1. The articles describes four cultures defined by two continuums in a 2 x 2 matrix. Would a complex project be able to be accomplished in a fragmented Project Management team culture?
2. If not, what culture do you think would be best if the team was under severe budget and time constraints? Why?

Whot Holds the Modern Compo ny Together? The short answer is culture But which type is right for your organization? by Rob Gofiee and Gareth Jones 1111: organizational world is awash with talk of corporate cultureand for good reason. Culture has become a powerful way to hold a company together against a tidal wave of pressures for disintegration, such as decentralization, tie-layering, and downsiz- ing. At the same time, traditional mechanisms for integrationhierar- chies and control systems, among other devicesare proving costly - and ineffective. 1' Culture, then, is what remains to bolster a company's identity as one ' ' _. . .. .- " organization. Without culture, a company lacks values, direction, and ' .. purpose, Does that matter? For the answer, just observe any company with a strong cultureand then compare it to one without. But what is corporate culture? Perhaps more important is there one : ,- right culture for every organization? And if the answer is no- which we MM Rob Gaffer: is a professor of organizational behavior at London Business School. Gareth tones. formerly senior vice presrdent for human resources at Polygrarn international in London. is a professor of organizational development at Henley Management College in Oxfordshire, England. Coffee and tones are g ' the founding partners of Creative Management Associates. an organizational gt . . _. consulting firm in london. 33 .I' - l'dfr'l'a'J earl-.1 L'Cl Communal Fragmented Mr-r L'i'llljl ry- firmly believe how can a manager change an orga- nization's culture? Those three questions are the subiect of this article. Culture, in a word, is community. It is an out- come of how people relate to one another. Commu- nities exist at work iust as they do outside the com- mercial arena. Like families, villages, schools, and clubs, businesses rest on patterns of social interac- tion that sustain them over time or are their undo- ing. They are built on shared interests and mutual obligations and thrive on cooperation and friend- ships. It is because of the commonality of all com- munities that we believe a business's culture can be better understood when viewed through the same lens that has illuminated the study of human orga- nizations for nearly 150 years. ' That is the lens of sociology, which divides com- munity into two types of distinct human relations: sociability and solidarity. Briefly, sociability is a measure of sincere friendliness among members of a community. Solidarity is a measure of a commu- nity's ability to pursue shared objectives quickly and effectively, regardless of personal ties. These two categories may at first seem not to capture the whole range of human behaviors, but they have stood the test of close scrutiny, in both academia and the field. What do sociability and solidarity have to do ; with culture? The answer comes when you plot the dimensions against each other. The result is four types of community: networked, mercenary, frag- mented, and communal. {See the matrix "Two Di- mensions, Four Cultures\"! None of these cultures is \"the best." In fact, each is appropriate for differ. our business environments. In other words, man- I34 CORPORATE CULTURE agers need not begin the hue and cry for one cul- tural type over another. Instead, they must know how to assess their own culture and whether it fits the competitive situation. Only then can they con- sider the delicate techniques for transforming it. Sociobilify and Solidarity in Close Focus Sociability, like the laughter that is its hallmark, often comes naturally. It is the measure of emotion- al, noninstrurnental relations [those in which peo- ple do not see others as a means of satisfying their own ends} among individuals who regard one an- other as friends. Friends tend to share certain ideas, attitudes, interests, and values and usually associ- ate on equal terms. In its pure form, sociability rep- resents a type of social interaction that is valued for . its own sake. It is frequently sustained through con- tinuing face-to-face relations characterized by high levels of unarticulated reciprocity. Under these cir curnstances, there are no prearranged "deals." We help one another, we talk, we share, we laugh and cry together with no strings attached. In business communities, the benefits of high so- ciability are clear and numerous. First, most em- ployees agree that working in such an environment is enjoyable, which helps morale and esprit de corps. Sociability also is often a boon to creativity because it fosters teamwork, sharing of informa- tion, and a spirit of openness to new ideas, and allows the freedom to express and accept out-of- the-box thinking. Sociahility also creates an envi ronment in which individuals are more likely to go beyond the formal requirements of their iobs. They work harder than is technically necessary to help their colleaguesthat is, their communitylook good and succeed. But there also are drawbacks to high levels of so- ciability. The prevalence of friendships may allow ; poor performance to be tolerated. No one wants to rebuke or fire a friend. It's more comfortable to ac' ceptand excusesubpar performance in light of an employee's personal problems. In addition, high- sociability environments are often characterized by an exaggerated concern for consensus. That is to say, friends are often reluctant to disagree with or criticize one another. In business settings, such a tendency can easily lead to diminished debate over goals, strategies, or simply how work gets done. The result: the best compromise gets applied to problems, not the best solution. In addition, high-sociability communities often develop cliques and informal, behind-the-scenes networks that can circumvent or, worse, under- PHOTO: JOANNE DUGAN/GIAPHISTOCK What Is Your Organization's Culture? To assess your organization's level of sociability, low medium high answer the following questions: 1. People here try to make friends and to keep their relationships strong 2. People here get along very well 3. People in our group often socialize outside the office 4. People here really like one another 5. When people leave our group, we stay in touch 6. People here do favors for others because they like one another 7. People here often confide in one another about II personal matters To assess your organization's level of solidarity, answer the following questions: IIIII III 1. Our group (organization, division, unit, team) understands and shares the same business objectives 2. Work gets done effectively and productively I 3. Our group takes strong action to address poor performance 4. Our collective will to win is high 5. When opportunities for competitive advantage arise, we move quickly to capitalize on them 6. We share the same strategic goals 7. We know who the competition is mine due process in an organization. This is not to routes might have taken months. But in the worst say that high-sociability companies lack formal or- case, it can be destructive to loyalty, commitment, ganizational structures. Many of them are very hi- and morale. In other words, networks can function erarchical. But friendships and unofficial networks well if you are an insider-you know the right peo- of friendships allow people to pull an end run ple, hear the right gossip. Those on the outside of- around the hierarchy. For example, if a manager in ten feel lost in the organization, mistreated by it, or sales hates the marketing department's new strate- simply unable to affect processes or products in any gic plan, instead of explaining his or her opposition real