Culture and Organization Design

Four Types of Organizational Culture

Managers want a corporate culture that reinforces the strategy and structural design that the organization needs to be effective within its environment.

For example, if the external environmental requires flexibility and responsiveness, such as the environment for Internet-based companies like TwitterOpens in new window, FacebookOpens in new window, PinterestOpens in new window, or NetflixOpens in new window, the culture should encourage adaptabilityOpens in new window.

The correct relationship among cultural values, organizational strategy and structure, and the environment can enhance organizational performance.

Cultures can be assessed along many dimensions, such as the extent of collaboration versus isolation among people and departments, the importance of control and where control is concentrated, or whether the organization’s time orientation is short range or long range. For our purpose, we focus on two specific dimensions:

1. the extent to which the competitive environment requires flexibility or stability and
2. the extent to which the organization’s strategic focus and strength are internal or external.

Four categories of culture associated with these differences as illustrated in Figure X4, are adaptabilityOpens in new window, achievementOpens in new window, clanOpens in new window, and bureaucraticOpens in new window.

Figure X4 Four Types of Organizational Culture

These four categories relate to the fit among cultural values, strategy, structure, and the environment. Each can be successful, depend on the needs of the external environment and the organization’s strategic focus.

The Adaptability Culture

The adaptability culture encourages entrepreneurial values, norms, and beliefs that support the capacity of the organization to detect, interpret, and translate signals from the environment into new behavior responses.

This type of company, however, doesn’t just react quickly to environmental changes — it actively creates change. Innovation, creativity, and risk-taking are valued and rewarded.

Most Internet-based companies use the adaptability type of culture, as do many companies in the marketing, electronics, and cosmetics industries, because they must move quickly to satisfy customers. Zappos.comOpens in new window became a hugely successful Internal retailer with an adaptability culture that encourages open-mindedness, teamwork, and a little weirdness.

The Mission Culture

An organization concerned with serving specific customers in the external environment, but without the need for rapid change, is suited to the mission culture.

Individual employees may be responsible for a specified level of performance, and the organization promises specified rewards in return. Managers shape behavior by envisioning and communicating a desired future state for the organization.

Because the environment is stable, managers can translate the vision into measurable goals and evaluate employee performance for meeting them. In some cases, mission cultures reflect a high level of competitiveness and a profit-making orientation.

Anheuser-Busch InBevOpens in new window, reflects a mission culture. Professionalism, ambition, and aggressiveness are key values. Managers keep employees focused on achieving high sales and profit levels, and those who meet the demanding goals are handsomely rewarded. Bonuses and promotions are based on performance, not seniority, and top executives are unapologetic about giving special treatment to high achievers.

The Clan Culture

More than any other, this culture focuses on meeting the needs of employees as the route to high performance. Involvement and participation create a sense of responsibility and ownership and, hence, greater commitment to the organization.

In a clan culture, an important value is taking care of employees and making sure they have whatever they need to help them be satisfied as well as productive.

The Bureaucratic Culture

This type of culture supports a methodical approach to doing business. Symbols, heroes, and ceremonies reinforce the value of cooperation, tradition, and following established policies and practices as ways to achieve goals.

Personal involvement is somewhat lower here, but that is outweighed by a high level of consistency, conformity, and collaboration among members. This organization succeeds by being highly integrated and efficient.

Today, most managers are shifting away from bureaucratic cultures because of a need for greater flexibility. However, Pacific Edge Software (now part of Serena Software) successfully implemented elements of a bureaucratic culture to ensure that all its projects stayed on time and on budget.

The husband-and-wife co-founders, Lisa Hjorten and Scott Fuller, intentionally established a culture of order, discipline, and control. This emphasis on order and focus meant employees generally went home by 6:00 P.M. rather than working all night to finish an important project. Although sometimes being careful means being slow, Pacific Edge managed to keep pace with the demands of the external environment.

Some people like the order and predictability of a bureaucratic culture, whereas other people would feel stifled and constrained by too much discipline and would be happier working in some other type of culture.