Notes about Corporate Cultures and Performance by James Heskett and John Kotter (via Google Bard):
In their book Corporate Culture and Performance, James Heskett and John Kotter argue that a company’s culture has a profound impact on its economic performance. They define corporate culture as “the shared values and beliefs that shape the way employees think, feel, and act.” They found that companies with strong cultures that are aligned with their strategy and business context tend to outperform those with weak orunaligned cultures.
Heskett and Kotter identified four key dimensions of corporate culture:
- Values: These are the beliefs that employees hold about what is important in the workplace. For example, a company might value customer service, innovation, or teamwork.
- Beliefs: These are the assumptions that employees make about how the world works. For example, a company might believe that customers are always right, that change is inevitable, or that employees are the most important asset.
- Norms: These are the unwritten rules that govern how employees behave in the workplace. For example, a company might have norms about dress code, communication style, or how to handle conflict.
- Rituals: These are the ceremonies and events that reinforce the company’s culture. For example, a company might have a weekly all-hands meeting, a quarterly awards ceremony, or an annual retreat.
Heskett and Kotter found that companies with strong cultures tend to be more profitable, have higher employee satisfaction, and be more innovative. They also found that these companies are better able to adapt to change and weather economic downturns.
The authors argue that leaders can play a key role in shaping a company’s culture. They recommend that leaders:
- Be clear about the company’s values and beliefs.
- Model the desired behaviors.
- Reward employees who exhibit the desired behaviors.
- Hold employees accountable for their behavior.
- Create opportunities for employees to learn and grow.
Corporate Culture and Performance is a seminal work that has had a major impact on the field of business. It is a must-read for anyone who wants to understand the importance of corporate culture and how to create a culture that drives performance.
Here are some additional key takeaways from the book:
- A company’s culture is not static. It can be changed, but it takes time and effort.
- Culture is not just about values and beliefs. It is also about behaviors, norms, and rituals.
- A strong culture can be a competitive advantage. It can help a company attract and retain top talent, innovate more effectively, and weather economic downturns.
- Leaders play a key role in shaping a company’s culture. They can create a culture that is supportive of the company’s strategy and business goals.
If you are interested in learning more about corporate culture, I highly recommend reading Corporate Culture and Performance. It is a well-researched and insightful book that will help you understand the importance of culture and how to create a culture that drives performance.
[Author’s Note: The above text was AI-generated and may not be accurate. The overarching intent behind this blog post is to provide a starting point for discussions among aspiring community builders. Just as startup founders can benefit from startup oriented content (such as those provided by accelerators and incubators), community builders can benefit from community building oriented content. If you are an aspiring community builder, please contribute to the discussion by commenting on this post]
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One response to “Corporate Cultures and Performance by James Heskett and John Kotter”
While this book was written from a perspective of analysing how for profit companies operate and whether their cultures have an impact on their economic performance, the authors have done a detailed analysis on how culture operates. These principles can be generalised to evaluate cultures in general.
The first key observation that the authors make is that people systematically tend to underestimate the power of culture until they try to change it. Without using the exact terminology of the cultural iceberg, the authors point out that “when cultures are not our own, their most visible and unusual qualities seem striking”. To illustrate this point, the authors use the example of the IBM Salesman or by contrast the informality of tech companies such as Apple.
This is exactly analogous to what Edward Hall describes as the Cultural Iceberg, where the most visible elements of culture are above the waterline and what can be observed.
Continuing from there, both Hall and the authors (Heskett and Kotter) continue to state that there are elements of culture which are not visible until someone from inside the culture tries to implement a strategy or program which is incompatible with that culture. This is also in line with the model provided by Hall where he notes that there are elements of cultures that are below the waterline (in contrast with those above).
Additionally, Heskett and Kotter also point out that there are differences in the kinds of cultures that exist. One way of differentiating cultures are strong cultures as opposed to weak cultures. This is analogous to our concept of cultures that are deeply rooted and those which are not.
Heskett and Kotter also point out (correctly) that the strongest cultures are those which are rooted in values. The authors also add that if there is strong value alignment among the members of that culture, then such values are harder to change and their effects often persist even with changes in membership. One example that the authors provide of such a value are managers who care about their customers. Such an example, is not specifically pertinent to community builders, but the point that the authors make withstands such non-pertinence.
Conversely, the authors also note that culture which are not rooted in values, but are rooted in norms are more visible, but are easier to change. The reason that such cultures persist is because they are visible and that group members behave in ways that teach these practices. However, such cultures are far easier to change by the implementation of specific programs.
The authors also examine the role that leaders play both in sustaining as well as in changing cultures when the circumstances dictate.
The authors also point out the several ways in which culture perpetuates itself. Some examples:
– Newly selected members of the group are explicitly taught the group’s practices
– Historical stories and legends can be repeated to emphasise the group’s values and what they mean in a day to day and practical way
– Managers and leaders can act in ways that exemplify the culture and the ideals that they stand for
– Senior members can repeatedly mention the values that the group stands for in their daily communications
– People who successfully achieve the ideals of the group can be recognised and made into heroes
– Younger members naturally tend to identify and imitate the values of their more senior mentors
The authors point out that in groups with strong culture, the ability to coordinate and take swift decisive action is much stronger.
However, the authors also differentiate between the types of culture along a second dimension. In this view, the authors point out that some cultures are adaptable while others are not. This is an important point. Companies with strong and adaptable cultures tend to outperform their counterparts who are in similar markets across a variety of industries and across a variety of macroeconomic conditions.
This further lends credence to our view that Values are best seen as situation independent decision helpers. James Heskett and John Kotter spend a good portion of their book substantiating these claims with empirical evidence measuring both the economic performance of these companies as well as indicators of strong culture.
In this sense Kotter and Heskett have provided some of the groundwork through which aspiring community builders can seek to design strong and adaptable cultures by choosing the right values around which these cultures can be built as well as the right rituals and norms that will help sustain such a culture.