Culture and Innovation

Table of Contents

1        Introduction……………………………………………………………………………………………….. 3

2        Literature Review……………………………………………………………………………………….. 3

2.1         The nature of organizational culture………………………………………………………………………………… 3

2.1.1      Eight dimensions of organizational culture………………………………………………………………… 3

2.1.2      Three layers of organizational culture……………………………………………………………………….. 4

2.1.3      Three levels of culture…………………………………………………………………………………………………. 5

2.1.4      The classic “7-S” model……………………………………………………………………………………………… 5

2.2         Organizational culture, power, politics and leadership…………………………………………………… 6

2.3         Organizational culture impacts on innovation…………………………………………………………………. 7

2.3.1      The Competing Values Framework (CVF) & Organizational Culture Assessment Instrument (OCAI)…………………………………………………………………………………………………………………….. 7

2.3.2      The dimensions of national and organizational culture……………………………………………… 8

2.4         Conclusion………………………………………………………………………………………………………………………… 8

3        Case studies analysis…………………………………………………………………………………… 9

3.1         An Automobile manufacture company……………………………………………………………………………. 9

3.1.1      7-S framework……………………………………………………………………………………………………………… 9

3.1.2      Three levels………………………………………………………………………………………………………………….. 9

3.1.3      The CVF…………………………………………………………………………………………………………………….. 10

3.2         A Telecom company………………………………………………………………………………………………………. 10

3.2.1      The CVF…………………………………………………………………………………………………………………….. 10

3.2.2      The eight dimensions…………………………………………………………………………………………………. 10

3.2.3      Five dimensions of national cultures………………………………………………………………………… 11

3.3         Conclusion……………………………………………………………………………………………………………………… 12

4        Recommendations……………………………………………………………………………………. 12

4.1         Leadership shapes culture……………………………………………………………………………………………… 12

4.2         Managing culture change………………………………………………………………………………………………. 13

4.3         Cross-Cultural leadership………………………………………………………………………………………………. 14

4.4         Conclusion……………………………………………………………………………………………………………………… 14

5        Biography…………………………………………………………………………………………………. 16

6        Appendix………………………………………………………………………………………………… 18

6.1         Innovation……………………………………………………………………………………………………………………… 18

6.2         The Cultural web…………………………………………………………………………………………………………… 18

 

1        Introduction

Organisational culture reflects written and unwritten rules and values, which guides and justifies people’s behaviour in the organisation. Thus, organisational culture has a powerful impact on performance and long-term effectiveness of the organisation (Trompenaars & Hampden-Turner, 1997). Leadership, an important part of the culture itself plays a critical role among others in organisational change and innovation.

This paper provides a critical review of the theories and models of organisational cultures and how they impact on the people and their behaviours in the organisation, as well as the overall success of the organisation. In addition, it also contains a case study analysis that connects theoretical frameworks with the real-world aspect. Finally, it summarizes some strategies and actions that could be implemented via leadership in order to build or promote a suitable organisational culture that supports change and innovation.

2        Literature Review

2.1       The nature of organizational culture

Organizational culture was first introduced in 1979-1980, and during the coming 10 years, it had a lot of focus. After that it had been more balanced but still perceived as a focal point of motivation, commitment prioritization and base for resource planning and organizational development (Alvesson & Sveningsson, 2008).

Organizational culture comes from the organisation’s history, stories about heroes and values that over time have been carved out by doing mistakes and correcting those (Schein, 2010). In time, organizational culture becomes a unique system that reflects the core value of the organization and its members (Robbins & Judge, 2009).

According to research, there are seven primary key characteristics: Innovation and risk-taking, Attention to detail, Outcome orientation, People orientation, Team orientation, Aggressiveness and Stability (Robbins & Judge, 2009:586), which could give an impression about an organization’s culture.

The role of culture is to define the boundary, create the sense of identity, foster commitment to the community and stabilize the social system. However, when a culture became very strong, e.g. its core values are widely held in the organization, the culture itself would become a barrier to not only change and innovation but also diversity and Mergers and Acquisitions.

2.1.1       Eight dimensions of organizational culture

There are eight dimensions of Organizational Culture, according to Hofstede (2013a). The knowledge of these dimensions will help a leader to operate, to deploy strategies and actions, to successfully reach the organizational goals such as accomplish mergers and acquisitions or create lasting change and promote innovation.

  1. Means-oriented vs. Goal-oriented

This dimension is very much related to the effectiveness of the organisation. In strong goal-oriented cultures, the organisation focuses to achieve specific internal goals or results, even if these involve substantial risks. A strong means-oriented culture makes the organization avoiding risks and people tend doing limited actions in their work.

