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Corporate Culture Is Dead. Long Live Corporate Culture

Commitment to an organization-wide ethos feels increasingly antiquated. Except where it succeeds wildly.

(originally published by Booz & Company)

I’ve seen two strong theories about the future of corporate culture recently. Both are compelling, and each comes to a very different conclusion. In other words, we have all the ingredients for a debate.

The first argument: Many variations of culture should exist within an organization.

Of all the topics you might expect Eric Ries to riff on, corporate culture does not immediately spring to mind. Ries is the author of The Lean Startup and an expert on entrepreneurship and product development. As he argues it, the link between innovation and culture is hard to ignore. If companies—particularly large and mature ones—expect to adopt the sustainable approaches to innovation that Ries believes are critical to their survival, they need to forget about having a consistent set of norms across the full enterprise. Instead, they need strong cultures for their various professional functions.

Ries’s argument about culture derives from his larger belief that different functions in the organization require different forms of management. The part of the organization that develops new products and launches new lines of business, for example, should not be held to the same set of standards as units that manage mature and stable lines. The same should be true of their cultures.

According to Ries, a healthy innovation-focused culture will promote self-organizing teams to do the work. It will accept failure as a necessary way to learn. Meanwhile, the legacy culture, managing the day-to-day business, should reinforce the types of controls that keep people moving forward steadily and with assurance.

I’m inclined to agree with Ries. In fact, several years ago I wrote a post for Harvard Business Review that also questioned whether broad corporate cultures had outlived their usefulness. My angles at the time were globalization and outsourcing. I argued that the increasing cultural diversity within global organizations and their growing reliance on partnerships would make a commitment to a culture at the corporate-wide level all the less useful to attempt and all the more difficult to maintain.

Edgar Schein argues something similar in his view of three cultures: managerial (finance-oriented), operational (people-oriented), and engineering (technology-oriented). Each group believes something different is important, and the creativity of the enterprise comes from the clash among these three points of view.

So, when it comes to culture, we are experiencing the rise of the functions, yes?

It’s tempting to believe so. There’s just one problem. The second argument—and one that is also supported by direct observation—is this: Corporate-wide cultures are a linchpin to long-term superior performance.

In Walter Isaacson’s book about Steve Jobs and in other accounts of powerful companies, from Apple to Amazon to Google, there is a common theme. It’s the same one evident in reports about UTC (as described by George Roth in the upcoming issue of s+b), Hyundai (profiled by Bill Holstein), Ikea (researched in our growth article last spring), Toyota, and others. What common element is evident in all these companies? Undeniably strong, organization-wide commitments to a clear and consistently practiced set of cultural norms. These are organizations full of “true believers,” who appear to happily immerse themselves in tightly defined ways of engaging with one another, who drink up corporate traditions, and who are eager to extend their organization’s ways of being—seemingly irrelevant of function or geography.

I will admit to being surprised by the robustness of this conclusion. But I am not ready to give up the other side of the argument. Like so many things in the world of management, contradictions abound.

So let’s kick it around. Which culture should be stronger: corporate or functional? We’d value your thoughts by commenting below.

Paul Michelman

Paul Michelman is editor-in-chief at Safari Books Online, and was formerly executive editor of strategy+business.

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