way. at a staff meeting, the manager might talk it over Solidarity, by contrast, is based not so much in directly (over drinks, after work) to an old friend, the heart as in the mind, although it, too, can come the company's senior vice president. Suddenly the naturally to groups in business settings. Its rela- plan might be canceled without the marketing de- tionships are based on common tasks, mutual in- partment's ever knowing why. In a best-case sce- terests, or shared goals that will benefit all involved nario, this kind of circumvention of systems lends a parties. Labor unions are a classic example of high- company a certain flexibility: maybe the marketing solidarity communities. Likewise, the solidarity of plan was lousy, and canceling it through official professionals -doctors and lawyers, for example- HARVARD BUSINESS REVIEW November-December 1996 135may be swiftly and ruthlessly mobilized if there is ' an outside competitive threat, such as proposed . government regulations that could limit profitabil- ity. But, inst as often, solidarity occurs between un- like individuals and groups and is not sustained by continuous social relations. Consider the case of a Canadian clothing maker that wanted to identify strategies to expand inter- nationally. Although its leaders were aware that the company's design, manufacturing, and market- ing divisions had a long history of strained rela- One of the great errors of the recent literature on corporate culture has been to assume that organizations are homogeneous. tions, they assigned two managers from each to a strategy SWAT team. Despite very little socializ- ing and virtually no extraneous banter, the team worked fast and well together and for good reason: each manager's bonus was based on the team's per- formance. After the group's report was doneits analysis and recommendations were top-notch the managers returned to their iobs, never to associ- ate again. In other words, solidarity can be demon- strated discontinuously, as the need arises. In con- trast to sociability, then, it can be expressed both intermittently and contingently. It does not require daily display, nor does it necessarily rest upon a net- work of close friendships. The organizational benefits of solidarity in a business community are many. Solidarity gener- ates a high degree of strategic focus, swift response to competitive threats, and intolerance of poor per- formance. It also can result in a degree of ruthless ness. If the organization's strategy is correct, this kind of focused intent and action can be devastat- ingly effective. The ruthlessness, by the way, can it- self reiniorce solidarity: if everyone has to perform to strict standards, an equality-ofsuffering effect may occur, building a sense of community in shared experience. Finally, when all employees are held to the same high standards, they often develop a strong sense of trust in the organization. This company treats everyone fairly and equally, the thinking goes; it is a meritocraey that cuts no spe- cial deals for favored or connected employees. In time, this trust can translate into commitment and loyalty to the organization's goals and purpose. 136 i | i CORPORATE CULTURE But, like sociability, solidarity has its costs as well. As we said above, strategic focus is good as long as it zeroes in on the right strategy. But if the Strategy is not the right one, it is the equivalent of corporate suicide. Organizations can charge right over the cliff with great efficiency if they do the wrong things well. In addition, cooperation occurs in high-solidarity organizations only when the ad- vantage to the individual is clear. Before taking on assignments or deciding how hard to work on projects, people ask, \"What's in it for me?" If the answer is not obvious or immediate, neither is the response. Finally, in high-solidarity organi- zations, roles [that is, iob definitions] tend to be extremely clear. By con- trast, in cultures where people are very friendly, roles and responsibili- ties tend to blur a bit. Someone in sales might become deeply involved in a new REID projecta collabora- tion made possible by social ties. This kind of overlap usually doesn't happen in high- solidarity environments. Indeed, such environ- ments are often characterized by turf battles, as in- dividuals police and protect the boundaries of their roles. Someone in sales who tried to become in- volved in an R&D effort would be sent packing and quickly. Although our discussion separates sociability and solidarity, many observers of organizational life confuse the two, and it is easy to see why. The con- cepts can, and often do, overlap. Social interaction at work may reect the sociability of friends, the solidarity of colleagues, both, or sometimesnei- ther. Equally, when colleagues socialize outside work, their interaction may represent an extension of workplace solidarity or an expression of intimate or close friendship. Yet to identify a community's culture correctly and to assess its appropriateness for the business environment, it is more than aca- demic to assess sociability and solidarity as distinct measures. Asking the right questions can help in this process. [See the questionnaire \"What Is Your Organization's Culturei\"] It is critical, before completing the form, to select the parameters of the group you will be evaluating; for instance, you might assess your entire company with all its divisions and subgroups or a unit as small as a team. Either is fine, as long as you do not change horses in midstream. Our unit of analysis here is primarily the corporation, but we recognize that executives may use the framework to look in- side their own organizations, comparing units, divi- sions, or other groups with one another. HARVARD BUSNES REVIEW Novanbeerecember 1996 w , shared experiences. (At one net- Such an exercise can indeed be instructive. One of the great errors of the recent literature on corpo- rate culture has been to assume that organizations are homogeneous. just as one organization differs from another, so do units within them. For exam- ple, the RSLD division of a pharmaceutical compa- ny might differ markedly from the manufacturing ' division in both solidarity and sociability. In addi- tion, there are often hierarchical differences within a single company: senior managers may display an entirely different culture from middle managers, and different still from blue-collar workers. Is this variation good news or bad news? The an- swer depends on the situation and requires manage- rial judgment. Radically different cultures inside a ' company may very well explain conflict and sug- gest that intervention is necessary. Similarly, one type of culture throughout a corporation may be a signal that some forms need to be adjusted to ac- count for differing business environments. The Networked Organization: High Sociobiliiy, Low Solidarity It is perhaps the rituals of what we call net- worked organizations that are most noticeable to ' outsiders. People frequently stop to talk in the hall ways; they wander into one another's ofces with no purpose but to say hello; lunch is an event in which groups often go out and dine together; and of ' ter-hours socializing is not the exception but the rule. Many of these organizations celebrate birth- days, field softball teams, and hold parties to honor an employee's long service or retirement. There . may be nicknames, iii-house jokes, or a common language drawn from worked company, for instance, ern- ployees tease one another with the phrase "Don't pull a Richard," in ref- erence to an employee who once fell asleep during a meeting. Richard himself uses the jest as well.] Em- ployees in networked organizations sometimes act like family, attending one anorher's weddings, anniversary parties, and children's confirmations and bar mitzvahs. They may even live in the