  1. Internally driven vs. Externally driven

Internally strong driven culture makes people see their actions towards the external part. The company is honest and ethical. So they know what is best for the customer. An externally strong driven culture focuses on customer requirement. Therefore a pragmatic view is more important than an ethical approach.

  1. Easy-going work discipline vs. Strict work discipline

This dimension aims to describe the internal structure, control and discipline. An extreme easy-going culture has neither a strong internal structure nor pro-active actions. It is low on control and discipline. The organization is used to improvisation and surprises. Strict work discipline makes people very cost-focused, timely and severe.

  1. Local vs. Professional

At a local company, the staff identified themselves with the organisation they work and/or the leader they work for. In a strong local culture, people act very short-termed. They have an internal focus and like to be like everybody else. At the professional organisation, the individual is the profession and/or the job content. They have a long-term view and an external focus.

  1. Open system vs. Closed system

This dimension is about the accessibility of an organisation. Open cultures instantly welcome new staff and open towards internal as well as external people. It favours diversity. In a strong closed organisation, employees need to get approved to get into the inner circle, as it wants people to be qualified to work for the company.

  1. Employee-oriented vs. Work-oriented

This dimension is most related to the leadership philosophy. Strong employee-oriented organisations would concern a lot about the employees, even if the business would be impacted. In a strong work-oriented organisation, the employees would be seen as workers to do the job, and there are no other concerns about the employees.

  1. Degree of acceptance of leadership style

This dimension expresses in which degree the leadership style of management is. The management style is the same all over the company, and culture is measured as a central trend.

  1. Degree of identification with your organization

This dimension shows to which degree people simultaneously identify themselves with the company. It could also be possible that people identify themselves with the goals that exist in the company or a customer, maybe their own manager, or group they work in.

In sum, Goal-oriented culture would have more acceptances for innovation, as it involves risk-taking. Internally strong culture with customer focus and ethical standard are needed for innovation (Robbins & Judge, 2009). Easy-going culture is more familiar with change or innovation. Professional culture’s long-term view and external focus are good for innovation as well.

2.1.2       Three layers of organizational culture.

Trompenaars & Woolliam (2003) suggested that culture is like an onion with 3 layers.

The first layer is the artefacts of the culture that often are visible as behaviours, expressions, dress codes, organizational structure, policies and procedures. When observing the first layer one needs to be aware of their subjectivity, i.e. interpret it from one’s own thinking, previous experience and so on. Otherwise, with a pair of coloured glasses, the observer will not see the correct picture.

Second layer is about the good/bad values the culture prefer and the right/wrong norms that should exist. Culture has been created because people need it for survival, but they have forgotten the origin of it, as it is something people do all the time (Trompenaars & Woolliams, 2003). Values are shared between the people and reflect on their actions. As an insider of the culture, one should have a different view of it than an outsider.

The third layer, which is the core layer, is a summary of all problem-solving knowledge the organization collected over many years. This core of the onions layer is the most difficult part to discover and understand from an outsider’s view, but it is the key to successfully cross-functional collaboration and organizational culture synergies (Trompenaars & Woolliams, 2003). Unfortunately, some management has not enough knowledge of this part of the culture. Especially when it comes to challenges within the merge and accusations.

2.1.3       Three levels of culture

Schein (2010) described what people often see the more official culture at first and he calls it the surface of culture, where the organisation has culture artefacts and behaviours. It follows an intermediate layer, which represents the cultural values. Schein (2010) pointed out that the core of the culture, as a common understanding in the company, exists at the core of these three layers.

  1. Artefacts

It includes group behaviours, the underlying assumptions or climate of the group, the company’s policies, procedures, processes, structures and how they are organised. To correctly analyse the existing artefacts one could choose to do it in two ways, either by living in the group for a longer period to understand which artefacts exist or during a shorter period of normal workday analyse the organisation through interviewing the people about the structure they work by, values they treasure or norms they judge by.

  1. Espoused Beliefs and Values

Espouse beliefs and values came from when a group gets challenged by a common task or issue to solve. The group then need to take on collectively the activities and understand the results. If the result, later on, turns out to be good, it gives then a quite high possibility that this will be seen as a start of the group’s common beliefs and shared knowledge. If these common beliefs continue, they will go into a transformational process and become the groups shared assumptions and values.

The espoused beliefs and moral rules work as a norm for the team leader to follow, and this also supports the leader in being able to answer consequently on questions, and influence new team member’s behaviour.

