CMI Module 1 - Chapter Notes PDF

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Module One: The Question of Change and Innovation

Copyright © 2014 MindEdge Inc. All rights reserved. Duplication prohibited.

Learning Objectives After completing this module, you should be able to: 1. Define organizational culture 2. Describe the types of organizational cultures (Quinn & Cameron's four types: Clan, Adhocracy, Market, and Hierarchy; Johnson & Scholes' Cultural Web) 3. Explain the role of leadership in shaping an organization's culture 4. Describe the sources of change (technological, cultural, socioeconomic) 5. Discuss the nature and process of change (Bridges' Transition Model; change curve; first, second, and third order change model) 6. Identify key characteristics of organizations open to change and innovation 7. Discuss why change management efforts succeed and why they fail 8. Explain the intersection between change and innovation efforts and institutional or organizational culture 9. Describe the role of leaders in developing a vision for change and innovation in their organization 10. Describe differences in cultural issues in a corporate, nonprofit, and public sector environment 11. Analyze and explain the issues for an organization facing change through a brief case study 12. Explain the need for cultural competency (valuing diversity and inclusion) especially in preparation for organizational leadership within a competitive global marketplace. 13. Discuss the impact of sustainability issues on organizational cultures

Defining Key Terms We employ the following definitions for the key terms in this course. These terms provide a foundation for common understanding. Leadership We define leadership in this course in simple terms: Leadership is the process by which one person influences the thoughts, attitudes, and behaviors of others.

Traditional views of leadership, based on military and hierarchical models, have changed. Today there is a greater understanding of the varieties of leadership, in business, government, education, health care, not-for-profits and in more personal settings (like team-based leadership and the family). Leadership is not limited to the naturally charismatic, the extroverted and gregarious, and those selected for top management positions. In fact, many of the elements that comprise being a leader can be taught or developed. There are several different ways leadership can emerge, which include training and learning. Role-playing is a significant part of leadership. At the same time, leaders must also consider the potential internal and external challenges they may face and how they can overcome them. Change, Creativity, and Innovation Organizational change is the act of making an organization something different from what it is or from what it would be if left alone. Change management is the process of managing change in an organization. In change management, leaders are called upon to understand the scope of the change, to make a persuasive case for it, and to help employees adjust to new working conditions. Creativity is defined as the generation of new ideas by individuals and teams. In contrast, innovation is the process by which an organization generates new ideas and converts them into new products, business practices, and strategies that create value. Innovation is not deemed successful unless that creative process is translated into a commercially successful endeavor. Notes For further information on: Moore's Law. "Moore's Law and Intel Innovation" at: http://www.intel.com/content/www/us/en/history/museum-gordon-moore-law.html. Clay Christensen's concept of disruptive innovation. "Disruptive Innovation" at: http://www.christenseninstitute.org/key-concepts/disruptive-innovation-2/.

Organizational Culture As defined by MIT's Edgar Schein, organizational culture is: "the basic tacit assumptions about how the world is and ought to be that a group of people share and that determines their perceptions, thoughts, feelings, and their overt behavior." 1 This culture is a set of attitudes, beliefs, traditions, values, and customs individuals within an organization have in common. Every organization has its own unique characteristics, principles, traditions, and world view that define how "things are done." Although these may change over time, they still provide a perception of what someone might experience within the organization. Simply put, the organizational culture of a group is its personality. This is true whether the organization is a corporation, a nonprofit, the military, or a government agency.

Culture dictates how members will think, feel, and behave. It is important to understand an organization's culture in order to know what to expect and what will be expected. You're more likely to be successful in an organization when you behave and perform according to cultural norms. An individual who doesn't adhere to sanctioned values can suffer the consequences by not being promoted, not receiving monetary rewards, and (in extreme cases) being fired for "not fitting in."

