or not) within a defined organizational environment.

The acronym P.I.E. (short for performance, image and exposure) provides a useful lens to determine a person’s current stance within the organizational environment, and it can be instructive in helping that person find their way and improve their lot within the organization. For example, it is simply taken for granted that employees who seek to become something more must be strong performers. They need to burnish an image that is consistent with their organization’s culture and with their own aspirations. And they need to ensure that the work they are doing is getting the right level of visibility (or exposure) and that credit is given where it is due. Without a strong showing in each of these three areas, many people are simply lost in the shuffle and are never afforded the opportunity to really shine and excel within an organization. Impression management is so absolutely vital to a person’s success, and yet it is rarely taught, ineffectively modeled, and often times only learned when the damage has been done.

In an exercise we conducted in class from the Experiences in Management and Organizational Behavior (“EMOB”) textbook, entitled “People’s National Bank, University Branch,” we gained first-hand knowledge of the organizational cultures that exist within a broader organization, and the opportunity to role play how a newly appointed manager, Gary Herline, needed to quickly learn the existing culture of his new branch so that he could effectively manage the organization. This ties directly to the premise of this course, as stated in the syllabus: “the basic principles of human behavior that effective managers use when managing individuals and groups in organizations.”

Our team observed significant differences between the corporate environment of People’s National Bank where Herline was on a management fast track and the culture of the University Branch, where the previous manager simply resigned with very little notice, leaving in his wake an organization with high turnover, customer service and business growth challenges, and a general lack of cohesion among the staff. Herline had to get a plan together very quickly, and his blueprint for the plan was largely based on the culture he was inheriting and his ability to turn things around.

In The Ropes, organizational behavior, a key driver and resultant byproduct of culture, is split into two key viewpoints, one being the technical and rational approach, looking at what went wrong and deciding how to do it right via process; and the other, cultural and interpretive, acknowledging that an organization is comprised of people and cannot be treated or programmed like machines. As culture is further dissected, the example of IBM is brought up several times. As pointed out by Geert Hofstede when he studied IBM’s global organizational culture, it is absolutely essential, as an insider or an outsider, to understand the culture you are working with so that you can anticipate how interactions will be managed, how crises may be caused and resolved, and ultimately how to operate effectively within the surroundings, a la “When in Rome …”

Socialization is the critical element for individual adaptation to and navigation of any given organizational culture, in which newcomers learn “proper behavior as well as proper beliefs, attitudes and motives (The Ropes, 11).” It is for this reason that the initial orientation is so critical to the success of new hires, and why companies such as Disney have been able to create such a believable and immersive entertainment experience for their guests by inculcating within their cast members the sense that they are part of something important, and that they need to play their roles without fail, as they learn in Disney’s “Traditions.”

Ultimately, a company is nothing more than its people, and when an organizational culture is toxic or dysfunctional, such as Al Dunlap’s Sunbeam, the company cannot sustain success, financial or otherwise, over the long term. It is for this reason that instruments such as Kaplan and Norton’s Balanced Scorecard exist, to ensure that managers are thinking about the balanced equation of good fiscal decisions that place a high value on customers, employees and other stakeholders and are oriented to sustainability and long-term perspectives.

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Since we’re talking about “Good to Great” …

Good to Great: Why Some Companies Make the Leap… and Others Don’t
by Jim Collins

How did the selected good-to-great companies like Abbott, Circuit City, Fannie Mae, Gillette, Kimberly-Clark, Kroger, Nucor, Philip Morris, Pitney Bowes, Walgreens, and Wells Fargo produced sustained great results and achieved enduring greatness, evolving into companies that were indeed ‘Built to Last’.