  1. Basic Underlying Assumptions

The basic assumptions are presumed and unconscious beliefs and values. Therefore, leaders who want to influence and achieve, need to have a deeper knowledge of the basic assumptions, which is the essence of the culture. Leaders influence the group by proposing their own assumptions until it becomes the group’s shared assumptions. These shared assumptions are the glue that keeps the group together and where the group see meaning and stability (Schein, 2010).

2.1.4       The classic “7-S” model

The classic “7-S” Model that includes Strategy, Structure, System, Share values, Style, Staff and Skills could be used to access an organizations performance (Weber, 1998), so the leader would be able to detect redesigns or changes needed. Those seven elements are split into a hard element that could easily be measured and the soft elements that are more intangible. Element Shared values links all other elements. The right balance of all seven elements creates a good culture.

Hard element

Strategy gives the direction of the organizational plan and action. The structure shows the organizational design. One could easily overview it through an organizational chart to find out if the organization has multiple layers or flat structure. A simple and flat structure is optimal for creativity. The system includes a process and support system such as a reward system, financial and information system etc.

Soft element

Shared values reflect the organizational culture. It could often be found within mission statement or corporate objectives. Skills mean the collective capabilities and competencies within the organization. Staff refers naturally to the employees. The style is about how leadership expresses the organizational culture.

This framework allows the leader of the organization to adopt a holistic view. Through it, the leader can assess where imbalances have appeared in the organization and how to rebalance and improve in order to enhance overall performance and achieve organizational goals. Hence, it is a good tool to use when one needs to bring about changes such as system, strategy or culture etc.

2.2       Organizational culture, power, politics and leadership

Organizational culture and politics are linked together thus political factors could significantly influence organizational strategy development (Johnson & Scholes, 2001), thereby also influence its leadership.

“Power is the capacity to influence the attitudes and behaviour of people in the desired direction” (Yukl, 2010:232). A manager could use its position to influence people, this power called position power. A leader uses his/her personal characteristics to influence followers, this power called personal power. Research shows that effective leaders use more personal power than position power (Yukl, 2010). Personal power is more inspiring and positive. It touches people’s needs for self-development.

Organizational politic is using lobbying towards both people and groups that are not direct reports, to influence their minds to reach the lobbying group’s/person’s own values, visions, goals, interest, aims (Morgan, 1989). Robbins & Judge (2009) summarize politics as; when people in a company change their power in activities, they are engaging in politics.

There are some different opinions about politics. Kotter (1996) and Kanter (1983) expressed the benefits of politics, while Mintzberg (1983) and Robbins & Judge (2009) argued the downsides of it. However, ”change agent who is not politically skilled will fail” (Buchanan & Badham, 1999:18). Hence, a leader should really put effort to understand the political behaviour and how the politics work, in order to be successful (Peters, 1982).

Depending on the culture, politics is used in different ways and levels. So, for a leader or a change agent, it is important to have awareness of the politics in the company. One needs to understand the different coalitions that exist, wherein the organization they are and what aim they have, as well as the way they want things to be done and what loyalty is expected. In this way, one could more easily predict their further actions. In addition, one has to understand that all decisions will be iterative until the negotiation is finalized between the stakeholders (Johnson & Scholes, 2001).

2.3       Organizational culture impacts on innovation

2.3.1       The Competing Values Framework (CVF) & Organizational Culture Assessment Instrument (OCAI)

Innovation is the fuel of an organization’s organic growth (Degraff & Quinn, 2007), whilst creativity and change are the fuel of innovation. Skills/competence and culture are another two key elements that have huge impacts on innovation.

The Competing Value Framework is a system that integrates a company’s strategy, innovation, finance and leadership. Its purpose is to elevate a company’s effectiveness and thereby achieve goals such as innovation or growth. It has four quadrants: Collaborate, Create, Control and Compete. Each quadrant reflects different sets of characteristics (organization and culture), practices (process and leadership) and values.

Collaborate represents empowerment and teamwork. Collective learning and nurturing are very important. Hence, trust and integrity are highly valued within the organization. Leadership is value-based. Coaching and mentoring are widely used. Collaborate leadership emphasizes the sense of community, facilitates new ideas, growth and security at the workplace. Innovation is based on the needs of the community.

Create reflects flexibility, entrepreneurship, challenge and risk-taking. Hence, one would let go of control in order to allow creativity and imagination. Optimism, enthusiasm, trust and freedom are therefore highly valued by the organization. Create leaders look always toward the future and trends. They are visionaries. Innovation represents a strategic advantage.

Compete means winner or loser. The organization could be aggressive and values high achievers. Hence one could expect a result-oriented and profit-focused workplace. Compete leaders are strategic and risk hedging. They value a diverse workforce. Innovation is based on shorter-term profit or business goals.

