7 Common Causes of Corporate Culture Crises
The book "Fish Can't See Water" explains how corporate and national culture intersect. / Credit: Goldfish image via Shutterstock

What's the glue holding your business together? Chances are it isn't money, but something more difficult to put into words — an underlying current that forms the basis of all your decisions and interactions. What is this intangible force? It's called culture, and it has the power to make or break your business.

Culture is a powerful force that can have a huge impact on the success of any company, whether it's a tiny online retailer or a giant corporation. But harnessing this force isn't always easy. Kai Hammerich — an international headhunter with Russell Reynolds Associates in London — believes that, to get culture working for your company, you may need an outsider's perspective.

Hammerich's new book, "Fish Can't See Water: How National Culture can Make or Break Your Corporate Strategy" (Wiley, 2013), offers insight into how today's business leaders can better understand culture — both their own and that of other companies. Hammerich and co-author Richard D. Lewis lay out the ground rules for making culture the center of your business.

In an interview with BusinessNewsDaily, Hammerich explains why your business needs a guidebook for navigating the nuanced world of business culture.

BusinessNewsDaily: What is your definition of culture?

Kai Hammerich: There are several definitions of corporate and group culture. The American guru of culture and leadership, Edgar A. Schein, defines organizational culture as "a pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems.”

From this definition, it follows that culture is learned, reinforced and handed to the next generation and new members of the group. Culture has a purpose in terms of achieving common objectives. Perceived success will reinforce the culture and make it stronger. A group will develop its own distinct patterns of behaviors and beliefs to support the culture and the internal socialization process.

BND: What purpose does culture serve in the business world?

K.H.: Corporate culture serves to guide the members of the group or the company in terms of accepted behavior, both internally and vis a vis the outside world of customers, partners and the wider public.

At its very best, corporate culture guides judgment and enables people to overrule man-made systems that otherwise would dictate decisions and encourage behavior, adversely affecting the organization.

BND: The title of your book raises an interesting point. Can you explain how a fish's inability to see water relates to culture and corporate strategy?

K.H.: It is no longer a secret that the single biggest obstacle to successful globalization is the inability of most companies to understand the worldview and aspirations of partners and competitors. Their culture is opaque — it seems irrational. But so does ours to them. Surely we can see ourselves clearly — or can we? Can fish see water? Can we see our own cultural environment?

Where national traits are concerned, we are all experts and victims. Culture hides much more than it reveals and, strangely enough, what it hides, it hides most effectively from its own participants.

BND: In your book, you mention that a business's founder can play a major role in shaping the culture or core values of a company. Can you give us an example of where you see this happening today?

K.H.: The founders are often dominant in every aspect of company life during the embryonic startup period, and through this make a lasting impact on the corporate culture, which often will continue well beyond their own presence. 

Sony rose to global prominence though a strong partnership between the founder and genius innovator, Masaru Ibuka, and his younger, more commercially and internationally oriented partner, Akio Morita. Both influenced the core culture. Similarly, the technology giants Apple, Oracle, Dell and Microsoft all were profoundly impacted by the personal values and beliefs of their founders.

BND: What are some examples of cultural traits that linear-active cultures (the U.S., the U.K., Germany) view in a positive light, but which people from nonlinear cultures (Latin America, Asia, Arab countries) might see in a negative light?

K.H.: One example is our focus on results over building relationships. Direct criticism, which may be rational and facts-based, may cause someone to lose face, and thus should be delivered delicately to become accepted in nonlinear cultures.

It is not always wise to be too dogmatic or inflexible, even if you are right. In many cultures, ambiguity and flexibility may facilitate reaching an agreement more quickly. Don’t rush — you don’t build a deep relationship in one meeting.

Linear-actives are good at completing action trains. That is, when they have embarked on a course of action or project, they will concentrate on its completion and are reluctant to allow human interference while they are thus engaged. Multiactives are less single-minded about action trains but very much concerned with completing human transactions. Once they have embarked on a meaningful conversation or other significant engagement with a fellow human, they drop all other matters until the human errand has been brought to a satisfactory conclusion.

To illustrate the point, if an American businessman is on the phone when a close friend of his suddenly enters his office, he will wave his friend into a corner to wait until he has finished his phone call. An Italian, by contrast, will quickly terminate the phone call in order to greet his friend in a cordial manner.

BND: What's an existential corporate crisis, and what's the most common crisis affecting today's companies?

K.H.: As we list in the book, there are seven common causes of a corporate crisis — poor strategy facing competition, poor execution, disruption (technology or process), success, time, change of leadership and navigating a transformation point.

Most companies understand how to deal with an isolated crisis. All of the above crises happens at regular intervals in most companies — and they deal with it. However, the most life-threatening situation is when a company has two or three crises at the same time. This is when the board and the management find it difficult to navigate the situation.

Sony, after the late 1990s, is a prime example of [a time when the following] three crises coincided: Poor execution relative to the newcomer, Samsung; a technology disruption within the industry (moving from analog to digital), which required new skills and capabilities and; the transition from the founder to a managerial regime. Sony still has not overcome those challenges completely.

BND: Your book focuses primarily on the differences between national cultures. But are there any overlapping cultural traits that you find interesting? Please share them.

K.H.: From the bazaar in Kabul to Wall Street, two truisms exist — a bias for action and being customer-oriented.

BND: How can the principles set forth in your book be applied, on the micro level, to small businesses?

K.H.: The book’s primary focus is on the international company, whether large or small. Though, many of the observations are highly relevant for any size domestic type organization— including the seven causes of a crisis, and the Cultural Dynamic Model.

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Originally published on BusinessNewsDaily.