Culture influences the daily behavior of those involved in an organization; as Shawn Parr of Bulldog Drummond, an innovation and design consultancy, has noted: "It's important to understand what is driving your culture. Is it power and ego that people react to, and try to gain power, or a culture of encouragement and empowerment? Is it driven from top-down directives, or cross-department collaboration? To get a taste of your culture, all you have to do is sit in an executive meeting, the cafe or the lunch room, listen to the conversations, look at the way decisions are made and the way departments cooperate." 2 Within an organizational culture, there can also be subcultures. A subculture is a group of people with a culture which is different from the larger culture to which they belong. This subculture is typically distinct and it may be hidden. Examples of subcultures include special units within the military (Navy SEALS), given functions within a business (traders in a financial services company), geographically distant departments (branch offices), and other groups where separation from the larger culture is possible. The following examples of organizational culture suggest how it can shape and guide its members. Corporate Culture: Google Google commonly makes the lists for being a "best place" to work. This is largely due to the unique culture that its founders have created. In their own words, "what makes working at Google truly unique is the workplace culture that encourages innovation and a healthy disregard for the impossible." Google's recruiting process is rigorous because it is looking for the smartest and most thoughtful employees and because it values ability over experience.3 Google's work atmosphere is relaxed and informal and employees are given significant autonomy. There is no dress code. Benefits abound in a consciously non-hierarchical environment, which features free organic meals, free laundry, and over-the-top exercise and game facilities. These all come in handy because employees work long and hard as the organization has high expectations about employee performance.

Nonprofit Culture: The Salvation Army The Salvation Army was founded in London, England, in 1865, by William Booth, a preacher. What makes this nonprofit unique is that it adopted a military organizational structure in its approach to "winning souls for Jesus." Booth became the organization's first General in 1878 and members of the charity have military titles and wear uniforms. The Salvation Army seeks to meet the "physical and spiritual needs" of those whom they preach to. Today the organization is in more than 125 countries where it runs thrift shops, homeless shelters, and offers humanitarian and disaster aid. In the United States, the Salvation Army's red kettles and bell ringers are synonymous with the beginning of the Christmas season.

Public Sector Culture: Food and Drug Administration Critics of the federal Food and Drug Administration claim that the agency is overly cautious and bureaucratic in the way it handles the review and approval of new drugs. They argue that delays over safety concerns have hampered the introduction of needed new pharmaceuticals. The FDA's caution, however, is based on the errors it made in the 1960's in allowing the drug thalidomide to be prescribed for morning sickness and the toxicity led to birth defects. Some, like Scott Gottlieb writing in the National Affairs journal have described a "culture of fear": "This fear flows from a presumption among review staff that the FDA is the lone bulwark standing between truth and chaos when it comes to prescribing drugs."4

Military Culture: The Marines Founded in 1775, the U.S. Marine Corps promotes core values of honor, courage, and commitment. The Marines consciously emphasize the traditions of the Corps from the induction of enlistees through boot camp and continuing on into active duty. In 1883 the Marine Corps adopted Semper Fidelis or "Semper Fi" for short, as its motto (Latin for "Always Faithful.") A few phrases the Marines are known for include "Once a Marine, Always a Marine," "Jarheads," "Leathernecks," and a recruiting slogan "A Few Good Men." Marine culture is distinctive. Leatherneck magazine quotes an anonymous Canadian civilian who noted: "Marines are about the most peculiar breed of human beings I have ever witnessed. They treat their service as if it was some kind of cult, plastering their emblem on almost everything they own, making themselves up to look like insane fanatics with haircuts to ungentlemanly lengths, worshiping their Commandant almost as if he was a god, and making weird noises like a band of savages. " This observer concluded, however, that: "their high spirits and sense of brotherhood set them apart and, generally speaking, of the United States Marines I've come in contact with, are the most professional soldiers and the finest men I have had the pleasure to meet."

