Rensis Likert Professor, Ross School of Business, University of Michigan
Partner, The RBL Group
The study of culture is not new. In a classic book, anthropologists A. L. Kroeber and
Clyde Kluckhohn identified 164 definitions of culture . . . in 1952!
The study of organizational culture has also received enormous attention with the
classic maxim: “Culture eats strategy for breakfast.” Although Peter Drucker did not
actually say it, he and many others have clearly supported this notion, with many books
(over 100!) in recent years entitled “Culture (fill in the blank______)”:
LinkedIn has even recently identified the top 10 voices on company culture.
With so many recent ideas about culture, let me offer a simple playbook for today’s
culture agenda to help business and HR leaders navigate the culture issue: Why culture
matters, what culture means, and how to create or change a culture.
Why Culture Matters
Research shows and corporate directors, financial auditors, and business executives at
Davos believe that “culture” matters and is an increasing challenge in today’s
organizations, particularly with hybrid work when people may not be face-to-face.
In the COVID world—when many employees worked at home often isolated from each
other—cultural and social cohesion has declined, often leading to lower employee
experience scores and increased mental health challenges.
Everyone readily accepts that organization “culture” exists and has impact. Toxic
cultures have dysfunctions of hostility, mistrust, selfishness, scarcity thinking, and
insensitive leaders who lower productivity, employee retention, strategic reinvention,
investor confidence, and customer satisfaction. Abundant cultures have the opposite
positive effect. Creating the right culture will enable organizations to flourish and win in
What Culture Means
As noted above, “culture” has many definitions, even in organization settings. Let me
suggest three historical waves of looking at organization culture and an emerging fourth
wave (see figure 1).
Wave 1: Culture as values and behaviors. Individuals and organizations have values
that shape behavior. These values can be identified as an organization’s culture, and the
behaviors may be tracked to determine the cultural type.
Wave 2: Culture as systems or climate. A company culture shows up in how
information, decisions, diversity, accountability (and other processes) are managed.
These systems determine the climate of an organization.
Wave 3: Culture as patterns or norms. Anyone entering a company recognizes that
unspoken rules or expectations of how work is done. These patterns become accepted
ways of working.
All of these three waves of culture (values, systems, and patterns) focus on what
happens inside an organization. In some nomenclatures, they are the “roots” of the tree
and are embedded in stories, history, and rituals, both spoken and unspoken. These
internal definitions of culture thrive when employees are together to share values, work
processes, and experience common norms.
Wave 4: Culture as identity in the marketplace. An emerging view of culture is to
ensure that it is the “right” culture, which means that the culture inside an organization
Culture Playbook, p. 3
creates value for stakeholders outside (customers, investors, and communities). In this
outside-in view, culture is about the value of the values to a customer or investor and the
extent to which internal systems and norms increase customer share, investor
confidence, or community reputation. This outside-in view of culture is less about the
underlying roots off a tree (which are often difficult to change) and more about the
leaves of the tree, which metaphorically change in different seasons.
This outside-in view of culture integrates purpose, values, and brand to create the
“right” culture, the one that creates value to all stakeholders. In this cultural focus,
employees creating value for external stakeholders matters much more than how
employees work. Culture change begins by identifying what an organization is trying to
be known for in the marketplace. Then we make that external identity real to employees
inside the organization (figure 2).
Figure 2: Culture from the Outside-In
How to Create or Change a Culture
My colleagues and I have been involved with numerous culture change transformations.
More often than not, they start with laudatory rhetoric but then fizzle with few
sustainable changes. When we have seen culture transformation succeed, it starts with
the business case for culture (why culture matters), then uses the outside-in definition
of culture (what culture means), then gets implemented in five steps (see figure 3).
Step 1: Define the desired culture. Ask internal leaders and external customers what
your organization should be “known for” to be effective. This identity becomes
synonymous with the desired brand that encourages customers to buy and investors to
invest. Work to create a high unity (over 80 percent) on the answer to this question.
Culture Playbook, p. 4
Figure 3: Five Steps to Implementing a Culture Transformation
Step 2: Build an intellectual, top-down agenda. The desired culture needs to be
communicated over and over and over again. This shared cultural message may appear
in internal speeches, town hall meetings, social media, bulletins, and other
communication mechanisms. Simple and redundant messages shape an intellectual
agenda of what the desired culture should be.
Step 3: Encourage a behavioral, bottom-up agenda. Cultural ideas and messages flow
down—behaviors and actions flow up. Ask employee groups throughout your
organization what they can do more of or less of to make the desired culture real in their
day-to-day activities. Cultural messages change employee behaviors.
Step 4: Design and deliver a process, side-to-side agenda. Culture gets woven into
organization process around people (hiring, training, paying), strategic decision making,
resource allocation, and other governance choices. The organization processes should
reinforce the desired culture.
Step 5: Create a leadership brand. We have proposed that the right leadership
competencies should be aligned to promises made to customers, creating a leadership
brand. Employees often do what leaders model, and when leaders think and act
consistent with customer expectations, their work reinforces the desired culture. We
have encouraged firms creating advertising programs to allocate a percent of this
external marketing budget to internal leadership training on the same issues.
These five steps are not a perfect script for the culture change agenda, but they suggest a
simple (not simplistic) playbook to approach culture change that creates value for
customers and turns cultural aspirations into daily actions.
Culture Playbook, p. 5
So what does this culture playbook suggest?
Don’t just talk about culture ideals, tie them to customer and investor value so
that culture has marketplace impact.
Don’t just diagnose what is happening with culture but offer guidance about what
should happen to create the right culture.
Don’t measure culture with rhetoric but with results from employees, strategy,
customers, and investors.
Don’t let culture become an abstraction but a set of concrete and integrated
activities built around intellectual, behavioral, and process actions.
Don’t hesitate to make sure that leaders at all levels think, act, and feel consistent
with the desired culture.
Net lesson: The culture playbook matters and is an agenda worth pursuing!
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