The past, present & future of culture
How can organisations ensure wellbeing, performance and ethical conduct in an increasingly uncertain and unpredictable world?
“The heresy of one age becomes the orthodoxy of the next.” — Helen Keller 1
[This post is based on a recent paper co-authored with my EQ Lab colleague Dr Richard Claydon for the Governance Institute of Australia] 2
Culture - the past
Organisations have always had cultures - which the people who work there experience as ‘the way we do things round here’. 3
But we didn’t always think of organisations as having cultures.
The idea only really caught hold in the 1970’s when a resurgent post-war Japan, producing high-quality, low-cost products, was decimating the industrial supremacy of the US, especially in its own domestic market.
The big American consulting firms of the time had no off-the-shelf solutions.
But McKinsey was keen to re-establish its intellectual dominance of the market, which it lost to Boston Consulting Group’s invention of strategic consulting.
So they pulled together cultural themes from Japan (loyal employees doing continuous improvement), Scandinavia (egalitarian workers with diverse voices) and the traditional US focus on the hard S’s of Structure, Systems and Strategy, which was, and remains, the bedrock of McKinsey’s business.
An up and coming McKinsey consultant by the name of Tom Peters was centrally involved in adding three soft S’s - Staff, Style and Skills - to the mix.
He even dared to suggest that these were of primary importance - a heresy that triggered a movement within McKinsey to have him ousted from the firm. 4
A final seventh ‘S’ was added to the mix, and McKinsey had its soon-to-be-famous 7S Model.
The seventh ‘S’ was originally Superordinate Goals - organisational outcomes requiring cooperation across internal boundaries. But that sounded too highbrow for a catchy marketing message that would get McKinsey consultants selling the package. 5
So, in a two-day meeting, Peters et al came up with Shared Values and with that, the ‘culture as shared values’ nonsense that’s led organisations astray for more than 40 years was born.
Other big consulting firms jumped onto the bandwagon, and soon organisations everywhere were cooking up lists of values that everyone was supposed to live by. 6
Turbocharged by the $250Bn consulting industry, ‘culture as shared values’ has dominated the narrative around organisational culture.
But two other ‘modes’ have featured in the wider discourse.
First is the organic, emergent culture of innovation common to high-tech startups, driven by creativity, freedom, responsibility, openness, commitment to truth, and having fun.
My own 35-year career in helping clients create future-fit cultures of innovation and agility began when I worked for one of the world’s leading open innovation labs exemplifying this high-tech culture. 7
The other mode is the evangelical ‘change the world’, mission-driven culture that encourages people to devote huge energy, dynamism and commitment to ‘the cause’. 8
Then, when the dot com bust of late 2000 wiped $1.7 trillion from the value of internet companies 9 the love affair with culture lost much of its intensity.
The pretence that ‘culture = shared values’ continued but served mostly as PR window dressing for customer marketing and recruiting. 10
Culture - the present
For people in the body of an organisation, the gap (or gulf) between the simple cultural rhetoric and the complex cultural reality that people experience in their day-to-day work tends to generate the following reactions:
Cynicism — disgust at the gap
Apathy — despair at the gap
Irony — wry recognition of the gap
These often show up in HR surveys as ‘employee disengagement’ but in reality just reflect the fundamentally misguided notion that a simple list of values can ever represent the inherent complexity of human beings in an organisational community.
The people who don’t simply dismiss the list of shared values as ‘corporate nonsense’ see them in three ways, often dynamically switching between and/or mixing the views:
Integrated - an aspirational value-set that people can be inspired to work towards, but can never actually achieve.
Differentiated - inevitable sub-cultural interpretations that occur in different teams, departments and countries as people make sense of the value-set within the context of their own work.
Fragmented - individual contestations and disagreements about what the value-set means informed by professional pride and personal histories.
Then there are three ways that culture is approached in practical terms:
Managerial — culture is a means of management control, so everyone who doesn’t fit in is a bad apple who should be retrained or fired.
Radical — the organisation isn’t performing as required, therefore the culture isn’t working, and needs to be transformed.
Adaptive — because different people interpret ‘we’ and ‘round here’ differently and dynamically, ‘the way we do things round here’ inevitably has multiple diverse interpretations that, when embraced, can lead to significant value co-creation.
In an increasingly uncertain and unpredictable world with digitally transformed hybrid workforces, it’s this adaptive agility that organisations must bring to life across their operations.
Culture - the future
As COVID illustrates, the world is becoming increasingly unpredictable. The pace, complexity and volatility of change means that there simply isn’t time for information, data and insights to work their way up a hierarchy, be explored, debated, developed into plans and rolled out before the world has moved on and rendered them obsolete.
Adaptive cultures occur where the sense-making, decision-making and action-taking inherent to high performing teams become tightly coupled, rapidly and repeatedly iterated, deeply embedded, and widely distributed throughout the organisation.
Given that this Substack channel is all about the creation of future-fit cultures, I won’t repeat what I’ve previously published here and here.
You can read the full paper on the Governance Institute of Australia website here.
Image credit: The Fourth Doctor's Tardis Interior by Magnus D
From the book Optimism (1903). The full quote is: “The idea of brotherhood re-dawns upon the world with a broader significance than the narrow association of members in a sect or creed; and thinkers of great soul like Lessing challenge the world to say which is more godlike, the hatred and tooth-and-nail grapple of conflicting religions, or sweet accord and mutual helpfulness. Ancient prejudice of man against his brother-man wavers and retreats before the radiance of a more generous sentiment, which will not sacrifice men to forms, or rob them of the comfort and strength they find in their own beliefs. The heresy of one age becomes the orthodoxy of the next. Mere tolerance has given place to a sentiment of brotherhood between sincere men of all denominations.” (Part II, segment 47].
You can read the full paper on the GIA website here.
The words ‘we’ and ‘round here’ are crucial because different people in an organisation define those differently, hence experience the organisation’s culture differently…
This four page summary by Tom Peters of how McKinsey cooked up their 7S model makes fascinating reading.
Ibid (Tom Peters’ four page summary).
The poster child for this nonsense was Enron, whose shared values of Integrity, Respect, Communication and Excellence failed to prevent their $62Bn demise in 2001 due to persistent fraudulent behaviour at the highest levels. Enron CEO Jeffrey Skilling – himself a former McKinsey partner – was sentenced to 24 years in prison for conspiracy, insider trading, false statements, and securities fraud.
I joined Cambridge Consultants in 1983. After a few years a client asked me if I could help 'get their people to behave more like our people' (i.e. adaptive, innovative, agile), launching the career path I’ve been on ever since.
Mostly these slide into forms of fundamentalism that eventually destroy the organisation from within.
See this CNN piece from 9 November 2000.
There was some tinkering with cultures on a superficial level - as described in a previous post.