Cultural Differences Between Sectors The cultures of corporations, nonprofits, and public sector organizations are shaped by different factors, many of them unique. Corporations typically have to satisfy shareholders, who expect financial returns on their investment. A corporation's focus on making enough profit to keep their investors happy can mean a lessened emphasis on the personal development of the employees.

Nonprofit organizations have members, boards of directors, contributors, and volunteers to serve, so their culture often tends to be more nurturing and accommodating. As mission-driven organizations, they want to their workers and volunteers to remain passionate about the cause. Public sector organizations must operate working under national, regional, and local guidelines, or by mandates voted on by legislators or voters. They must balance meeting the needs of taxpayers and those they serve while adhering to regulations, safety issues, and government guidelines. Notes 1. Edgar Schein, "Three Cultures of Management: The Key to Organisational Learning," Sloan Management Review (Fall 1996), page 11. 2. Shawn Parr, "Culture Eats Strategy for Lunch," www.fastcompany.com, January 24, 2012, http://www.fastcompany.com/1810674/culture-eats-strategy-lunch. 3. Alan Eustace, "Do Cool Things That Matter," Google corporate website, https://www.google.com/intl/en/about/jobs/lifeatgoogle/ 4. Scott Gottlieb, "Changing the FDA's Culture," National Affairs, Summer 2012 http://www.nationalaffairs.com/publications/detail/changing-the-fdas-culture.

Models of Culture Experts in organizational behavior and management have developed several models of corporate culture in an attempt to better understand the behavior of people in an organization. Two of these models are the Organizational Culture Assessment Model developed by Kim Cameron and Robert Quinn and the Cultural Web Model fashioned by Gerry Johnson and Kevan Scholes. Organizational Culture Model The Organizational Culture Assessment Instrument is a validated research method developed by Kim Cameron and Robert Quinn that looks at organizational culture. This method uses a test questionnaire to determine the

culture of an organization. After the testing process is completed the results show the organization's dominant culture type. The Competing Values Framework (CVF) classifies the organization's culture. According to Cameron and Quinn, there are four types of cultures: Clan, Adhocracy, Market, and Hierarchy. Each culture type can have an internal or external focus and a preference for flexibility or stability/control, as can be seen in the following chart:

Type Clan

Foc us Internal

Pr e fe r e nc e Flexibility

Adhocracy External Flexibility

Le ade r ship Char ac t e r ist ic s Mentor, team builder Visionary, Entrepreneur

Market

External Stability/Control Demanding, Market-driven

Hierarchy

Internal

Stability/Control Demanding, Market-driven

The Clan is a friendly place where people openly share like a family or group of friends might. This organization values loyalty, tradition, collaboration, commitment, teamwork, participation, and consensus. The leader has a tendency to be a mentor or team builder. The Adhocracy style of organization is entrepreneurial, flexible, and creative. People take risks and are innovators. You will find cutting edge organizations in this type of culture striving to improve and grow. It anticipates what is needed in the marketplace and is agile enough to respond quickly. The leader is entrepreneurial and a visionary. The Market culture is results-oriented, competitive, and driven. Members are goal-oriented and success is achieved by meeting targets and goals. Delivering results to customers and being productive is valued more than developing employees. This culture strives to win and leaders are demanding and drive their people hard to increase market share and profitability. The Hierarchy style places an emphasis on being a formal, structured, and stable environment. It values rules, procedures, and policies that provide stability for the organization. Individuals are encouraged to be reliable, dependable, and deliver results by following the structure of the group.

