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 / Third Quarter 2001 / Issue 24(originally published by Booz & Company)


The Cult of Three Cultures

But when we become aware of the separate cultures, we can see precisely why many CEOs who come up from the shop floor fail as dramatically as Robert Stempel did, whereas others succeed (and lose many of their old friends in the bargain). And we can also see, as Professor Schein has begun to suggest, that most blanket attempts to “change the culture” of a whole company are wasted efforts. No matter what the change message is, large companies are so diverse that an influential minority will be predisposed to hate it.

The Parts vs. the Whole
Professor Schein helped found the field of organizational development (OD) in the 1950s (when he studied the reeducation of American prisoners of war coming back from Korea and corporate training centers at IBM and General Electric). Over the years, he has been a rigorous researcher, a key advocate for slow, thorough, and gentle corporate change initiatives (a column called “Culture & Change” would probably not exist if it weren’t for his subtle influence), and a mentor to such eminent organizational learning figures as Peter Senge.

Unlike most organizational learning and OD theories, which tend toward the monolithic view, Professor Schein’s three-cultures theory is not very holistic. It concentrates not on the essence of a corporation, but on its parts. These parts don’t fit together with machinelike precision, because a corporate culture is not a machine. Professor Schein’s three corporate cultures fit together in a vague, insubstantial way that actually makes them all the more influential. They affect us because they are unseen.

The first, the operational culture, is the culture of day-to-day line managers — the people who get products and services out, procure supplies, process bills, and make delivery trucks run on time. Operations people appreciate teams; they understand, as nobody else does, how to get a bunch of disparate individuals to pull together. Indeed, the operations culture is grounded in an ingrained awareness of the way that quality of life depends on the capability and reliability of good people.

Leaders in this culture are often connoisseurs of human “character.” They expect good people to be loyal, candid, and trustworthy, and they do their best to shut out those who do not fit in. They develop an easy skepticism about overarching solutions; they know that technology generally doesn’t work unless people are around to compensate for the flaws and bugs in the design. And although many operations managers appreciate the importance of raising capital, there’s no gut feel for finance built into the operations culture.

If you want to find facility with deals, leverage, and capital flow, you have to look to the second corporate culture, the executive culture. Members of this culture typically include the CEO, the board, the business-unit leaders, and the finance-oriented staff. Although they may support learning and human potential, their jobs and passions lie in shepherding the cash flow that keeps the organization alive. They are the only ones directly accountable for the organization’s obligation to return money and value to outsiders, both to shareholders and to society at large. As Professor Schein notes, they tend to see themselves as lone heroes, embattled and competitive. They are the last recourse in a crisis.

The executive culture, precisely because of its remoteness from ordinary human values, is not easy to move into. When the Boeing Company announced its headquarters’ move from Seattle to Chicago early this year, it was clearly a wrenching executive-culture effort to put some distance between the company’s decision-makers (who might have to relocate or close a plant) and their employees, friends, and neighbors. When CEOs like Robert Stempel don’t make it across the threshold from operations to executive culture, it’s often because they can’t write off their old loyalties to the people they left behind.

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