same towns. Inside the office, networked cultures are charac- terized not by a lack of hierarchy but by a profusion of ways to get around it. Friends or cliques of friends make sure that decisions about issues are made be- fore meetings are held to discuss them. People move from one position to another without the "reguired" training. Employees are hired without WARD BUSINESS REVIEW November-December 1996 going through official channels in the human re- sources departmentthey know someone inside the network. As we have said, this informality can lend exibility to an organization and be a healthy way of cutting through the bureaucracy. But it also means that the people in these cultures have de- veloped two of the networked organization's key competencies: the ability to collect and selectively disseminate soft information, and the ability to acquire sponsors or allies in the company who will speak on their behalf both formally and informally. What are the other hallmarks of networked orga- nizations? Their low levels of solidarity mean that managers often have trouble getting functions or operating companies to cooperate. At one large Eu- ropean manufacturer, personal relations among se- nior executives of businesses in France, Italy, the United Kingdom, and Germany were extremely friendly. Several executives had known one another for years; some even took vacations together. But when the time came for corporate headquarters to parcel out rescurces, those same executives fought acrimoniously. At one point, they individually sub- verted attempts by headquarters to introduce a Europe-wide marketing strategy designed to com- bat the entry of U.S. competition. Finally, a networked organization is usually so political that individuals and cliques spend much of their time pursuing personal agendas. It becomes hard for colleagues to agree on priorities and for , managers to enforce them. It is not uncommon to hear frequent calls for strong leadership to over- come the divisions of subcultures, cliques, or war- ring factions in networked organizations. Networked organizations are characterized not by a lack of . hierarchy but by a profusion of ways to get around it. In addition, because there is little commitment to shared business objectives, employees in net- worked organizations often contest performance measures, procedures, rules, and systems. For in- ' stance, at one international consumer-products campany with which we have worked, the strategic planning process, the structural relationship be- tween corporate headquarters and operating com- . panics, and the accounting and budgetary control systems were heavily and continually criticized by 137 Unilever: A Networked Organization There is a frequently told story within Unilever, the Finally, Unilever moves its young managers fre- Anglo-Dutch consumer-goods group with worldwide quently - across borders, products, and divisions. This sales of roughly $50 billion. Unilever executives, it is effort is an attempt to start Unilever relationships ear- said, recognize one another at airports, even when ly, as well as to increase know-how. they've never met before. There's something about the Yet these carefully nurtured patterns of sociability way they look and act - something so subtle it's im- have not always been matched by high levels of com- possible to pin down in words yet unmistakable to panywide solidarity. Unilever has found it hard over those who have worked for the company for more than the years to achieve cross-company coordination and a few years. agreement on objectives. It's not that executives fight Obviously, there's a bit of exaggeration in this com- over strategy as much as "talk it to death" in the pany legend, but it underscores Unilever's tradition as search for consensus, says one senior vice president. a networked company - that is, one with a culture Does this networked culture fit Unilever's business characterized by high levels of sociability. For years, environment? In good part, yes. Unilever's managers the company has explicitly recruited compatible peo- hail from dozens of countries. This diversity could ple - people with similar backgrounds, values, and in- have been an isolating factor, hindering the flow of in- terests. Unilever's managers believe that this corps of formation and ideas. But because of the culture's high like-minded individuals is the reason why its employ- levels of sociability, there is widespread fellowship ees work so well together despite their national diver- and goodwill instead. Second, a key success factor in sity, why they demonstrate such strong loyalty to Unilever's business is proximity to local markets. The their colleagues, and why they embrace the company's organization's low solidarity has kept units focused on values of cooperation and consensus. their home bases with good results. And finally, until Unilever takes other steps to reinforce and increase recently, Unilever has been a highly decentralized or- the sociability in its ranks. At Four Acres, the compa- ganization. Simply put, there has been little need for ny's international-management-training center out- strategic agreement among units. side London, hundreds of executives a year partake in But Unilever's environment might very well be activities rich in social rituals: multicourse dinners, changing with the emergence of a single European group photographs, sports on the lawn, and, perhaps market, which would make coordination among busi- above all, a bar that literally never closes. As former nesses and functions imperative. Indeed, many recent chairman Floris Maljers remarks, "This shared experi- organizational changes - the creation of Lever Europe ence creates an informal network of equals who know in the detergents business, for example - can be inter- one another well and usually continue to meet and preted as an attempt by Unilever to create higher lev- exchange experiences." els of corporate solidarity, largely through a process of In addition to the events at Four Acres, Unilever's centralization. sociability is bolstered by annual conferences attend- In addition, Unilever faces some competitors, such ed by the company's top 500 managers. The compa- as Procter & Gamble and L'oreal, known for their high ny's leaders use these meetings to communicate and levels of solidarity around corporate goals. This asset review strategy, but there is much more to them than has lent Unilever's competitors the ability to acceler- work. (The intense fraternizing that takes place at ate product development processes and exploit market these conferences has earned them the nickname Oh! opportunities quickly. Unilever must match those Be Joyfuls!) Maljers notes, "Over good food and drink, competencies or risk losing clout. our most senior people meet, exchange views, and re- Finally, Unilever's relative lack of solidarity means confirm old friendships." that management can lose its sense of urgency - a executives in country businesses. Indeed, the criti- successful networked corporations. These organi- cism even took on an element of sport, increasing zations have learned how to overcome the nega- sociability among employees but doing nothing for tives of sociability, such as cliques, gossip, and low the already diminished levels of solidarity. productivity, and how to reap its benefits, such as Generally speaking, few organizations start their increased creativity and commitment. One method life cycle in the networked quadrant. By definition, of maximizing the benefits of a networked culture sociability is built up over time. It follows, then, is to move individuals regularly between functions, that many organizations migrate there from other businesses, and countries in order to limit excess quadrants. And despite the political nature of this sive local identification and help them develop a kind of community, there