Control values continuous improvement to seek perfection and risk minimizing. Hence, the organization focuses on technology, process, quality, efficiency and cost saving. Control leaders are realists, organized and accountable. They tend to focus on details and rules. Innovation means technology and engineering.

Based on the Competing Values Framework, Professor Robert Quinn and Kim Cameron (2006) developed an organizational culture assessment tool called Organizational Culture Assessment Instrument (OCAI, 2013a). By using six key aspects of organizational culture (Dominant characteristics, Organizational leadership, Management of employees, Organization glue, Strategic emphases and Criteria of success), this tool illustrates a profile of the organization. The outcome has four culture types (OCAI, 2013b): Clan Culture (collaborate), Adhocracy Culture (Create), Market Culture (Compete) and Hierarchy Culture (Control).

In sum, different culture and leadership generate different organizational practice and purpose, which in turn affect change and innovation as well as its people. All four cultures need innovation to boost the growth. However, the Adhocracy Culture is mostly open for innovation and change, as it emphasizes creativity, which is the fire of innovation (Degraff & Quinn, 2007). For the other three cultures, innovation is not the first priority. Hence, they tend to have less ability to accepting change. In addition, reflecting the real-life aspect, one would not be surprised to find perhaps several culture types within one company.

2.3.2       The dimensions of national and organizational culture

“Organizational cultures often reflect national culture” (Robbins & Judge, 2009:607). For example a Swedish company’s meeting structure typically represents the Swedish culture of consensus, which is everyone has his/her part of the collective decision. If the company arranges a meeting in its foreign subsidiary with local employees, it should oversee its meeting procedure to meet the requirements of the foreign local national culture, in order to operate successfully.

On the other hand, national culture influences largely the organizational culture. In fact, national culture reflects often the organizational basic value. National cultures are very difficult to change as they have evolved over a long time and have a strong social ground with its ceremonies and lifestyles.

Five Dimensions of National Cultures

National culture has five dimensions according to Hofstede (2013b):

  1. Power distance

This dimension reflects the inequality of human society’s power distribution, which is the hierarchical society. Cultures with large power distance (high hierarchical) make new ideas and creativity impossible. Hence high hierarchical national culture is a big barrier to innovation.

  1. Individualism vs. collectivism

This dimension includes individualism (the terms of “I”) and collectivism (the terms of “we”). Individualism defines people that only take care of themselves and their nearest families. Collectivism means people are loyal to larger groups than their nearest families. For example, Japan has a collectivism culture.

  1. Masculinity vs. femininity

This dimension has a masculinity side that refers to completion, achievement and success and a femininity side that refers to consensus, cooperation and caring. For example, the Swedish culture is more at the femininity side.

  1. Uncertainty avoidance (UAI)

This dimension mentions the degree of uncertainty among people for the future. A strong UAI culture rejects unconventional behaviours or unusual ideas. A weak UAI culture has a more relaxed view of principles. Hence a more weak UAI culture would most likely encourage change and innovation.

  1. Long-term orientation vs. short-term orientation

This dimension expresses the long-term view e.g. future, adaptation and pragmatic behaviour (the truth is associated with the situation) and the short-term view, which is tradition, the absolute truth, obligations and short-term result. From an innovative view, the culture with a long-term view is more acceptable to change.

In summary, cultures with lower power distance, collectivism and femininity should favour innovation, as cooperation and democracy facilitate creativity. Furthermore, long-term orientation and unconventional thinking are also essential for innovation and change.

2.4       Conclusion

Organisational Culture can be defined as “the collective programming of the mind that distinguishes the members of one organisation from others.” (Hofstede, 2001:1). It is a socially constructed phenomenon that involves a larger group that has a related history and they tend to hold on to their rituals, symbols and myths (Alvesson & Sveningsson, 2008). In addition, they also have shared subconscious assumptions and implied beliefs. Organizational culture is the glue that keeps the company together (Bates, 1984).

Trompenaars & Woolliams’ (2003) and Schein’s (2010) theories are similar to each other. According to them, with the core layer that reflects the organizational true value hidden in the middle and symbols or artefacts on the surface, organizational culture often appears itself in different layers. Much like the personality of a human, there are stories behind the culture and its values. To access them, one needs to dig deeper. Hofstede’s (2013a) eight dimensions, on the other hand, look more into the organizational character to determine its values.

Whilst the 7-S gives a leader holistic views of the organization, the CVF exams the relationship between culture, leadership and innovation. Furthermore, the organizational power that usually uses political tactics to achieve its goals shapes culture and leadership. Hence, Organizational culture and its leadership could both inspire and prohibit innovation.

