At IBM in the old days, they used to talk about ‘wild ducks’. This was the name IBM gave to its mavericks: the risk-takers and entrepreneurs within the corporation who were not afraid to take chances, who were ready to think the unthinkable and do the impossible. They pioneered new technologies and opened up new markets and worked out new ways of doing things. In IBM folklore they were one of the main reasons why IBM rose to become the largest computer maker in the world, says Morgen Witzel, honorary senior fellow at the University of Exeter Business School, writing for FSN.
Wild ducks were a big part of the IBM culture, and that culture in turned played a major role in IBM’s success. But IBM is not unique in this respect. Look around at any large and strong business – especially those that have lasted for decades, enduring the ups and downs of the economy along the way – and you will find evidence of similar strong cultures. Shell, Intel, McKinsey & Company, Honda, Michelin, Walt Disney, McDonald’s: look behind the scenes at any of them, and you will find evidence of a strong managerial culture. That culture embraces not only the values that the business holds and the principles that it lives by, but also the operating practices of the business: in other words, how it does things.
The Dutch academic Geert Hofstede, himself formerly a senior manager with IBM, once likened culture to the ‘software of the mind’. In his book Cultures and Organizations (1991), Hofstede describes how culture shapes the way we see things, how we interpret knowledge, how we relate to other people, how we regard authority, and our attitudes to success and failure, among many other things. It follows that when a group of people share a culture, they also share norms of behaviour, attitudes and ways of doing things. And just like a good software programme, a strong culture makes it easier to get things done.
How does a strong culture help a business? There are several dimensions in which culture is important, but one of the most often discussed is the sharing of knowledge. Max Boisot, now a professor at the ESADE business school in Barcelona, has shown how some kinds of cultures make it easier for people to share information and discuss ideas. In his book Information and Organizations (1987), Boisot describes how the key traits of such cultures include an absence of bureaucracy – meaning people can communicate freely without having to go through ‘channels’ – and high levels of trust.
It is generally agreed that businesses which encourage communication, both lateral and vertical, across all parts of the organisation tend to be more dynamic, more innovative – and more successful. Andrew Grove of Intel, one of the more thoughtful CEOs of the 1990s, believed implicitly in the value of communication. Grove encouraged his people to come up with new ideas, no matter how outrageous they might seem. This constant ‘chatter’ among managers and staff, whether conducted by e-mail, in formal meetings and discussions, or informally over lunch or around the water cooler, was a major factor in Intel’s policy of continuous innovation. In Grove’s view, it was also one of the main reasons the firm’s success.
Some Japanese firms, notably Honda and Toyota, follow this same policy of encouraging their people to speak out and share ideas. Like Intel, too, they have cultures based strongly on trust. People know that they can say things, even unpopular things, without fear of reprimand or dismissal. A secondary effect of this culture of trust is that when problems emerge, people who spot them are not afraid to tell their colleagues and senior management, so that preventive action can be taken quickly. Contrast this with the culture at Enron, where people who raised doubts about the company’s finances were either dismissed or ordered to keep quiet. (Did the culture at Lehman Brothers, or Northern Rock, encourage people to speak out even if it was unpopular? One wonders.)
Another area where a strong culture can play an important role is loyalty. Strong cultures engender a sense of belonging, as if to a club or a society. Some businesses, especially in the Far East, go still further and try to create a sense of family. The reasoning is that if people are loyal to the business they work for, they will work harder and take pride in their work. Studies in service industries in particular have shown that when workers are proud of the businesses they work for, they are more likely to go the extra distance to keep their customers happy too. When customers are unhappy, workers take this as a reflection upon themselves, and often they will use their own initiative to solve the problem. It is no coincidence that the John Lewis Group, which has some of the most satisfied employees of any retail business in the UK, is also one of the most profitable.
For all this to work, of course, the culture has to be genuine. In his classic book The Interpretation of Cultures (1973), the anthropologist Clifford Geertz distinguished between ‘thick’ cultures, in which most if not all members of the organisation share the same values and believe in doing things the same way, and ‘thin’ cultures, where the values are shared by only a minority of people. For example, there is some doubt as to how ‘thick’ the ‘wild duck’ culture at IBM really was. A grim joke among IBM employees in the 1980s ran as follows; Q: What really happens to wild ducks? A: They get shot.
For a culture to engender loyalty, pride, trust and the desire to communicate and share knowledge, it must be perceived as real. Perhaps one of strongest business cultures of all time was built by George Cadbury and his son Edward at the Birmingham chocolate makers Cadbury Brothers in the late nineteenth century. The Cadburys involved their employees in all aspects of running the business. They encouraged workers to come up with suggestions for new products and processes, and rewarded those whose ideas were adopted. They set up works committees, with representation from every level of the business from top management to tea ladies, who were involved in decision making on new strategies and new investments. And most of all, the Cadburys themselves were deeply involved in the process, talking to and listening to their people. Edward Cadbury believed that chairing the works committee at Cadbury Brothers was by far the most important of the many activities that took up his time.
The result? In three decades, Cadbury went from being a small regional firm in Britain to the largest maker of confectionery in the world. It did so through the power of its people and its culture. As one admiring observer said at the time, ‘At Cadbury’s, everybody thinks.’
Creating and maintaining a strong business culture is not easy. It takes time and hard work and constant attention. But those companies that do build and maintain strong cultures are those that have the best chance of becoming world-beaters when the markets are good – and the best chance of surviving dark times like the present, and being ready to face the recovery when it comes.