are many examples of wider strategic view of the organization. Later on, 138 HARVARD BUSINESS REVIEW November-December 1996to find that well-meaning management interven- tions to increase strategic focus often consolidate workplace friendships but do little for organization- competitive advantage in any business environment. al solidarity. That could account for at least some of This challenge is well known to the company's lead- the frustrations of those who complain, for exam- ers. As Maljers himself notes, "Everybody may be so ple, that the outdoor team-building weekend was busy with friends elsewhere - with the interesting great fun but not remotely connected to the daily training program, the well-organized course, the next work of ensuring that the different parts of the busi- major conference - that complacency sets in. Unfortu ness are integrated. nately, we have seen this happen in some of our units, As we have noted, each type of corporate culture especially the more successful ones. It may be neces- has its most appropriate time and place. We have sary to shake up the system from time to time." observed that the networked organization func- This comment underlines one of the biggest risks of the networked organization. Employees may be so tions well under the following business conditions: busy being friends that they lose sight of the reason O When corporate strategies have a long time they are at work in the first place. frame. Sociability maintains allegiance to the orga- Interestingly, Unilever's recently announced orga- nization when short-term calculations of interest nizational restructuring is designed in part to address do not. Consider the case of a company expanding some of the negative consequences of the networked into Vietnam. It might be years before such an ef- form. The company will be broken into 14 business fort is profitable, and in the meantime the process groups, and, according to the plan, each will have a of getting operations running may be difficult and clear business rationale, stretch targets, and transpar- frustrating. In a networked culture, employees are ent accountability. In a booklet sent to all managers, often willing to put up with risk and discomfort. the company described the changes as a means to "es- They are loyal to their colleagues in an open-ended tablish a simple, effective organization dedicated to the needs of the future. This must provide great clarity way. The enjoyment of friendship on a daily basis is of roles, responsibilities, and decision making.... Un- its own reward. der the new structure, business groups will make an- When knowledge of the peculiarities of local nual contracts on which they must deliver come 'hell markets is a critical success factor. The reason is or high water.'" that networked organizations are low on solidarity: Similarly, in an interview in the September issue of members of one unit don't willingly share ideas or Unilever magazine, company chairman Niall FitzGer- information with members of another. This would ald identified the values of the new organization in certainly be a strategic disadvantage if success these words: "Simplicity, clarity, and delegation of au- came from employees having a broad, big-picture thority are intended to be the prime virtues of the new perspective. But when success is driven by deep and organization. A disciplined approach [is essential] - intense familiarity with a unit's home turf, low sol- those who have been given the task of delivering re- idarity is no hindrance. sults must focus on delivering." In the terms of our model, this reorganization is When corporate success is an aggregate of local clearly an effort to move toward the mercenary quad- success. Again, this is a function of low solidarity. If rant: less politicking (as enjoyable as it might be) and headquarters can do well with low levels of inter- a more ruthless focus on results. But can Unilever let divisional communication, then the networked go of its ingrained sociability and take on the behaviors culture is appropriate. of a high-solidarity enterprise? The company's future performance will tell. The Mercenary Organization: Low Sociability, High Solidarity At the other end of the spectrum from the net- these individuals often become the primary man- worked organization, the mercenary community is agers of the networked organization's political low on hallway hobnobbing and high on data-laden processes, and they keep them healthy. memos. Indeed, almost all communication in a High levels of sociability usually go hand in hand mercenary organization is focused on business mat- with low solidarity because close friendships can ters. The reason: individual interests coincide with inhibit the open expression of differences, the criti- corporate objectives, and those objectives are often cism of ideas, and forceful dissent. Constructive linked to a crystal clear perception of the "enemy" conflict, however, is often a precondition for devel- and the steps required to beat it. As a result, merce- oping and maintaining a shared sense of purpose- nary organizations are characterized by the ability that is, solidarity. It would not be surprising, then, to respond quickly and cohesively to a perceived HARVARD BUSINESS REVIEW November-December 1996 139Mastiff Wear: A Mercenary Organization Several years ago, a senior manager at a company early. Indeed, a common strategy for a Mastiff execu- we'll call Mastiff Wear, an international manufacturer tive is to work hard, even at the cost of his or her per- of popular children's clothing, invited 15 of the com- sonal life, accumulate wealth, and then leave. Rela- pany's top executives to dinner at a fancy new restau- tionships with the organization exist primarily as a rant in London. The men and women had just sat means for employees to promote their own interests - down when the host announced a challenge to be com- career, personal, or otherwise. pleted over dinner: devise a new advertising slogan. In some ways, this mercenary culture has been an The best solution, the host said, would earn a bottle of apt fit for Mastiff in recent years. The company has Dom Perignon. For the next three hours, the guests had considerable success in the clearly defined distri- took to their task single-mindedly, even tearing up the bution channels in which it operates. Internally, a elegant menus to use as working paper. The restau- fierce focus on efficiency has ensured that resources rant's delicacies passed before them throughout the are used to the fullest. Little is wasted, and the com- night, and the executives ate, but few seemed to take pany does only what it can do best, creating centers of notice of where they were. What they were doing was corporate excellence to spread its knowledge. Exter- all that mattered. nally, a strategy of targeting clearly defined sectors - Not long after, one of the authors of this article met primarily department stores and catalogs - and a with a similar group of executives at Mastiff Wear. "If clearly identified "enemy" has consistently en- I join Mastiff next Monday," he asked them, "what abled Mastiff to establish dominant market positions. should I know are the rules of success at this organiza- Most recently, this ability has been illustrated by the tion?" Rule one, he was told: Arrive on Sunday. Rule company's dramatic entry into the European mar- two: Call your family and tell them you won't be ket - a move that has inflicted considerable damage home until next weekend. on a major competitive player there. Both of these stories illustrate a typical mercenary But mercenary cultures have their shortcomings. culture in action: members work long hours and often When you successfully occupy the number one posi- value work over family life. (The executives in the tion in many markets, as Mastiff has for many