Chapter 15 Organizational Culture and Innovation Living and working together

Chapter 15 Study Questions What is organizational culture? How do you understand an organizational culture? What is innovation and why is it so important? How to manage organizational culture and innovation? Copyright © 2010 John Wiley & Sons, Inc.

What is organizational culture? The system of shared actions, values, and beliefs that develops within an organization and guides the behavior of its members. Copyright © 2010 John Wiley & Sons, Inc.

What is organizational culture? Observed Shared Values Common Assumptions Copyright © 2010 John Wiley & Sons, Inc.

What is organizational culture? External adaptation Knowing the mission and goals. Knowing the tasks and methods to achieve them. Methods of coping with success and failure. Copyright © 2010 John Wiley & Sons, Inc.

What is organizational culture? Important aspects of external adaptation Separating, or prioritizing, eternal forces based on their importance. Developing ways to measure accomplishments. Creating explanations for not meeting goals. Copyright © 2010 John Wiley & Sons, Inc.

What is organizational culture? External adaptation questions: What is the real mission and what are our goals? How can we contribute to reaching those goals? What external forces are important? How do we measure results? What do we do if specific targets are not met? How do we tell others how good we are? How will we know when to quit? Copyright © 2010 John Wiley & Sons, Inc.

What is organizational culture? Internal integration The creation of a collective identity. Finding ways of matching methods of working and living together. Copyright © 2010 John Wiley & Sons, Inc.

In your experience… Recall the orientation you received during your first day or week with a new organization Was it formal or informal? Were the rules described or written in a manual? What were you told about your department? How did you meet your team mates? (individually, collectively, during lunch) Copyright © 2010 John Wiley & Sons, Inc.

What is organizational culture? Important aspects of working together: Deciding who is a member and who is not. Developing an informal, common understanding of what is acceptable or unacceptable behavior. Separating friends from enemies. Copyright © 2010 John Wiley & Sons, Inc.

What is organizational culture? Internal integration questions: What is our unique identity? How do we view the world? Who is a member? How do we allocate power, status, and authority? How do we communicate? What is the basis for friendship? Copyright © 2010 John Wiley & Sons, Inc.

What is organizational culture? Subculture A group of individuals with a unique pattern of values and philosophy that are not inconsistent with the organization’s dominant values and philosophy . Copyright © 2010 John Wiley & Sons, Inc.

What is organizational culture? Counterculture Groups where the pattern of values and philosophies outwardly reject those of the larger organization or social system. Copyright © 2010 John Wiley & Sons, Inc.

What is organizational culture? Problems associated with importing societal subgroups from the larger society Subgroups may naturally form into a counterculture. The firm may encounter extreme difficulty in coping with broader cultural changes. Embracing natural divisions from the larger culture may lead to difficulty in international operations. Copyright © 2010 John Wiley & Sons, Inc.

How do you understand an organizational culture? Layers of cultural analysis Observable culture. Shared values. Common cultural assumptions. Copyright © 2010 John Wiley & Sons, Inc.

How do you understand an organizational culture? Sagas Heroic accounts of organizational accomplishments. Rites Standardized and recurring activities that are used at special times to influence organizational members . Copyright © 2010 John Wiley & Sons, Inc.

How do you understand an organizational culture? Cultural symbols Any object, act, or event that serves to transmit cultural meaning (i.e. the color brown and the nickname “Big Brown” is associated with UPS). Copyright © 2010 John Wiley & Sons, Inc.

How do you understand an organizational culture? Shared values Help turn routine activities into valuable and important actions. Tie the organization to the important values of society. May provide a very distinctive source of competitive advantage. Copyright © 2010 John Wiley & Sons, Inc.

How do you understand an organizational culture? Shared Values Reinforce Corporate Identity Enhance Collective Commitment Provide a Stable Social System Reduce Bureaucratic Control Copyright © 2010 John Wiley & Sons, Inc.

How do you understand an organizational culture? Organizational myths Unproven and often unstated beliefs that are accepted uncritically. Enable managers to redefine impossible problems. Facilitate creativity. Allow managers to govern. Copyright © 2010 John Wiley & Sons, Inc.

How do you understand an organizational culture? Characteristics of strong cultures A belief that ritual and ceremony are important to members and to building a common identity. A well-understood sense of the informal rules and expectations so that employees and managers know what is expected of them. A belief that what employees and managers do is important and that it is essential to share information and ideas. Copyright © 2010 John Wiley & Sons, Inc.

What is innovation and why is it so important? The process of creating new ideas and putting them into practice. Copyright © 2010 John Wiley & Sons, Inc.

The Innovation Process Requires Organizational Support Discovery Phase Idea Creation Share ideas Implement Experiment Workable? Testing Produce and market Final application Copyright © 2010 John Wiley & Sons, Inc.

What is innovation and why is it so important? Product innovations Introduce new goods or services to better meet customer needs. Process innovations Introduce of new and better methods and operations. Copyright © 2010 John Wiley & Sons, Inc.

What is innovation and why is it so important? Innovation is a continual process of: Exploration An emphasis on freedom and radical thinking provides an opening for big changes. Exploitation A focus on refinement and reuse of existing products and processes. Copyright © 2010 John Wiley & Sons, Inc.

How to manage organizational culture and innovation Management philosophy Links key goal-related strategic issues with key collaboration issues to determine a series of general ways by which the firm will manage its affairs. Copyright © 2010 John Wiley & Sons, Inc.

How to manage organizational culture and innovation A well-developed management philosophy : Establishes generally understood boundaries for all members of the firm. Provides a consistent way for approaching new and novel situations. Helps hold individuals together by assuring them a known path to success. Copyright © 2010 John Wiley & Sons, Inc.

How to manage organizational culture and innovation Strategies for managing organizational culture Managers help modify observable culture, shared values, and common assumptions directly. Through reward systems Steady state (hierarchical, ‘clan’ cultures) Evolution and change (growth, market culture) By setting the tone of the organization. Copyright © 2010 John Wiley & Sons, Inc.

How to manage organizational culture and innovation Common mistakes in changing culture Trying to change people’s values from the top down without also changing how the organization operates. Attempting to revitalize an organization by dictating major changes and ignoring shared values. Copyright © 2010 John Wiley & Sons, Inc.

How to manage organizational culture and innovation Organizational lag The dominant cultural patterns are inconsistent with emerging innovations. Cultural change is hampered by a legacy of established behaviors, with an over-reliance on rule-following and reinforcement of old patterns of behavior. Copyright © 2010 John Wiley & Sons, Inc.

How to manage organizational culture and innovation Techniques for overcoming ‘cultural lag’ and promoting innovation: Demonstrate how current behaviors can be applied to new innovations. Balance rule changing with rule following. Copyright © 2010 John Wiley & Sons, Inc.