Leaders are efficient, organized, and strive to run a smooth operation by following processes and procedures. Employing the CVF research tool can help members of an organization understand what their culture is today and if change is warranted, recognize potential areas of conflict and opportunity. Organizational Culture model

[Chart adapted from Robert Kreitner and Angelo Kinicki, Organizational Behavior, (New York: McGraw Hill, 2010)] There are two dimensions in this framework. The first dimension "differentiates an orientation toward flexibility, discretion, and dynamism from an orientation toward stability, order, and control...[It] represents a continuum ranging from versatility and pliability on one end to consistency and durability on the other end." The second dimension "differentiates an orientation toward an internal focus and capability, and the integration and unity of processes, from an orientation toward an external focus and opportunities, and differentiation and rivalry regarding outsiders....This dimension ranges, in other words, from cohesion and consonance on the one end to separation and independence on the other." 1 This model can help leaders of a hierarchical organization, for example, recognize that it will have difficulty competing in situations where flexibility and an external focus is required. Conversely, an Adhocracy will need more systems and structure if it wants more stable and consistent operations.

Cultural Web The Cultural Web is a model used to understand and possibly change an organization's culture. Developed by Gerry Johnson and Kevan Scholes, it brings to light the assumptions and practices that make up an organization's culture. There are six elements in the Cultural Web paradigm that offer a broad view of an organization's working culture. The six elements are stories, rituals and routines, symbols, organizational structure, control systems, and power structure.

[Chart adapted from Gerry Johnson and Kevan Scholes, Exploring Public Sector Strategy, (Harlow: Pearson Education, 2001).] The elements are interrelated and indicate what might need to be changed for a more successful and productive environment.

Ele me nt s

De sc r ipt ion

Stories

Stories are the past events and what people talk about inside and outside of the organization. Does the organization celebrate someone or something? This can provide insight as to what people value.

Rituals and Routines

Rituals and Routines are the daily behavior and actions that are considered to be approved and valued.

Symbols

Symbols in an organization are logos, the dress code, what type of neighborhood the facility is located in, how fancy the furnishings are, etc.

Organizational Organizational Structure is what is shown on an Structure organization chart. However, sometimes those who have power, influence, and contribute the most may not be on the top of the chart but they are nonetheless valued. Control Systems

Control Systems control things like finances, quality control, and rewards.

Power Structures

Power Structures are where the real power is in an organization. This may be one or several top people or it could be a whole subgroup within a group. These are the decision-makers that influence goals, missions, directions, and strategies of where the organization is going.

Johnson and Scholes argue that their Cultural Web paradigm can be employed to change an organizational culture. They have developed a fourstep process for using the Cultural Web in effecting cultural change, as can be seen in the following chart.

Notes 1. Jeff DeGraff and Bob Quinn, "The Competing Values Framework," www.competingvalues.com, http://competingvalues.com/competingvalues.com/wpcontent/uploads/2009/07/The-Competing-Values-Framework-An-Introduction.pdf.

Leaders and Culture What impact can leaders have on organizational culture? There are differing views on this question, as noted by James C. Sarros, Brian K. Cooper, and Joseph C. Santora in a Journal of Leadership & Organizational Studies article. The functionalist school "claims that leaders are the architects of culture change...either through substantive, visible actions or through the symbolic roles they play." The anthropological view argues that leaders can't create culture, "that is, leaders are part of culture, not apart from it ." The authors concluded, however, that "the body of evidence is heavily weighted in favor of the functionalist perspective, in which leaders are in a position to shape the organization's culture."1

Edgar Schein of the MIT Sloan School of Management in his Organization Culture and Leadership argued that leaders, through their daily conversations, created and changed culture. He wrote: "Organizational cultures are created by leaders, and one of the most decisive functions of leadership may well be the creation, the management, and—if and when that may become necessary—the destruction of culture."2 This course lines up with the functionalist school, maintaining that leaders do shape and mold organizational culture. The following presentation reviews some of these issues.

Leadership and Culture Leaders can shape and mold the culture of their organization. They can also be influenced by an existing culture. Some management thinkers argue that the entire purpose of leadership involves creating a positive culture. The level of difficulty in changing a well-established culture in an organization should not be underestimated.

Negative Cultures? Outsiders who look to alter an existing culture will often encounter significant resistance. Insiders may believe that they can 'outwait' new leadership and that the existing organization...