years, restaurant worked even when they could have been you may run out of enemies. As a result, you may lose socializing, and no one complained - or even noticed.) the competitive edge that originally brought your In addition, the stories illustrate this form's high de- company a sense of urgency and the collective will to gree of internal competition and strong focus on the win. In addition, Mastiff, like many mercenary cul- achievement of tasks. tures, may have suffered from excessive strategic Mastiff also embodies several other characteristics focus. In this case, a characteristic concern with oper- of high-solidarity cultures. There are strict standards ational efficiencies proved barely adequate when com- for performance, and underachievers are dealt with petitors were gaining market share from new-product ruthlessly. As one executive remarks, "Once in a development. Focusing on one or two issues is a while, one of us just disappears." Those who survive strength, of course. The danger is that you can lose are well rewarded - so well that many are able to retire sight of what's happening on the horizon. opportunity or threat in the marketplace. Priorities poor performance. Those who are not contributing are decided swiftly - generally by senior manage- fully are fired or given explicit instructions on how ment-and enforced throughout the organization to improve, with a firm deadline. There is a hard- with little debate. heartedness to this aspect of mercenary cultures, Mercenary organizations are also characterized and yet the high levels of commitment to a com- by a clear separation of work and social life. (Inter- mon purpose mean it is accepted, and usually sup- estingly, these cultures often consist of people ported, in the ranks. If someone has not performed, whose work takes priority over their private life.) you rarely hear, for instance, "It was a shame we Members of this kind of business community had to let John go- he was so nice." John, the think- rarely fraternize outside the office, and if they do, it ing would be, wasn't doing his part toward clearly is at functions organized around business, such as a stated, shared strategic objectives. party to celebrate the defeat of a competitor or the Finally, the low level of social ties means that successful implementation of a strategic plan. mercenary organizations are rarely bastions of loy- Because of the absence of strong personal ties, alty. Employees may very well respect and like mercenary organizations are generally intolerant of their organizations; after all, these institutions are 140 HARVARD BUSINESS REVIEW November-December 1996' sponse, which a mercenary organiza- . tion is able to mount. usually fair to those who work hard and meet stan- l B When the nature of the competition is clear. Mer- dsrds. But those feelings are not sentimental or tied to affectionate relationships between individuals. People stay with high-solidarity companies for as - 1003 as their personal needs are met, and then they move on. Without a doubt, the advantages of a mercenary organization can sound seductive in the perfor- mancedriven l990s. What manager would not want his or her company to have a heightened sense of competition and a strong will to win? In addi- _ tion, because of their focused activity, many merce- nary organizations are very productive. Moreover, unhindered by friendships, employees are not re- luctant to compete, further enhancing performance as standards get pushed ever higher. But mercenary communities have disadvantages as well. Employees who are busy chasing specic targets are often disinclined to cooperate, share in- formation, or exchange new or creative ideas. To do so would be a distraction. Cooperation between units with different goals is even less likely. Con- sider the example of Warner Brothers, the enter- tainment conglomerate. The music and film divi- sions, each with its own strategic targets, have trouble achieving synergy for example, with sound tracks. {Musicians recording on a Warner record label, for instance, might be called on to score at Warner movie] Compare this situation with that at Disney, a major competitor, which relent- lessly and protably exploits synergies between its . movie charactersfrom Snow White to Simha and its merchandising divisions. The mercenary organization works effectively under the following business conditions: El When change is fast and rampant. This type of situation calls for a rapid, focused re- EIWhen economies of scale are achieved, or competitive advantage is gained, through creating corporate centers of excellence that can im- pose processes and procedures on op- erating companies or divisions. For entropic, the Ziirich-based diversi- fied corporation ABE Asea Brown cenary organizations thrive when the enemy-and the best way to defeat itare obvious. The merce- nary organization is most appropriate when one en- emy can be distinguished from many. Komatsu, for example, made Morn-Ctrsnslated as \"Encircle Caterpillar"its war cry back in 1965 and focused , all its strategic efforts during the 1970s and early 3 19803 on doing just that, aided effectively by a high-solidarity culture. By contrast, lBM zigzagged strategically for years, unable to identify its compe- tition until the game was nearly up. its cultural type during that time is not known to us, but we can guess with confidence that it wasn't mercenary. The Fragmented Organization: Low Sociobility, Low Solidarity Few managers would volunteer to work for or, ' perhaps harder still, run a fragmented organization. But like strife-ridden countries, unfriendly neigh- borhoods, and disharmonious families, such com- munities are a fact of life. What are their primary characteristics in a business setting? Perhaps most notably, employees of fragmented - organizations display a low consciousness of orga- nizational membership. They often believe that they work for themselves or they identify with oc- cupational groupsusually professional. Asked at a party what he does for a living, for instance, a doc- : tor at a major teaching hospital that happens to have this kind of culture might reply, "I'm a sur- ' , geon,\" leaving out the name of the institution where he is employed. Likewise, organizations that have this kind of culture rarely field softball teamswho would want to wear the company's In mercenary organizations, you rarely hear, for instance, \"It was a shame we had to let ; John go - he was so nice.\" .3 Boveri builds worldwide centers of excellence for . ' product groups. Its Finnish subsidiary Stromberg has become the world leader in electric drives since its acquisition in 1936, and it now sets the standard for the A35 empire. El When corporate goals are clear and measurable, and there is therefore little need for input from the ranks or for consensus building. HARVARD BUSINESS REVIEW NovemberDecember 1996 name on a Tshirt? and employees engage in none of the extracurricular rites and rituals that charac- , terize high-sociability cultures, considering them a waste of time. ' This lack of affective interrelatedness extends to behavior on the job. People work with their doors shut or, in many cases, at home, going to the ofce only to collect mail or make long-distance calls. 