7. Leading by Leveraging Culture (management series)

By Jennifer Chatman and Sandra Cha in California Review Management (2004)

1. Why do CEOs fail? A 1999 Fortune magazine article suggested it was because they were unable to fully implement their strategy. The focus shifts from strategy formation to strategy execution... "and culture is all about execution" (21).

"Culture is a system of shared values (defining what is important) and norms (defining appropriate attitudes and behaviors)." This shared culture energizes employees and shapes behavior. "A culture cannot be crafted until an organization has first developed its business strategy."

"The first criterion for using culture as a leadership tool is that it must be strategically relevant."

2. Norms are the psychological basis of culture. They are distinct from rules, which are formal. "The concept of norms implies social control" (22). "Relying on formal rules, policies, and procedures will not result in outstanding anything, be it customer service, innovation, or quality." Outstanding service is not determined by normal situations but by how you are treated in nearly impossible to anticipate, unique to a person situations that are difficult to solve.

"The less formal direction you give employees about how to execute strategy, the more ownership they take over their actions and the better they perform" (23).

"Violations are considered in terms of letting their colleagues down rather than breaking rules."

3. "The second criterion for using culture as a leadership tool is that it be strong."

Strong cultures have two characteristics: high levels of agreement among employees about what's valued and high levels of intensity about these values.

• Warring factions have the intensity but not the agreement.
• Vacuous cultures agree on what's important but don't much care about seeing it done.

"Firms that developed a strong, strategically appropriate culture performed effectively over the long run only if their culture also contained norms and values that promoted innovation and change."

"Expressing a creative idea is... risky—since a person suggesting one can end up being perceived as unintelligent." 

"Leaders also promote innovation by creating a shared belief that team members are safe to take interpersonal risks" (25).

4. The third criterion is that "leaders must move quickly to implement promising ideas."

"Developing a culture that encourages employees to express creative ideas may cause good ideas to crop up from unexpected places... More importantly, once managers spot a good idea, norms that emphasize urgency and speed will ensure its implementation."

5. Three key managerial tools for using culture as a leadership tool:

a. Recruit and select people for culture fit.

• "It makes sense to hire people who will fit the culture, possibly even trading off some immediate skills necessary for the specific entry job for better culture fit."
• Be mindful of recruiters hiring just people like them. similarity-attraction effect
• Shape the selection process accordingly.

b. Manage culture through socialization and training.

c. Manage culture through a reward system.

6. Actor-observer bias is the human tendency to interpret one's owns actions generously and to explain the actions of others unsympathetically.

"To succeed, leaders must instill their employees with confidence and clarity about key cultural values. If they do not, employees will provide their own explanations."

7. The three Cs of culture:

• clear, consistent, comprehensive