"Leaders who believe that the structural rearrangement of an organization-horizontal or vertical, merged or virtual - is the key to performance miss the obvious. It is the culture, not only the arrangement of boxes on the organization chart, that counts."

- Regina E. Herzlinger

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Culture is a nebulous concept. It is a word used quite often to describe the "feel" of an organization. But what exactly is it?

In "The Corporate Culture Survival Guide" (1999), Edgar Schein defines culture as three independent levels:

1. Artifacts - visible organizational structures and processes.
2. Espoused values - strategies, goals, philosophies.
3. Basic underlying assumptions - unconscious, taken-for-granted beliefs, perceptions, thoughts and feelings.

Culture IS important, particularly in organizational change. It can influence the success or failure of change initiatives in powerful ways. Ignore it, and any attempt for even small change within the organization risks failure. Pay attention to it, leverage it, and the chances for significant organizational change are greatly increased.

Only by thoroughly examining culture can we understand its impact. We have to look at what an organization wants to achieve, then identify any cultural issues that are in the way of getting there.

We believe organizations that truly wish to become exceptional must understand the role that culture plays in an organization. How it influences behaviour. How it governs the "norms" of the organization. How it facilitates or impedes "exceptionalness." For instance, in many organizations, culture has often been established by the founding member or members. As the organization grows and develops, this culture can have significant impact on the adaptation to strategy, the marketplace and organizational learning.

An eleven-year study†, found that firms with a strong corporate culture based on a foundation of shared values outperformed the other firms by a large margin:

• Their revenue grew more than four times faster.
• Their rate of job creation was seven times higher.
• Their stock price grew 12 times faster.
• Their profit performance was 750 percent higher.

Another study†† found that companies with strong but adaptable cultures out-performed weaker companies by a factor of 6 in terms of stock returns (and the stock market by a factor of 15) over a 50 year period.

At The Centre for Exceptional Leadership, we are in the business of creating exceptional organizations. Consequently, we understand and pay attention to cultural analysis.

This analysis often begins in the Getting Started Phase.

†"Corporate Culture and Performance” (Free Press, 1992)
††Collins and Porras reported in their book "Built to Last" (Harper-Collins 1997)