141 They are often secretive about their projects and sparsely attended. Indeed, any social behavior that progress with coworkers, offering information only is discretionary is unlikely to take place. when asked point-blank. In extreme cases, mem- We realize it must sound as if fragmented organi- bers of fragmented organizations have such low lev- zations are wretched places to work - or at least ap- els of sociability that they attempt to sabotage the peal only to the hermits or Scrooges of the business work of their "colleagues" through gossip, rumor, world. But situations do exist that invite, or even or overt criticism delivered to higher-ups in the or- benefit from, such a culture, and further, this kind ganization. of environment is attractive to individuals who pre- This culture also has low levels of solidarity: its fer to work alone or to keep their work and personal members rarely agree about organizational object lives entirely separate. tives, critical success factors, and performance In our research, we have seen fragmented organi- standards. It's no surprise, then, that high levels of zations operate successfully in several forms. First, dissent about strategic goals often make these orga- the culture functions well in manufacturing con- nizations difficult to manage top-down. Leaders of- cerns that rely heavily on the outsourcing of piece- ten feel isolated and routinely report feeling as if work. Second, the culture can succeed in profes- there is no action they can take to effect change. sional organizations, such as consulting and law Their calls fall on deaf ears. firms, in which highly trained individuals have Low sociability also means that individuals may idiosyncratic work styles. Third, fragmented cul- give of themselves on a personal level only after tures often accompany organizations that have careful calculation of what they might get in re- become virtual: employees work either at home or turn. Retirement parties, for example, are often on the road, reporting in to a central base mainly by University Business School: A Fragmented Organization Despite how unpleasant it sounds to work where lieve, sets the standards and controls outputs, such as both sociability and solidarity are lacking, there are journal articles. In addition, it shapes employment op- indeed environments that invite such cultures and do portunities and determines career progress. There is no harm whatsoever to the organization, its people, or no point, the professors' thinking goes, concerning its products in the process. Still, there is the stigma of themselves with the goals and strategies of an institu- an "unfriendly" organization to contend with, which tion that does not have direct bearing on their day-to- is the reason this case study uses a disguised name for day work or future pursuits. its subject. As we have said, however, none of this diminished University Business School is typical of its breed: it sociability or solidarity compromises the competitive offers an M.B.A. program and several shorter execu- position of UBS, a highly renowned institution. The tive programs. Its other products are books, reports, reason is that many professors do indeed do their best and scholarly articles. The school achieves all this work alone or with scholars from other institutions smoothly, with remarkably low levels of social inter- who share similar interests. Moreover, M.B.A. and action of any kind among members of the community. other academic programs don't necessarily need input Take sociability. At UBS, professors work mainly from groups of staff members; most professors know on their own, researching their specialty, preparing what to teach and are disinclined in any case to take classes, writing articles, and assessing students' papers. the advice of others. Indeed, the only reason for meet- Often this work is done at home or in the office, be- ings in this environment is to decide on academic ap- hind closed doors displaying Do Not Disturb signs. pointments and promotions. This activity involves Many professors have demanding second jobs as con- consideration of scholarship, which requires neither sultants to industry. Therefore, when social contact sociability nor solidarity. Finally, UBS need not worry does occur, it is with clients, students, or research that its employees are losing focus or urgency about sponsors rather than with colleagues. In fact, faculty their work - one of the biggest risks of low-solidarity members may actively avoid sociability on campus organizations. On the contrary. UBS attracts a self- in order to maximize discretionary time for private selecting group of highly autonomous, sometimes consulting work and research for publication. egocentric individuals who are motivated, not alienat- As for solidarity, UBS professors see themselves ed, by the freedoms of the fragmented organization. foremost as part of an international group of scholars, In short, the success of UBS underscores our point: feeling no particular affinity for the institution that there is no generic ideal when it comes to corporate employs them. Their occupational group, they be- community. If the culture fits, wear it. 142 HARVARD BUSINESS REVIEW November-December 1996electronic means. Of course, fragmented organiza- close ties outside the ofce. In the early days of tions sometimes reect dysfunctional communi- I Apple Computer, for instance, employees lived to- ties in which ties of sociability or solidarity have : gether, commuted together, and spent weekends been torn asunder by organizational politics, down- ' together, too. At the same time, the sense of solidar- sizing, or other forms of disruption. In these cases, ity at a typical start-up is sky high. A tiny company the old ties of friendship and loyalty are replaced by an overriding con- fo'di'dual 41.11:- ' . $3,\";de $1.33 was People in fragmented The last unhealthy scenario aside. organizations often work with . however, a fragmented culture is ap- prOpriate under the following busi- their doors shut or at home. ness conditions: . DWhen there is little interdepen- ' deuce in the work itself. This might occur, for etc has one or at most two products and just as few . ample, in a company in which pieces of furniture or goals {the first usually being survival}. Because clothing are subcontracted to individuals who work founders and early employees often have equity in out of their homes and then assembled at another the start-up, success has clear, collective benefits. site. A second example might be a firm composed of In communal organizations, everythingfeels in sync. tax lawyers, each working for different clients. I But, as we have said, start-ups don't own this cul- Eiwhen significant innovation is produced primar- ture. Indeed, communal cultures can be found to fly by individuals rather than by teams. [This, it | mature companies in which employees have should be noted, is becoming increasingly rare in - worked together for decades to develop both friend- business, as cross-disciplinary teams demonstrate I ships and mutually benecial objectives. the power of unh'ke minds working together.) ! Regardless of their stage of development, com- , B When standards are achier by input controls, I munal organizations share certain traits. First, their 1 not process controls. In these organizations, time employees possess a high, sometimes exaggerated, has proven that management's focus should be on I consciousness of organizational identity and mem- recruiting the right people, once they have been ' bership. Individuals may even link their sense of . hired and trained, their work requires little supervi- I self with the corporate identity. Some employees at sion. They are their own best judges, their own | Nike, it is said, have the company's trademark sym- barshest tsskmasters. - bol tattooed above their ankles. Similarly, in the D'When there are few learning opportunities be- early days of Apple Computer, employees readily _- tween individuals or when professional pride pre- identified themselves as \"Apple people." vents the transfer of knowledge. In an international Organizational life in communal companies is -, oil-trading company we have worked with, for ex- punctuated by social events that take on a strong ample, employees who traded Nigerian oil never ritual signicance. The London office of the inter- ahared market information with employees trading national advertising agency I. Walter Thompson, ' Saudi crude. For one