According to (Yukl, 2010), national cultural values and societal norms have big impacts on leadership behaviour, as leaders need to conform to the rules and traditions of the society, for example, to follow the laws and regulations, respect traditions and rituals. Hofstede’s (2013b) five Dimensions suggested that national culture has also a significant influence on organizational culture, as it reflects the basic beliefs of the people.

3        Case studies analysis

3.1       An Automobile manufacture company

This company established in 1937. It produced premium cars annually up to 125 000 that were sold in more than 60 countries around the world. It was a mid-size company with approximately 6000-8000 employees and most of them worked in Sweden. Its turnover was around USD 1.5 billion. The automobile manufacturer’s cars were inspired by unique aviation heritage and stood for dynamic cars with a distinctive design.

3.1.1       7-S framework

I have spent eight years of my professional life working for this company where Lean philosophy is applied to the whole organization. Using the 7s framework, one could discover that the company structure is a team and the overall strategy is a Lean production with zero waste. The leadership adopted a more transformational approach that emphasized higher moral standard, empowerment, leading by example and coaching etc. The staff values teamwork, discipline and change incentives. They are goal and value oriented. Everyday work and decisions were based on a Lean philosophy that reflects efficiency, quality and zero waste as well as continuous improvement. Good suggestions or inventions were rewarded via the bonus system. As a result, the company’s overall performances were enhanced which in turn strengthened its competitive advantage in many years.

3.1.2       Three levels

Using Schein’s (2010) theory, one could see that employees’ had a very strong belief in the company, their products and its leaders. There were a lot of positive stories about the previous CEO’s energy, engagement. The thresholds between the people are low. The dress code was correct but not too formal.

One could also see behaviours such as identifying themselves with the company (wearing clothes or using bags that has the company’s logotype), being open-minded for new discussion in order to solve a problem and doing one’s best to reach perfection (truly convinced and committed to producing the best product) etc. One of the slogans was about extensive innovation, proudness of the car, safety, quality and no compromises.

The organisation was flat and lean. The power structure of this company could be seen by the quite direct and firm approach from the management.

In spare time, employees often were gathering to attend internal race competitions. They had rituals such as a co-occurrence and usage of the company test cars.

Schein’s (2010) Espoused Beliefs and Values could be seen via that just good enough was not acceptable; they strived for perfection in everything they did. The company’s value statement was: being an independent car manufacturer that never compromises the quality or the safety, which means that the perseverant engineers were very professional and innovative but strict to the point. If they didn’t get one solution to work they created a new one that did.

The deep fundamental value, which is the Basic Underlying Assumptions are: we are the best and most unique automobile manufacturer in the world. The leadership has successfully influenced these values to its people in the organization. These values give people the meaning of their work and are the glue that keeps the people in the company together. It is the key to the cross-function teamwork (Trompenaars & Woolliams, 2003).

3.1.3       The CVF

Applying the CVF to exam this company, one could easily place it to the Collaborate quadrant, as empowerment and teamwork are two characteristics of the company. Collective learning and new ideas are very important to people in the company. In addition, as the company also emphasized perfection by always seeking continuous improvement in quality, safety (inspired by the aviation history where safety is crucial) and cost-saving, as well as technic development, it also belongs to the quadrant of Control. These values also led to the never-ending technic improvements that were more focused from an artistic perspective than a more customer-oriented approach. The outcomes were some technically very advanced products that no customer on their market would like to buy. Finally, it also has some characters of the Create quadrant. The organization has a flat structure. It has trust and freedom as well as entrepreneurship. Higher risk is acceptable.

3.2       A Telecom company

This company established in1876. Today, it is a global company with business in more than 180 countries. Its net sales are about USD 34 billion and has approximately 110 000 employees. More than 40% of the world’s mobile traffic passes through their networks. Its value according to their website is “using innovation to empower people, business and society, and working towards the Networked Society, in which everything that can benefit from a connection will have one”.

3.2.1       The CVF

The CVF and the OCAI help to determine that this organization that I have worked for over 15 years has the character of Compete and Control. Their business success is: to be the winner of the branch. Short-term profit and overall profitability were emphasized in corporate meetings. Leadership styles within the company are mainly transactional. Market position and R&D are two of the focus areas. Organizational design and structure reflect multiple layers of responsibilities and matrix organisational charts. Hence, the organization is quite stiff, formal and hierarchic. It focuses on rules and details. Strategies were communicated often but not followed by the people as much as the top leaders expected.

These characters of the culture have become barriers to change and innovation. As change efforts failed frequently, in order to meet the rapid demands of the market, leaders tried to instead repeatedly restructure some parts of the organizations, e.g. the Group IT department.

