Friday, March 25, 2011

Organisational Culture and Strategic Management

This is in continuation to our blog on Strategic Management Perspectives. One of the perspectives of strategy is that organization culture could have lot of impact on whether company’s strategy would be achieved or not. In simple words, organizational culture is the way a particular organization does things. Organization culture is the software of an organization that decides what kind of behavior is awarded and what is punished, what are the rules and operative procedures and what kind of management structure company follows. Schein (1984) has defined organizational culture as “the pattern of basic assumptions that a given group has invented, discovered or developed in learning to cope with its problems of external adaptation and internal integration, and that have 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” (Schein, 1984). According to Graves (1986), it is the glue that hold organization together.

Culture and strategy are both social processes and many strategists argue that culture and strategy are interlinked. If a particular strategy, planned by strategist does not match with the organization culture than it could be almost impossible to achieve intended outcome from the planned strategy. There is no best culture and there is no best strategy. Fit between strategy and culture has to be very dynamic and continuously evolving.

There is a relation between resource based view of strategy and seeing organizational culture as strategy. According to resource based view, organizational competitive advantage is rooted in its capabilities and resources. Organization culture could be a great resource for company and could help company easily achieve its strategies and developing itself as a strategic capability.
It could be argued that organization culture could be definitely help or hinder in achieving a particular strategy however issue with organization culture is that can it be really influenced or modified as desired by the management and developed it as strategic capability. Organizational culture can be studies with several models such as 7S, Cultural Web by Johnson and Scholes, Handy’s (1985) typology, Schien’s three levels of culture.

A strategist shall pay a careful attention to fit between organization culture and strategy. However a particular organization culture should not justify inertia and shall be used to achieve organization goals.

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