thing, they weren't given any for instance, throws parties for its staff at exciting, incentive to take the time to do so; for another, even glamorous, locations, recent events were held each group of traders took pride in knowing more . at the Hurlingham Club and the Natural i-Iisoory than the other. To give away information was to Museum in London. The company also offers its give away the prestige of being at the top of the employeesamsster class oncreativity that features field-a market insider. a speech by a celebrity. Dave Stewart, former gui- tarist of the rock band the Eurythmics, even played . The Communal Organization: a set during his presentation And finally. Thomp- High Sociobility, High Solidarity son holds an annual gala awards ceremony for the company's best creative teams. Winners go to lunch A communal culture can evolve at any stage of a in Paris. Other communal companies celebrate en- company's life cycle, but when we are asked to il- trance into their organizations and promotions lustrate this form, we often cite the characteristics with similar fanfare. of a typical small, fast-growing, entrepreneurial The high solidarity of communal cultures is of- start-up. The founders and early employees of such ten demonstrated through an equitable sharing of companiesare close friends, working endless hours risks and rewards among employees. Communal in tight quarters. This kinship usually flows into I organizations, after all, place an extremely high HARVARD BUSINESS REVIEW November-December 1996 ['3 British-Borneo Petroleum Syndicate: A Communal Organ Synergy is a term that gets bandied about quite a bit, act. They talk about their feelings openly and often as in "Wouldn't it be terrific if our divisions, operating help one another out - without making deals. In addi- companies, or functional areas had more synergy? tion, they are a team that plays together out of the of- Then they could learn from one another and share new fice- at picnics, parties, and ball games. This convivi- ideas - even exchange market or technological infor- ality is, in some part, management's doing. Managers mation." This hope, while admirable in theory, often have systematically tried to recruit compatible people remains just that in practice-a hope. with similar interests and backgrounds. And they Not so at British-Borneo Petroleum Syndicate, have improved on this foundation with regular team- where a communal culture- combining high sociabil building events such as Outward Bound courses for all ity and high solidarity - dovetails effectively with the new hires, frequent social events, and active support company's strategic need for cooperation and inter- of company softball, track, and sailing teams. Every- change among functions and locations. Indeed, the one in the company is invited to participate, from synergy among groups at British-Borneo is perhaps its board members to clerks. greatest competitive advantage. The London-based British-Borneo's sociability, however, has not come company, which has grown more than tenfold in the at the expense of solidarity. The company's employees 1990s to reach a market capitalization of $550 million display a strong sense of urgency and will to win. They in 1996, explores for and produces oil and gas in the are clearly committed to a common purpose. Indeed, North Sea and the Gulf of Mexico. Success in this in the United Kingdom, the company's strategy is kind of endeavor arises from speed of movement, risk known and understood by people of every rank, in- management, and the innovative use of technology - cluding secretaries and other support personnel. The which in this context can come only out of cross-func- widespread knowledge and acceptance of British- tional teams. Success is also linked to well-orches- Borneo's objectives have come about through careful trated, complex interfaces with other players in the effort. The company devotes considerable time and market and with governments. And finally, success energy to hammering out - through workshops and comes from employees committing to strategies that brainstorming sessions - a collective vision that is are rather long-term. The exploration phase for most owned by the staff. ventures will take several years, and production - Interestingly, despite the company's high levels of hence cash flow - often lags a few years beyond that. sociability, British-Borneo employees are not reluc- British-Borneo's high levels of sociability can be tant to speak their mind. (Ordinarily, friendships pre- seen in the honest and relaxed way employees inter- clude tough criticism or disagreement.) Staff members value on fairness and justice, which comes into overcome. And not only is the external competi- sharp focus particularly in hard times. For example, tion seen clearly, its defeat is also perceived to be a during the 1970 recession, rather than lay people matter of competing values. The competition has off, Hewlett-Packard introduced a 10% cut in pay as much to do with an organization's purpose-the and hours across every rank. It should be noted that reason it exists -as it has with winning market the company's management did not become demo- share or increasing operating margins. nized or despised in the process. In fact, what hap- Given all these characteristics, it is perhaps not pened at Hewlett-Packard is another characteristic surprising that many managers see the communal of communal companies: their leaders command organization as the ideal. Solidarity alone may be widespread respect, deference, and even affection. symptomatic of excessive instrumentalism. Em- Although they invite dissent, and even succeed in ployees may withdraw their cooperation the mo- receiving it, their authority is rarely challenged. ment they become unable to identify shared advan- Solidarity also shows itself clearly when it comes tage. In some cases, particularly where there are to company goals and values. The mission state- well-established performance-related reward sys- ment is often given front-and-center display in a tems, this attitude may be reflected in an exagger- communal company's offices, and it evokes enthu- ated concern with those activities that produce siasm rather than cynicism. measurable outcomes. By contrast, organizations Finally, in communal organizations, employees that are characterized primarily by sociability may are very clear about the competition. They know lose their sense of purpose. which companies threaten theirs - what they do However, where both sociability and solidarity well, how they are weak - and how they can be are high, a company gets the best of both worlds - or 144 HARVARD BUSINESS REVIEW November-December 1996solidarity that makes the communal business en- ation terprise an inherently unstable form. The sincere geniality of sociability doesn't usually coexist-it are encouraged to strip things down to reality when can't- with solidarity's dispassionate, sometimes they communicate about the company's business. ruthless focus on achievement of goals. When the This frankness creates an atmosphere of challenge and two do coexist, as we have said, it is often in reli- debate, which is one of the hallmarks of a high-solidar- gious or volunteer groups. Perhaps one reason is ity environment. that people tend to join these groups after they've Finally, British-Borneo is a classic high-solidarity become familiar with, and agree with, their object environment in its adherence to strict performance tives. (A church's policies, procedures, beliefs, and standards. The culture does not tolerate underachieve- goals, for instance, are made well known to pro- ment. Outstanding results are generously rewarded, spective members before they join. Once inside but it is not unusual for someone who does not mea- sure up to be asked to leave, sooner rather than later. the organization, members