3.2.2       The eight dimensions

According to the eight dimensions of Organizational Culture, it is a means-oriented company as both, the employees and the managers like to play safe instead of taking any risks. Low-risk tolerance could be seen more in the administrative departments. As this environment is difficult for innovation, the company has during some years grown by accomplished several acquisitions to increase its portfolio.

It has an internally driven approach. A long track record of successful products made it a strong believer in doing the right things for the market.

The company has a strict work disciple, i.e. focused on processes, rules and being serious. This could be seen in their approach of stubbornly stay with old project methodologies that are out-dated for software development, though they know that the market requires a faster delivery of new solutions. Change is ongoing but it works really slowly into better ways of working.

The company seems to have a quite strong local approach with short-sighted views. People identified themselves with the organisation and the leader they work for.

This engineering company system is more of a closed system. They value more in higher educated employees that have served loyally for a long time. The company has a lot of specialists where their areas could not be invaded.

It has a strong employee-oriented organisation that would take care of its employees at least in the inner circles; even this could affect the business.

The degree of acceptance of leadership style could be in the middle level as the organisation bases their deeds on as little risk as possible. They tend to play safe and with a lot of political decisions made by the inner circle. The leadership is mainly transactional. But there are some transformational leaders that try to survive in the corners of this large organisation. Hence, change efforts may view more risky by the leaders and people in the organization. This of course impacts on the innovation and change processes negative.

The degree of identification with your organization dimension shows in this company in form of proudness, especially when one has worked in the company for many years.

3.2.3       Five dimensions of national cultures

During my assignment in Middle East, I noticed that the local organization has a fire-fighting culture. Many existing problems had been almost cemented into the culture. A national culture with a lot of symbols in forms of traditional dress called “thobe”, heroes such as the prophet Mohammed and a lot of rituals such as complicated greetings and pay respect to a very strict hierarchy (Hofstedt, 2001).

The organisational culture was also highly political.  The management’s behaviours were among others praise loyalty and punish people that questioned the leadership.

Not surprisingly, this local organization culture has a high power distance (Hofstedt, 2013b). People had high respect towards individuals from the more prominent families that recognized by their names.

Old age was also treated with high respect as well as country origin decides how the power was distributed to the local company. So innovation was difficult to introduce.

It has a strong individualism, as many of the employees where Asians. They have learnt from their culture that information is power, and should not be given to anyone outside the family. This, of course, affected very negatively the openness and creativity needed in groups to achieve innovations.

It had a strong masculinity dimension in terms of competition and emphasise on own achievement.

Saudis where relying heavily on fate which means that they believed in that God decides everything that is going too happened. Hence uncertainty avoidance (UAI) is strong.

The short-term orientation they had was connected to their old traditions, the strong religious believers and focus on the short-term result. A short-term mindset effects innovation negatively, as the interest is focused on the past. They also try to dress, act and think as if nothing could be changed.

According to my experiences within this company’s different market units, generally many cultures in Asia has higher power distance, although the collectivism dimension was seen for example in China, people in Asia mostly tend to display individualism. Western cultures often have lower power distance. When it comes to individualism, it is more mixed due to the influence of their national cultures.

3.3       Conclusion

Both companies did not have innovation as their highest prioritisation. However, the automobile company definitely prioritize more in innovation than the telecom company. It seems that leaders in both companies want innovation, but the needs of control prohibited or slowed down their strategies. In other words, the organizational cultures, especially the telecom company’s culture are not a perfect fit for innovation and change. The automobile company is more successful because there are more freedom and trust in the organization.

Both companies’ sub-cultures generally matched the overall organizational culture. Politic activities are much more advanced in the telecom company that has a strong market focus. Position power is used much more frequently than personal power in the telecom company than the automobile company.

National culture did deeply influence those two companies, as both of them are employee oriented.  Hence, at the telecom company’s foreign subsidiaries, one could see the opposite work-oriented dimension, which reflects the local national culture.

Many dimensions such as individualism, short-term orientation etc. impact negatively on innovation. However, the leadership style and power distance dimensions are two of the biggest barriers to innovation. Older cultures often have stronger UAI dimension, which also prohibits innovation.

4        Recommendations

4.1       Leadership shapes culture

A very connected area in culture is leadership. It plays, in fact, a central part in influencing organizational culture.

Firstly, leadership in top management often sets norms (written or unwritten) for the organization to follow. It is the leader’s responsibility to be a role model in good and ethical behaviours as well as stimulating change and innovation (Schein, 2010). People tend to follow the leader’s behaviour. If the leadership visibly favourite change and innovation, people in the organization would adopt the idea more easily.