Some key learnings:

  • Most good-to-great company leaders or CEOs came from the inside. They were not outsiders hired in to ‘save’ the company. They were either people who worked many years at the company or were members of the family that owned the company.
  • Strategy per se did not separate the good to great companies from the comparison groups.
  • Good-to-great companies focus on what NOT to do and what they should stop doing.
  • Technology has nothing to do with the transformation from good to great. It may help accelerate it but is not the cause of it.
  • Mergers and acquisitions do not cause a transformation from good to great.
  • Good-to-great companies paid little attention to managing change or motivating people. Under the right conditions, these problems naturally go away.
  • Good-to-great transformations did not need any new name, tagline, or launch program. The leap was in the performance results, not a revolutionary process.
  • Greatness is not a function of circumstance; it is clearly a matter of conscious choice.
  • Every good-to-great company had “Level 5” leadership during pivotal transition years, where Level 1 is a Highly Capable Individual, Level 2 is a Contributing Team Member, Level 3 is the Competent Manager, Level 4 is an Effective Leader, and Level 5 is the Executive who builds enduring greatness through a paradoxical blend of personal humility and professional will.
  • Level 5 leaders display a compelling modesty, are self-effacing and understated.
  • Level 5 leaders are fanatically driven, infected with an incurable need to produce sustained results. They are resolved to do whatever it takes to make the company great, no matter how big or hard the decisions.
  • One of the most damaging trends in recent history is the tendency (especially of boards of directors) to select dazzling, celebrity leaders and to de-select potential Level 5 leaders.
  • Potential Level 5 leaders exist all around us, we just have to know what to look for.
  • The research team was not looking for Level 5 leadership, but the data was overwhelming and convincing. The Level 5 discovery is an empirical, not ideological, finding.
  • Before answering the “what” questions of vision and strategy, ask first “who” are the right people for the team.
  • Comparison companies used layoffs much more than the good-to-great companies. Although rigorous, the good-to-great companies were never ruthless and did not rely on layoffs or restructuring to improve performance.
  • Good-to-great management teams consist of people who debate vigorously in search of the best answers, yet who unify behind decisions, regardless of parochial interests.
  • There is no link between executive compensation and the shift from good to great. The purpose of compensation is not to ‘motivate’ the right behaviors from the wrong people, but to get and keep the right people in the first place.
  • The old adage “People are your most important asset” is wrong. People are not your most important asset. The right people are.
  • Whether someone is the right person has more to do with character and innate capabilities than specific knowledge, skills or experience.

The Hedgehog Concept is a concept that flows from the deep understanding about the intersection of the following three circles:

  • What you can be best in the world at, realistically, and what you cannot be best in the world at
  • What drives your economic engine
  • What you are deeply passionate about

Discover your core values and purpose beyond simply making money and combine this
with the dynamic of preserve the core values – stimulate progress, as shown for
example by Disney. They have evolved from making short animated films, to feature
length films, to theme parks, to cruises, but their core values of providing
happiness to young and old, and not succumbing to cynicism remains strong.
w. Enduring great companies don’t exist merely to deliver returns to shareholders.
In a truly great company, profits and cash flow are absolutely essential for life,
but they are not the very point of life.

Running on luck … the Young Manufacturing exercise

Tonight’s role-playing exercise from the EMOB, page 235 entitled “Upward Communication: Young Manufacturing Company,” illustrated a case where the CEO of the company was absolutely clueless and his management team was running amok. Apparently, if you order 1 million gaskets and find out they are defective, this can be the ultimate test of a just-in-time inventory system. And when your CEO doesn’t know that you’ve switched to a just-in-time inventory system, and you commit all of the companies resources to trying to rework the product of a defective supply chain, you get the Young Manufacturing Company.

I had the great misfortune of playing Roy Conti, manager of quality control and a direct report to Bob Young, the president of the company. And apparently my character has still not gotten over the fact that his son was not hired by the company, and that instead they hired Fran Kurowski. Now, Roy has been with the company from the very beginning ( nine years ago) and from the looks of things he’ll be there till the bitter end. It turns out that the genius in charge of production, Donna Kelly, specializes in obfuscation but not so much in production.

Easy as P.I.E.

One of the very early points that was made is that the behavior you reinforce in an organization is the behavior you get, hence the premise for the entire class, organizational behavior, or in other words why do people do the things that they do in organizations.

The organizational culture addresses the value system of the organization, what gets rewarded, how people interact, and the diversity of the organization itself. It also points to the answers to the following questions: how do you succeed? And do you fit in?

We learned the PIE acronym for success in an organization:

P is for performance

I is for image (and is that image consistent with the culture)

E is for exposure and visibility