find little "strategic" We've mentioned some of the sources of British- dissension to get in the way of friendship.) By con- Borneo's culture, but it is critical to note that perhaps trast, when people consider employment at a busi- the most important source is CEO Alan Gaynor, ness enterprise, they may not know what the orga- whose charismatic leadership sets an example. nization's beliefs and values are - or they may know Gaynor participates in the company's many social them and disagree with them but join the organiza- functions, for example, and is open about his feelings. tion anyway for financial or career reasons. Over At the same time, he is intolerant of subpar perfor- time, their objections may manifest themselves in mance and is relentlessly focused on strategic goals. low-solidarity behaviors. That Gaynor is a major driver of British-Borneo's In their attempts to mimic the virtues of commu- communal culture, however, is emblematic of one of nal organizations, many senior managers have this form's challenges. While a communal culture is failed to think through whether high levels of both usually difficult to attain and sustain, a strong leader can manage both to powerfully effective ends. But sociability and solidarity are, in fact, what they should the leader ever leave, the community he or she need. Again, from our research, it is clear that the created can easily collapse. Because of its fragility, a desirable mix varies according to the context. In communal culture is also difficult to export. That is what situations, then, does a communal culture the challenge Gaynor faces today, in fact, as British- function well? Borneo's embryonic operations in Houston, Texas, go When innovation requires elaborate and exten- through a dramatic expansion. sive teamwork across functions and perhaps loca- tions. Increasingly, high-impact innovation cannot be achieved by isolated specialists. Rather, as the knowledge base of organizations deepens and diver- does it? The answer is that the communal culture sifies, many talents need to combine (and combust) may be an inappropriate and unattainable ideal in for truly creative change. For example, at the phar- many business contexts. Our research suggests that maceutical company Glaxo Wellcome, research it seems to work best in religious, political, and projects are undertaken by teams from different dis- civic organizations. It is much harder to find com- ciplines - such as genetics, chemistry, and toxicol- mercial enterprises in this quadrant. The reason is ogy - and in different locations. Without such team- that many businesses that achieve the communal work, drug development would be much slower form find it difficult to sustain. There are a number and competitive advantage would be lost. of possible explanations. First, high levels of socia- When there are real synergies among organiza- bility and solidarity are often formed around partic- tional subunits and real opportunities for learning. ular founders or leaders whose departure may We emphasize the word real because synergy and weaken either or both forms of social relationship. learning are often held up as organizational goals Second, the high-sociability half of the communal without hard scrutiny. Both are good - in theory. In culture is often antithetical to what goes on inside practice, opportunities for synergy and learning an organization during periods of growth, diver- among one company's divisions may not actually sification, or internationalization. These massive exist or be worth the effort. However, when they do and complex change efforts require focus, urgency, exist, a communal culture unquestionably helps. and performance- the stuff of solidarity in its un- When strategies are more long-term than short- diluted form. term. That is to say, when corporate goals won't be More profoundly, though, there may be a built-in reached in the foreseeable future, managerial mech- tension between relationships of sociability and anisms are needed to keep commitment and focus HARVARD BUSINESS REVIEW November-December 1996 145high. The communal culture provides high socia- bility to bolster relationships {and the conunitment that accompanies them) and high solidarity to sus- tain focus. Indeed, we have seen communal cul tures help enormously as organizations have gone - global-a long and often tortuous process during There may be a built-in tension between sociability and solidarity that makes communal cultures inherently unstable. which strategies have a tendency to be open ended and emergent, as opposed to the sum of measurable milestones. C] When the business environment is dynamic and complex. Although many organizations claim to be in such an environment, it is perhaps most pro- nounced in sectors like information technology, telecommunications, and pharmaceuticals. In these industries, organizations interface with their . environment through multiple connections involv- ing technology, customers, the government, com- petition, and research institutes. A communal cul- ture is appropriate in this kind of environment because its dynamics aid in the synthesis of infor- mation from all these sources. _ Changing the Culture There is clearly an implied argument here that organizations should strive for a form of communi- ty suited to their environment. Reality is never so neat. In fact, managers continually face the chal- lenge of adjusting their corporate community to a changing environment. Our research suggests that over the last decade, a number of large, well-estab- lished companies with strong traditions of loyalty and collegiality have been forced, mostly through competitive threat, to move from the networked to the mercenary form. To describe the process as tricky does not do it justice. It is perhaps one of the most complex and risk-laden changes a manager can face. Consider the example of chairman and president 1 Ian D. Timmer of the Dutch electronics company Philips. Once a monumentally successful compa- ny, Philips lost its competitive edge in the mid- 19805 and even came close to collapse. Timmer ' [and many observers] attributed much of the com- ' 146 CORPORATE CULTURE pany's troubles to its corporate culture. Sociability was so extreme that highly politicized cliques ruled and healthy information flow stopped, particularly between REID and marketing. [During this period, many of Philips's new products flopped; critics said the reason was that they provided technology that consumers didn't particularly want.) Meanwhile, authority was routinely challenged, as were company goals and strategies. Management's lack of control allowed many employees to relax on the iob. They had little con- cern with performance standards and no sense of competitive threat. In short, Philips demonstrated many of the negative consequences of a networked organization. However, given the industry's primary success factors inno- . vation, market focus, and fast product rollout- Philips needed a mercenary or communal culture to stay even, not to mention get ahead. Timmer attempted just such a transformation, first by trying to lower managers' comfort level. He implemented measurable, ambitious performance targets and held individuals accountable to them. In the process, many long-serving executives left the company or were sidelined. Timmer also con- ducted frequent management conferences, at which the company's objectives, procedures, and values were clearly communicated. He demanded commitment to these goals, and those employees who did not conform were let go. In this way, soli. darity was increased, and Philips's performance he- gan to show it. As performance began to improve markedly, Timmer made efforts to restore some of the compa- ny's sociability, which had been lost during the turnaround - thus moving the company from mer- cenary toward communal. Meetings began to focus