As Robbins & Judge (2009:600) pointed out that an organizational culture that has high-risk tolerance with less aggressiveness and focuses on both means and outcomes tends to shape high ethical standards. This reflects mainly the culture in the Create quadrant of the CVF that is optimal for innovation and change. The only exception is according to Hofstede et al (2010) that the means culture tends to avoid risk-taking. So, this would suggest, a more balanced risk-taking is more desirable.

Secondly, leaders in the organization also should tailor processes (selection, routine) and systems (reward, protection, education) to introduce and enhance new as well as old employees to adapt to the organizational value and culture, e.g. in meetings, training, socializing events or mentoring programs etc.

Grant (2010:318) argued, “The more stable the operating and administrative side of the organization, the greater the resistance to innovation”. As theories such as the CVF also concurred that organizations system that established by its leadership could prohibit innovation. Hence, leadership needs to tailor a flexible (give freedom) and less control (build trust) oriented system to encourage creativity and new ideas (Covey, 2009).

Finally, Collin’s (2001) research showed that Level 5 leaders, similar to transformational leaders, would influence in a culture much more than for example transactional leaders. Innovation will occur if a suitable leadership style has been applied. For example, transactional leadership’s relationship with their employees is limited to have a mutual benefit, i.e. the leader set goals and if they are fulfilled the employee get their raise, promotion or bonus. And these transactional leaders are effective in an organization that has a need of just to be maintained and these leaders will continue to lead the organization into a status quo level. Transformational leaders, on the other hand, go further on than just to reward or punish the employees. They emphasize employee’s personal growth and also want to create better processes, as well as think innovative and seek new opportunities (appendix 6.1). They are not afraid to take risks, which is something one needs to do to create a platform for innovation. Transformational leaders also serve as a coach and mentor for their employees, which create trust and leads to more effective answers (Munshi et al, 2005).

4.2       Managing culture change

Since the foundation of the organization, the organizational culture is like personality has been influenced by many aspects such as the founders’ value, leadership, the surrounding environments and national cultures and so on.

Culture change is possible and that the best way to do it is as Cameron & Quinn (2006, p102) described that the prerequisite for change as; ‘Culture change will not occur without the involvement, commitment and active support of the organisation members throughout the entire organization.’ It is most important that the leader understands the common process for organisational change ahead and has the knowledge of how to manages the culture change (Schein, 2010, p 299).

To change the culture one needs to add huge efforts. Schein (2010) described three steps of culture change, which is unfreezing, learning new, internalizing.

Unfreezing

This part is to create motivation within the employees to change. To be able to do so the employees need to face hard facts that makes them understand the sense of urgency or even uncomfortableness and guilt. Leaders could then imply that people need to learn and think in a new way.

Let people show comfort in that they see possibilities to solve the problem and find out something new without losing their face (Schein, 2010:301).

 Learning new concepts

The change manager that would start a change must be very clear about the ultimate goals that are the problems will be solved.  The change manager could start the process of learning new things by for example; refresh old concepts, trial-and-error, copy a role model in the company or create a role model by themselves by working according to the new concept, i.e. walk the talk (Schein, 2010:310). A very efficient way of bringing about change is to use change agents or early adapters (that is a recognized person in the organization) to support the rest of the organisation to get into the new concept.

Internalizing

Internalizing or incorporate within oneself in a new refreezing process is the last step. And if the change manager has done the analysis correct, the results should be seen. If the results default, the new concept will end up in a new iterative learning process until it starts to show good results. Human psychology has a natural resistance to change that should never be underestimated. The new way of working therefore needs to feel “psychologically safe” for the involved parties (Schein, 2010:311).

 

Also, if the organizational culture is young, or the organization is small or weak, or it is undergoing a crisis or top leadership change, culture change could be applied via new stories and rituals, new systems (reward, job rotation etc.) that support the new values (Robbins & Judge, 2009:609).

 

If the Culture is very strong, as it over time has been created untouchable assumptions. These assumptions have created a feeling of safeness in the group and something people created trust towards. To challenge these assumptions, is of course something that would not be seen as always positive, as one would create anxiety in the group. So, the think-out-side-the-box approach is probably more suitable for the situation, but this also could be a devastating action for a new leader, if he/she tries to create changes without first to understand the existing assumptions and culture.

In addition to the 7-S framework, the Cultural Web (appendix 6.2) has been proven to be a tool that could visualize possible problems to implement strategies and also simulate thoughts around the change that where planed (Johnson et al, 2001). One of the challenges is to think outside the box and that nothing is sainted for a questioning, as the things the organisation takes for granted could be the target for change. To find the paradigm it could be useful to look at the outer circles first, because those could lead you to the paradigm definition. One will also need to create an environment the supports the way people in the organization should do things, i.e. that is in line with the desired strategy.

Finally, it is more effective for a leader to use his/her personal power than position power in change management.

4.3       Cross-Cultural leadership

The famous GLOBE (Global Leadership and Organizational Behaviour Effectiveness) project is a systematic research of cross-cultural leadership more than 60 countries over the world. The study measured the connection between culture values, society climate and structure, organizational processes, economic development and leadership (Yukl, 2010).

The result of the GLOBE confirmed that charismatic/transformational leadership (value-based-, team oriented-, participative) is strongly approved across cultures (Hartog et al., 1999). Reflecting from the 7-S and CVF, these leadership styles emphasizes risk tolerance, moral enhancement, trust and creativity which are all essential for innovation.

Furthermore, in a country where performance orientation is set high, it also influences companies to act likewise (Javidan et al., 2004). Hence, respecting and paying deep attention to national culture is essential for a leader to understand the local organizational culture.

Other cross-cultural studies that focused on individual orientation and capacities showed that cross-cultural leadership needs competencies such as transformational leadership, emotional intelligence, and cultural intelligence (Deng & Gibson, 2009), as well as the ability of complex problem solving, learning and being hard-working and persistent (Robie et al., 2001).

Culture intelligence defined by some researches as the “natural ability to interpret a individual’s unfamiliar gestures and behaviours in the same way that others from the individual’s culture would” (Robbins & Judge, 2009:80). In a nowadays global business world, culture intelligence is seen as one of the key assets by many organizations. Therefore, leaders could also adapt employee selection criterion and culture training (to learn how to interact in a meeting or conference, learn about different traditions and values etc.) to facilitate a desirable culture.

4.4       Conclusion

Influencing or modifying an organization’s culture is a difficult task and long-term process, but it is not impossible. Leadership and its capability is the key to enable organizational culture modification. Effective leadership such as charisma and transformational or level 5 leadership are very suitable to accomplishing the cultural change to allow innovation. Leadership shall furthermore enhance its moral standard, culture and emotional intelligence, as well as its ability to learn, to solve the problem and being persistent. Finally, creating a good culture with trust and freedom is as equally important as to ensure that all people in the organization truly share the organizational value.

5        Biography

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Cameron, K. & Quinn R. E. (2006). Diagnosing and changing organisational culture. San Francisco: John Wiley Jossey Bass.

Collins, J. (2001). Good to Great, Why Some Companies Make the Leap… and Others Don’t. New York: HarperCollins Publishers Inc.

 Covey, S. (2009). The Seven Habits of Highly Successful People. New York: Rosetta Books LLC.

Degraff, J. & Quinn, S. E. (2007). Leading Innovation: How to Jump Start Your Organization’s Growth Engine. New York: The McGraw-Hill Companies, Inc.

Deng, L. & Gibson, P. (2009). ‘Mapping and modelling the capacities that underlie effective cross-cultural leadership: An interpretive study with practical outcomes’ Cross Cultural Management: An International Journal 16/4  347-366

Hofstede, G. (2001). Culture’s Consequences. Thousand Oaks: Sage.

Hofstede, G., Hofstede, G.J. & Minkov, M. (2010). Cultures and Organizations. New York: McGraw Hill

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Javidan, M., House, R.J. & Dorfman, P.W. (2004). ‘A Nontechnical Summery of GLOBE Findings in Robert House, PJ Hangers, M Javidan, PW Dorfman and V Guota (eds)’. Culture, leadership, and organizations: the GLOBE study of 62 societies. London: Sage.

Johnson, G. & Scholes, K. (2001). Exploring public sector strategy. London: FT/Prentice Hall.

Kanter, R.M. (1983). The Change Masters. Allen and Unwin

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Munshi, N., Oke, A., Puranam, P., Stafylarakis, M., Towells, S., Moeslein, K. & Neely, A. (2005). Leadership for Innovation, Advanced Institute of Management Research: London www.aimresearch.org/academicpub.html

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Robbins, S. & Judge, T. (2009). Organizational Behavior, 13th edn. New Jersey: Person Education Inc.

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6        Appendix

6.1      Innovation

Munshi, N., Oke, A., Puranam, P., Stafylarakis, M., Towells, S., Moeslein, K. & Neely, A. (2005). Leadership for Innovation, Advanced Institute of Management Research: London www.aimresearch.org/academicpub.html

6.2      The Cultural web

6.3

Johnson, G. & Scholes, K. ( 2001). Exploring Corporate Strategy. Harlow, Essex; FT Prentice Hall
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